ACEEE discusses utility energy efficiency models for SMEs


The whitepaper, Big Opportunities for Small Business: Successful Practices of Utility Small Commercial Energy Efficiency Programmes, discusses energy efficiency models which utility firms can implement toward helping small business operators reduce their energy usage and costs.

The paper is an analysis of how multiple utilities’ energy efficiency programmes for small business consumers were implemented.

The author highlights the challenges faced by utility companies in registering small business consumers to participate in energy conservation projects, as well as constraints faced in the initial deployment of the projects and the benefits associated with energy efficiency for both the consumer and the utilities.

Energy efficiency models

According to ACEEE, amongst existing efficiency models, the most prevalent model being deployed by utility firms for their small business customers is the ‘direct install’ energy efficiency model.

In most cases, direct install energy efficiency models are designed to help consumers using below 100KW of energy reduce their usage, free of charge.

With the direct install model, a utility selects a programme implementer who will be responsible for implementing assessments on consumers’ energy usage, identify potential for energy efficiency and install measures including LED lights and HVAC systems. [USDA offers up $300m in energy efficiency funding].

With the non-direct install model, consumers find their own installers of energy efficiency measures to meet targets set by their energy provider and secure the rewards associated with meeting the targets.

The whitepaper is a presentation of results of a survey of 15 gas and electric energy efficiency programmes for small business customers.

Energy efficiency spending and benefits

In terms of spending, amongst the surveyed utilities implementing energy efficiency initiatives for small business consumers, the smallest of the programmes spending $1 million to $3 million per year.

Medium-sized energy efficiency programmes are reported to be spending $7 million whilst large programmes are invested up to $10 million to $20 million per year.

ACEEE states that returns of utilities energy efficiency projects for small business electric consumers range at 9% of utilities gross energy savings.

ACEEE highlights its confidence that with increased participation of small business consumers in energy conservation projects, energy capacity savings from the sector has high potential to increase from its current levels.

[quote] Factors such as the lack of will and time by small business consumers to participate in energy efficiency programmes is hindering the growth of the sector.

At the same time, lack of capital by utilities small business customers to fund their own energy efficiency measures including staff is also limiting the growth of energy savings from the small business energy efficiency programme sector.

Since a majority of small business operators rent facilities and buildings in which they operate from, the lack of their decision making to register the facilities’ participation in energy efficiency programmes negatively impacts on the utilities energy efficiency programmes for small business customers.

More importantly, ACEEE states that lack of consumer awareness around the benefits of energy efficiency is still restraining the market. [ComEd boosts consumer awareness on energy efficiency].

On the utilities side, structural and economic limitations are also negatively impacting on the sector. The diverse nature of industries, energy uses, savings opportunities, financial needs, languages spoken, building types and culture implicates utilities energy efficiency programmes design.

ACEEE recommends that utility firms –

  • Segment the market according to energy needs and common business customers in designing and incorporating small business consumers in energy programmes
  • Provide streamlined installation and lighting measures as lighting delivers cost-effective savings through a small set of efficiency measures to a variety of businesses in most industries
  • Tailor and target marketing and communications to customer needs
  • Offer financing to encourage comprehensive retrofits and deeper savings
  • Provide dedicated project process managers
  • Offer a wide set of eligible measures
  • Establish partnerships comprising chambers of commerce, small business advocacy organisations and community groups.

Other energy efficiency models include the ‘pay for performance’ in which the utility works with an implementation contractor or service provider who offers vertically integrated energy efficiency services to small businesses based on a negotiated contractual price for energy savings.


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Nicholas Nhede is an experienced energy sector writer based in Clarion Event's Cape Town office. He has been writing for Smart Energy International’s print and online media platforms since 2015, on topics including metering, smart grids, renewable energy, the Internet of Things, distributed energy resources and smart cities. Originally from Zimbabwe, Nicholas holds a diploma in Journalism and Communication Studies. Nicholas has a passion for how technology can be used to accelerate the energy transition and combat climate change.