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Is Custom Efficiency Expensive?

By September 13, 2016December 26th, 2021Briefs

When describing custom efficiency programs, one of the words that people use most often is “expensive”. Custom programs have significant costs, but is the expensive label justified?

Yes, they are expensive….

The quick answer is yes; custom programs are expensive. Custom efficiency programs require more effort than prescriptive programs. This includes project documentation review, savings calculations, and occasionally, customer meetings to collect additional project information such as conditions and efficiency levels. This leads to custom programs having costs per kWh or therm that are greater than a prescriptive program serving the same customer base. See the chart below from LBNL (Lawrence Berkeley National Laboratory).

….but not for what you get.

However, looking at the simple cost per kWh or therm doesn’t give you the full picture. Custom programs offer many unique opportunities that prescriptive programs simply do not offer. First, custom programs are cost effective. They also, by definition, focus on savings opportunities that are specifically tailored to the meet the customer’s needs and specific energy savings opportunities.

Custom programs also contribute to market transformation in ways that prescriptive programs may not. Technologies included in prescriptive programs are generally well-established and accepted technologies. In contrast, new technologies can be tested and vetted through custom programs, increasing customer acceptance and providing support and experience to the trade ally network needed to leverage new energy saving technologies. This can reduce the time needed for new technologies to gain widespread market acceptance.

Finally, custom programs offer more than just financial incentives for energy efficiency projects. They can also be a valuable resource for the customer, helping them overcome other barriers to complete their projects. For example, customers may not have the technical expertise to identify projects, determine the savings levels, or calculate the payback periods for internal reporting. Custom programs often result in customers thinking more broadly, identifying and achieving more savings.

Research indicates that energy efficiency programs are often the most significant utility-related interaction that a customer will have in any given year, and increases customer satisfaction[1]. Our own anecdotal experience reviewing customers’ custom energy efficiency projects demonstrates that well-functioning programs provide a positive experience and put the utility and the customer “on the same team.” It can also prompt the customer to look for additional, deeper energy savings projects.

In the end, the time spent with the customer helping them reduce their energy consumption can provide the utility with goodwill, as well as good savings.

Michaels Energy

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