For three decades we have been trying to sell energy efficiency to customers. And for most of that time a very large majority of them have been ignoring these efforts, regardless of whether the government or a utility is driving them.
Sure, we have made energy efficiency overly complicated and required the customer to do all the work, but isn’t it time to consider whether we have been selling the wrong thing? Especially now, given that we have so much work to do to turn our energy system into one that stops contributing to global warming and captures the full value of a variety of renewable energy technologies.
Contrast the very slow progress we have made in efficiency with the rapidly growing popularity of distributed solar energy. While still contributing a small amount of energy, solar has become the new black in the energy world, as investors and customers continue to embrace it.
In Germany, a combination of strong, stable policies and a willingness to enable property owners to participate in energy production has produced remarkable results. Last month it was reported that Germany installed more new photovoltaic solar capacity in December alone than the United States installed in all of 2011!
Further, the installed price of PV in Germany was roughly half the cost. What gives, as even with strong incentives the economic returns on solar systems would struggle to compete with those offered by basic efficiency?
In Jackson (WY), political leaders speak about putting energy efficiency “vegetables” before renewable technologies “dessert.” While there is an undeniable logic to this approach, we must begin to acknowledge and accept that energy consumers, like consumers of many things, are not simply logical.
Is it possible that subverting this kind of logic might open doors to more rapid growth in both renewable energy and efficiency investments? Remember that Germany now produces 20 percent of its total energy from renewable sources. Should we be selling solar and giving customers efficiency with their purchase?
Or better yet, what if we offered customers “100 percent clean energy” for a set rate, and included best-in-class efficiency services as part of the offering? Efficiency measures should improve the financial performance of the offering, and may in fact lead to lower energy costs even if rates go up slightly.
This approach is likely to be the best way to address concerns over how increased energy rates may affect lower income households. Rates can go up and total energy costs can go down at the same time. “Pay more per unit of energy, but use significantly less” should become a formula for our future. If efficiency can reduce consumption by 30 percent and rates go up 20 percent, the end user will see lower costs for energy. The benefit gets even better if distributed solar contributes a modest amount of revenue through on-site generation.
If I were running an energy company, that is the value proposition I would want to use to engage customers, as it would allow me to sell them solar and give them efficiency. If I were managing a city, this is the pricing structure I would want for my residents.