By Mark Henderson
Historical data shows that small businesses typically balk at the upfront costs and perceived risk of implementing energy-saving initiatives. While small- and medium-sized businesses (SMBs) consume 40 to 50 percent of the nation’s energy and more than three in 10 of them state that energy is one of their top three business expenses, less than 2 percent participate in their utility’s energy efficiency programs. This poses a huge challenge for the utilities trying to reach this untapped market and bridge the gap between SMBs and those program resources.
Fortunately, there are signs this is changing due to market evolution and innovation. Technology is transforming business processes for utilities and their end customers, and opening the door to a new era of energy management that utilities can use to engage budget-restricted SMBs. Three strategies in particular serve as critical change agents for utilities’ SMB engagement in the coming years.
Deploying Data-Driven Targeting and Engagement
Data analytics provide significant value for utilities through identification of high-potential customers for energy savings by examining their meter consumption data at scale. These include pinpointing customers who can save 10-20 percent or more on their energy bill through cost-effective equipment adjustments and upgrades.
With detailed assessments of energy consumption at hand, utilities can make unbiased, comprehensive customer recommendations for energy reductions and operational changes across lighting, HVAC, plug load and refrigeration. Utilities understand that small businesses have diverse needs, so they can analyze data from their energy meters to develop unique programs that work for any organization.
Embracing Intelligent Equipment
To capture the next frontier of savings, utilities and businesses must go beyond thinking about initial equipment installation to ensuring that the equipment is operated optimally over time. Operational improvements, in fact, account for 30-50 percent of the energy-saving potential in businesses.
Some utilities have tried to drive behavioral change in small businesses to maintain optimal operations – for example, making employees aware that they should turn off the lights at the end of the day. But this is not enough. As large businesses have long understood, automation is key. Control-based solutions, which automate when lights are on or optimize temperature set points based on when the business is operating or when energy prices are high, are now becoming more accessible to small businesses from both a cost and usability perspective.
Beyond the upfront cost of the equipment, business owners are often concerned about maintaining a particular ambiance for customers. This is a top priority for retail and restaurant owners who rely on environmental factors to create an enjoyable experience, in the hopes of bringing customers back again. Intelligent technologies are increasingly providing the benefit of creating a better ambiance, while simultaneously increasing energy efficiencies. These benefits, along with employee productivity, must be touted alongside pure energy savings as reasons to adopt as they can be the difference for utilities in getting to “yes.”
Meeting Them Where They Are
The question then becomes, where can SMBs find the right equipment, resources and financing required to make purchasing energy efficiency products easy?
SMBs make purchasing decisions in a variety of ways, and utilities need to make sure they are incentivizing various buying channels properly. For example, utilities are increasingly placing incentives at the manufacturer (upstream) or distributor (midstream) level to streamline the buying experience. By the time a business is working with a contractor to identify the right technology, they see attractive pricing on energy efficient technology.
Small businesses may also make purchases like everyday consumers – in a retail store or online. To meet the growing demand for digital channels, utilities can offer small businesses marketplaces specifically oriented around energy efficiency products and education to provide easy access to solutions and support. As utilities increasingly rise to the forefront of the purchase process for energy-related devices, they have the power to influence the distribution, purchase and installation of these products to create a seamless energy buying experience.
Energy-efficient technology and new channels for utility engagement enable SMBs to embrace energy efficiency without sacrificing the quality of their businesses. Not only can businesses reduce energy spend and drive cost savings, but they can also gain credit for sustainability. These organizations face a new generation of environmentally focused customers, and energy efficiency programs and sustainability initiatives will help them foster stronger relationships with these customers for continued growth.
Mark Henderson is Chief Utility Solutions Officer, Ecova