Economics of Energy Efficiency

Addressing Market Barriers

The resources here will help you prepare talking points to address many of the factors that are often cited as barriers to increased investment in energy efficiency.

How Will Energy Efficiency Programs Impact Us Financially?

A primary concern for public power is that energy efficiency will financially harm the utility by reducing revenues, and in turn affect the local government or local population that depends on utility contributions to the general fund to supplement other municipal services. This is particularly amplified considering many city budgets are already facing shortfalls, due to the current state of the economy.

How Will Energy Efficiency Programs Affect Customers' Bills?

Demonstrating the business case to decision-makers and customers is similarly challenging if a rate increase is needed to cover program costs. While public power has greater flexibility in adjusting rates on an as needed basis, this is often not the politically favorable option and requires substantial education about the potential for programs to ultimately reduce customer bills, despite a higher per kilowatt hour (kWh) charge.

Is Energy Efficiency a Reliable Resource?

Another barrier that you'll want to be prepared to address is the view that energy efficiency is not a guaranteed or reliable resource. This can be overcome by pointing to the success of peer utilities, more and more of whom are incorporating energy efficiency into their portfolio of energy resources. This topic is also covered in greater detail in the Resource Planning section.