Small to Mid-Sized Businesses Left Out of Demand-Side Management Programs

by | Oct 6, 2017

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SMBs demand-side management programs

LEED Platinum-certified Cooper Vineyards in Louisa, Virginia. Credit: US Department of Agriculture, Flickr Creative Commons

Even though they usually make up a large percentage of a utility’s customer base, small to mid-sized businesses (SMBs) are significantly underrepresented in demand-side management program participation, according to a recent Navigant Research analysis.

Brett Feldman, principal research analyst at Navigant Research, wrote in Forbes that SMBs have been hard to reach. “There are too many of them for utilities to have dedicated account managers, they typically do not have staff resources focused on energy issues, and mass marketing does not easily penetrate their conscience,” he says.

The issue is compounded by the lack of a clear SMB definition, Feldman notes. “Some utilities and vendors use square footage, others use annual kilowatt-hours, and still others use kilowatt peak demand.”

Feldman cited a California study from last year, SMB customers made up 78% of utility customers in the state but were only about a third of the participants in energy efficiency program incentives. In that case, small and medium-sized customers were defined by usage in kilowatt hours. The numbers he pulled for program participation in Massachusetts and Long Island also revealed lack of participation among SMBs.

SMBs represent an untapped opportunity, Feldman argues. They tend to be cost-conscious, care about community relations, and find value in taking action that will benefit local economies. Recognizing that potential, utilities have started aggressively pursuing SMBs with new integrated demand-side management, demand response, and energy efficiency product offerings, Feldman says.

Although integrated DSM has been a topic of discussion for many years, actually getting energy efficiency and demand response out of their siloes within utilities has been a significant challenge. Technical, policy, and economic changes have started causing that to shift. Last year Navigant Research predicted that global integrated DSM spending is expected to reach $1.2 billion in 2025, with North America as the largest region for that investment.

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