Energy Efficiency Incentives: Why Utilities Can't Deploy Them Fast Enough
May 9, 2026
Across North America, utility investments in energy efficiency have never been higher. In the United States, utility spending on efficiency programs reached a record $8.8 billion in 2023, a 17% increase from the 2019 low. In Quebec, Hydro-Québec plans to invest $2.5 billion in energy efficiency over three years as part of its Action Plan 2035 and achieved 1.9 TWh in energy savings in 2025, a 200% increase over 2024. In France, obligations under the “Décret tertiaire” and Energy Savings Certificates (CEE) are also driving providers to intensify their efforts. The budgets are there. The programs are in place. Greenhouse gas reduction targets are tightening year after year. Yet a significant share of the energy efficiency potential in commercial, institutional, and industrial buildings remains untapped.
The problem isn't a lack of funding. It's the difficulty of deploying it effectively, building by building, at scale. Between a program's budget envelope and a completed project in a real building, there's a path full of obstacles.
The Bottleneck Is Operational, Not Financial
Most utilities offer well-structured programs: subsidized energy analyses, financial support for high-performance equipment, and demand response options. Hydro-Québec, for instance, covers up to 75% of eligible costs through its Custom Offer, with caps of up to $5 million per project. Its Efficient Solutions Program serves both small and large businesses, and financial support for energy analyses can reach up to $60,000.
Despite this generosity, conversion rates remain insufficient. In Quebec's commercial sector, energy savings in 2025 reached 960 GWh, a considerable achievement. However, when measured against the 500,000+ commercial, institutional, and industrial buildings across Canada, the scale of the remaining work becomes clear.
So what's standing in the way? Four factors come up consistently.
1. The Inability to Target the Right Buildings at the Right Time
Program managers face a fundamental challenge: across a portfolio of thousands, or even hundreds of thousands, of client buildings, how do you identify those with the greatest savings potential?
Without analytical tools that cross-reference consumption data, building characteristics, and eligible measures, targeting remains imprecise. Utilities end up reaching the most visible or proactive clients rather than those where the impact would be greatest. Field representatives often lack the techno-economic information needed to have a convincing conversation with a building owner.
The result is a paradox: programs available on one side and building owners unaware of their eligibility on the other. Or worse, owners who are aware but lack a clear picture of the return on investment required to make a decision.
2. Processes That Are Still Too Manual and Too Slow
Generating a credible techno-economic recommendation for a single building still requires hours of engineering work: data collection, energy modelling, scenario comparison, integration of applicable incentives, and structured report writing. The cost of a thorough energy study can easily reach several thousand dollars per building.
Multiply that effort across hundreds of buildings, and the bottleneck becomes obvious. Engineering firms delivering these analyses face a well-documented shortage of specialized labour. Delivery timelines are lengthening, and some firms are turning down projects due to capacity constraints.
The result: program budgets renew faster than they get spent. The money is available, but the ecosystem's execution capacity can't keep pace with the ambition. As Hydro-Québec has noted, its ecosystem of an estimated 600 suppliers participating in efficiency programs is expected to triple over the next decade to meet demand.
3. Lack of Standardization Undermines Justification
For a utility to justify its efficiency investments, whether to regulators, shareholders, or government partners, it needs recommendations that are comparable, traceable, and verifiable.
But when each study is conducted with different tools, different assumptions, and different formats, comparability becomes a challenge. Two engineering firms analyzing the same building can reach significantly different conclusions simply because their methodologies and calculation tools aren't aligned.
Measuring impact at the program level then becomes an exercise in faith rather than data. How do you demonstrate that the millions invested in a program generated the promised energy savings, when the calculation methods vary from one project to the next? This lack of standardization undermines program credibility and complicates accountability efforts.
4. The Growing Complexity of Decarbonization Scenarios
Building energy transitions are no longer just about changing light bulbs or improving insulation. Program managers now need to evaluate complex combinations of measures: energy efficiency, electrification of heating systems, electricity-natural gas dual-energy, renewables, smart peak demand management, and incentive rate options.
Fairly comparing these cross-cutting scenarios across all energy sources, while accounting for applicable incentives and local regulatory constraints, exceeds the capabilities of most traditional modelling tools and in-house spreadsheets. Existing engineering software is powerful for deep analysis of a single building, but it's rarely designed for automated, multi-site analyses centered on rapid techno-economic decision-making. This complexity creates a paralysis effect: faced with too many options and not enough clarity, decision-makers postpone their decisions. And a postponed project is often an abandoned project.
What Needs to Change
For the billions invested in energy efficiency to translate into real projects in real buildings, three conditions must be met.
First, better targeting. Utilities need tools that can rapidly analyze their client portfolios to identify the highest-potential buildings. Not in three months, but in a matter of days. Precise targeting allows resources to be focused where they'll have the greatest impact and enables utilities to present building owners with a clear picture of what they stand to gain before they even ask.
Second, standardized and defensible recommendations. Analysis must be comparable across buildings, traceable in its assumptions, and rigorous enough to support the regulatory justification of programs. This standardization also enables the engineering firms that deliver these programs on the ground to scale their throughput, with consistent deliverables that strengthen the credibility of the entire chain.
Third, the ability to scale. If techno-economic analysis remains a manual craft, performed building by building with non-interoperable tools, the pace of program deployment will never match the ambition of the targets. It must be possible to analyze dozens, or even hundreds, of buildings simultaneously, with a consistent level of rigour.
New Approaches Are Emerging
This is precisely the space, between the program and the project, where new technology-driven approaches are taking shape. Platforms like vadiMAP are working with energy providers to identify the highest-potential buildings within a portfolio, automate feasibility studies that once took months, generate standardized and defensible scenarios, and accelerate the journey from diagnosis to action. The goal isn't to replace human expertise, but to multiply it: enabling engineers and program managers to cover more ground, faster, with comparable and verifiable results.
The Challenge of the Next Decade
The energy transition won't be won or lost on ambition or capital. Both are already in place. The decisive factor is execution capacity — the ability to move from program to project at the speed the next decade demands.
The utilities that succeed in deploying their programs at the scale of their ambitions will be those that invest not only in budget envelopes but also in the tools and processes that turn them into measurable results. Building by building. Project by project. Program by program.
Ultimately, an incentive that never gets used isn't a saving for the utility. It's a missed opportunity for everyone.
Sources
1. ACEEE, 2025 State Energy Efficiency Scorecard, March 2025.
2. Hydro-Québec reaffirms its commitment: Affordable and competitive rates
3. Hydro-Québec, Trajectoire en efficacité énergétique : Mieux consommer ensemble, Plan d’action 2035
4. Les Affaires, Les mesures d’efficacité énergétique d’Hydro ont doublé en 2025, février 2026
5. Hydro-Quebec Efficient Solutions Program - Upgrade or replace your equipment and systems for less!