As of 2014, approximately half of U.S. states have enacted enforceable, long-term Energy Efficiency Resource Standards (EERS). According to the American Council for an Energy Efficiency Economy (ACEEE), these states represent over 60% of the U.S. energy consumption. If maintained through 2020, their efforts are expected to save more than 240,000 GWh.
Among the remaining states, most have established at least partial policies and initiatives, either at state or local levels, aimed at reducing overall energy reduction. More are expected to adopt statewide standards in the wake of NY’s REV 2.0 initiative.
Even though Missouri hasn’t yet enacted enforceable EERS, the state has taken on voluntary targets of .3% annual savings in 2012, ramping up to .9% this year and 1.7% in 2019 for cumulative annual savings of 9.9% by 2020.
Meeting these goals will require smart actions on the part of Missouri’s Utilities.
Before we examine the details on how this can be done, let’s take a brief look at the energy market in the Show-Me State.
The Missouri Energy Efficiency Investment Act (MEEIA) of 2009 (SB 376) requires utilities to capture all cost-effective energy efficiency opportunities, establishing a new standard in the state for electric utility investment in demand side management.
Historically, Missouri utilities have offered limited energy efficiency programs for their customers. The passing of MEEIA and subsequent commission orders have led to a “rapid and large increase in utility energy efficiency programs.” (source: American Council for an Energy-Efficient Economy)
While the passage of MEEIA has had led to the implementation of integrated resource planning (IRP) and new demand side management (DMS) programs, a full roll out of energy efficiency programs, from all affected utilities, is still in progress.
The Missouri Public Service Commission (PSC) also completed a revision of its Integrated Resource Plan rules in Case No. EX-2010-0254 and now requires demand side and supply side measures to be evaluated on an equivalent basis. This should spur the development and expansion of DSM programs in future years.
Currently, most DSM program costs are recovered over a six to ten year period. This new rule also allows utilities to propose performance incentives that are based on net shared benefits from the DSM programs it implements.
If implemented correctly, particularly through pay-for-performance model programs, this can drastically reduce the time to full program cost recovery.
The key to reaching Missouri’s energy efficiency targets is to execute well-designed and far-reaching energy efficiency programs that reach all customer classes, especially the underserved small business segment.
Historically, utilities have paid upwards of $0.31/kwh to deliver business energy efficiency solutions. At Lime Energy, we deliver our solutions at between $0.24-$0.28/kwh, in a pay-for-performance model.
There are 3 main reasons our program is able to deliver energy efficiency at lower costs to both the utilities and ratepayers.
Through our vertically integrated services model (ISM) we’re able to provide utilities with an entire suite of energy services – from market segmentation and customer recruitment to installation and equipment warehousing â€“ that usually require multiple firms.
We organize the utility’s disparate trade allies into an organized Ally Force that allows them to do what they do best â€“ install jobs. This allows us to concentrate on high value activities like market segmentation, customer acquisition, marketing and delivering an exceptional customer experience. Our ISM also ensures the delivery of a consistent message across the entire program, which leads to higher customer satisfaction levels.
Our integrated model is structured for rapid program design and start-up. We’ve done this many times before and have it down to a science. With no waiting on trade allies, Lime can launch an accelerated new SBDI program in three months.
At Lime Energy, we consider ourselves the Champions of Small Business. Our custom direct install programs target the traditionally under-served segment of small businesses who are unlikely to utilize the standard and custom incentive programs as they are often currently designed.
Small Business Owners expect an easy, simple and personalized offering that exceeds their expectations while lowering their energy costs.
Because we offer small businesses a program that makes sense for them and delivers high satisfaction rates, our ISM model can achieve participation rates far exceeding those achieved by traditional â€œtrade allyâ€ programs.
Our pay-per-performance model means we don’t get paid until the jobs are complete and the kwh savings are realized.
If we don’t get results, we don’t get paid. It is that simple.
Traditional Direct Install programs often come with outsized administration fees. We’ve even seen programs where nearly half of the budget is going to the administrator.
As the Champions of Small Business, we want to see as much of the incentives as possible go directly to the customer. This allows for more customer choice, higher participation rates and higher customer satisfaction levels.
There is no doubt that energy efficiency has huge potential for reducing energy costs to small businesses in Missouri. The challenge is to overcome the barriers to effective program implementation and produce results on the ground.
From a policy standpoint, the voluntary energy efficiency standards at the state-level show a strong commitment from the Show-Me State to drive energy efficiency results.
Through program design excellence and best practice execution on the ground, smart programs can be adopted throughout Missouri to unlock more of its energy efficiency potential.