Market Segments

Financing programs are not one-size-fits-all — different financial products will work better for different market segments. Markets you might consider serving include the following:


The residential market includes both owner occupied and rented homes and apartments. This market has two main needs:

  1. Quick replacement of large items like heating and cooling systems.
  2. Comprehensive home performance retrofits that add insulation and seal leaks in addition to often replacing inefficient heating and cooling equipment, repairing or replacing duct work, and adding solar PV, solar thermal, or a heat pump.

In the first case, the program should focus on "up-selling" customers to a more efficient system than they would have purchased otherwise. In the second case, the goal is to encourage as many energy-saving improvements as possible. When working in the residential market it is important to act in accordance with consumer lending laws, which vary by state.

Small Business

The small business market includes small retail establishments and small offices. Small businesses often lease their space and the property and can have high turnover. Small business programs tend to focus on improvements with short pay backs (under 5 years) such as lighting retrofits, plug load management, and some basic building weatherization. The small business programs that have been most successful are called "direct install" programs, in which the program sponsor, usually the local utility, provides a package of audit, installation and financing services to the customer. This "one-stop" service package is usually made more attractive with incentives or rebates.


The commercial market mostly consists of large office buildings and large retail spaces. These spaces can benefit from a variety of improvements, from lighting upgrades to re-commissioning (calibrating and repairing existing systems) to comprehensive upgrades of HVAC (heating, ventilation, and air conditioning) systems, and energy management technology.


The municipal/state, university, school, and hospital (MUSH) markets have similar retrofit opportunities as the commercial market. However, they are often limited in their access to capital and often use Energy Savings Performance Contracts (ESPC) to implement their projects. In an ESPC, an energy service company (ESCO) provides a turnkey service to develop and deliver the retrofits and to arrange the project financing. The capital cost of the retrofits is repaid from savings over a relatively long (10 to15 year) contract term. Project capital is provided by a variety of sources, including utility incentives, public or utility revolving loan funds, bonds, bank loans, and leases. We offer a guide for using ESPCs with this market, though it can be applied more broadly to the commercial market as well.

Market Segments