Small Business Energy Efficiency: Utilities Court a Historically Underserved Market

Around the country, a quiet revolution is taking place. Small businesses - who at times have played the part of ugly stepsister in the energy efficiency dance - may finally be getting their invitation to the ball. As utilities seek to reduce their customers' consumption of energy (for regulatory compliance or to postpone costly infrastructure upgrades), they are extending a hand to the 22.9 million small businesses country-wide with incentive programs that better meet the needs of these smaller consumers.

"From the neighborhood pizza parlor, dry cleaner and grocery store to service, health care and technology companies, small businesses have become the cornerstone of our economy. However, with all of this power to drive economies, small businesses have been left out of many cost-saving programs. This is especially true with utility-sponsored energy efficiency programs. Why? Small commercial accounts are very disparate and (until now) have been difficult to segment into actionable groups by utilities. Data about these small commercial accounts are often incomplete and difficult to gather, and yet, this is a sector that has great potential to help the environment by becoming greener -- and add precious dollars to their bottom lines."

A huge sector of the economy whose participation in energy efficiency can make a significant impact on the environment and their own financial health? It's hard to imagine that more effective utility programs haven't yet been delivered. Much of this is due to the split incentive (i.e., many small businesses do not own the properties they utilize, and thus are reluctant to invest in facility improvements) and a lack of quality information:

"Typically, utility data consist of the business' name, primary contact, phone number, address and type of business... This lack of information leads to another roadblock to outreach: the current benchmarking process. Utilities review year-over-year data on a business. Did a specific business use more or less energy last year? Have there been unexplained spikes or troughs in consumption? If there were more data points to consider and analyze, the utility would be in a better position to offer customized information about energy usage and recommend energy-efficiency programs; thus, truly offering something useful and economically sound to the business owner."

Thankfully, new technological developments will make it easier for utilities to build a solid knowledge base about their small commercial customers, which in turn will allow them to offer more customized and enticing incentives that speed attainment of the utility's own goals. And, the financial equation is only improving: Utilities are developing more lucrative rebates and incentives, and new financing programs (such as Octus's Building Energy Savings program, PACE financing, and utility-company on-bill financing) are proliferating.

We at Octus have seen many investor- and municipal-owned utilities get in the game by designing and delivering programs with the small commercial customer in mind - programs such as Roseville Electric's Small Business Commercial Lighting Program, for which Octus was one of four approved energy efficiency specialists. But we believe that the utilities are just warming up. And as their ability to better segment and target this diverse - but enormous - slice of the economy grows, so too will participating small business' bottom lines.

10 Ways to Reduce Energy Use and Costs in Your Building

Octus participated in an energy project financing panel at this week's Sacramento Clean Tech conference, shouldered by experts from Ernst & Young, Morrison Foerster and Five Star Bank. Great conversation and content, with an underlying theme (at least from our seat on the podium): If you own or manage a commercial building, investing in energy efficiency improvements is the best investment you can make. Period. And, of course, we plugged the Octus/Five Star Building Energy Savings project financing program and other readily-available financing options.

The panel concluded with standard audience Q&A, including questions about how the economics of energy efficiency retrofits and project finance work, and how CRE professionals can sagely make it happen. We served up a handful of easy-to-consume morsels, both physical (retrofits) and behavioral. Time was short; unfortunately, we did not have an opportunity to orate, in depth, the myriad measures Octus employs to help slash utility bills.

If time allowed, we would/should have shared a top-10 list from Johnson Controls, as reported in GreenBiz.com, summarizing how you can reduce energy use and costs. Bread and butter stuff for folks in the energy- and building-efficiency space, but worthy of a recap:

1. Assess how your building consumes and wastes energy. Conduct regular energy audits to determine what condition your equipment is in and how it is performing. These audits will show where and how energy is being wasted and prioritize energy improvement measures.

2. Use more energy efficient equipment. Install new energy efficient equipment and replace or eliminate outdated, inefficient equipment. Look for Energy Star labels for equipment and appliances.

3. Match HVAC and lighting output to occupancy. Install programmable building controls that enable systems to provide light, heat and cooling to building spaces only when they are occupied.

4. Maintain equipment for maximum efficiency. Make sure that your equipment is properly serviced and maintained so that it runs as efficiently as possible. Increase operating efficiency of chillers, boilers and packaged cooling equipment through proactive service and maintenance.

5. Maximize lighting efficiency. Upgrade lighting to high efficiency bulbs and fixtures. Energy efficient lighting uses less energy and generates less heat, reducing your costs and easing the strain on your HVAC systems.

6. Measure water usage and waste. Conduct water audit in your facilities, campus, or geography to determine where water is being used and wasted. Reduce water consumption by installing low-flow equipment and fixing leaks.

7. Schedule cleaning during regular work hours. Experiment with different "day cleaning" schedules. Arrange cleaning schedules to overlap with work hours instead of having cleaning done after hours and keeping the lights, heating and air conditioning on at night. That will reduce energy consumption.

8. Insulate thoroughly. Insulate exterior walls, outlets, pipes, radiators, etc to reduce heat and cooling loss.

9. Meet LEED standards. Build, renovate, and operate your facilities according to Leadership in Energy and Environmental Design (LEED) standards. That will benefit your bottom line by lowering operating costs and increasing asset value. It will benefit the environment by conserving energy and water, reducing waste sent to landfills, creating healthier, safer occupant environments, and reducing harmful greenhouse gas emissions.

10. Make building occupants more informed. Educate and engage building occupants to promote energy conservation and reward wise energy decisions and behaviors.