It’s not only about light bulbs: Are energy efficiency utilities the business model of the future?

Ted Trabue had me at “low-hanging fruit.”

I met Trabue, Managing Director of Washington, D.C.’s Sustainable Energy Utility (DCSEU) at a green technology showcase the organization sponsored in January.  He was standing by himself in the middle of the room when I walked in, so — in good networking style — I walked up, introduced myself and asked for his card.

Our brief, but engaging conversation quickly zeroed in on the DCSEU’s mission, which, he said, is all about what happens when most of the quick and easy energy-efficiency measures — the proverbial low-hanging fruit of the energy industry — have been achieved.

This challenge is not hypothetical. The uncertainties of federal energy policy notwithstanding, the nation’s capital is an extremely energy savvy and energy efficient city. It ranked No. 13 on the American Council for an Energy-Efficient Economy’s (ACEEE) 2017 State Energy Efficiency Scorecard, with a particularly high score on building energy management.

Basic energy efficiency is still a core concern for Trabue; the DCSEU distributed close to 20,000 free LED light bulbs to its residential customers in 2017, many to low-income customers. But, he said, the utility is now more intently focused on disruptive technologies — today’s startups and pilot projects — that in a few years could become industry standards or best practices.

“We want to bring the right people together – entrepreneurs, innovators and decision-makers – to support early adoption and address barriers to entry to the D.C. market,” he said.

At the January event, that meant providing an introduction to companies on the cutting edge of energy efficiency and clean energy. For example, MeteoViva is a German firm that has developed a predictive and extremely granular energy management system for commercial and institutional buildings.

According to CEO Jean-Marie Bergeal, the system gathers extensive weather and building use data to create a thermodynamic model that is used to program the “best, cheapest way to run the building for the next three days.” The model breaks down a facility’s energy use floor by floor and zone by zone on each floor.

“Anticipation is the name of the game,” Bergeal said, noting that the system can be adjusted  for real-time fluctuations in weather or building use.

It can also be integrated with load management and demand response programs, and be used to leverage time of use rates, he said.

DCSEU helped support MeteoViva’s first U.S. installation, located at American University’s (AU) School of Communication. The system cut the building’s energy costs 36 percent, essentially paying for itself in one year, Bergeal said. AU is now planning a second installation at its School of International Service.

MeteoViva’s extended reach underlines another trend in the use of energy efficiency as a distributed energy resource (DER) — the overlapping and aggregation of programs and services that have come to define the space and accelerate ongoing innovation. Beyond anticipation, combining diverse, complementary DERs and making them dispatchable is clearly the name  of the game.

The new energy economy

Where and how do DCSEU and other energy efficiency utilities fit in, within this bigger, evolving picture?

DCSEU was launched in 2011, under the aegis of the D.C. Department of Energy and Environment (DOEE) and the Vermont Energy Investment Corporation (VEIC), which has established and operates similar energy efficiency utilities in its home state and the Midwest.

The D.C. venture is funded through a surcharge on the electric and gas bills of all residents and businesses in the city, currently 1.5 cents per therm for natural gas customers and just a fraction of a cent, about 0.16, per kilowatt-hour for electricity customers. Its mandate includes an “energy equity” requirement that it spend 20 percent of that money in D.C.’s low-income neighborhoods, with a target of obtaining 5-10 percent of its energy savings from such programs.

For its first six years, DCSEU operated on year-to-year contracts, Trabue said, which limited its ability to develop longer-term programs and projects. It is now working under an ambitious five-year contract that includes year-over-year targets for energy savings that will ramp up to 5 percent of the city’s energy consumption in 2014.

Those targets translate into yearly energy savings that will essentially double over the next five years — topping out at a maximum of over 172,000 MWh in 2022. Hitting those figures will, as Trabue said, mean removing barriers and bringing cutting-edge technologies to market as quickly as possible.

Discussions of the evolution of utility business models — increasingly a mainstay at energy conferences across the country — tend to envision change along a continuum, from incremental adjustments to the status quo, to a significant paradigm shift. Energy efficiency utilities such as DCSEU aren’t usually seen as part of the conversation, but clearly, they represent an intriguing model of the utility as a platform for energy efficient products and services that residential and business customers can plug into at whatever level works for them.

At the same time, they are absolutely outcome-focused, and promote the kinds of collaborative partnerships between electric utilities and technology developers that are playing a growing part in the U.S. energy transition.

Drew Adams is Head of Strategy and Partnerships at A.F. Mensah, a New Jersey company that has developed a cloud-based system for aggregating solar and storage systems to provide power to both wholesale and local power markets. Speaking at the DCSEU event in January, he said, the company focuses on being modular, so it can design systems for small, residential projects or larger, commercial campuses.

Its business model is also based on working directly with utilities and solar developers, Adams said. For example, one of its current projects is a pilot with Baltimore Gas & Electric, aggregating power from 20 residential solar and storage systems spread across a 22-mile radius in the Baltimore area.

A new energy economy is inevitable, he said, one in which dynamic interactions between stakeholders will be the key to unlocking value, and many different approaches will be needed.

Sounds kind of like DCSEU.