New Approaches for Energy Efficiency Market Penetration

Abstract

Penetrating the energy efficiency market is a challenge anywhere in the world. Many business models have been designed and implemented. Despite the fact that energy prices are continuously on the rise, industries in most countries have maintained the practice of investing in expanding production rather than in making operations more energy efficient. The higher cost of operations is simply transferred to the consumers in the form of increased prices for services and products. To date, investments in production expansion always win over investments in reducing operating costs through improving the efficiency of energy use. However, with oil prices exceeding $100 per barrel, the benefits of energy efficiency—reduced costs, increased productivity and competitiveness, economic development, and improved environment—are becoming increasingly attractive and feasible. Yet investment in energy efficient technologies and systems lags behind the potential for benefits. Investors are still reluctant to implement energy efficiency projects for several reasons.

This article examines a new business model in energy efficiency market penetration. The new business approach adds energy consulting services and training to the traditional energy project services. The ESCO's consulting services establish energy programs with the host organization. The program aims to increase awareness and makes the client's staff feel that the project is its own. This helps success and sustainability. It builds confidence in the client for high investment energy efficiency projects.

In any energy efficiency market, sustainability of ESCOs is very difficult. Project contracts are relatively large, and their timing is usually uneven. A high business development cost is associated with winning project contracts. The new business model creates a steady stream of smaller income to support the ESCO staff and office between projects. Examples of the implementation of new market penetration models are presented in this article.