Uniting Municipalities and Utilities for Joint Energy Efficiency Goals: Exclusive Interview with Ersilia Serafini, CEO of Summerhill Group - [an Energy Central Power Perspectives™ Interview]
- Aug 14, 2019 2:48 pm GMT
Energy efficiency as a goal carries with it undebated support. Whether the goals are to reduce customer energy bills, reduce overall energy demand, or enhance reliability of the grid, increasing energy efficiency is a pretty universal positive. However, that does not mean that working towards energy efficiency is always worked towards in a manner that best supports successful implementation, and not because of any specific opposition but rather because of inefficient program design and implementation.
Within cities and localities, a number of different stakeholders might flood customers with messages about how and why to increase the efficiency of their home or business. However, when those messages become conflicting, confusing, or overwhelming because they’re coming from different directions, the end result might be the undercutting of efficiency goals. Collaboration between stakeholders, including municipalities and utilities, is the key to successful implementation, according to Ersilia Serafini, the CEO of Summerhill Group. At the upcoming AESP Summer Conference, taking place in Toronto at the end of August, Ersilia will be moderating a panel entitled 'On Common Ground: Where municipalities & utilities can make things happen.’ As a sneak peek into this critical and fascinating topic, Ersilia was kind enough to spend some time answer my questions about how and why municipalities and utilities should be working in tandem toward joint energy efficiency goals.
Matt Chester: You are going to moderate a panel on how municipalities and utilities can collaboratively work to deliver on efficiency and emissions reductions goals—can you start with explaining why this is a topic you’re invested in and how you got involved with it?
Ersilia Serafini: We’re a company in the energy efficiency space and our overarching goal is to help people and businesses use energy more wisely and efficiently. So, for us, the success has come from making sure we can leverage the stakeholders that are important and most credible to the end customers and really move the needle to drive change. We’ve been in the center of this space and you can see the role that the utility and municipality have through their existing relationships with the customers. Homeowners and businesses pay taxes and get services from the municipality, and with utilities they’re paying them for their energy use. So, for us, it was an obvious collaboration to bring together these entities around energy efficiency.
MC: Where is there opportunity for achieving these goals through collaboration that municipalities and utilities cannot achieve when they work individually? What is the gap that these organizations should be looking to close?
ES: One of the biggest challenges with outreach and customer engagement is that customers are being bombarded with so many different messages from so many different companies. We’re in an era and a time where, from a political and regulatory perspective, there’s a lot of focus on climate goals and climate adaptation. There’s a lot of discussion about how energy efficiency plays a key role to achieve climate goals, but it’s not the only thing.
As a customer, I’m looking to see who’s most credible in terms of these solutions. For example, utilities may be incenting heating and cooling technologies because of their kilowatthour and meters cubed savings to meet their regulatory obligations. Then you’ve got municipalities that are dealing with flooding and extreme weather issues and they are incenting water storage and water efficiency technologies, so the collaboration here is that all of these things should come together in a seamless message to the customer rather than having to go to many different entities to get that information.
Say I’m renovating my business or home with energy efficiency measures, we need to consider how I’m going to bring all these parties together so I make the best decision about my investment. I want to make sure I have the right advice, the right technologies, and from my perspective I don’t care about which entity gets the ‘credit’ for the kilowatthour or meters cubed saved. That’s not how the end-use customer thinks. That’s where the collaborative opportunity is.
MC: You’re going to be moderating a number of organizations in Canada who are bridging this gap— do you think there’s anything unique to the Canadian markets that’s making this type of work excel that has them as leaders? Or could other markets in the United States, Europe, and elsewhere readily adapt the lessons learned from these leaders?
ES: That’s a really interesting question and it’s probably at the heart of why we’re having this panel. It’s specific to Canada because what we’re seeing for the first time is a movement away from regulating energy efficiency at a provincial level. We have a funding issue that’s popped up after a new administration came into Ontario and decided they didn’t think that’s where the ratepayer dollars should be going. And we’re starting to see this in jurisdictions across Canada.
So, it’s providing a lesson where other jurisdictions should try to get ahead of that. We’re sitting here wondering how we’re going to continue to maintain capacity in the market for these types of services when our funding sources are drying up. So, while there are still broad areas of the United States where this isn’t yet an issue, I think we’re going to see a continuing trend of states moving away from funding energy efficiency programs. There’s definitely a lesson to be learned across jurisdictions about different ways we can work to fund these goals in the absence of ratepayer-funded programs.
MC: Where do customers come into play in these collaborations— does the current arrangement see customers being separated and siloed where a collaborative approach would be more effective on reaching individuals?
ES: Absolutely. I’ll start by saying that we, as an industry, need to start asking ourselves who has the greatest credibility with the customer and then put our ego aside in terms of assessing our influence on the customer. You talk to a lot of groups that feel like they own the customer, and utilities are very much in that mentality of thinking they have the best relationship with the customer. But you have to ask, what kind of relationship is that? What’s the quality of that relationship? And the answer will be different across jurisdictions, it’s not a blanket statement. Some utilities have tremendously effective and valuable relationships with their customers and others don’t where there are trust issues.
Summerhill undertook some market research recently that looked into millennials’ attitudes towards energy efficiency to figure out how you motivate this group to take action. One of the things we found the most interesting is that when you ask them who they go to for insights into energy efficiency, their number one answer was retailers. They go to the store—a Home Depot or a Costco or a Lowes. It really drives home the point that we shouldn’t make assumptions about our influence with the customer and that when we make broader programs to bring people in, we really need to stop and ask ourselves -who’s going to have the greatest amount of influence with that customer.
As another example, when we design programs, we spend a lot of time making sure we understand what’s actually happening in the market. By that I mean, if it’s an incentive program or rebate program targeting specific measures the contractors and industry associations need to be a part of the design of those programs. Too often, we see them being engaged after the fact when it’s too late to make the changes that are necessary to achieve success. No matter who’s putting out the program, whether the municipality or the utility, the customer is going to go back to their trusted advisor, which could be the guy on the floor of Home Depot or the contractor already in their house who might advise the customer something different. That person, at the point of install or purchase, is the one who is most influential on a customer’s decision. We need to make sure we increase that collaborative influence in the design of the programs, and you really need to think about who the most credible voice is.
MC: Do you have any other examples or stories of where these types of programs fell short that you anticipate other programs can avoid such pitfalls?
ES: In terms of avoiding pitfalls, it comes back to the fact that historically in ratepayer structured programs, utilities are in the driver’s seat and they’re designing programs for their silo whereas I think back to the concept of this panel: the municipality also has a direct relationship with that same customer.
Financing is often a big gap in increasing participation in efficiency programs and there have been models that have been piloted to drive energy efficiency where the municipality provides no interest or low interest loans, or actually own the technology. So, as a homeowner you pay for these energy efficiency upgrades through your property taxes and they become a part of the home. The point, though, is those are siloed, too. They’re not necessarily collaborating with the utilities. Neither side are really including the broadest view of stakeholders to help influence the customer decisions.
MC: Stepping back from this panel that’s discussing current successes, in your opinion how do these collaboratively programs of tomorrow look? Is there still substantial evolution to come? Is there opportunity still left on the table that the industry leaders are still looking to grab?
ES: Absolutely. My view is anchored in moving the sector generally to truly market-based principles and I don’t think we’ve seen that yet. Again, I’ve come back to answer this question before on the funding constructs that exist—there are a lot of public sector funds going towards paying for these programs that I think will continue to erode in the face of debt challenges that our governments are facing.
In our industry, the opportunity is there to think through how the value of energy efficiency fits into the market and the value placed on continuing to drive efficiency, moving to a more market-based approach where these types of programs pay for themselves. As a society we need to first value the impact energy efficiency has on our system. I think that’s a bit of a ways off, but we need to continue to drive our politicians to set that tone at the top, to value the system benefits of energy efficiency.
Once we all agree that there’s value to our system in continuing to get customers to save energy, then other stakeholders and new players are going to come in the room and ask what that value is worth economically and then find ways to be entrepreneurial in deciding which programs to run because there is now economic value placed in the system. I think that’s the opportunity for the future.
If you're interested in learning more about the opportunity for energy efficiency collaboration between utilities and municipalities, be sure to check out Ersilia's panel on this topic at AESP’s Summer Conference (in Toronto from August 27 to 29). You can learn more about the agenda and register for the conference here.
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