Energy Efficiency Policy: A Market-Based Program Approach

by Jennifer Chiodo on March 6, 2013

Today ratepayers in many states are making large investments in energy efficiency.  I am a passionate advocate for the need to invest in cost effective improvements to our building infrastructure.  However, I am concerned that many efficiency programs are taking short cuts to attain near-term goals that will undermine the market’s ability to generate deeper and more lasting efficiency improvements over time.

After years of working with energy efficiency programs in multiple states, I have concluded that 11 factors affect a program’s capacity to generate short-term versus long-term energy efficiency improvements.

  1. Program role: Who is involved and what is the connection to the current market?
  2. Outreach: Which audiences are being reached and is education and training included?
  3. Recruitment: Who is involved in recruiting end users into the program?
  4. Opportunity assessment: Who is involved in assessing efficiency opportunities?
  5. Implementation: What is the process for selecting contractors to implement the efficiency measures?
  6. Verification: Who is responsible for verification, and are results shared with the end user?
  7. Spillover: Is there an easy way for efficiency measures to be shared beyond the immediate projects?
  8. Market development: Is there a market investment made at the practitioner and end user level?
  9. Job creation: How many jobs are created, at what level, and for how long?
  10. Short-term outlook: How quickly and how likely is it that near-term goals will be met?
  11. Long-term outlook: Is energy efficiency embedded into the market at a sustainable cost to ratepayers?

The following table summarizes my comparison of a market-based model to a program-centric model for energy efficiency program delivery and the pros and cons of each.

Energy Efficiency Program Delivery Model Comparison: Market‐based vs. Program‐based

 In order to achieve deep and lasting cost reductions from energy efficiency, I think we need public policies that support a market-based approach. What do you think — and why?

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