Peter Kelly-Detwiler writes on the Forbes website about a novel approach to increase investments in energy efficiency in the commercial and industrial sectors.
Can A Subscription Approach Help Accelerate Adoption of Advanced Energy Technology?
For decades, the energy efficiency industry has – to a large degree – been stymied in its effort to transform the efficiency of the commercial and industrial (C&I) sectors. There are numerous reasons for this, but it doesn’t change the fact that the C&I sectors needlessly spend a lot of money on inefficient technology and wasted energy.
A huge opportunity that has largely remained unrecognized
I recall a conversation on this topic about a decade ago when I headed Constellation Energy’s Demand Response group. I asked the facilities manager at a well-known multi-site retailer what his simple payback period (the timeframe needed to recoup investments) was for investments in energy efficiency. “Three years,” he replied.
That response is typical of many enterprises in the U.S and around the world. In an era where one cannot even harvest a 1% return in a savings account, there are hundreds of millions of dollars of relatively risk-free investments (often in simple lighting and air conditioning systems) that could yield 20-30% or better, that continue to go unrecognized.
In many cases, not capturing these opportunities is perfectly rational, because the companies involved are more focused on their core missions (building another location, growing revenue, serving customers, students or patients), and do not allocate the necessary resources for infrastructure upgrades. In other instances, it’s a matter of available staff time: overworked facilities managers simply do not have the hours in the day necessary to vet all of the offerings out there. It’s not that they are unaware of the potential. If anything, they get too many emails promising the benefits of “this or that” technology, and it takes time to identify the best-of-breed and reputable vendors. Finally, many companies have opportunity costs for their capital and choose to deploy most of it in support of their core missions.
These are all big obstacles, but they also represent a huge untapped opportunity, according to Pier LaFarge, co-founder and CEO of Sparkfund, a company that offers a subscription model for funding advanced energy technologies. LaFarge started Sparkfund with several co-founders four years ago, based on the notion that the successful As-A-Service software model could also be brought to energy efficiency (and other technologies, such as energy storage, electric vehicle infrastructure and water efficiency). In the few short years since Sparkfund began operations, its model has been picking up speed. To date, LaFarge indicates the company has “just north of 200 customers, with deployments in 43 states across hundreds of buildings, and more than $32 million in energy technology deployed.”
Using a subscription model to transform the way efficiency gets done
That’s a good start for a relatively young firm, but LaFarge has his eye on a prize far larger than that. His goal is to transform the industry and change the conversation about ‘how’ customers access advanced energy technology. In addition to citing the success of Salesforce.com, he uses the analogy of Netflix and the transformation in how consumers access movies and shows. For those of you too young to remember, there was a time when we used to drive to video stores, and then spend endless time walking up and down the aisles until we found a movie we wanted to rent. Today, with streaming services, that model has been completely transformed. Netflix and streaming services like it aren’t just a better option, they have become the right way to access media. LaFarge believes that a similar shift in customer behavior is on its way in how we access advanced energy technology.