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New SECC Report: Energy Challenges of Commercial Renters

By Crystal Leaver on

Florist at shop

When many people think of renters, they likely think first of residential customers. However, there are a large group of commercial renters that utilities have to serve. Small to medium sized businesses (SMBs) who rent can be one of the most challenging segments to reach and engage. The Smart Energy Consumer Collaborative (SECC) recently interviewed SMB renters to better understand their values, motivations, and barriers around energy management. 

Commercial renters select a property mostly for the location, making sure that the size and space meet their individual business needs. Energy usage patterns vary widely according to the business activities. A beauty salon may need to run dryers all day while an office complex has to power servers 24/7. Once a tenant starts a lease, they can be reluctant to leave since the switching costs are often too high. While in a space, most haven’t thought about approaching their landlord to make improvements around energy efficiency. 

Not surprisingly, SMBs are focused on the costs, not the environmental impacts of energy use. Some can be persuaded to implement more sustainability measures if it helps their overall image for employees and customers, perhaps generating more sales or attracting highly skilled staff. Regardless, any energy efficiency or savings offer needs to have a financial incentive for SMB renters. 

Comfort was identified as top of mind for participants when it comes to energy management, even if it results in high energy bills. In fact, many SMBs simply accept that their energy bills will be high. A large part of participants lack basic knowledge about energy efficiency, including the potential benefits for their business, and don’t have the time to do the research. Those that do ask their landlord about making improvements can be denied, even if they volunteer to pay all or half of the cost. 

The research found that demand response programs were not practical for SMB renters because it interrupts business, which tends to happen during peak hours. Participants were not excited about electric vehicle charging stations either because the parking lot is considered the landlord’s responsibility. However, energy audits from their utility were welcomed as they enable SMBs to see options, their benefits, and their costs in one place, and make an informed decision. 

While a challenging segment to reach, there is a big opportunity to reach SMB renters. By educating this segment and giving them personalized, cost-effective recommendations, energy providers can make saving money and energy possible for this segment. Read more about SECC’s SMB Renter Research results here

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