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Reaching Success Beyond Lighting-only Measures in Hard(er)-to-Reach Markets

I just returned from the 2018 ACEEE Behavior, Energy and Climate Change (BECC) Conference in Washington, DC.  What an energizing four days!  The speakers were passionate and discussed very innovative and intriguing projects.  I presented a post-conference workshop, “How segmentation ties to program delivery: analytics, program design, and go-to-market strategy” with my colleagues, Tim Sennott and Karen Germain.  We had a very interactive session with an engaged audience.  

My part of the workshop presented the challenge of reaching specific underserved niche-markets and increasing measure penetration in individual market segments.  This can be solved by designing an easy-to-understand program crafted around bundling measures. Bundled measures allow higher savings per project by including multiple measures, some of which might not meet a payback threshold.  These bundles are meant to drive small business and trade ally participation and to increase non-lighting measure penetration.

Why measure bundling?

Our experience in commercial prescriptive programs has shown that historically, 87% of non-residential energy efficiency projects include measures that are installed in isolation: one type of measure at a time. This approach leads to businesses installing the most cost-effective measures one-by-one, leaving savings from the less cost-effective measures stranded.  Stranded measures are rarely able to meet the businesses’ return on investment criteria, resulting in the permanent loss of the remaining opportunities. This is often the case for certain business types (schools, government, some corporations) that have strict policies around returns on infrastructure investments.

In Table 1, a school energy efficiency investment project is an example that demonstrates stranded savings.  Highlighted in gray, a total of 3,327 kWh, 9,150 therms, and $14,390 are left stranded if each measure is evaluated individually. The assumed payback threshold is three years in this example, where only the first five measures meet the threshold individually.  When these measures are bundled, the total meets the payback threshold and all eight measures can be installed. The package of measures leads to annual dollar savings that are 35% higher than the savings from individually- installed measures.

Table 1. Energy efficiency measures installed at a k-12 school with savings, costs and payback

In a different market segment, such as local grocery or convenience stores, a different approach is more effective. Ranking energy efficiency measures as “Basic,” “Plus,” and “Cutting Edge” helps store owners self-assess their progression along their journey, based on the value they place on energy efficiency. Marketing materials, including graphics such as the table in Figure 1, show facility managers not only where they stand based on measures already installed, but also how to take the next step toward increasing energy efficiency savings. Facility managers in low-margin businesses like groceries or restaurants often don’t have much time to invest in energy efficiency research. A pre-defined measure bundle such as “equipment commissioning” paired with “floating head pressure control,” and “energy management system upgrades” offers an easy solution to move non-participants or single end-use participation utility customers into more active energy efficiency program participants.

Figure 1. Energy efficiency measure ranking for the grocery market segment

How does measure bundle design work?

Designing a program that bundles measures into a package requires careful planning and consideration, taking into account the local energy efficiency measure penetration within targeted niche markets, local utility client goals and concerns, and local trade ally relationships. The keys to success with this approach are to first understand the local customer base. Do certain niche market customers have low program participation? Are certain energy efficiency measures nearing saturation across markets or within particular markets? Advanced analytics a provide deep understanding of local markets.

The second key to success is to understand utility goals and concerns. Do they have capacity constraint problems across their territory or feeder problems specific to a geographic location? Do they have a regulating body focused on under-served markets or focused on cost effectiveness thresholds?

The final key is getting trade allies to work together to provide a combined offering to the customer. There are several options to encourage trade allies to collaborate through the lifecycle of project identification, justification, and valuation. Trade ally training, a trade ally networking user groups, and a customer project web portal for qualified trade allies can facilitate collaboration between the trades.  In our current world, an ever-increasing percentage of business is facilitated over the web and there is an opportunity to use a digital solution to resolve this existing barrier.

What will a Measure Bundle program do for you?

  • Target specific, underserved niche markets, increasing measure penetration in the market segment
  • Result in higher savings per project by including measures that otherwise would not meet a payback threshold
  • Increased customer participation based on customer benefits, including:
    • Bundled financial analysis allows higher savings to better meet financial thresholds
    • Reduced project management costs by combining projects.
    • Streamlined procurement: complete scope of work in fewer proposals.
    • Streamlined use of utility and state rebates: reduced number of applications
    • Scale of “basic,” “plus,” or “cutting edge” energy efficiency allows customers flexibility to select the option that best connects with their goals and objectives

DNV GL has successfully designed and implemented energy efficiency projects on behalf of utility clients for 40 years and has offerings that can be tailored to fit a variety of market segments. We are ready to help you customize a measure bundle program specific to your service territory, identifying the underserved market segments and energy efficiency measure saturation within those markets. We will work with you develop the best marketing strategies paired with a trade ally plan.  Our team has significant project experience in both retrofit and new construction programs. We work through the project life-cycle to identify, justify, and evaluate energy-saving measures and provide post-installation engineering review to verify savings.

For more information, please contact Jennifer McWilliams, a Senior Engineer at DNV GL. Ms. McWilliams has twenty years’ experience in energy efficiency, including program implementation, engineering, and evaluation. Ms. McWilliams is a graduate of Carlton College and holds a Master of Science Degree in Mechanical Engineering from the University of Washington.  If you would like more information on our energy efficiency services and products, please feel free to reach out, or visit us on the web. We’ve posted a variety of white papers and webinars to help your utility make a more informed decision.

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