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Engaging small businesses and contractors in energy efficiency: program approaches for both

In February, my colleague Steve Baab posted a blog discussing two different program delivery approaches for small businesses. In this blog, we will discuss two additional delivery approaches and how to maximize enrollment of small businesses to install energy efficiency measures.

Regardless of the program approach, prior to the installation of any energy efficiency measure (EEM), the following steps must occur for customer engagement:

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The two approaches described in the previous blog were:

  1. Program-driven model: Implementer acts as the contractor. In these cases, the program identifies the opportunity, sells the opportunity, and installs the EEMs.
  2. Market driven model: Implementer pre-approves contractors and trade allies who sell and install the EEMs.

We now explore two additional approaches:

  1. Auditor driven model: Implementer uses staff to conduct audits, identify opportunities and sell projects that are then handed off to contractors. This model typically involves standard pricing and a closed contractor network.
    • The advantages of this approach are:
      • Control of costs and timing of projects
      • Control of customer experience, communication, and branding
      • Ability to targete customers and measures
    • The disadvantages of this approach are:
      • Limited customer choice for contractors
      • Limited market-driven competitive pricing structures
      • Removes the ability for the market to mature and produce projects on its own
      • Increased program administrative costs, which reduces program cost effectiveness
  1. Hybrid: This approach allows for a combination of any of the other three models. They all have their advantages and disadvantages, so it can be the best approach to use the elements that meet program needs specific to its situation or market.  In some cases, a focus on comprehensiveness is desired, and, in another, the priority could be lowering the per unit acquisition costs. Such factors can require either a tighter contractor network or a more open network to expand the reach.

Combining all efforts provides the following advantages:

  • Providing flexibility for customers to choose their preferred contractor, resulting in competitive market dynamics
  • Educating the local contractor base to sell and deliver technologies and systems that are energy efficient
  • Targeting marketing/segmentation
  • Maximizing comprehensiveness opportunities and project management on a per-customer basis
  • Managing and monitoring through a better understanding on market potential, customer dynamics, and control of the pipeline.

The hybrid approach may require more balancing of resources and efforts, but it allows flexibility for the needs of a specific utility at any point in time.  This enables the team to meet energy efficiency budgets and goals, as well as address specific market challenges for the small businesses and the contractors who serve them.

Ultimately, with the exception of the program-driven model, the contractors are an important stakeholder in the delivery of energy efficiency measures to small businesses. These contractors are a critical key to achieving program success.  If we train, empower, and nurture these contractors, the market place will experience success in promoting energy efficiency, as well as engage more customers.

I will discuss this issue further with three case studies at the Behavior, Energy, and Climate Change (BECC) conference October 20-22 in Baltimore.  I will present three case studies where I will explore who these contractors are and we have learned about their motivation and participation in programs serving the traditionally hard-to reach small (and medium) businesses during the lightning session, Stronger Together: Leveraging Groups for Behavior Change. If you are attending, please introduce yourself to me so we can further discuss this topic. I will also be producing a white paper on this topic.  Stay tuned…


Karen Maoz is a Senior Consultant with DNV GL.  Karen has more than 16 years of experience in energy efficiency, ranging from program planning, research, evaluation, and implementation. Karen has a Bachelor of Science in mechanical engineering from the University of Texas Austin, and a  Master of Science in mechanical engineering  from the University of California, Berkeley. She  is a registered PE in California and is on the Board of Directors for the AESP California Chapter.

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