Business Development in Small Commercial Building Energy Retrofit Projects—A Review on Current Industry Practices

The energy retrofit of small commercial buildings on a large scale offers a significant opportunity for economic development in the form of construction activity and utility cost savings for small businesses. In the U.S., small commercial buildings account for 9% of total primary energy use and 87 billion square feet of existing floor stock. Significant factors restrain efforts to pursue small commercial building energy efficiency projects including limited ability of building owners/tenants to invest in retrofit, lack of information, and limited market capability to develop and aggregate small commercial building retrofit projects. This paper outlines the result of a qualitative study that was designed to review and evaluate different approaches to project delivery in buildings energy retrofit industry with a focus on understanding the challenging aspects of smaller scale projects. Multiple experts in the energy service industry were interviewed to understand existing business models, to map different project delivery methods, and to identify opportunities and challenges in achieving deep efficiency goals in smaller projects. The results show that energy service companies are utilizing different strategies to avoid unnecessary investment and risk in business development activities which has resulted in few retrofit projects for smaller buildings. There is a need for systemic and data-driven approach in business development to eliminate unnecessary risk in delivery process. Uncertainty about project outcomes can be minimized by asking right questions at the right time in the process to avoid high risk investments. The proposed strategies to reduce the level of investment required to develop retrofit projects includes: (1) the integration of education and training programs with energy efficiency programs, (2) investments in integrative delivery methods and information systems for retrofit projects, and (3) integration of energy assessment methods with measurement and verification activities to reduce overall project costs.