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Dec 8, 2011

Broader + Deeper = Greater Savings

 

The momentum for electric utilities to achieve high levels of energy efficiency savings has never been greater. Regulation has taken the lead. Utilities operating in seven states, for example, are required to meet more than 20 percent of their load in 2020 with energy efficiency programs.

Energy efficiency is a central ideal, if not the cornerstone, of Rocky Mountain Institute’s Reinventing Fire, a vision for an oil-, coal- and nuclear-free U.S. energy system by 2050. In fact, RMI believes that 40 percent of capacity can be replaced by energy efficiency.

To meet these ambitious goals, utility program managers are trying to adopt two strategies: seeking more breadth (total program customers) and going for more depth (savings per customer).

As illustrated in the figure above, if a utility wants to increase savings from 0.5 percent of total electricity demand to 2 percent, it could seek to either quadruple program participants or quadruple the savings per participant. Going solely for either strategy is a daunting task. But by pursuing both in combination, program managers are much more likely to meet their goals.

To help utilities achieve both broader and deeper savings and meet ambitious targets, RMI has released Turbocharging Efficiency Programs: Going for Broader and Deeper Savings.

Utility performance on efficiency programs can vary widely. Some programs have achieved participation near 90 percent vs. the 35 percent average. Why is this?

We found several tactics common among the utilities that are leading the way in energy savings. The leaders have incorporated many business process improvements into their programs that can be adopted by other utilities. Turbocharging presents best practices in four main categories:

  • Make marketing work
  • Improve sales execution
  • Drive down transaction cost
  • Embrace collaboration

Good marketing is a targeted message that compels a wide audience to invest in energy efficiency.

Improved sales execution adapts to customer demands and is open to new program ideas. Other sales-oriented businesses ask something akin to “do you want fries with that?” to create added sales. Utilities should do the same.

Driving down transaction costs finds ways to cut unnecessary expense and increases the productivity of program portfolios with faster and simpler audits, moving upstream to vendors and manufacturers, and using the web effectively to drive participation rates.

Embrace collaboration leverages the range of efficiency program stakeholders to embrace market transformation, get credit for codes and standards, and increase buy-in among regulators.

This is the second of three articles to be featured on RMI’s Outlet blog on Turbocharging Energy Efficiency Programs. The first article in the series was written by RMI consultant Mathias Bell and National Resources Defense Council staff scientist Dylan Sullivan. The final article, to appear Dec. 15, will provide a case study.

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