Commercial buildings consume 30 percent of all electricity used in the United States (EIA 2013). Therefore, the potential for these businesses to save money — and utilities to collect kWh savings — is enormous. Utilities recognize the value of offering programs and product incentives to their commercial customers to help reduce energy use, but surprisingly, approximately 50 percent of utility Commercial & Industrial (C&I) programs are not currently meeting their savings goals (ESource). However, as the “low hanging fruit” of energy efficiency, lighting programs are the exception. Lighting programs consistently bring in large kWh savings, and give a big boost to large C&I portfolio savings targets.
In the next several years, new federal thresholds for lighting efficiency will erode the kWh savings currently found with lighting upgrades, so the time to leverage lighting change-outs for savings is now. Ecova and the Mass Save lighting initiative hit upon a winning program design that leveraged point of sale incentives via distributors to increase end user participation.
THE MASS SAVE CHALLENGE: STALLED SAVINGS
In 2011, Ecova partnered with the Mass Save Electrical Program Administrators (PAs) to deliver the Mass Save “Bright Opportunities” C&I Lighting Program. Prior to the initiative, C&I programs had seemingly reached a plateau on energy savings and there was still a large swath of middle-sized businesses with untapped savings opportunities.
The Mass Save initiative addressed this hurdle with a program design that would give the “middleman” – i.e., lighting distributors – incentives to move more energy-efficient products into their commercial customers’ facilities. Distributors receive incentives from the PAs for eligible products, which they then pass on at a discount to their customer. C&I customers, in turn, like this structure because they do not have to apply for rebates from the utility and wait for reimbursement. Making them more likely to choose the incentivized products.
TAPPING INTO ECOVA’S EXPERTISE
Ecova has designed and managed dozens of utility energy efficiency programs and over the years has developed the keys to a successful upstream/midstream program implementation. These include:
- Aligning manufacturers and distributors. Deep partnerships allow Ecova to work in synergy with their established business practices.
- Proactive data management and analytics. Ecova examines regional and national commercial technology sales trends and layers in local performance to ensure utility rebates are maximizing their market potential.
- Expertise in program promotion. Ecova combines program branding, marketing support, stakeholder outreach and distributor training. Distributors are empowered to represent the program benefits to customers and maintain high standards of quality assurance.
Ecova implemented this flexible program design that deftly accommodated changing market conditions and rapid improvements in efficient commercial lighting products. The program has consistently exceeded the established goals for both unit sales and kWh savings, validating the potential of this program design.
The Mass Save program design has now been successfully replicated in programs managed by Ecova in Rhode Island, Connecticut, Colorado and Minnesota. The current implementation team has been awarded the highest possible score in client satisfaction. In 2012, a third-party evaluation of the initiative found that 92 percent of customers and 100 percent of participating distributors were satisfied with the program.
AN EYE ON THE FUTURE
Programs using the distributor channel to deliver incentives to customers are cost-effective, combining the best features of upstream and downstream programs into a single channel that intersects the market where decisions are made. Ecova sees continued opportunity for cost-effectively delivering significant energy savings within this model, while also exploring ways to deliver other products through the same program design.