ABSTRACT

In 2010, Pacific Gas and Electric (PG&E) Company sponsored the launch of the LED Accelerator Program (LEDA), a market development program that promotes the highest performing and best quality LED lighting products. Using tiered incentives and engaging strategically with the market, LEDA leverages the buying power of large commercial customers to stimulate manufacturers to produce and sell best-in-class LED products. At the same time, LEDA builds the capacity of the supply chain to accelerate adoption beyond the program’s direct reach. LEDA’s market development strategy helped develop a competitive market for best-inclass LED lighting technologies. The Program’s LED Qualifying Product List (QPL) used Energy Star and Design Lights Consortium (DLC) standards for quality and efficacy as the lowest tier in the Program, meaning customers, designers, and manufacturers were all seeking to deploy better performing technologies to access more lucrative incentives. Near the end of 2015, DLC created similar specification tiers as LEDA. Thus, in 2016 LEDA aligned its program design requirements with DLC’s premium tier and started requiring networked controls in order to lead the market towards deeper energy savings and harmonize LED specifications across the country for national customers. This paper highlights the program design best practices that led LEDA to receive ACEEE’s 2012 Exemplary Market Transformation Program award. It also explores the newly added measures that are repositioning LEDA towards a new technology market development program for state-of-the-art technologies.

Introduction: Challenges and Opportunities for Market Development Programs

The majority of demand side management (DSM) funding in the country is directed toward resource acquisition, prioritizing cost-effective, claimable energy savings. The resource acquisition regulatory framework typically heavily favors metrics such as $/kWh and Total Resource Cost (TRC) to ensure ratepayer value. While this weighting may be appropriate for resource acquisition programs, it is not an effective strategy to evaluate the success of market development and transformation efforts. Market development, while critically important to market transformation initiatives, is not market transformation. Market development is the stage when behaviors are starting to change and the adoption grows from 0% to 5-15% adoption (bridging the chasm ), whereas market transformation is a state when behaviors have changed. Program funding exists for emerging technologies demonstrations, voluntary resource acquisition programs, and codes and standards; however there is a glaring funding gap for market development activities. Market
development focuses specifically on bridging the chasm by implementing large-scale deployments that replicate performance and build consumer confidence, and developing the capacity of the supply chain to facilitate a competitive market. As a subcomponent to larger market transformation efforts, market development program planning, implementation, and evaluation requires a holistic approach to product, supply-chain and workforce development, information dissemination, and product standardization. These critical aspects of a market transformation initiative are often not valued in resource acquisition models; the longer term goals and more dynamic set of key performance indicators (KPIs) requisite for a market transformation effort create points of tension in a predominantly resource acquisition model (Prahl, 2014). In addition to resource acquisition metrics, LEDA continually monitors and assesses a multitude of market development KPIs to inform intervention and transition strategies for each Program cycle’s modifications, including:

• How many manufacturers are making the products?
• How long has the product been commercially available?
• How competitive are the prices and warranties compared to the standard practice – both currently and relative to previous periods?
• What is the adoption of the product within major distribution channels?
• What is the awareness of value proposition among major distributors and buyers?
• What specifications, standards, and third-party ratings exist for the product?