From kWh to Equity: How to Lead Environmental Justice for Micro and Small Businesses

A Focus on Equity in Energy Program

It’s no secret that energy efficiency benefits are not evenly distributed to communities who have higher energy burdens. Studies show that micro and small businesses (MSBs) are underserved by energy efficiency programs. Furthermore, California small businesses were hit hard by the pandemic, with over 30% closing in 2020. MSBs are important community pillars that offer vital services, jobs, and economic growth. They tend to be active participants and deeply rooted in their communities. However, they often face lingual, financial, time, and tenant-rights barriers that limit their ability to participate in energy efficiency programs. Installation contractors may unsuccessfully serve these customers, due to limited capital, financial incentive, and tenant-landlord issues.

Resource Innovations is addressing the environmental hazards and socioeconomic burdens that MSBs disproportionally face with energy programs that are now designed to focus on equity first. Due to historical inequities, these communities, which are predominantly comprised of people of color, American Indian and Alaska Native people, and income-eligible residents, are disproportionately exposed to poor air quality, traffic congestion, and groundwater threats. As a result, they are more susceptible to stressors such as cardiovascular disease, poverty, and unemployment. Our MSB equity-focused programs in California drive environmental justice by focusing efforts on the number of participants served, utility bill savings, and non-energy benefits (such as improving health and safety, reducing environmental impacts, and improving operations), instead of the traditional and narrow focus on cost-effective energy usage reductions. Our equitable energy efficiency program, backed by California policy, allows us to better serve our communities that are impacted by historical disadvantages.

Case Study: Empowering a Nonprofit in Fresno County

A nonprofit in Fresno County, one of the program’s first participants, is deeply committed to community wellbeing and sustainability practices. Since enrolling, they have expressed that enhancing their business has been a streamlined and hassle-free process. Collaborating closely with their dedicated Green Business Coordinator, they have established strong connections and feel reassured by the smooth journey. As a bonus, employees in the organization are even showing interest in purchasing air purifiers and smart power strips for their homes, after seeing the benefits of energy efficiency at work. 

Policy and Structural Shifts

California’s Public Utility Commission (CPUC) and investor-owned utilities (IOUs) have paved the way for this new approach by dedicating a minimum of 14% of the 2024-2031 energy efficiency portfolio (an estimated $1.2 billion) to programs that support underserved communities. To facilitate this funding decision, the CPUC worked with IOUs to divide energy efficiency portfolios into four segments (resource acquisition, market support, equity, and codes and standards). The equity segment is “focused on ensuring better access and increased opportunities to engage underserved customers and hard-to-reach communities." This work stems from the CPUC’s commitment to environmental and social justice, which recognizes the imperative of addressing our history of unfair treatment to communities that are predominately people of color and income-eligible residents. In 2022, California passed Senate Bill (SB) 535. The law requires proceeds from the State’s cap-and-trade program to improve health and quality-of-life and to reduce pollution in disadvantaged communities. It also directs the California Environmental Protection Agency (CalEPA) to identify these communities based on geographic, socioeconomic, public health, and environmental hazard criteria.

Challenges and Adaptations

While there are promising upsides to the equity-focused model, we continue to address challenges with this paradigm that operates outside of the traditional, energy-based utility system model. This model requires removing structural components of a kWh, kW, and therms savings-focused program. Utility savings accounting and evaluation and verification systems must adapt to accommodate measures that were previously retired (such as lighting and to-code measures) or developed with limitations that left out MSBs because they weren’t cost effective. It requires no-cost and low-cost measures that are low barrier, meaning they may be installed without landlord approval, have minimal upfront capital investments, and offer no-interest financing for larger projects. It also requires strong partnerships with community partners, such as trade allies and community-based organizations (CBOs).

Year after year, community partners provide feedback that the programs offered to these businesses don’t consider their unique needs, like in-language education and awareness, ability to replace the equipment that matters most to MSBs, and ways to provide services that don’t impact operations. In our program model, Resource Innovations shifts liability and administrative burden away from community partners, so they no longer deal with the externalities often associated with delivering energy efficiency services at scale.

Designing Programs with Local Needs in Mind

Design, outreach, and implementation decisions are heavily influenced by the community’s needs. Identifying these needs is critical to ensure that the offerings result in a successful program delivery. Community partners are crucial to accessing local businesses, thanks to the many years they’ve spent offering trusted services to their communities. An integral component of the program design mobilizes community partners who have built relationships and trust within the community. The California Green Business Network, a nonprofit network of city and county programs, provides a path for participants to register as Certified Green Businesses, which results in economic advantages and benefits.

While still in our early stages of deployment across California, we are seeing strong interest by MSBs due to both the innovative design crafted in alignment with IOUs and the State’s and the CPUC’s focus on funding these utility customers. California’s first-of-its-kind approach serves our neighborhood mainstay businesses in a way that recognizes the barriers they historically face with access to energy efficiency programs. By improving MSB spaces while reducing their maintenance and energy consumption costs, these programs build resiliency to economic impacts, mitigate climate change, and improve air quality. Reduced energy bills allow businesses to strengthen and modernize their operations, grow their workforce, pay employees living wages with access to benefits, and most importantly, remain open to continue serving their surrounding communities for years to come.

About Resource Innovations

Resource Innovations (RI) is an energy transformation firm. Women-led, purpose built, and focused on impact, we’re constantly expanding our portfolio of solutions to guide utilities through increasingly complex, connected challenges. For communities across North America, we’re leading the charge to power change. Find out how RI can transform your business.