Up and down the building efficiency chain there are a series of aligned goals and values helping reduce demand: Utilities want to lower peak energy load; customers want to cut their bills; governments are looking to slash emissions.
But in between an efficiency proposal and verified savings is a key partner that utilities may overlook: the contractors who actually execute, install and even promote projects. A new report, however, concludes that by strengthening the relationship utilities can help access savings that might have otherwise have been lost.
The new survey from consulting firm DNV GL, an annual "trade ally" market research report that reaches out to energy contractors, aims to provide national perspective on the work contractors do with utilities, and insight into the efficiency opinions expressed by their customers.
The results, released this week, show contractors and other organizations see updates on utility program news and changes, and training on utility programs and application processes, as the most useful benefits of their relationship.
"If there's one takeaway it's that the trade allies, who work with customers of all different sizes, they view the utilities as their partners," said Karen Germain, DNV GL consultant and project manager for the survey. "The education and training provided by utilities is important to them and their businesses and it's import in terms of the ultimate success of energy efficiency projects."
DNV GL first conducted the survey in 2015 to measure 2014 demand side management program activity, and then executed the research again in 2016 to review the previous year's program trends. The research aims to illustrate a "broad view that characterizes the attitudes of contractors across the United States," and represents a mix of company types and sizes — a nearly equal number of respondents work at very small firms and very large firm, working primarily with non-residential customers.
Most of their customers are commercial operations of varying sizes, followed by industrial and government customers.
Just over 60% of contracting firms told DNV GL they meet regularly with a designated point of contact at the utility, to discuss rebates and incentive programs, with a sizeable chunk of those meeting every three months. But of the almost 40% who do not currently meet with utilities on a regular basis, more than half thought it would be beneficial.
And regular meetings could lead to an expansion of services, if utilities are able to communicate their plans. Almost 70% of respondents said they would "be likely or very likely to expand into the neighboring territory while maintaining current activity, should that territory offer better incentives."
Contractors that are working closely with power companies "can extend a utility's reach and help achieve energy savings goals," Germain said. But only if three key challenges can be addressed, she said: Customers still do not fully understand the value of energy efficiency, they face cashflow constraints, and contractors often have difficulty sitting down with the appropriate decision-maker. Some of that may be more than a contractor can address, but the one area where they can certainly have an influence is in explaining the value of efficiency projects.
Germain said contractors rely on utilities for up-to-date information about their demand side management programs, sales coaching and technical consultations — but a full 38% are not regularly getting updates or assistance.
The individuals who execute energy efficiency projects "appreciate the support and would only like more," Germain said.
A building efficiency boom
In many ways, the industry's recent focus on efficiency is driving a golden age of demand management focused on buildings.
The Obama administration last year announced new initiatives as part of its Better Buildings Program, targeting a 20% rise in efficiency. Dozen of municipalities committed to improve the energy efficiency of their building stock, and more are focused on the rollout of more modern lighting.
Utilities have an expanding array of tools aiming to make commercial buildings more comfortable while also conserving energy. Some upgrades, like lighting, have become commonplace and cost-competitive. States are stepping in with stricter standards: policy and building energy codes moved California and Massachusetts to the top spot in the American Council For an Energy Efficient Economy's most recent state rankings, and highlighted the increasing range of ways building managers can address energy use.
While environmental concern is a growing driver of efficiency policy, building managers are mostly looking at their bottom lines. And so the extent to which utilities can communicate potential savings will directly impact signups.
Reduced energy bills top the reasons for installing efficiency upgrades, the DNV GL survey concluded. But beyond that, 65% pointed to reduced maintenance costs as a major project driver. Improved comfort scored only about 14%, and environmental benefits were a selling point for only about 10%.
"Helping the trade ally make the case to the end customer is one of the bigger challenges," said Germain. The end customer ultimately specializes in their own area of business."
Diversifying efficiency offerings, overcoming barriers
High-efficiency LED lighting has been on the market for years, and as an upgrade project is well known. Now, "utilities are seeking to diversify their portfolios," the survey found.
Lighting saw a 2% shrink in portfolio share over 2014 results, while HVAC projects saw a 5% increase, along with smaller growth from refrigeration and new construction projects. Rooftop PV, refrigeration and building management projects all scored lower, highlighting the range of services still on the table.
But even as utilities contract for and offer a growing range of services, the survey concluded many "customers don’t understand the value of energy eficiency."
Some 67% of contractors identified that lack understanding as a "very high barrier" to moving ahead with savings projects. That highlights the need for greater education up and down the communication chain, and the report concluded it "suggests additional opportunities to provide sales and technical training to Trade Allies."
"For utilities, the the opportunity is to look at trade allies as a long-term relationship and understand how they can support them and identify opportunities. It's about the education of the trade ally, making sure they're really well-versed, helping them make the case," Germain said.
Many contracting firms are very specialized organizations, and Germain also said it is vital for utilities to take the time to understand their businesses and priorities, as well as the priorities the utility wants to push.
"It's slowing down and making sure they are prepared and ready," she said. "It's not so much a generic approach as a considered approach, and the idea of an ongoing partnership."
Utilities must make sure they are providing their partners with the "latest and greatest approach, the most recent thinking," said Germain.