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Role of ESCOs vs. Utilities in Encouraging Common Energy Efficiency Goals

Source: Alliance to Save Energy

The Alliance to Save Energy recently published an interesting article titled "How Can Energy Service Companies and Utilities Partner More Closely to Boost Systems-Level Efficiency," which asked an evident but important question. What role to ESCOs and utilities play in total system efficiency?

In the face of increasing goals for grid resilience, minimizing effects to the climate, and managing energy systems, energy efficiency plays a key role. ESCOs often approach energy efficiency from a building level, using retrofits, components, and smart systems, while utilities obviously focus on the larger efficiency of the energy system-- from generation through transmission/distribution and into the use in buildings across residential, commercial, and industrial sectors. 

According to the ASE article:

There is a strong case for increased ESCO-utility collaboration. While component-based efficiency measures are still important for energy savings, systems-level measures are necessary to achieve greater levels of efficiency. ESCOs have decades of experience applying a “systems approach” to building retrofits, which considers the interactions of components within and among various building systems (e.g., HVAC, lighting), as well as interactions among multiple buildings, and between the building and the electric grid. From building system retrofits to integration of renewable energy and energy storage, ESCO projects run the gamut of energy-saving solutions. There is opportunity for ESCOs to lend their systems-level knowledge and expertise in closer partnership with utilities and, in return, to benefit from the utilities’ access to building and grid energy data and their unique relationships with customers, including those in energy assistance programs and underserved markets.

Explained this way, ESCO/utility partnerships for total system efficiency seems like a common sense solution, but what I didn't see in the article from ASE was examples of successful implementations. That's why I wanted to take this topic and question to the Energy Central community. 

In general, what role do you see ESCOs playing compared with energy efficiency, and is there cause for a change in the paradigm of responsibilities? Has your organization already implemented the types of collaborations discussed above? Where should this topic move next?

Let's discuss!

 

Matt Chester's picture

Thank Matt for the Post!

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David Carpenter's picture
David Carpenter on January 9, 2019

This will happen to a greater extent in the future as research and development increase. The main driving force is economics. Most utilities are down in usage (revenue) to about 36%. This is common because of newer better efficient appliances, hvac and lighting. This is predominant in the commercial and residential settings and moving at a slower pace in the industrial sector. Industrial management teams are now discussing ways to be more efficient as product life and energy waste play major roles on their economic impact. Better microgrid methods and technology, newer semiconductors and communications are already driving the ESCOs and Utilities to coexists. Coexist may not be the correct analysis but utilities are keenly aware of the need for adapting to the new economic utility market.

Matt Chester's picture
Matt Chester on January 9, 2019

That's a great point about the other factors, particularly microgrids, that are forcing together ESCOs and utilities as bedfellows-- willing or not!

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