A Structure for Incentivizing Greater Achievements in Strategic Energy Management

A well-defined strategic Energy Management (SEM) program is based on an Energy Management System (EnMS) that directs change in an organization’s culture. An EnMS directs top management to provide sufficient resources to staff to save ever more energy. While a relatively small number of utility and energy efficiency providers offer SEM programs, SEM’s value is evidenced by the growing number of participants and available programs. The growth in utility SEM program participation is occurring despite the relatively low financial incentives offered.
 

However, the wide spread uptake of EnMS business practices has not been proven rapid through non-incentivized market-based programs such as the U.S. DOE’s Superior Energy Performance (SEP). SEP is built upon certification to the internationally developed EnMS standard ISO 50001 and requires third party verification of energy performance improvement. To accelerate the uptake of ISO 50001 nationwide, a financial incentive mechanism is needed.
 

This paper outlines a broad incentive structure that could be applied at the regional or national level as a tax incentive or a grant program or by an efficiency program administrator, such as a utility. The incentive structure encourages ambitious targets for improvement in energy performance indicators (EnPIs), and addresses the problems of assuring persistence of operation and maintenance measures and of discouraging free ridership in ways that are enabled by the structure of SEM.