Energy Efficiency vs Market Share II

This is the second follow up on our blog series EE vs MS.

By: The Masked Avenger

Today the utility industry suffers from a curious identity crisis. Industry insiders know full well that new technologies exist to give homeowners and businesses much better control over how they use energy without any assistance from the utility industry or their cash incentives. But they continue to spend billions of dollars trying to persuade their costumers that they are in the business of saving energy and making people comfortable when in fact they are in the business of buying and distributing energy.

Most notably, they are not experts in energy efficiency. That is why all of those services are so easily farmed out to energy consulting firms that are little more than glorified marketing agencies who spend most of their time convincing utility customers to use less energy while quietly profiting from the energy they use.

There is a running joke in our industry that goes something like this: the only person who knows less about energy efficiency than an energy consultant is the utility that hires him. And for those of us who have been employed by one of those firms, you can’t help but feel as if we were all working for Philip Morris and writing anti-smoking ads.

It certainly didn’t begin that way, but in 2009 a new economic bubble appeared when the Department of Energy decided to allocate three million dollars for each state to develop their own residential rebate programs. Known collectively as the Stimulus Package, these programs existed side-by-side with utility rebate programs and in most cases were designed and implemented by the very same consulting firms who had been quietly managing these programs for decades. They soon realized however that someone stood to make a fortune if the industry could be consolidated by a few key players and if the funding spigot could be left open indefinitely.

This is now a billion dollar industry and over the last few years several national organizations have been gobbling up smaller, local energy efficiency firms in the hopes of consolidating the market into a single brand much like the telecom or food industries.

The result of which is clearly calling into question the legitimacy of these rebate programs and the role that utilities will play in the energy efficiency model of the future.

There is still a place for utilities to help modify customer behavior, but that needs to change from paying customers who do the right thing to making customers pay a little extra for doing the wrong thing. The change may be subtle, but for utilities to remain relevant they need to focus on what they do best and let the free market take care of itself. As with so many other industries, the energy efficiency industry is being dominated by new technology providers. These are rarely the utilities themselves and never the energy consulting firms they hire to run their programs.

If utilities want to reclaim a leadership role in the energy efficiency world, they need to drop their current program model and adopt a tiered billing system that would give customers the choice to self-regulate and benefit from all the technological advances that dominate every other aspect of their lives. This would result in lower energy costs for those who cared about such things and give the energy abusers a chance to pay for their own gluttony. It would also shake up the energy efficiency industry and put an end to the boondoggle of all utility rebate programs.

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