Technology Tuesdays: How EE Programs Move Technology Forward

As a practitioner of energy efficiency (EE), I often take it for granted that everyday folks understand not only the importance of EE programs but also the role they play in advancing technologies. Did YOU know that EE programs drive technological innovation? One could argue that one of the primary purposes of EE programs is to advance EE technology. To understand this, let’s talk about EE programs and what they aim to accomplish. 

EE Program Purpose 
In the most general terms, EE programs are packaged offerings aimed at reducing energy use and costs for a specific industry segment or customer type. For example, there are EE programs that focus on agriculture and offer a menu of EE measures and/or services that meet the specific needs of those customers. In the agricultural segment, some examples of EE measures and services include pump tests, heavy equipment optimization, and variable-speed drives. The overall outcomes for EE programs in all sectors include: 

• Economic benefits to customers 

• Grid reliability and flexibility 

• Equity and accessibility 

• Support for State and regional climate goals 

• Policy innovation based on aggregated data 

As one of the main vehicles for delivering EE technology to the marketplace, EE programs are often the first interactions customers have with some technologies. How can this be? As new technology emerges in the market, the cost tends to be higher than the standard technology or the technology it is positioned to replace. Therefore, EE programs funded by ratepayers often offer an incentive or rebate, reducing the cost of that technology. In some cases, the cost is eliminated altogether, making the adoption of that technology zero out-of-pocket for the customer. This does two things: 

1. Reduces risk for those who would not ordinarily be early adopters of a new technology 

2. Creates demand in the market for that technology 

https://www.econlib.org/library/Topics/College/supply.html 

EE Programs vs The Marketplace 
Let’s revisit secondary school economics for just a moment. The law of supply and demand explains how prices are determined in the marketplace. Supply is the availability of an item in the marketplace, and demand is the number of people who want to purchase that item. As supply increases, prices generally decrease. 

How do all these pieces work together? By reducing the risk of adopting new technologies and increasing customer exposure to them, EE Programs create demand in the marketplace for those technologies, signaling to manufacturers that they should produce more. As demand increases, prices begin to decrease. This decrease in pricing expands market-wide accessibility to that technology. 

Evolution of Technology 
What happens when a specific technology becomes the standard or “the normal?” Since technology is constantly evolving, this will be true of all technologies at some point. They will eventually have to make room for the next emerging technology. Who and how is this determined? 

This occurs for a myriad of reasons, but for this discussion, we will focus on two: Utility Companies and Title 24. 

Utility Companies 
Utility companies are the driving force for EE programs. EE programs are funded through rates customers pay, and utility companies are primarily responsible for developing EE programs to deliver energy savings to their customers. A moment ago, we discussed customer exposure to new technologies. To get regulatory “credit” for energy savings, utility companies must demonstrate that the customer would not have otherwise adopted a new technology or service absent the availability of that technology through the EE program or service. This is called influence. Once a utility company is unable to prove “influence,” it is no longer able to offer a monetary incentive or rebate for that specific technology. This occurs when the technology becomes more of a standard practice in the marketplace. 

Title 24 
What determines that a technology has become standard practice? There are many reasons this occurs. However, one of the easiest signals to follow is Title 24. Now you may be asking, “What is Title 24?” It is commonly referred to as the California Energy Code. Officially, it is called California’s Energy Commission’s Building Energy Efficiency Standards for residential and non-residential buildings. It is a section of the California Building Standards Code. This document outlines the technology and safety standards for construction, renovations, retrofits, and more. The California Building Standards Code is enforced through the permitting process. In short, once a technology is incorporated into this standard, it no longer needs support from EE programs to drive customer adoption. 

EE programs are more than just cost-saving tools; they are catalysts for technological progress, market transformation, and equitable access. By strategically reducing barriers to adoption and amplifying demand, EE programs accelerate the journey of emerging technologies from niche innovations to everyday standards. And as codes like Title 24 evolve to reflect these advancements, the cycle continues, paving the way for the next generation of solutions. Understanding this dynamic empowers us to see EE not just as a policy tool, but as a powerful engine driving our clean energy future. 

Resources: 
Photo credit: https://www.econlib.org/library/Topics/College/supply.html 
https://energycodeace.com/ 
https://www.energy.ca.gov/programs-and-topics/programs/building-energy-efficiency-standards