Why energy efficiency benefits both consumers and utilities?

energy efficiency
In a typical business, the business may try to maximize revenue as much as possible to boost profits. This is often accomplished by businesses increasing rates to the highest level that the market will support. However, rather than change rates, utility providers often offer energy efficiency programs to consumers with the goal of reducing energy consumption and helping consumers save money. In deregulated markets, many providers also strive to offer lower rates as opposed to higher rates. This seems contrary to a typical business model, and you may be wondering why utilities are so focused on

helping consumers curb the demand for the product they are selling. The reality is that energy efficiency programs benefit the consumer and the supplier in different ways, and a closer look will reveal how this is a win-win situation for both parties.

The Ability for Consumers to Save Money

There are a wide range of energy efficiency programs offered by utility providers across the country today, and many of these programs are touted to the public as being able to help the consumer save money on energy costs. For example, some utility companies may offer a rebate if a consumer upgrades to energy efficient windows or buys an energy efficient HVAC system. Consumers may need to make these upgrades to their home anyway, and the rebates offered may encourage the consumer to purchase more energy efficient alternatives. The rebate saves money on the cost of goods, and possibly installation. Furthermore, the energy efficient nature of the product may reduce energy demand and help save money on an ongoing basis.

The Need for Energy Companies to Invest in Efficiency

Saving money is the benefit that consumers get from participating in an energy efficiency program, but what do utility companies get out of this process? In some states, utility companies must participate in these programs as mandated by the government. Therefore, there is a good chance that your utility company does not have any option available except to offer an energy efficiency program to consumers. Many states have strict guidelines regarding how beneficial or effective the programs must be.

The Need to Keep Pace With Increased Demand

Regardless of whether or not your state requires utility companies to offer energy efficient programs to consumers, most utilities have to cope with ever increasing demand. There are two main drivers for energy growth: population increase, and fluctuations in demand. While increase in energy consumption due to population growth is relatively straightforward to model, the demand spikes generally cause lot of headaches to utility companies. Imagine a hot summer when ACs are running almost 24 hours a day in every house on the block for a week. Any new device that is connected to this system, will put additional stress, and might cause the whole grid to fail. Therefore utilities face a dilemma: heavily invest into new infrastructure projects or try curbing the demand. Not surprisingly, they choose the later as it is cheaper and does not carry risks associated with new grid expansion.

In many areas of the country, consumers can freely change electricity suppliers by going online and comparing rates from various providers. Not only can they save money, but sign up for the renewable energy plans that are generally not offered by conventional utilities. Furthermore, clients may be able to take advantage of the energy discounts and rewards that some of the suppliers are currently offering. Now is a great time to explore the options and make a switch to a more affordable and efficient supplier. Click here to compare your energy options.

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