How much will REV seep into the market transformation discussions at the ACEEE MT Symposium?
The American Council for an Energy Efficiency Economy (ACEEE) hosts its annual Market Transformation Symposium in Baltimore this coming week. This will be the 20th Symposium, meaning that market transformation has been as a policy and a public goal since the late 90’s, when incentive-based demand side management programs were matured as a standard approach for reducing energy use.
The most succinct definition of market transformation (MT) is from the ACEEE itself, which say it is “strategic interventions that attempt to cause lasting changes in the structure or function of a market, or the behavior of market participants, resulting in an increase in the adoption of energy efficient products, services, or practices.”
I began regularly attending this Symposium in 2002, and watched how the tone and direction of policy discussions about market transformation itself transformed over time. In the early and mid-2000’s, the prevailing paradigm was that MT was an element that could be applied, or extended, from existing DSM programs, an element that was assumed as a natural extension for how an incentive-based program could be run. Early successes were celebrated for sustained market adoption of key residential consumer measures in compact fluorescents, horizontal access clothes washers, and double pane windows. The natural inclination rising from these early perceived successes was that market engagement, education, and outreach – combined with an incentive-based program – could achieve measurable MT progress.
Most program and policy designers recognize that true market transformation efforts take a three year cycle to see tangible results. This, of course, is challenging for utilities and states to justify to regulators. An incentive-based program can, generally speaking, readily measure the cost-benefit ratio of a dollar spent to achieve 1.0 or higher of energy savings by a physical upgrade of any kind of consumer good or building equipment, on an annual basis. A MT based approach relies on a longer period of time to measure shift in knowledge, awareness, attitude, and ultimately observed buying behaviors. This is not easy stuff to measure and justify to regulators, so the “piggyback” approach of attaching MT efforts and outcomes to incentive programs was the norm. By the late 2000’s through the early 2010’s, spirited discussions during presentation Q&As and sessions breaks began popping up about the nature of MT, the speed of sustained market adoption, and the costs for transforming marketplaces. These discussions all hinged on the premise of whether program funders and designers were correctly prudent with spending public finances on MT, or, were too cautious and too slow, depending on one’s point of view.
The New York Reforming the Energy Vision (REV) public policy now adds a new color to the MT world. REV is designed to significantly change and expand how the clean energy marketplace is intended to work. The New York State Energy Research and Development Authority (NYSERDA) has always maintained MT as a key mission, and now has approval from the NYS Public Service Commission to move ahead with their efforts under the 10-year Clean Energy Fund (CEF). NYSERDA’s newest mission has been made explicitly clear by their leaders in every public forum I attended last year: they are no longer in the business of “buying energy efficiency”, but now – instead – in the business of strategically investing in sound business models that the private marketplace will use to profitably drive desired consumer behavior in choosing clean energy products, services, and actions.
So, the public policy approach is dramatically shifted: from the long-established public funded efforts to help the private marketplace move towards a desired public benefit to, instead, an investment into the private marketplace to pursue profitable enterprises that also create a desired public benefit, i.e. reductions in energy use and in greenhouse gases. This is, then, the ultimate exercise in MT, where the burden of engaging and moving business owners, financial institutions, homeowners, and similar towards clean energy adoption rests on the abilities of private vendors or third party institutions, not the utility or the state.
In the last three energy conferences I attended last year, subtle – and occasionally not-so-subtle -references were brought up by a few conference presenters over what REV really means, or, how much it will really work. This is indeed a dramatic shift in the way public energy policy is designed and executed. Reasonable skepticism is natural and expected. In the coming week we’ll see what the prevailing perceptions seem to be from our colleagues in the MT world, and how much they are ready to embrace what is unfolding in New York State.
Be sure to catch DNV GL at ACEEE’s National Symposium on Market Transformation, where we will present a paper on how Net Zero Energy is the ultimate market transformation and moderate the How to Establish a Baseline, Measure, and Claim Savings for Market Transformation Programs panel.