2024 is off to a brisk start in the energy efficiency industry, and there appears to be no slow-down ahead.  In a landscape etched through evolving challenges and opportunities, service providers and building owners alike must navigate a complex array of factors to drive success this year. Let’s dive into the key retrofit trends that are sure to drive innovation and transformation in the industry in 2024.

Financing Energizing Initiatives: Inflation Reduction Act & Alternative Financing

2024 may be the year the Inflation Reduction Act (IRA) plays a larger role in kickstarting energy efficiency projects. This alongside alternative financing mechanisms like Energy as a Service (EaaS) could be the tonic needed to stimulate significant growth in project starts and provide accessible funding avenues for organizations seeking to invest in sustainability.

Staying up to date with these approaches can help you win more projects. 

Key energy-efficiency related provisions of the IRA include:

Investment Tax Credit (ITC): The ITC is a tax credit of up to 30% of the cost of installing solar panels or other renewable energy systems. This credit can help businesses save money on energy bills and reduce their carbon footprint.

Production Tax Credit (PTC): The PTC is a tax credit of up to $0.0275 per kilowatt-hour (kWh) of electricity generated from wind or geothermal energy and can help businesses save money on their energy bills and reduce their reliance on fossil fuels.

Energy Efficiency Improvement Credit: The Energy Efficiency Improvement Credit is a tax credit of up to 30% of the cost of making energy efficiency improvements to a business’s property, helping your customers save money and reduce their environmental impact.

Clean Fuel Vehicle Tax Credit: The Clean Fuel Vehicle Tax Credit is a tax credit of up to $7,500 for a new electric vehicle (EV) or $4,000 for a new plug-in hybrid EV. This credit helps businesses make the transition to an electric fleet.

Alternative Fuel Infrastructure Tax Credit: The Alternative Fuel Infrastructure Tax Credit is a tax credit of up to 30% of the cost of installing alternative fuel infrastructure, like electric vehicle charging stations or clean hydrogen fueling stations.

HVAC Evolution: Accelerated Upgrades and Heat Pump Adoption

The HVAC industry is undergoing a rapid evolution, driven by a growing emphasis on energy efficiency and sustainability. Research suggests a notable increase in HVAC upgrades, with a parallel surge in heat pump adoption rates across commercial retrofit projects. These advancements reflect a broader trend towards greener and more efficient building systems.

Integrating smart technology into HVAC systems is becoming more prevalent, offering improved energy efficiency, remote monitoring, and predictive maintenance capabilities. The industry is also seeing a surge in the importance of indoor air quality as consumers become more health-conscious (also creating an additional opportunity for Germicidal Ultraviolet Lighting sales).

Due to their energy efficient and eco-friendly qualities, the HVAC industry has seen an increase in the adoption of heat pumps in commercial facilities. The devices, which transfer heat to warm or cool spaces, are less energy-intensive than traditional systems and offer year-round climate control.

As the HVAC market “heats up” and grows from $62 billion to $95 billion by 2028, retrofit contractors that focus on selling the economic and ecological benefits (including environmental impact of Scope 2 emissions reduction) of upgrading an HVAC system are poised to attract new business. Through partnering with current HVAC professionals, retrofitters can close experience gaps and provide a new measure to offer customers to improve the efficiency and financial performance of client’s buildings.

Electrifying Transportation: The Road to Accelerated Electrification

The momentum is building in the transition to electric vehicles and infrastructure electrification, reshaping the transportation scene. Industry analysts project a swift increase in global EV sales, leading to greater demand for charging solutions and grid integration technologies. This move toward electrification creates fresh opportunities for synergy between the transportation and building sectors in energy efficiency efforts.

While true that early EV enthusiasm (from early adopters) waned a bit in 2023 as inventories accumulated at dealerships and interest rates peaked, 2023 still marked a record year in EV sales as Q4 sales increased year over year by 40%. Interest in EV’s is still high and many believe this will accelerate as charging infrastructure becomes more complete.

Powering the Future: Solar PV Capacity Gains Momentum Alongside Battery Storage Advancements

Renewable energy sources, particularly solar photovoltaic (PV) technology, are experiencing unprecedented growth (growing by 50% in 2023, reaching almost 510 gigawatts).

Analysis by leading renewable energy agencies forecasts a significant expansion in global solar PV capacity, accompanied by a proliferation of integrated battery storage systems, including the emergence of innovative storage solutions like solid-state batteries, which offer higher energy densities and longer lifespans compared to traditional lithium-ion batteries.

These developments underscore the critical role of renewable energy in driving sustainability, resilience and an ongoing increase in demand for retrofit projects.

Navigating the Digital Landscape: Transforming Facility Sustainability for the Modern Age

The digitalization of sustainability refers to the integration of digital technologies and data-driven approaches to enhance and optimize energy-efficiency and sustainability efforts across industries. This includes using digital tools and platforms to collect data, develop and deploy projects, as well as monitor, track, analyze, and optimize building performance.

Driven by the pace and demand for additional energy and decarbonization data, 2024 will see a noticeable increase in the energy-efficiency sector’s adoption of data-driven platforms. Key solutions will see the incorporation of newer entries like computer vision (AI-driven software that derives meaningful information from digital images, like product labels and form factors), Digital Twin and augmented reality solutions for higher-end design applications, environmental sustainability and carbon-scoring dashboards, and of course the continued abandonment of disconnected manual and spreadsheet-driven processes in favor of collaborative project development and design retrofit platforms like SnapCount.

The world is now demanding that everything is produced more accurately and at a faster speed than ever before, increasing the importance of using up to the minute digitally integrated technology.

Policy and Regulation: Driving Forces of Change

Policy frameworks and regulatory mandates play a crucial role in shaping the trajectory of energy efficiency initiatives, influencing market dynamics and investment decisions. Analysis by leading policy research institutes highlights the impact of government incentives and regulatory frameworks in driving adoption of energy-efficient practices and technologies.

Consider these 3 major population centers, New York, California, and Illinois (Chicago):

New York

Local Law 97 (Climate Mobilization Act): Local Law 97 aims to reduce greenhouse gas emissions from buildings, setting emissions limits and performance standards for large buildings in the city and imposing punitive penalties starting this year. Covered buildings that exceed annual emissions limits will face an annual financial penalty of $268 per ton of CO2 equivalent over the limit based on 2024 energy usage and emissions.

Local Law 84 (Benchmarking): Local Law 84 requires owners of large buildings to annually benchmark their energy and water consumption using the ENERGY STAR Portfolio Manager tool and report the data to the city.

Local Law 87 (Energy Audits and Retro-commissioning): Local Law 87 mandates energy audits and retro-commissioning of large buildings every ten years to identify energy-saving opportunities and improve building performance.

California

California Gov. Gavin Newsom signed two new rules into law on Oct. 7, 2023. Under the new Climate Corporate Data Accountability Act, U.S. companies with annual revenues of US $1 billion or more will have to report both their direct and indirect greenhouse gas emissions starting in 2026 and 2027.

Chicago

Chicago Energy Benchmarking Ordinance: Similar to New York City's Local Law 84, the Chicago Energy Benchmarking Ordinance requires large buildings to benchmark their energy use annually using the EPA's ENERGY STAR Portfolio Manager tool and report the data to the city.

Chicago Energy Code: Chicago has adopted energy codes (based on IECC2021)  for buildings to promote energy efficiency and reduce energy consumption. The Chicago Energy Conservation Code establishes minimum energy efficiency standards for new construction and major renovations.

Chicago Climate Action Plan: The Chicago Climate Action Plan outlines strategies and goals to reduce greenhouse gas emissions, adapt to climate change impacts, and promote sustainability in the city. The plan includes initiatives such as increasing renewable energy use, improving energy efficiency, and reducing transportation emissions.

Sustainability Consciousness: Rising Awareness and Action

The growing awareness of the environmental impact of buildings by the general population is fueling a collective push towards sustainability and resilience, prompting organizations to prioritize environmental considerations in building retrofit strategies. Support by consumers, major brands, and regulators alike are highly evident in marketing and enterprise reporting highlighting the urgency of addressing energy efficiency and climate-related sustainability measures.

2024 will see more public and privately held organizations adopt sustainable practices as part of their brand promise. Providers who are aware of the increasing community support as well as the financial incentives available will be well placed to grow with this increased demand.

Accelerating the Pace: Meeting the Challenge Head-On

The foundational practices of energy efficiency retrofit projects have been around for decades and have evolved at a more traditional pace. Now, in 2024, the rapidly evolving sustainability landscape will challenge industry leaders to adapt quickly to meet the roadblocks and opportunities ahead, including the importance of agility and innovation in project execution, with streamlined processes and collaborative approaches driving efficiency gains and cost savings.

As we navigate the complexities of the energy efficiency retrofit industry, these trends serve as guideposts for navigating change and driving innovation. By embracing technological advancements, policy initiatives, and market dynamics, stakeholders can seize opportunities and overcome challenges to create a more sustainable and resilient built environment for future generations.

Looking to prepare your organization for the accelerated growth ahead? The SnapCount team is here to equip you with a comprehensive platform that will improve speed, precision and professionalism and enable you to grow unfettered by the constraints of time and labor.

If you want to learn more on how you are positioned to capitalize on these opportunities, click the button below to book a call with one of our growth advisors.