Energy Incentives

I work in the business of energy efficiency. I have found some realities to exist within this field: Energy management and proper use of efficient technology, controls, and management programs makes good business sense, strictly in terms of operating costs vs. capital costs (green marketing value and environmental benefits, etc. are another argument, not discussed in this post). Some efficiecy measures are more attractive to a wider market when incentives are provided for the implementation of these technologies. Altruism is rare - by this I mean that if a utility offers incentives for efficient air conditioning (for example), the incentive paid by the utility is less that the expense that would otherwise be required to build a power plant with that generation capacity. In effect, everyone wins with this type of incentive - the utility avoids a large capital expense, the customer saves money on their energy bill, the environment is not polluted with the additional level of power plant emissions, and the supply-demand curve affecting the general public's energy costs gets shifted slightly towards lower price for everyone.

In effect, the larger this type of program becomes, the more benefits are enjoyed by everyone. One principle should apply to these programs to help them be widely implemented for the benefits listed above. Transparency. Customers will be more likely to participate in these programs if they are confident they will gain a benefit from the program - i.e. if they are sure they will get their incentive check. Any uncertainty will decrease the likelihood that people will participate in this type of program. Many programs, to their benefit, have prescriptive measures that have clearly defined incentives for a given project. Unfortunately, a large portion of projects do not fit neatly into these pre-defined boxes. One challenge that will exist to expand efficiency efforts will be to identify these types of projects such that this uncertainty (and risk to the customer implementing the project) is minimized or removed.