California Institute for Energy and Environment (CIEE)

In its recent decisions pertaining to the objectives of upcoming energy efficiency programs, the California Public Utilities Commission (CPUC) has placed a strong priority on market transformation, defined as: Long-lasting sustainable changes in the structure or functioning of a market achieved by reducing barriers to the adoption of energy efficiency measures to the point where further publicly-funded intervention is no longer appropriate in that specific market. This White Paper summarizes the experience of utilities and other publicly-funded program sponsors in the design, delivery, and evaluation of programs aimed at achieving market transformation. The information presented is drawn from an extensive review of literature in the field and neighboring disciplines, as well as from interviews with program sponsors and regulators familiar with the issues addressed. It is meant to serve as a source book of concepts, strategies, and practical solutions for challenges that typically arise in programs whose objectives include market transformation. We focus on the use of evaluation and other types of research to guide program development and delivery and to assess progress and results. We also offer a number of specific recommendations for consideration by the CPUC and the California utilities as they move forward to design and implement the 2009 – 2011 programs. These recommendations are meant to facilitate the alignment of policies and procedures in regard to energy efficiency program design, program evaluation, and sponsor incentive structures with the CPUC’s stated goal of encouraging the achievement of market transformation.