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The recent executive order signed by Trump, titled “Unleashing American Energy,” aims to boost domestic energy production and reduce regulatory constraints. But the energy sector was already on a roll long before Trump, with returns between 2021 and 2024 averaging 45% compared to the previous period, 2017 to 2020, which showed returns of -10%, according to S&P Global. What changed?

American utility companies have, since the late 1970s, been encouraged to actively promote energy conservation and help customers consume less energy, with significant policy pushes occurring in the 1990s through deregulation and environmental concerns leading to increased focus on energy efficiency programs and customer education. Why would a company that is in business to sell more want to teach customers to buy less?

U.S. utility companies have historically agreed to government policies aimed at reducing energy consumption for several reasons:

Incentives and Regulatory Pressure: Government policies often include financial incentives, such as tax credits or subsidies, that make compliance with energy saving goals more attractive. Additionally, regulatory frameworks (like the Clean Power Plan or state-level renewable energy mandates) require utilities to meet certain energy efficiency or renewable energy targets. Non-compliance can result in fines or loss of access to government support.

Cost Efficiency: Reducing energy consumption through energy efficiency programs or demand-side management can be more cost-effective for utilities than expanding energy generation capacity. This helps reduce infrastructure investments in new power plants or grid expansion, leading to lower operating costs in the long term.

Long-Term Financial Viability: Climate change poses a long-term risk to the stability of energy markets. By participating in policies aimed at reducing energy consumption and mitigating climate impacts, utility companies help ensure the long-term sustainability of their business and the energy systems they operate within.

Reducing Carbon Emissions, Not Energy Consumption

Many utilities are now diversifying their revenue streams and transitioning from mere electricity providers to comprehensive energy service companies. Some are even marketing and selling solar panels, partnering with local installers, and offering energy-efficient products like LED lights and smart thermostats.

But, since you can’t grow your core business without growing your core business, over the past few years the utilities have been successful in changing the focus from reduction in energy consumption to instead talking about reducing carbon emissions. This does not mean selling less electricity, but rather encouraging a wider adoption of how it is used, e.g., to power an electric car; in other words, decarbonization without limiting growth.

Austin Energy, TX offers up to $1,200 to consumers that install an EV charger; Holy Cross Energy, CO gives customers up to $250 for each kW of battery capacity they add to their solar setup; and New York Electric and Gas, offers business customers refunds of up to 100% of all costs required to upgrade their electrical infrastructure.

However, as Mike Specian from the American Council for an Energy-Efficient Economy (ACEEE) points out, while many utilities have embraced decarbonization commitments, not all have translated these corporate goals into robust energy efficiency programs.

Powering On More Efficiently

While Trump’s recent executive orders have frozen funds from major clean energy initiatives like the Inflation Reduction Act, Specian remains optimistic. He notes that many incentives for energy efficiency are administered at the state and utility level, ensuring the transition continues despite federal rollbacks. Jennifer Garber, spokesperson for Duke Energy in North Carolina, appreciates the president’s focus on new power generation, and Ryan Lowry, spokesperson for DTE Energy in Michigan, explained that they recently demolished their Trenton Channel coal-fired power plant and in its place are building a 220 MW battery energy storage center.

Shifting the focus from only reducing energy consumption to reducing carbon emissions is often better for utility companies because it aligns with evolving environmental, economic and technological realities. Here’s why this shift is advantageous:

Economic Opportunity: Reducing carbon emissions through renewable energy adoption, electrification and clean technologies creates new business opportunities without requiring utilities to limit growth or profitability.

Avoiding Overinvestment: Overemphasizing energy reduction can lead to diminishing returns. It’s often more cost-effective to decarbonize energy production than to continue reducing consumption aggressively.

Grid Modernization: Utilities can focus on building smart grids, integrating renewables, and deploying battery storage to ensure that increased demand for electricity is met with clean energy.

In sum, the energy sector’s evolution from only conservation to also considering decarbonization while increasing production represents both a business opportunity and a strategic imperative.

For more on the future of energy consumption, check out: Five Environmental Startups Leading The Way In 2025.

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