The long winding road toward efficient furnaces
April 24, 2014 - 4:45 pm

By Andrew deLaski, Executive Director, Appliance Standards Awareness Project (ASAP)

The struggle for improved gas furnace efficiency standards may have an end in sight. Today, the U.S. Court of Appeals for the D.C. Circuit approved a settlement between the Department of Energy (DOE) and an industry trade group. In the settlement, DOE agreed to pull back efficiency standards completed in 2011 and develop new standards in their place within two years. This new rulemaking represents another opportunity to set strong furnace standards which will save energy and cut consumers’ heating bills.

Since DOE based the 2011 standards on a recommendation jointly filed by efficiency advocates and furnace manufacturers, we are disappointed at the delay in efficiency improvements. But, with litigation threatening to tie up not only the new furnace standards, but also new standards for heat pumps and air conditioners, DOE’s decision to redo the furnace standards now makes sense. Previously announced central air conditioner and heat pump standards will take effect next January, as planned.[/no-glossary]

Improved furnace standards are more important than ever

Heating is the single largest household energy expense in the U.S. ( About 40% of non-transportation energy costs.) Since heat is a necessity, high prices fall hardest on poor and fixed income households, who far too often must choose between paying the heat bill or buying food, medicine or other essentials. Without standards, consumers, especially renters and those with low incomes, often get stuck with the lowest-efficiency equipment.

The updated standards that DOE will soon begin work on will assure that all buyers of new furnaces get products that are truly energy efficient. High efficiency, condensing-gas furnaces cut gas usage by 11-16% compared to a new conventional furnace, which can yield substantial heating bill savings for consumers. The annual fuel utilization efficiency (AFUE) of condensing gas furnaces is 90% or more compared to 80% AFUE or less for noncondensing furnaces. (For a visual, see the 2nd graph in ‘Today in Energy’)

A long time coming

The road to new furnaces standards has been tortuous. This article from the Kansas City Star published last December tells the story well. The just-approved settlement resulted from litigation brought by the American Pubic Gas Association (APGA), which represents municipally owned gas utilities, like Philadelphia Gas Works and others. APGA objected to DOE’s use of a new process intended to expedite adoption of broadly supported standards, claiming that DOE did not adequately address their concerns. With technological improvements bringing down the cost of efficient furnaces, gas prices creeping back up, and contractors more familiar with high efficiency products, we expect that as DOE gets to work on developing a new standard, the agency will find that strong new gas furnaces standards make even more sense now than they did in 2011.

AC and heat pump standards are on track

The 2011 DOE rule which would have increased gas furnace standards also improved heat pump standards and increased central air conditioner standards by 8% for equipment installed in the southern half of the United States. Equipment sold in California and the southwest states will also have to meet minimum performance criteria under the hot, dry conditions that prevail in much of that region. The settlement allows these standards to take effect on schedule January 1, 2015. It also allows sellers to install units manufactured before January 2015 for up to an additional 18 months, allowing them to clear existing inventory. Because the new central AC standards are the first-ever standards that vary by region, DOE needs to develop an implementation and enforcement approach. DOE plans to convene a committee of stakeholders to attempt to negotiate the implementation and enforcement rule.

According to DOE, the new heat pump and AC standards will save will save about 150 billion kilowatt hours of electricity over 30 years, or about enough to meet the total electricity needs of 13 million households for one year, while delivering net savings of more than $4.2 billion to U.S. consumers.

We will be actively participating in DOE’s processes for both the new furnace standards and regional AC standards enforcement.

Small actions that add up to large energy savings for Earth Day
April 22, 2014 - 10:43 am

By Rachel Cluett, Senior Research Analyst

There are many tips out there about saving energy in your home. So many, in fact, that it can leave you wondering, “Well, what are the things that I should focus my attention on to really cut down on energy use and energy bills?” In my former job as an energy auditor, one of the most frustrating things I encountered was hearing the many misconceptions about how energy is used in the home. This old conventional wisdom really confuses honest efforts to cut down on energy use and lower monthly utility bill payments. It is hard to know what changes really make a difference with so many tips to choose from—especially when most of us don’t get any feedback to track our progress until the energy bill shows up almost a month later.

In the spirit of Earth Day, ACEEE offers our top picks for energy saving tips that provide real savings opportunities for people willing to commit a little effort. We hope to foster a better understanding of not only how you can reduce energy used in your home, but also how much you can expect to save.

Take action with the following tips that are geared to the hot summer months. (Hey, we can dream that it’s almost summer, right?) More and more utilities are introducing Web portals that show customers how much energy they use. Be sure to check with your utility to see if they provide this service so that you can track how you’re doing! If you live in a hot climate, you probably spend more than the average American on cooling costs, so expect to save even more than what we estimate below:

  • Raise your thermostat and use a fan. In the summer months, set your thermostat a few degrees higher than normal (we recommend 78° F) and supplement your air conditioner with ceiling fans or standing/box fans, which use a lot less electricity. Just remember that fans cool people, not rooms, so turn them off when you’re not there. For each degree you raise the thermostat, you can save 3–5% on air conditioning costs. If you normally cool your house to 72°, you can expect to trim about $60 to $110 off your summer cooling bill (an average of $10-18 for each degree you bump the temperature up).
  • Cool the house according to your schedule. Keep your air conditioner off when no one is home. It takes less energy to cool the house down when you return home than to keep it cool the whole day. Turning off the air conditioner during work hours also means it’s not running during the hottest part of the day, generally from 2pm to 5pm, when it has to work the hardest. To avoid coming home to a sauna, install a programmable thermostat (or use your existing one) to schedule the air conditioner to kick on about 30 minutes to an hour before you arrive home. The average American household spends about $360 on cooling every year. Reducing the need to cool your home during the hottest hours of the day could save upwards of $120 every year.
  • Seal up air leaks. While this tip may seem more critical in the winter, it is also important to seal your home in the dog days of summer when your air conditioner is working hard to keep it cool. What can you do? Update caulking around window and door frames, add door sweeps and weather strips to door frames, seal up attic hatches, fireplaces, and whole-house fans that are not in use. Contact a home performance contractor to address harder-to-reach leakage areas in the attic and basement. By improving air sealing in the attic and adding insulation, you can save 20% on overall energy costs. And the easiest fix in some homes? Be sure to close windows when you’re heating or cooling your home, and if you have a whole-house fan, turn it off when the air conditioning is running.
  • Replace inefficient light bulbs. If you haven’t yet changed out the highest-use lights in your home for more efficient lighting, today is the day! Replace all of your high-use lights with compact fluorescents (CFLs) or light-emitting diodes (LEDs). Lighting is no small electricity load in your house—it accounts for almost $300 per year on the energy bill of an average home. CFL and LED options use only 25% of that energy. Imagine cutting that load by 75%: it could save you over $200 a year.
  • Install showerheads and aerators. Switch out showerheads to high-efficiency models that use only 1.5 gallons of water per minute (gpm). Switch out faucet aerators with high-efficiency units (1.5 gpm for the kitchen, 1.0 gpm for the bathrooms). Make sure to buy pipe tape at the hardware store for easier installation of your new water fixtures. Savings will vary depending on how many showers are taken in your household, but for an average home this will reduce the amount of water needed for showers, hand washing, and dish washing by almost half, saving about $45 a year. For households with shower-loving teens, expect to save even more. For additional water savings, don’t forget outdoor water uses: Consider installing timers or more efficient drip irrigation systems to cut down on water use for landscaping.
  • Unplug electronics. These days, homes have an expanding array of electronics that weren’t around 20 years ago. Many of these products, particularly chargers and remote-controlled devices, continue to use energy even when they’re turned off. The share of energy that electronics use in an average house has increased significantly to account for as much as 10-15% of home electricity use. Unplugging devices that are not in use (or using a power strip with an on/off switch) is the easiest energy-saving step to take and could save you about $20 annually. This might seem small, but if 5,000,000 households made this small task a habit, the collective action would save enough energy to eliminate the need for one 500 MW coal power plant!

We encourage you to celebrate Earth Day with us by taking action in your own home. For more energy efficiency recommendations, including more tips to reduce summer cooling costs, see our Consumer Guide for Home Energy Savings.

SF Fed highlights the central role of efficiency in the maturing of green community development
April 17, 2014 - 9:13 am

By Eric Mackres, Manager, Local Policy and Community Strategies

Energy efficiency is increasingly viewed as an essential element of community development, and is arguably becoming the most appreciated and integrated “green” topic in the field. For example, a growing number of state housing finance agencies actively encourage the inclusion of energy-efficient features in the properties in which they invest.

The recent “Green Issue” of the Federal Reserve Bank of San Francisco’s Community Development Investment Review focuses almost exclusively on energy efficiency programs, policies, and practices, and their connection to place-based asset building, health, and affordability. Here are some highlights from the issue:

  • Practitioners describe advances in programs and policies that improve energy efficiency in building types as varied as multifamily , manufactured , and single-family homes.
  • The National Housing Trust identifies emerging partnerships between community development organizations and energy utilities around the country.
  • Financing products that are appropriate for underserved sectors, particularly multifamily rental housing, are explored through case studies in California , Illinois , and New York .
  • The growing recognition and analytical understanding of the job creation benefits of energy efficiency (described in contributions by ACEEE’s Casey Bell and ACEEE Board Member Denise Fairchild of the Emerald Cities Collaborative) are articulated in terms that will likely resonate beyond the energy efficiency and community development communities.

Energy efficiency’s positive effects on community development and local economic opportunity are well established. It is encouraging to now see a growing community of practitioners developing a common language, a shared agenda, and a collection of innovative strategies to deliver on its promise.

Actions have consequences: Passage of Ohio legislation will cost jobs
April 16, 2014 - 11:27 am

By R. Neal Elliott, Associate Director for Research

A lot of analysis of the impacts of the SB 310 legislation in Ohio, particularly on the state’s economy, has been in the news lately. Many of these assessments, including those from ACEEE, have focused mostly on employment numbers. But numbers are relatively abstract, and we need to remember that these numbers represent workers and their families. Several conversations at our recent Market Transformation Symposium with implementation contractors working in neighboring Indiana brought this home to me.

Last month, Indiana canceled their energy efficiency programs, and many contractors running programs in the state have already begun the process of laying off staff. In a recent letter to leaders of the Indiana Senate, six companies that help customers cut down on energy waste reported the impacts of canceling the programs. The letter states that about 381 jobs directly related to the programs will be lost, and an additional 1,200 jobs associated with supporting these programs will also vanish. It’s estimated that workers employed by these jobs would have produced a half-billion dollars in investment in the state.

If Ohio follows suit and discontinues their efforts to become more a more energy-efficient place to live and do business, it’s likely that we will see similar rounds of layoffs. Contractors delivering energy efficiency to customers could be fired. As in Indiana, jobs at companies that supply equipment and manufacture energy efficiency products could also be lost.

There’s more at stake than energy savings as the Ohio legislature and governor consider whether to abandon the state’s cost-effective energy efficiency programs. Their citizens’ livelihoods and businesses are on the line.

The new National Research Council report is a good sign for upcoming heavy-duty vehicle standards
April 14, 2014 - 3:44 pm

By Siddiq Khan, Senior Researcher

Last week a National Research Council (NRC) committee on heavy-duty vehicles released a report on technological, market, and regulatory factors relevant to the upcoming Phase 2 heavy-duty vehicle fuel efficiency and greenhouse emissions standards. One reason to pay attention to this report is that the first phase of the heavy-duty standards, adopted in 2011 by the [no-glossary]National Highway Traffic Safety Administration (NHTSA)[/no-glossary] and the Environmental Protection Agency (EPA), drew extensively from the National Research Council heavy-duty committee report released in 2010.

The new report contains several recommendations in line with ACEEE’s priorities for the Phase 2 program. The committee recommends bringing trailers, especially all new 53-foot (and longer) dry van and refrigerated van trailers, into the regulation. These two categories encompass more than 70% of all trailers in the market. This would be an important advance from the Phase 1 program that could deliver at least 10% additional fuel savings for tractor-trailers.

Other committee recommendations address vehicle testing issues. Due to the substantial cost of physically testing vehicles, the certification process relies heavily on simulation modeling. The committee emphasized the need to improve the model used for this purpose, in order to realistically capture truck GHG emissions and fuel use, and to promote design integration of vehicle components to achieve greater efficiency. The committee also recommended the adoption of more realistic test cycles that would include road grade, and reflect the longer times that less powerful trucks may need to accelerate. The importance of choice of test cycles in promoting real-world efficiency improvements was also noted.

The NRC’s report did not discuss technologies to be adopted in the forthcoming rule, but reiterated the fuel savings potential from the technology packages offered in the 2010 National Research Council committee report. ACEEE has published a fact sheet illustrating potential further oil reduction from heavy-duty vehicles in Phase 2, as well as a white paper examining structural options for the program. The president has announced that the Phase 2 standards will be proposed in March of 2015.

A new DOE proposal would cement a big leap in lighting efficiency, but Congress is preventing even bigger savings
April 14, 2014 - 10:27 am

By Anthony Fryer, Senior Analyst, Appliance Standards Awareness Project (ASAP)

New energy-saving standards for certain types of incandescent and fluorescent light bulbs proposed by the [no-glossary]Department of Energy (DOE)[/no-glossary] last Friday mark another important step in improving lighting efficiency in the United States. DOE’s proposal further advances strong standards completed in 2009. Together, the 2009 standards and the proposed increases announced last week dramatically improve reflector lamp and fluorescent tube lamp efficiency by 70% and 23% respectively. Unfortunately, a congressional budget rider prevents DOE from saving even more.

Friday’s proposal covers incandescent reflector lamps, the cone-shaped light bulbs used in track lighting and recessed light fixtures, and fluorescent tube lamps, which are ubiquitous in office buildings. The sheer number of these light bulbs in use means that even modest efficiency improvements will yield large national energy savings. DOE estimates that in 2012 manufacturers shipped about 80 million reflector lamps covered by standards. And based on DOE data, almost 20% of all commercial-sector electricity use goes to power fluorescent tube lamps.

New standards build on previous improvements

DOE estimated that the 2009 standards, among the first completed during the Obama administration, will save more than any other standards ever issued by the Department. Those standards improved the minimum allowed efficiency by 62% for reflector lamps and 19% for fluorescent tubes. Today’s proposal further increases minimum-allowed efficiency for reflector lamps by another 8%, and for fluorescent lamps another 4%, compared to levels in effect before the 2009 standards.

According to DOE, for products sold over a 30-year period, the proposed increase would save consumers and businesses a combined 353 billion kilowatt-hours and $3-$8 billion dollars, and cut CO2 emissions by 170 million metric tons. (About 100 million metric tons of the CO2 emissions would accrue by 2030.) To put those numbers in perspective, the cumulative electricity savings would be enough to power about 29 million U.S. households for a year, and the CO2 savings would equal the annual emissions of over 35 million passenger cars. The vast majority of these savings come from the fluorescent tube lamps proposed rule.

Technology already exists in the U.S. market that can meet DOE’s proposed levels. For reflector lamps, the proposed levels can be met with improved halogen infrared technology that utilizes better reflector coatings. (Although LED reflector lamps are not covered by today’s standards, they are the most energy efficient option and, as their prices drop, increasingly cost-competitive with the halogen lamps covered by the proposed standards.) For fluorescent tube lamps, the proposed levels can be met using improved 800 series T8 lamps in which the phosphor mix and/or coating is enhanced to increase efficiency.

Although the proposed increase combined with the 2009 standards dramatically improves lighting energy efficiency, some lamp types have been left out. For example, DOE could save even more by including new standards for 2-foot linear fluorescent tube lamps, a growing category with about 5% market share in some regions. DOE should also address fluorescent tube lamps with a high color rendering index (CRI). These lamps have been excluded from previous standards due to their designation as specialty products but are now being marketed by some manufacturers for general service use.

Congressional budget rider prevents even bigger savings

Unfortunately, the proposed standards do not include the least efficient reflector lamps. Very common 65 Watt “bulged reflector” (BR) lamps and similar products, which are currently exempt from any standard, emit less than nine lumens per watt. Reflector lamps meeting today’s proposed standards emit more than twice as much light per watt consumed. But, a congressional budget rider prevents DOE from improving efficiency for these “exempt” reflector light bulbs. ASAP estimates annual shipments to be about 120 million (compared to 80 million for lamps included in the current proposal). If BR and other exempt reflector lamps were required to meet the standards in the proposed rule, consumers and businesses would annually save about 4.5 billion kWh in electricity and more than $500 million in lower energy bills. Between now and 2030, nearly 50 million metric tons of CO2 emissions would be eliminated. As it stands, DOE’s hands are tied as long as the congressional budget rider remains in place.

DOE continues to make strides towards the president’s emissions goal

Last Friday’s proposed standards represent another very good step for improving lighting energy efficiency and toward meeting the president’s goal of reducing carbon dioxide emissions by 3 billion metric tons by 2030 through new energy efficiency standards (click for ASAP CO2 tracker). For the light bulbs covered by today’s proposal, DOE is due to issue a final rule for the new standards in November, which would then go into effect in 2017.

A funny thing happened on the way to Finance Forum: the WHEEL deal
April 10, 2014 - 2:54 pm

By Casey Bell, Senior Economist and Manager, Finance Policy

The moment we have been waiting for has arrived! The Warehouse for Energy Efficiency Loans (WHEEL), a financing platform that will open the market for energy efficiency investment to institutional investors, is open for business. WHEEL acts as a virtual financial warehouse for relatively small individual loans, holding them until there are enough loans to attract attention from large investment houses. These transactions will potentially grow the market and make it easier for homeowners to find lower-cost loans for energy efficiency improvements.

Bonds are created for investors through a $100 million asset-backed securities medium-term note program that can be replenished and resold. The platform was formed by a public-private partnership consisting of collaborators from AFC First Financial, Citi, the Pennsylvania Treasury Department, Renewable Funding, the Energy Programs Consortium, the National Association of State Energy Officials, and the U.S. Department of Energy.

This news comes on the heels of several other secondary market transactions, and the announcement of Joule Assets’ $100 million fund for energy efficiency loan products. The influx of capital flowing in the right direction represents a turning point for the industry.

If you’d like to learn more about how the financial community intends to take advantage of this opportunity, and to expand customer uptake and access to hard-to-reach markets, you should attend ACEEE’s 2014 Finance Forum, where the theme will be “Building Momentum and Driving Demand.”

The program will feature the leaders that have been facilitating these groundbreaking transactions, including Citigroup, Renewable Funding, Kilowatt Financial, and Joule Assets, as well as lenders, utilities, policymakers, and clean tech companies that are driving investment in residential, commercial, and multifamily building sectors. (Just act fast: regular registration and special hotel rates are closing soon!)

Ohio poised to take a big step backwards with SB 310
April 09, 2014 - 1:34 pm

By R. Neal Elliott, Associate Director for Research

The state of Ohio is poised to take a major step backwards if its legislature enacts SB 310. The bill would gut what has been a successful energy efficiency policy that has saved ratepayers hundreds of millions of dollars so far, and would save even more in the future. The passage of SB 310 would set a very bad precedent, and would lead to higher electricity bills and electricity rates for customers.

Last year ACEEE analyzed the impacts of Ohio’s current energy efficiency policy and found that the state’s utility energy efficiency targets (established under the bipartisan legislation SB 221 in 2008) would save customers a total of almost $5.6 billion from avoided energy expenditures and reduce wholesale energy and capacity prices through 2020. Today ACEEE released a report that takes a look at state energy efficiency resource standards [no-glossary](EERS)[/no-glossary] around the nation, which finds very positive to-date results for Ohio. The report documents that through 2012, Ohio’s utility efficiency programs have achieved over 150% of the savings targets set in SB 221, saving customers even more than projected. Based on evaluations filed with the Public Utility Commission of Ohio, these energy savings have come at a fraction of the cost of new generation. Another recent ACEEE report found the cost of utility energy efficiency programs averages about 2.8 cents per kilowatt hour—2 to 3 times less than new generation.

The fact that efficiency is a good deal for ratepayers should not be news to Ohio or its utilities. Last month, AEP Ohio released its 2015 To 2019 Energy Efficiency/ Peak Demand Reduction (EE/PDR) Action Plan , which projects a lifetime cost of saved energy of $0.013/kWh. The plan projects total net benefits of about $1.5 billion for AEP Ohio customers, who would save over $1.60 for every program dollar.

SB 310 would effectively put an end to the energy efficiency resource standard that has resulted in such impressive savings in Ohio. If the bill goes forward, utility customers across the state would pay more for electricity. That might enhance utility profits, but it would be bad news for consumers and the Ohio economy.

A Field Guide to Utility-Run Behavior Programs: Making Sense of the Variety
March 20, 2014 - 1:53 pm

By Susan Mazur-Stommen , Behavior and Human Dimensions Program Director

The ACEEE Field Guide to Utility-run Behavior Programs, released in December, is the first comparative analysis of utility-run behavior programs. Practitioners, evaluators, and regulators can now use the guide to design and assess strategies and develop policies for utility-run behavior programs. The problem has been that, when state and local stakeholders thought about creating behavioral programs, they would encounter barriers. These barriers could include questions about cost effectiveness, or the high degree of uncertainty and confounding factors that surround dealing with human behavior. At the same time, and potentially tipping the balance in favor of behavioral programs, many states are looking for new ways to reach the savings targets they have set, and behavior programs are enticing as a cost effective way to reach significant energy savings.

The Field Guide attempts to answer some of these questions. The main takeaways from the report for regulators and state energy officials are that: 1) behavior programs can be just as cost-effective as other EE programs, 2) behavior programs are diverse in type and effect, and 3) different behavior programs can suit the varied needs of investor-owned utilities, municipal utilities, and co-operatives. Behavior programs are within range of most energy-efficiency programs; while only a limited number of program types provided cost and savings data, we found that the cost of saved energy from programs providing data was less than two cents per kilowatt-hour on average. Research shows that behavior programs can deliver consistent savings at scale. These programs can also reach new audiences for traditional offerings through using community-based social marketing. Finally, behavior programs can integrate well with physical/component/widget programs.

Programs can achieve greater impact and deeper savings by incorporating insights from social and behavioral sciences. When reviewing proposals for behavior-change programs, regulators and state energy officials should ask: Which energy usage behaviors will be changed? Are the interventions grounded in social and behavioral science? What specific behavioral strategy will be used in the program? Will the intervention have the ability to be evaluated?

Regulators, administrators, designers, and evaluators need to speak a common language around behavior programs. A common language eliminates confusion over terms. The taxonomy in the Field Guide offers that common language and clarity. The Field Guide is a reference that allows practitioners to compare what is being offered to what has already been on the market. It enables them to gain familiarity with some of the social science insights being used in the field today, thus helping program operators and their teams set expectations for performance from behavior programs.

Based on our research, several recommendations have emerged:

  • Require program administrators to share information. The collection and reporting of data from behavior programs currently varies wildly by state. Crafting a state-wide strategy for behavior would help generate consistent data.
  • Coordinate efforts regionally. We recommend that utilities coordinate their behavior program efforts with others in their region. Energy Trust of Oregon, for example, has had success in coordinating with Puget Sound Energy in Seattle, in part due to their similar customer bases and climate.
  • Piggyback small programs on larger ones. Scale may also affect the performance and cost effectiveness of specific program types (e.g. home energy audits and reports) so we suggest that smaller organizations may want to piggyback on the efforts of larger regional suppliers. Smaller coops want to be strategic and consider a game-based program or a community-based social marketing program to round out other messaging.

Using the principles of ‘track, share, and coordinate,’ it is our hope that utilities will develop program strategies that are successful in connecting with customers, cost-effective in their deployment, and consistent in delivering substantial energy savings.

Evaluating the Market for Industrial Energy Service Outsourcing
March 19, 2014 - 9:34 am

By Christopher H. Russell, Visiting Fellow, Industry

Energy service outsourcing is a business relationship that relieves a large facility from the potential distractions imposed by the ongoing management of one or more energy functions, such as steam, compressed air, water treatment, lighting, or other activities. In essence, a facility would transfer these functional duties to a vendor per a contractual agreement, subject to periodic renewal. The facilities that choose this route anticipate that their energy functions will be performed in a more reliable and cost-effective way by the vendor. Surprisingly, although these services have existed in the market for many years, many in the industrial sector are unaware of them or unsure how to take advantage.

The industrial energy efficiency program sector is also largely unaware of these market-based solutions. This is unfortunate, because U.S.-based manufacturers in 2006 acquired $156 billion dollars’ worth of energy to transform raw and intermediate materials into finished products. Of that total value, $80 billion was lost through inefficient conversion and use—thus providing a first-cut estimate of the market for energy service outsourcing. Forward-thinking program administrators are now looking to outsourcing as a method to effectively boost customer investments in energy efficiency while improving system reliability.

One approach is for these administrators to influence and support the existing market. Another method is to incorporate outsourcing into program offerings. A new report by ACEEE finds that both of these methods are viable options for assisting the industrial base in improving its use of energy. Outsourcing can address all the classic impediments to industrial energy efficiency by providing some combination of capital and expertise to perform common energy functions. The report does find, though, that the devil is in the details. A literature review and interviews with 41 experts (both energy users and solution suppliers) revealed that early identification of risks and associated contract terms are important to successful outsourcing experiences.

Outsourcing can leverage existing market solutions and expertise to reduce energy use, which can create jobs, reduce pollution and save companies money. Incorporating outsourcing into efficiency programs will require imagination and customer education in order to be successful, but if done properly, it presents a new method for programs to achieve energy savings targets. The report describes various business models and considerations for both providing and consuming outsourced energy services and provides a roadmap for evaluating if, and when, to explore such options. With proper preparation and education, outsourcing can be a cost effective method for programs to save energy and manufacturers to reduce energy costs. The awareness of risks and preparation for contingencies, however, will be key to the success of any such engagement.