Energy Efficiency vs Market Share I

This is a two part blog series. Make sure to check out the second installment.

By: The Masked Avenger

As discussed elsewhere, utility rebate programs have become obsolete; a victim of their own success and a relic of a time when utilities actually mattered. As with other industrial age businesses in the twenty-first century, utilities have become increasingly adept at throwing money at problems that don’t exist as a means of convincing customers that any alternatives are merely fantasies to be relegated to science fiction or some other hyperbolic, paranoid agenda.

The premise of these rebate programs has always been simple enough: gas and electric utilities pay their customers cash incentives to replace their older less efficient appliances with newer more efficient models. In the past, this issue had always been about product availability, not timing. No one buys a new water heater unless their old one just exploded all over their garage. And a one-hundred and fifty dollar cash incentive might actually get them to think about spending a little extra money to search for a better appliance. That is no longer the case as it’s rare to find a non-energy-efficient product anywhere in the marketplace, so the idea that a utility would need to expend any effort to motivate customers to replace their older appliances with a more efficient one seems like a colossal waste of time and money.

(Next time you get your gas or electric bill read the fine print on the back and you will find a modest three to five percent surcharge earmarked to fund your utility’s rebate programs. That’s money you are paying someone else to buy a new appliance that they were going to buy anyway. It’s called free ridership and it’s what fuels this entire enterprise.)

Ten or fifteen years ago customers had no options. Renewables were joke, manufactures and retailers didn’t care, and the best a utility could hope for was that customers weren’t tossing their old freezers into the local landfill. Fast forward to a kindler-gentler world and even the most wasteful among us would be hard pressed to find options that didn’t qualify us all as granola munching, tree-huggers.

In the interim, an entire cottage industry of energy efficiency consulting firms grew up around these rebate programs and continue to rake in millions of dollars in administrative fees all to help the utilities fund initiatives that are no longer necessary. Not a big deal, perhaps, except when you consider that as much as forty percent of all utility rebate funds are spent on pointless marketing campaigns, bloated org charts, and overpriced data analytics or software packages that are little more than repurposed versions of Excel or any basic internet search engine.

A smarter, less costly solution would be to recognize that these programs have served their purpose and let the market evolve to its next iteration which will likely be driven by Apple or Google not some patchwork of local energy consultants whose business model is focused on market share not energy efficiency. But, whatever that next solution is, utilities need to stop using their customers as a means to prop up a bogus industry that is clearly more concerned with billable hours than kilowatt hours. So who stands to lose the most if anything changes? Certainly not the utilities or their rate payers; and not the manufactures, the retailers, or the contractors. The only ones who have anything to lose are the energy efficiency firms themselves, and they will not go quietly.





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