Advanced Energy Perspectives

Getting Smaller Business to Save Energy and Money Through Integrated Demand-Side Management

Posted by Brett Feldman

Oct 4, 2017 4:00:00 PM

    

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This is a guest post from Navigant, an AEE Gold Affiliate Member

For decades, utilities have had success reaching large commercial and industrial (C&I) customers as well as residential with demand-side management (DSM) programs like energy efficiency and demand response (DR). Large C&I customers typically have utility account managers catering to their service needs, while mass marketing techniques like bill stuffers, direct mail, door-to-door canvassing, advertising, social media, and retail channel partnerships effectively reach residential consumers. However, the small to midsized business (SMB) customer segment is harder to reach, and these customers are typically underrepresented when it comes to DSM program participation. But it doesn’t have to be this way.

Why are small and mid-sized customers so difficult for DSM programs to serve? The reasons are several. There are too many for utilities to have dedicated account managers to look after them. They typically do not have staff resources focused on energy issues, and mass marketing does not get their attention. In addition, there is no clear definition of the SMB segment. Some utilities and vendors use square footage, others use annual kilowatt-hours, and still others use kilowatt peak demand to define these smaller business customers.

But it is clear that this customer segment is underserved. A 2016 study in California found that SMB accounted for 78% of customers, but only 33% of energy efficiency program incentives and 32% of energy savings from programs. The program participation rate for SMB customers is about one-third of the average for all business types. In Massachusetts, 1.4% of eligible customers participated in the small business direct install program, and the smallest customers did not receive attention comparable to customers closer to the 300 kW program cut off. In PSEG Long Island’s energy efficiency program, the participation rate among SMB was one-third that of non-small business customers (5% vs. 15%).

There is good reason to turn this around. This segment makes up a large percentage of a utility’s customer base and has specific characteristics that make these customers great candidates for DSM. They are cost-conscious, and so will be more likely to participate if energy projects can be put in terms that resonate with them. They also care about community relations, so if they can show that they are doing something to help the local economy or environment, they will find value.

Recently, utilities have started aggressively pursuing SMB with new integrated DSM (IDSM), DR, and energy efficiency product offerings to better leverage this untapped load resource and engage them to help improve J.D. Power customer satisfaction scores.

One example is Duke Energy, which initiated an IDSM program in 2016 called EnergyWise Business. It offers Wi-Fi thermostats or load control switches to customers to control central air conditioning load, with the thermostat offering including a web-based customer portal for advanced control and scheduling options. Customers choose from three cycling options – 30%, 50%, or 75% – and there is a winter control option for customers with heat pumps. The first year of the program had some successes and challenges, and lessons learned were applied to the second year of program operation in 2017.

Navigant Research will be hosting a free webinar on the topic of increasing SMB customer engagement through IDSM programs on October 10 at 2 p.m. Eastern Time. I will be joined by Robert Duval, director of operations at Itron, and Jeremy Morrison, program manager at Duke Energy, to share best practices when designing and deploying DR and energy efficiency programs for SMB.

Key topics covered will include tips for DR and energy efficiency program design, recruitment strategies to maximize customer participation, approaches to maximize energy efficiency savings, and insights from a utility that has successfully deployed an integrated DR and energy efficiency program for SMB. Register for the webinar here

Brett Feldman is principal research analyst with Navigant Research

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