The opportunity is growing for industrial customers to "opt out" of paying into publicly funded energy efficiency programs and "self-direct" those funds into energy savings. As more states develop publicly funded energy efficiency programs, advocates from the industrial sector continue to argue that their needs are best served by a self-direct construct. These advocates claim that they will achieve energy savings equal to or better than what they would have achieved had they remained paying participants in the publicly funded programs. While there are some merits to this argument, there is also evidence that there are advantages to keeping large industrial customers in a public benefits fund program, or at least in a self-direct program that better tracks such customers' investments and resultant energy savings.

This paper discusses the current landscape of such self-direct programs, the history behind them, how they are currently viewed and used by customers and energy efficiency program managers alike, and the current issues and challenges such programs present. It then discusses what can be learned from existing programs, and how the concerns and needs of all stakeholders could be collectively addressed by more effectively designing both industrial energy efficiency programs and self-direct programs. The paper concludes with suggested next steps for further inquiry and analysis.