Grabbing the dollars on the ground by opting in to energy efficiency

We’ve heard a lot lately about some large energy-using customers like large factories and retail chains seeking to opt out of energy efficiency programs. But what about the states and utility service territories where these customers are opting-in instead? It’s happening. It turns out that when efficiency programs are done right, customers are clamoring to participate.

Even though energy efficiency investments are highly cost effective and offer tremendous additional benefits, making such investments does not come naturally to some business owners. There are many reasons for this, but a critical barrier is that some companies lack the internal resources to identify efficiency investments. Companies may also find that even if a highly cost-effective efficiency opportunity is found, the return on investment is insufficient to satisfy their internal requirements. Savings are left on the table.

We know that savings are left unrealized because when customers opt out of energy efficiency programs and claim that they’ve made all cost-effective investments, those programs are still able to find cost-effective savings opportunities at the company’s site. Energy efficiency programs can provide access to technical expertise to identify a wide variety of savings opportunities, and greater flexibility in determining what constitutes a cost-effective project.

Large energy users around the country are benefitting from participation in their local energy efficiency programs. Some are even choosing to opt in to optional programs because of the value they provide. In addition to energy savings, companies can take advantage of the longer payback period allowed within energy efficiency programs to make additional cost-cutting investments they wouldn’t otherwise make. These programs also help companies work with technical experts they wouldn’t otherwise have access to and learn best practices from other facilities facing similar challenges.

Companies opting in to energy efficiency programs know this. They get to enjoy financial incentives to make the investments they’d like to make but wouldn’t be able to on their own. Let’s look at a few examples from states across the country:

In Oregon’s Portland General Electric and PacifiCorp territories, only 20% of the large industrial facilities that can self-direct choose to do so. The remaining 80% have experienced the benefits of participating in the efficiency programs offered by the Energy Trust of Oregon. The companies have recognized that, absent participation in these programs, their energy efficiency opportunities would not be identified and pursued. No newly eligible industrial companies have chosen to self-direct their efficiency efforts in the past 6½ years. Instead, they have increasingly found the value of program participation to far outweigh the cost.

In New Jersey, an “opt-in” program administered by the New Jersey Clean Energy Program has seen more demand than spaces available since its inception in 2011. What makes the program so attractive? For starters, projects with payback periods of up to 8 years can earn incentives, which themselves can range up to 75% of project cost. Participants develop long-term energy savings plans and are awarded incentives based on the development and implementation of the plan. They can then coordinate energy efficiency investments with other capital investments, and projects that wouldn’t otherwise be pursued (due to longer payback periods) are greenlighted.

In Michigan, 77 commercial and industrial customers initially chose to opt out of traditional efficiency programming and self-direct their funds when first presented with the option. Over the next few years, 30 chose to opt back in to the energy efficiency programs offered by their utilities once they saw the many benefits of participation.

Energy efficiency programs give customers more control over their future energy bills, and access to a wide body of technical knowledge developed as programs log years and years of customer engagement. Today, well-informed large energy users are choosing to opt in to this wealth of incentives and knowledge in order to grab (and keep!) the dollars they would have otherwise left on the ground.