Market Transformation

What if the investments you make in energy efficiency today, could be done in a way that delivers returns for years to come by making it easier or less costly to invest in energy efficiency tomorrow? That is the idea behind market transformation.

Many of the most effective energy efficiency programs in the country, including the ENERGY STAR program, use tenets of market transformation in their design and implementation. So, what exactly is market transformation? One of the earliest published definitions comes from a 1996 paper commissioned by the California Demand-Side Management Advisory Committee (PDF, 551 KB) and is as follows: “A reduction in market barriers due to a market intervention, as evidenced by a set of market effects, that lasts after the intervention has been withdrawn, reduced or changed.”

Barriers to energy efficiency generally fall into several categories and sometimes differ based on whether you are taking the perspective of consumers or suppliers, as shown in the examples below:

  • Informational
    • Consumer: lack of awareness of the energy efficient option
    • Supplier: lack of knowledge on how to sell or market the energy efficient option
  • Financial
    • Consumer: greater up-front cost to purchasing the efficient option
    • Supplier (e.g., manufacturer or builder): up-front investment cost of manufacturing or building the efficient option with no guarantee of return on the investment
  • Technical
    • Consumer: lack of a measurement standard for determining what is efficient
    • Supplier: lack of a measurement standard for determining what is efficient
  • Structural:
    • Consumer: inability to locate an energy efficient option when purchasing
    • Supplier (e.g., builder): inability to source an energy efficient option when needed

The good news is that the ENERGY STAR program addresses many of these barriers, directly and indirectly, through our partner network.

Energy efficiency program sponsors (EEPS) play a significant role in the partnership by promoting ENERGY STAR to industry and consumers. Below are a few examples of some of the key barriers and common strategies EEPS employ in the marketplace:


EEPS’ Strategy to Reduce Barrier

Greater first cost of efficient option

Rebate or instant discount to lower purchase price

Lack of availability

Supplier incentive to encourage stocking of efficient product

Training to encourage the availability of skilled professionals

Lack of consumer awareness

Direct outreach to customers, local PR

Lack of supplier awareness

Supply channel outreach, training, PR

Together, ENERGY STAR and its partners are making a significant contribution to transforming the market and realizing impressive national results and the environmental benefits associated with increased awareness, availability, and uptake of energy efficient options. Together, we can do even more.