Small Business Energy Efficiency: Roadmap to Program Design

The small business sector represents a largely untapped market for energy efficiency (EE) programs. Small businesses account for 29% of Xcel Energy’s electric energy sales in Minnesota. However, traditional prescriptive rebate programs have failed to achieve high participation rates by small businesses. Free audits and generous rebates are not sufficient to overcome the burden on the  business to initiate action and do not address the unique market barriers faced by small businesses.

Designing a successful small business retrofit program requires a paradigm  shift  from traditional EE  programs. EE must be treated as a product to be sold. High volumes of opportunities  must  be  generated and every aspect of the  delivery process integrated  with software that has the capacity to organize thousands of audits, while allowing customization to the unique needs of each business. Program staff must be technically proficient, but ultimately be selected because of sales experience. Extensive efforts must be made to develop, maintain and train an extensive network of contractors. While not sufficient by themselves, generous rebates are critical to initiation of the sales process. Neutral cash flow financing makes projects even more attractive.  

The combination of these program elements has proven to be a successful approach for the One-Stop Efficiency ShopSM lighting retrofit program. This is a full-service program for small businesses with demand below 400 kW. Almost 57% of program participants have a demand smaller than 50 kW. Between 2000 and 2012, the program will have served 8,600 small businesses resulting in 86 MW of savings.

Full report (PDF):
Small Business Energy Efficiency: Roadmap to Program Design