Of all the U.S. clean energy industries, demand-side management — the utility term of art for energy efficiency and other programs that manage energy use behind the customer's meter — has been hardest hit by the coronavirus pandemic.
More than two-thirds of the nearly 600,000 U.S. clean energy jobs lost in March and April were in the energy efficiency sector, according to BW Research. Most of those job losses came at the small businesses that do about 80 percent of the country’s efficiency work, but they’ve also struck nationwide efficiency contractors and utility program administrators.
Stay-at-home orders and business closures have halted energy audits and retrofits, preventing utilities from spending their multibillion-dollar annual efficiency program budgets. At the same time, people losing their jobs and confined to their homes are consuming more energy, and many are struggling to pay their utility bills.
As the summer cooling season approaches, this combination of rising residential demand and faltering household budgets could lead to more pressure on customers, not to mention the potential for overloaded residential grid circuits, as we’ve been tracking in COVID-19 hot spots such as New York City.
Energy efficiency is the cheapest clean energy resource, with average costs of about 3.1 cents per kilowatt-hour of reduction delivered through U.S. utility programs, according to the American Council for an Energy-Efficient Economy. It’s also one of the most labor-intensive, and the longer that COVID-19 restrictions weigh on the industry, the harder it will be for the industry to recover.
What’s to be done? On the policy front, the industry is seeking increased federal spending and tax credits to boost investment, although it’s unclear if Congress will act. It’s also advocating state-by-state regulatory changes to boost work that can be done under the pandemic’s shadow, such as retrofitting empty schools or offices.
On the technology and business-process front, utilities and companies are fast-tracking virtual energy audits, do-it-yourself smart thermostat installations, and other projects that are doable under social distancing restrictions. They’re also busy analyzing data from smart meters and digitally connected customers to assess their summertime energy needs and preparing to jump-start efficiency programs when workers can start entering homes and businesses again.
The virtues (and limits) of virtual audits
Last year, U.S. energy efficiency services provider CLEAResult started work on a virtual energy audit program that allows homeowners to use smartphone cameras to help auditors working via remote computer screens assess their home’s untapped efficiency capacity.
When COVID-19 struck, CLEAResult put the program into high gear, and it now has six utility clients in 11 states using the platform in single-family, multifamily, new construction and commercial buildings, said Dan Ridings, CLEAResult’s vice president of virtual delivery.
Video walkthroughs allow auditors to spot “instant saving measures — put an LED here; put an aerator on that faucet,” which is “where a lot of savings come from,” Ridings said. CLEAResult then ships the devices to homeowners and uses the same virtual interface to walk them through proper installation.
While CLEAResult has been forced to furlough a significant number of its employees and can’t conduct deeper assessments or retrofits under strict COVID-19 restrictions, it has trained several hundred auditors on the new platform and is “logging thousands of virtual engagements a week.”
The Tennessee Valley Authority is testing CLEAResult's service in Nashville and plans to roll it out across its territory this month, said Frank Rapley, senior program manager for the federal agency.
“We will be looking at productivity very closely” compared to in-home inspections, Rapley said. Because each virtual visit saves hours of driving and in-home inspection time, “I expect [productivity levels] to go way up.”
In Connecticut, utilities Avangrid and Eversource have launched virtual energy audits for homes and small businesses, along with low-cost LED lightbulbs, smart power strips and other self-installable gear. “We’re transitioning that offering from a pilot to a full-blown statewide program,” said Elizabeth Murphy, supervisor for Avangrid’s program. “It’s looking like there’s going to be quite a demand for this.”
There are limits to virtual audits, however, particularly for commercial and industrial sites, said Lloyd Kass, senior vice president at Lime Energy, an energy consultancy. Lime has been using Zoom and FaceTime to inspect hard-to-reach or dangerous sites for some time, but it can lead to “inaccuracies where professionals aren’t walking the site [and assessing it] with their own two eyes.”
Working in empty buildings to bring back jobs
Virtual audits can’t get construction and engineering staff back to work, Kass observed. But regulators and utilities are at least starting to approve work in empty buildings.
Lime Energy is about to carry out a $2 million retrofit job in Los Angeles schools. In Massachusetts, regulators have allowed utilities to pay for retrofit work in empty buildings as long as they’re indemnified against the risk involved, Kass said.
Other states are allowing on-site work under social distancing guidelines or boosting incentives for cash-strapped businesses. The Alliance to Save Energy, a trade group, is seeking federal legislation to boost efficiency tax credits and to allow the Energy Department to channel $6 billion toward small businesses through utility demand-side management programs.
Contractors may be able to expand the scope of services and equipment covered under utility demand-side management rules. Some states and utilities are considering expanding the list of “deemed measures” allowed under efficiency program rules to include health and hygiene equipment, Kass said.
Preparing for summer’s burden on customers and power grids
Energy demand peaks in the summertime as homes and businesses crank up the air conditioning. Those loads could be even heavier than normal this summer with so many people stuck at home.
Analysis from utility efficiency services provider Uplight found that, for two unnamed U.S. utilities, average residential loads increased by more than 20 percent and 30 percent in April, respectively, normalizing for weather. And “that was before cooling season” truly kicked in, said Indy Ratnathicam, vice president of marketing. “If they were maxed before, what are they looking like going into the summer?”
Similar analysis from Oracle’s Opower looking at loads before and after shelter-in-place orders found that residential daytime use increased by roughly 30 percent for at least one Western utility, said Paul McDonald, senior director of industry strategy. “More than one-third of their customers started getting bills that were at least 50 percent higher than usual for that time period.”
Utilities need to provide customers with energy-saving tips and tools to prepare for this summer, said Lisa Frantzis, head of the utility advisory committee for trade group Advanced Energy Economy. “There are a lot of things that can be done once you engage the customer,” from virtual efficiency audits to offers to enroll them in demand-response or rate-relief programs.
Adjusting expectations for the "new normal"
At the same time, utilities are cautious about making quick changes in such an unpredictable environment.
Opower’s utility customers paused their customer energy reports in mid-March to retool them to be more effective under stay-at-home orders, McDonald said.
Many utilities working with energy disaggregation and management provider Bidgely paused their smart thermostat control programs in the pandemic’s early stages to assess their impact on customers, said Colin Gibbs, vice president of strategy. But they’re seeking more data on how housebound customers are consuming energy, as well as promoting behavioral changes and online marketplace purchases that can lower their bills.
The uncertainty of how long the COVID-19 pandemic will last, or how often states may have to reinstate restrictions, is forcing utilities and demand-side management vendors to plan for long-term shifts in how they do business, said David Meisegeier, senior vice president at ICF, which implements and oversees about 150 demand-side management programs for utilities across the country. “We expect alternative delivery strategies will be in play,” Meisegeier said. "You might have people who might not [want to] have strangers in their houses going forward.”
Bidgely is focused on making things "as virtual as possible," said Gibbs. “This may be a catalyst for rethinking some of these programs and building in more resilience.”
Efficiency contractors are looking forward to work restrictions being lifted, but, as Gibbs asked, “If we shut down in the fall or winter, what happens then?”