If someone told me they could improve the efficiency of my computer so that it operates quicker, at no extra cost to me, I can’t imagine I’d turn them away. Yet, the energy efficiency industry offers a similar option for homes and businesses and at least so far, consumers aren’t flocking to the programs.

On-bill financing gives customers the ability to finance energy efficiency improvements made to their homes and businesses at no upfront cost. Customers pay for the insulation, lighting, new heating system or other efficiency measure over extended terms on their monthly utility bills. Typically, the savings from the efficiency improvement offset the cost, so the customer sees no increase in the monthly utility bill. You get a building that uses less energy and yet experience no financial pain in doing so.

There is no catch here. It sounds like a good deal for the consumer and early reports indicate it is. So why aren’t consumers interested?

A new report by the American Council for an Energy-Efficient Economy takes a close look at 19 on-bill financing programs offered in 15 states. In many cases, less than 1 percent of eligible customers choose to participate in these programs.

The concept is just beginning to take hold, so the problem may simply be lack of awareness, says Casey Bell, lead author of the report.

“The growth of these programs depends on a number of factors. We are seeing a trend where they are emerging in more states. While I profiled 19 programs, we found 31 in 20 different states. A lot of these programs are still new, and many are still in the pilot phase,” Bell said.

Indeed, when it comes to energy, it’s not easy convincing consumers to accept new ideas, even those that directly benefit them, as behavioral scientists made clear at an ACEEE-sponsored conference on energy use and behavior in Washington, DC earlier this month. Even if they read the brochure from their utility, watch a TV commercial and spot a sign on the bus, they still are slow to respond. What does convince them? A chat with a neighbor who tried the program, a push by their church, community or social group, a direct knock on the door by a real live person.

So to improve participation levels, it may be matter of more utilities offering more on-bill financing programs and then being patient; it may take some time for participation to snowball.

Will this happen? Can you expect to see your utility offer on-bill financing any time soon? The ACEEE report points out various reasons utilities are hesitating. Not surprisingly, money is a big issue. Utilities see less opportunity to finance an on-bill program, especially now that government funds are dwindling.

Some of this pressure can be relieved by attracting more third-party capital to programs, according to the ACEEE report. This approach has potential because investors perceive utility revenue as low risk; consumers tend to prioritize paying their utility bills, since non-payment leads to shutoff of service. So, some utilities are exploring the possibility of bundling program loans with other financial products and creating a secondary market for capital.

“There is a lot of opportunity to learn from experience, and tapping into private sector sources of funding is likely critical for scalability,” Bell said.

In other instances, utilities finance on-bill programs through Community Development Financial Institutions or by leveraging government loan through agencies like the USDA’s Rural Utility Service.

So it’s going to take some experiment and innovation for on-bill financing to achieve scale. As if often the case, financial innovation is as game changing as technological advancement. We may have the smart boxes to revolutionize the way we use energy, but if utilities and consumers can’t pay for them, they offer little good.

The solar energy sector provides a good example. For years we saw little installation of solar panels on commercial buildings, despite enormous information produced by the industry about solar’s value. Then, entrepreneurs in the last decade came up with the idea of solar leasing and solar power purchase agreements. As a direct result, solar panels began sprouting on the roof tops of stores, car dealerships, office buildings and other commercial enterprises. The lesson? In our contemporary energy economy, promise finally leads to practice – when the financing is right.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

Related posts:

• Where Does PACE Financing Stand Today?
• William Hargett
• PG&E and SunRun Give Home Solar a Major Shot in the Arm
• Kerry Lieberman Needs Renewed Cooperation
• BrightSource Energy Raises Additional $90 Million

As debate heats up around the proposals for clean energy legislation in Congress, one of the main points of contention is the amount of money it will cost.  More specifically, everyone wants to know how the average American household will be impacted by the respective energy bills in the House (Waxman-Markey’s American Clean Energy and Security Act) and the Senate (Kerry-Boxer’s Clean Energy Jobs and American Power Act).  This article will investigate the change in energy prices one can expect from legislation that could be passed within the coming months, and try to sift through the wide discrepancy in figures that are being tossed around.  Then some recommendations will be presented as to how energy usage can be reduced, to preempt any anticipated rises in cost.

How much will it cost?
How much more money per year should a typical American household expect to pay if clean energy legislation were to pass?  Depending on where one gets their information from, this figure varies hundreds of dollars!

It helps to learn where the information is coming from.  Analyzing the House’s proposal, the U.S. Government’s Environmental Protection Agency found that, “the overall impact on the average household, including the benefit of many of the energy efficiency provisions in the legislation, would be 22 to 30 cents per day ($80 to $111 per year).” Meanwhile, the Congressional Budget Office estimated the cost to be about $175 per household.  On the other hand, an August report by the conservative Heritage Foundation claims that “a typical family of four will pay, on average, an additional $829 each year for energy-based utility costs” after the passage of Waxman-Markey.

Although it may be difficult to agree on how many more dollars Americans can expect to pay from clean energy legislation, nearly every study concurs on one fact – we can expect energy prices to increase in the future with the passage of a clean energy act.  For anyone in the country paying utility bills, from homeowners to property managers to retail owners, this means they can expect to see their electricity prices rise.

So what should we do?  Fight legislation?
Hardly.  Aside from ecological and health arguments for reducing greenhouse gas emissions and mitigating global climate change, there would be catastrophic impacts on the world’s economy were we to proceed at our current pace of fossil fuel consumption.  In fact, most scientists argue that we need to take much more drastic and strict measures at combating climate change than even the more ambitious proposals worldwide are suggesting – meaning many feel that the House and Senate acts would not go far enough in reducing greenhouse gas emissions.  Thus, fighting any attempt at curbing greenhouse gas emissions (such as stymieing clean energy legislation or not participating in international climate talks) is near-sighted and irresponsible, because of the enormous toll we would be placing on our future’s environment and economy.  The current House and Senate proposals may not be perfect, but they are a step in the right direction – so let’s not let the perfect be the enemy of the good.

A better solution: Energy efficiency!
A better solution: start using less electricity and less energy as we make the shift from fossil fuels to renewable energy.  The best way to do this is by reducing energy demand and using energy more efficiently. How does one do that?

A good place to start is with an energy audit of a building, which analyzes the energy usage of a building and recommends measures to improve efficiency.  These are often done for free or at a discounted rate by a utility company.  Another option is to hire a certified Home Energy Rater, who typically use high-end equipment to thoroughly diagnose a building’s efficiency.  It is up to the user to implement the recommend improvements once the audit is complete.

Another recommendation is to have the systems of the building commissioned.  Commissioning entails hiring a commissioning agent to come inspect elements of the building – such as the HVAC system, lighting, water heating – and make sure they are all operating at maximum efficiency and as they were intended to do.  Then the agent will make the adjustments to correct any deficiencies and have the systems running at optimal performance levels.

For a larger building or commercial space (such as an office or retail store), one can attempt to implement an overhaul in operations and management that will demand less energy use by the individuals occupying the space.  There are several programs that exist which provide guidelines for instituting these changes, which include such recommendations as switching to more efficient appliance to informing building occupants about energy-saving techniques.

In any approach, it is important to use the tools and information available and put them to use.  Whether this is the latest in IT or simply common sense that should be shared, applying intelligence to our system of energy consumption will reap huge rewards.

[photo credit: photonburst]

Related posts:

• Green Tech Job Hunt: Track the Trends
• George Soros on Clean Energy
• China Named Leader in Green Energy Investing
• Obama Calls for Energy Bill, But No Mention of Cap and Trade
• So What Does the Clean Air Act Do?

The Smart Grid is coming, but most people around the country are not aware of what it is or what it means to them. If a key goal of the Smart Grid is ultimately energy conservation, the Grid’s very success will be dependent upon consumer awareness and support.

The Smart Grid will bring exciting improvements to our utility infrastructure such as more reliable power delivery and options for renewable power. The new Grid will provide other benefits including peak load management for utilities and energy storage capabilities. For consumers, this will also mean the installation of a Smart Meter, an improvement on traditional electric meters designed to communicate power usage between the consumer and their utility and enable consumers to reduce their bills by managing consumption, at least in the long run. Stimulus funding will help pay for some of the development, but consumers will still need to cover more than a fair share.

Public utility commissions and regulators may be on board with Smart Grid deployment, but American consumers may not. Not all consumers will be willing to learn about Smart Meters, analyze utility bills, pay for the upgrades or even care. The story will be a particularly hard sell during such a tough economic time. Chances are consumers would be more accepting and possibly even demand updated power systems if they actually knew about the Smart Grid and how it will benefit them. Studies have shown that when consumers are aware of their power usage and spending, they will lower usage somewhere between 10 and 25% — providing savings and reducing their carbon footprint. These are encouraging figures.

Some consumer awareness exists, but it is not widespread. People may have read that Obama recently allocated $3.9 Billion of stimulus funding to “Invest in Smart Grid Technologies and Electric Transmission Infrastructure.” The DOE also published “The Smart Grid: An Introduction” a consumer-friendly publication demystifying the Smart Grid for those who come across it.

Others may have seen ads from GE’s ‘NOW’ campaign that ran during this year’s Super Bowl or seen their flashy microsite PlugIntoTheSmartGrid.com, offering an educational, but somewhat simplified overview of the Grid.

Pilot Projects such as the Smart Grid City in Boulder, CO or Pacific Northwest National Laboratory’s (PNNL) GridWise Olympic Peninsula Project are also raising awareness. One challenge for PNNL was convincing consumers to participate. As an incentive, PNNL offered the participants a 10 % discount on their utility bills.

What consumers will need to know?
Most importantly, consumers will need to understand and buy into the cost/benefit case for these upgrades. Once installed, they will need to understand how and why to use Smart Meter data to make better decisions about power usage. Education and coaxing for some will be required to change consumer behavior. Consumers will need to realize that Smart Meters can also help utilities identify and respond to outages, deliver power more efficiently and eliminate the need for someone to come to the house and read the old electric meters.

There are multiple stakeholders in this undertaking (utilities, policy makers, regulators, environmental groups, vendors), however, consistent messaging to the consumer is critical. Similar to need for the uniformity of protocols with grid technology, so too is the importance that consumers are on the same page with what is going on.

It is still unclear what percentage of the public is aware of the Smart Grid. It is clear that consumer awareness will be needed for adoption of the program and supporting the ultimate goal of energy conservation.

[photo credit: Tom Raftery]

Related posts:

• Siemens Promotes Smart Grid Technology Innovation Contest
• U.S. Unveils Programs to Modernize Electric Grid System
• China to Pass U.S. in Smart Grid Investment in 2010, Study Says
• The Networked Grid — A Greentech Media Conference on the Smart Grid
• Solar-Powered Washing Machine Puts Smart Grid To The Test