A New Approach to Small Business Energy Efficiency

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A pilot project in Minneapolis is testing the idea that business advocates might be the key to unlocking energy efficiency in the small business sector.

The Challenge
Energy efficiency advocates often look for where the highest efficiency gains can be achieved for the lowest amount of cost and effort. In looking at commercial energy efficiency, that mindset leads to a focus on large commercial and industrial buildings. While those customers certainly do have the potential for great gains, small buildings are also vitally important to our economy and to our efforts to become more efficient with energy usage.

The U.S. Department of Energy did a good job of making this case in an article it released in June of 2013, backing its investments in small commercial energy efficiency:

In the United States, the commercial building sector — of which more than 90 percent are small buildings — consumes about 20 percent of all U.S. energy. According to studies by the Department’s Pacific Northwest National Laboratory and the National Renewable Energy Laboratory, small buildings have tremendous potential to save energy and improve their bottom lines. For example, small fast food restaurants have the potential to cut energy use by up to 45 percent, and a 10 percent reduction in energy costs can improve grocery stores’ profit margin by 16 percent.

Another way to put this is that if we want more than 10 percent of commercial buildings in America to be energy efficient, then we need an effective approach towards small buildings, and many of those buildings house small businesses.

The challenge with small businesses is that they have a unique set of barriers to implementing energy efficiency, in addition to the fact that it takes more footwork to reach 10 businesses comprising 25,000 square feet each than it does to reach one business occupying 250,000 square feet. These additional barriers include the following:

  • Time – Small business owners are often so busy running their business that they don’t have time to learn about and take action on energy efficiency opportunities. Katherine Tweed wrote about this in a 2012 GreenTech Media article, stating, “Enabling energy efficiency in the small commercial market has been difficult […] for utilities across the U.S. The market is fragmented, and business owners are not facilities managers or sustainability officers — they’re busy trying to keep their doors open and their customers happy.”
  • Knowledge – Even if small business owners did have the time needed to take action, many of them don’t know that the opportunity even exists, let alone understand how it can help them. In a study conducted by The Sustainability Review to explore the energy efficiency information gap for small businesses, researchers concluded, “The business owners we spoke with overwhelmingly want to reduce energy costs. However, most of them simply do not know where to find information on how to do so.”
  • Trust – Small business owners are constantly being approached by people who are trying to sell them something, leading them to be justly skeptical of anyone who walks through their door who isn’t a customer. Getting their attention requires having the ability to foster trust, either because of an existing relationship or credentials that clearly show that the business’ best interest is in mind. Tweed also touched on this point: “Small business owners are exceedingly wary of anyone trying to sell them energy products, even if the person is carrying valid credentials from a utility.”

If we want to achieve the kind of energy efficiency gains that are possible in the small business sector, we need an approach that addresses these unique barriers.

The Opportunity
A group of both small business and energy efficiency advocates in Minneapolis are working to develop a new approach that responds to this challenge. The project began with a process in which a stakeholder group — including the Lake Street Council, Latino Economic Development Center, Seward Redesign, Minnesota Chamber of Commerce Energy Smart program, Minnesota Department of Commerce Division of Energy Resources, Michael’s Energy, Clean Energy Resource Teams, and Great Plains Institute — met regularly for 12 months to inform each other on experiences, educate one another on the problems and opportunities, agree on the key challenges to be overcome, and act to develop a model that addresses the unique barriers of the small business sector.

Together, this group found that in order to engage small business owners in reducing their energy use, it’s vitally important to use the right messenger, and that person might not be an energy advocate. Undoubtedly, there are energy program outreach staff who do a wonderful job of working with small businesses. There are also many energy programs and resources that provide value for almost any kind of small businesses and at any price point, from a free assessment, to a detailed audit, to low interest financing for implementation. The availability of these opportunities is an achievement to be celebrated.

The problem is that from the perspective of a small business owner — who doesn’t necessarily have time to figure out which of these programs is the right one, and might not even know they exist in the first place — knowing just where to start can be a burden in itself, making the whole endeavor look more complicated than it needs to be. In Minneapolis, for example, there are at least ten organizations that offer energy assessments or audits, and all of them differ slightly in what they assess and in what information they provide to the business.

Even if the starting point is clear, many programs will only take a business so far in the energy efficiency process, or only focus on a single opportunity like lighting, leaving the business owner to find new resources (and build new trust-based relationships) in order to take further action. If we want to address this, then there needs to be a way to link together the suite of programs and opportunities available to small businesses in a clear and compelling way, and through a single relationship.

That’s why small business advocates might bring value as the right people to conduct outreach on energy efficiency programs. In Minneapolis, most neighborhoods have business associations that work to help their member businesses thrive. In other places, chambers of commerce and community development corporations serve this need. These organizations have outreach staff who can add value in the following ways:

  • Trust — Business association staff often either have a trusted relationship with their businesses already, or they come from an organization that more clearly has the business’ best interest in mind, so they’re less likely to be seen as a salesman and more likely to be seen as a partner.
  • Knowledge — Business outreach staff, with proper training, can take the pain out of understanding energy efficiency by acting as a navigator among the many programs and opportunities available to small businesses. By helping owners one step at a time, they can demystify what might be a confusing process.
  • Language — Business advocates often speak the same language as the business owners they work with. This is true both for owners who don’t speak English, but also for owners, even if they do speak English, who might not understand the technical jargon that’s often used when talking about energy efficiency. Business outreach staff can help bridge both kinds of language barriers.
  • Relationships — Business association staff have the potential to create and maintain long-term relationships with business owners. They are in contact with businesses to talk about not just energy, but recycling, loan programs, and neighborhood issues. This allows them to foster a relationship that continues beyond the energy efficiency process, enabling them to check in later with business owners who weren’t initially interested in taking action.

In the stakeholder group mentioned above, we’ve begun calling these people “Energy Coaches” because their role is to guide and encourage small businesses to achieve their energy goals, no matter what their needs are or where they’re at in the energy efficiency process. This approach is meant to support, rather than replace, energy program staff by having Energy Coaches act as a conduit to connect businesses to the energy programs and resources that fit their needs.

Our Pilot Project
We’ve started testing this approach with a pilot program that began on Thursday, September 11th with an initial training session for 15 new Energy Coaches. The 4-hour session covered the basics of energy efficiency opportunities, a mock energy assessment in a local commercial kitchen, and role playing to practice talking with business owners about barriers to implementation.

We also provided coaches with a guidebook to help them understand and navigate, on behalf of their businesses, the complex and confusing web of resources and programs available. This guide is the first attempt that we know of in Minnesota to clearly lay out the full set of decision points small business owners face when pursuing energy efficiency, including audit and assessment programs, financing programs, contractor selection, and preventative maintenance (to request access to the guide, please click here).

Over the next 12 months these Energy Coaches will be reaching out to businesses in their area, starting conversations about energy use and how it can affect a business’ bottom line, setting up energy assessments, connecting owners to financing programs, and following-up to answer questions and encourage taking action.

If this approach proves successful, it could significantly increase participation in the energy programs that are available to small businesses, holding promise as a model to be deployed elsewhere. While not all areas will have as many business associations as Minneapolis does, there are small businesses, and business advocates, in urban and rural areas alike. Plus, an opportunity to help businesses thrive while reducing energy usage can bring value to any community.


The Small Business Energy Coaches project is made possible through generous support from Wells Fargo and the National Fish and Wildlife Foundation.


Check out photos of Energy Coaches in action: