Harnessing Energy Saving Programs Through Your Utility

Big or small, your local utility likely offers energy savings programs. They may call them “Energy Waste Reduction (EWR)”, “Energy Efficiency”, or “Energy Optimization”, but the goal of these programs is to help their customers save energy and reduce the demand on the infrastructure, by offering programs that make their buildings and processes more efficient. As a utility customer, you likely pay into these programs, so you should take advantage of them when you can. Energy efficiency programs vary in how the incentives are paid out, the levels of incentives offered, and what energy-efficient improvements they incentivize.

Types of Energy-Efficient Improvements

Capital and operational improvements are typically the two types of energy efficiency programs your utility will offer. Depending on your building’s needs and your operations, you can likely take advantage of both options over time.

Capital Improvements

Capital improvements are energy-efficient items you purchase and install to reduce energy usage over the life of the equipment. This means you are buying energy-efficient upgrades that use less energy to operate. By buying new energy-efficient lighting, HVAC, and other equipment, you are going to see energy savings on future bills. Downstream and midstream programs are both examples of capital improvement programs.

One example of a capital improvement is beneficial electrification. This is when a residential or commercial customer retrofits appliances, HVAC systems or water heaters that only use electricity instead of natural gas or propane. The goal in this case is to minimize the use of fossil fuels while installing more efficient equipment.

Large capital expenditure projects can often receive large incentives from utility energy efficiency programs based on the amount of energy savings expected in a set time period.  The savings are typically measured in kilowatt-hours (kWh) or natural gas therms, but you can easily translate that into real dollar savings: just multiply the savings by the rate on your utility bill.  Please note that your utility may need to review and pre-approve your project for it to qualify for incentives.

Financing can be a concern for many capital projects.  Your utility may offer attractive incentives to help lower your first cost, but you still might not be able to pay for it out-of-pocket.   In addition to standard bank loans and lines of credit, there are numerous options for project financing available today.

To learn more about project financing, visit:
https://energysciencesllc.com/blog/leveraging-financial-offsets-and-programs/

Operational Improvements

Operational improvements are behavior-based changes that save you money by reducing the amount of energy your systems use and often involve optimizing processes and scheduling set points. Over time, building uses and operations change. Operational improvements ensure your systems are working properly for your current building needs without having to buy new equipment.

A great example of an operational improvement program is incentivized Retro-Commissioning (RCx). Through the RCx process, a trained engineer would review your building and process systems and look for optimization opportunities within the settings and controls. The engineer is looking for times when systems are running but are not actually needed, as well as for temperature setpoints that let the systems run more efficiently. No upgrades to equipment are needed. The team would analyze and make scheduling edits to find and implement energy savings. If you don’t have building controls, you could opt to purchase them, which would be a capital improvement.

To learn more about RCx visit:
https://energysciencesllc.com/blog/how-retro-commissioning-can-optimize-your-building-systems/

Different Incentive Types

Depending on the program type you opt for, the incentive or rebate may come in a different format. It’s also worth noting that depending on the utility, the word incentive or rebate may be used interchangeably; either way, you save on qualifying energy-efficiency projects!

Downstream Programs

Through a downstream program, you will receive an incentive or rebate directly for making a qualified energy-efficient upgrade to your systems or equipment. These energy-efficient upgrades are commonly referred to as measures, and in a downstream program, the incentives or rebates for these measures can either be prescriptive or custom. Programs that utilize prescriptive incentives set fixed amounts that are to be paid a given qualified measure, and you or your contractor would send in an application for this amount to be received after the measure has been implemented or installed. With a custom incentive the savings are typically paid out at a rate per kWh or therm saved. Custom offerings come with more complex qualifications including pre-application, application, measurement, and verification steps but are more flexible and can apply to measures or projects that are not already covered with a prescriptive incentive.

Midstream Programs

With a midstream program, the utility is providing the incentive to a distributor so that customers can buy qualifying energy-efficient measures at a reduced cost. While the number of measures included in a midstream program are more limited, one additional benefit of a midstream program is that in most cases a traditional application is not required. The name midstream comes from the fact that the incentive is applied at the midpoint of the supply chain between the manufacturer and the customer. With a midstream program, the distributor works directly with the utility to handle the submission of any required documentation, and the process is typically more streamlined for the customer.

Service Incentive Programs

Operational improvement programs are often provided as a ‘service incentive’ program. In this type of program, you are getting a service funded by the program, and in some cases, you can also earn incentives based on the amount of energy saved. What is included and how the incentive is paid varies per utility.

There are a lot of programs available to help you save money and energy, you just need to know where to look. Along with utility-led programs, many other entities, like the state, also provide incentives to help you be more efficient.

As an energy efficiency consultant, Energy Sciences helps clients optimize their energy usage and can help you identify what energy efficiency programs are the best fit for your needs. We can help facilitate the process by applying for these rebates. Continue your energy efficiency journey today!

Additional Resources

https://www.epa.gov/statelocalenergy/local-utilities-and-other-energy-efficiency-program-sponsors

https://www.aceee.org/leaders-pack-2024-beneficial-home-electrification

https://www.aceee.org/leaders-pack-2024-commercial

Article co-authored by: Alexis Southerland, Communications Manager & Matt Huffman, Senior Outreach Specialist