3 trends that will shape energy programs in 2025
As we head into 2025, we ask: what were the key trends and challenges affecting energy programs to emerge in 2024 and how will they evolve over the coming year? From rising energy demand and commercial energy costs to the crucial need to reach under-resourced communities, we must approach these issues with a renewed focus on the existing solutions that work, coupled with new energy innovations and effective collaborations.
Rising energy demand increases the need for energy efficiency and demand response
Rapid growth in electrical demand due to manufacturing growth, electric vehicle popularity and the computing power behind data centers and artificial intelligence (AI) have increased the urgency for energy programming across the U.S. and Canada. Demand for electricity is expected to double by 2028, after staying flat for nearly two decades, resulting in a drastic threat to our electric grid. As our industry aims to weather this storm, two of our most tried and true methods of energy management will be key: energy efficiency and demand response.
Ensuring that millions more customers enroll in demand response programs in the coming years will help an already stressed grid avoid peak events caused by extreme summer or winter weather across the country. Utilities can build a positive two-way relationship with their customers and continue to gather valuable data by expanding their demand response offerings to meet the coming challenge.
But reducing peak demand isn’t the only path; we need to rely on energy efficiency as well to reduce the total demand in both residential and commercial settings. By improving energy efficiency and chipping away at the rising demand, we can significantly enhance long-term grid resiliency. While demand response requires most customers to opt-in, many energy efficiency measures (for example, insulation) can last for a decade or more even as existing building tenants or homeowners are replaced. Identifying the needs and opportunities in key industries like data centers and artificial intelligence is another prime opportunity for energy efficiency programs to help push back against rising demand.
The good news is utility programs already have some of the tools to combat this growing demand. The next step is continuing to connect the dots between energy efficiency, demand response and grid resilience so we can grow the funding and impact of these critical programs.
Getting creative to reach under-resourced communities
Underserved communities including low-to-moderate income (LMI), rural and indigenous customers often experience a significantly higher energy burden and this represents a major opportunity for energy programs. Traditional cost-effectiveness tests used by utilities to justify their program funding often do not allow the level of investment needed to get these customers the help they need. But ongoing investments outside of the utility space and creative blending of this funding can open doors to reach more customers and build more equitable programs.
2024 saw the long-awaited launch of Inflation Reduction Act Home Energy Rebate programs in nine states, with more expected to come through in 2025. This massive federal investment provides more than $8 billion in funding to help LMI customers reduce their energy burden and upgrade their homes. Utilities in many of these states are already actively working to combine efforts with these state-led programs to ensure homeowners can maximize savings. This is a great example of where integrating funding from multiple sources can help utilities and other energy program providers go beyond their typical offerings and increase the impact of their energy programs.
But federal and state funding sources aren’t the only paths to explore. Utility programs across the country are exploring how they can work with local nonprofits, healthcare organizations and more to more effectively reach and impact these underserved communities. As rising costs and energy demand increase the need to help these customers, utilities should be actively exploring new partnerships and creative funding solutions to supercharge their programs.
Rising costs provide opportunities for commercial programs
Inflationary pressure and supply chain challenges coupled with the rising cost of energy (due in part to increased demand) provides a key opportunity for businesses across North America to think critically about how they use energy. Now more than ever, commercial energy efficiency programs should be positioning their offerings as a key solution to cost saving and profitability, especially in the small and medium businesses (SMBs) sector. A 2024 survey found that more than 60% of SMBs consider energy to be a moderate to large business expense and highlighted growing interest in demand response or electrification to help.
Utility programs should be doubling down on their outreach efforts to commercial customers, with a focus on alleviating energy costs and providing other non-energy benefits (like decreased maintenance costs). Helping businesses develop long-term plans and energy-conscious decision-making through strategic energy management (SEM) is another path that can build quality relationships and long-term savings for the businesses and utilities. Lastly, optimizing new commercial buildings with a focus on grid interactivity should help reduce operating costs for businesses and turn these building into much needed grid assets for utilities as they face rising demand challenges. The need for energy solutions is growing among commercial customers; it’s up to existing energy programs to make the connection and provide the right value proposition.
Check out more of our energy insights and learn how energy programs can thrive in 2025.