Reflecting on a watershed year for energy efficiency and the road ahead

First things first, Happy New Year everyone!

As I look in the rearview mirror, 2023 emerges as a pivotal year for our business and the broader energy efficiency landscape. For most people and businesses, sustainability and the choice to become more energy efficient is no longer a question. Instead, it’s now a matter of how fast (and how far) to go. We still have a lot of work to do, but that positive momentum is a promising sign that we’re in for an even brighter year ahead in 2024. As we kick off the new year, I want to share my reflections on 2023 and explore the trends that will continue to shape the industry in 2024 and beyond.

2023: A breakout year for sustainability

In addition to the strong double-digit growth we experienced running utility energy efficiency programs, 2023 was the first time we saw multiple states and municipalities actively developing and implementing their own energy efficiency programs. And, this was all happening simultaneously with the efforts of the U.S. Federal Government promoting energy efficiency and electrification through landmark legislation like the Inflation Reduction Act (IRA). Last year, we also saw significant growth of demand response programs, milestone electric vehicle (EV) usage and more resulting in record energy savings and lower bills for millions of utility customers. Collectively, these initiatives are helping to drive the shift toward a more sustainable and resilient energy landscape.

2024 will be the IRA’s time to shine

As I mentioned in a previous post, the IRA will be a marathon, not a sprint. We’re already seeing state energy offices start to mobilize and figure out how to translate the IRA and corresponding guidance from the DOE into a contractable framework. Goals will translate into concrete action this year as federal funding starts to flow. We’re all navigating new territory, and every state has its own set of nuances. State energy offices – many of which have limited administrative capacity – will need substantial resources and support to ensure that every dollar is allocated effectively, and everyone can take advantage of the IRA’s home energy efficiency and electrification rebates. 

Working better together

The pace of sustainability efforts varies across states, and the importance of strong collaboration can’t be overstated. Effectively implementing and tailoring programs to local needs will depend on strong partnerships between federal agencies, state governments and local communities. Imagine the chaos if, amidst the national rush to participate in IRA programs, these groups fail to communicate effectively. Proactive collaboration will help prevent wasted IRA funding and ensure it reaches those who need it most: income-eligible populations.

Increasing heat pump adoption

All signs point to heat pumps eventually becoming a major factor in the race toward decarbonization. Significant advancements in technology and federal tax credit incentives are driving a recent surge in demand, and public utility commissions (PUCs) are moving full speed ahead to implement heat pump programs.

Heat pumps move heat instead of generating it, so they are much more energy efficient than traditional systems like furnaces – even in cold climates – and new and improved ductless systems can be installed with minimal effort. A recent study in Joule measured heat pump performance in low temperatures across three continents, finding that heat pump efficiency was significantly higher than fossil fuel heating and electric-resistance alternatives, even well below 0°C:

New and existing incentive programs gaining traction in both the U.S. and Canada are also driving the positive momentum. Heat pumps power around 15% of U.S. homes and 7% of Canadian homes today, leaving a huge amount of untapped potential.

It’s impossible to overstate the potential impact of heat pumps, but the reality is: it’s a big decision for customers. Successful implementation will depend on addressing barriers to entry as the market grows. That’s where strong customer education comes in. As we continue to design and deliver heat pump programs, we need to meet customers where they are to gain influence and increase market penetration.

Promising shifts in consumer mindset

As the benefits of energy efficiency become increasingly apparent, more individuals and businesses are proactively seeking greener solutions, ultimately driving market demand and greater investments in our sector. We also anticipate substantial technological innovations to play a pivotal role in the energy efficiency landscape in 2024, which I look forward to covering in future blogs. 

The bottom line is, we’re going to see a record amount of money being put into sustainability programs over the next 3-5 years, and I’m excited by the real opportunity to make a meaningful impact on the planet (which we will all benefit from). With all hands on deck, 2024 promises to be another game-changing year.

Thanks for reading!