As much as I dislike many aspects of the current utility rebate ecosystem, I increasingly think it is important to understand why the system works before trying to build out an alternative.
One of the more illuminating conversations I had recently was with someone at Willdan describing how they historically ran Con Edison’s small-to-medium business (SMB) rebate program.
The structure was surprisingly simple.
There were roughly:
20 participating contractors,
10 active contractors,
and ~5 “super active” contractors that drove the majority of throughput.
The contractors themselves:
found customers,
scoped projects,
got customers to yes,
implemented projects,
and pushed paperwork through the system.
Willdan’s role was not really to develop projects.
Their role was to:
make sure Con Ed hit program goals,
make sure contractors were not (egregiously) abusing ratepayer dollars,
and maintain enough leverage over contractors to keep the machine moving.
The leverage came from several places:
rebate dollars flowed through Willdan,
contractors depended on program participation,
rebate funding itself was scarce,
and Con Ed intentionally limited concentration by ensuring no single contractor controlled too much program volume.
This created a world where Willdan could effectively “twist contractors’ arms” because contractors needed access to the program.
Importantly, this system works even though many aspects of it are deeply suboptimal for owners (and policymakers concerned with real market transformation).
The building science logic behind many rebate measures is often weak or distorted. Contractors learn how to game incentive structures. Certain measures become favored because they model well theoretically rather than because they create the best real-world outcomes.
You get situations where:
roof insulation becomes disproportionately incentivized because it saves “on paper”,
oversized heat pumps get installed because they maximize rebates,
lighting packages get optimized for incentives rather than outcomes,
or documentation requirements become so onerous that measures effectively stop getting installed.
And notably:
consultant engineers are barely part of this ecosystem at all.
Because consultants generally lack the business motivation to push projects through a bureaucratic and operationally messy process.
Instead, a strange intermediary layer emerges.
You get companies like Stratco — organizations that are not really contractors in the traditional sense, but instead specialize in navigating the rebate bureaucracy while subcontracting actual field work to others.
In some cases they may capture enormous portions of rebate value simply because they know how to operate inside the system.
For all its flaws, the system works for two core reasons:
Willdan effectively controls access to rebate dollars.
That creates leverage.
2. Contractors Have Strong Economic Motivation To Drive Projects #
Contractors are willing to:
find customers,
develop scopes,
push paperwork,
and close projects,
because doing so directly generates revenue.
But it is not even all contractors who will do this… it is just the subset of contractors who decide to make the investment in the internal resources to deal with the program bullshit. So by definition, owner choice is restricted in many cases.
But it does mean Willdan can largely sit above the system and:
track,
process,
approve,
and pressure participants.
That is an extremely important insight.
Because it clarifies what Wildan is struggling with with the Accelerator.
In an Accelerator context, Willdan does not really have either:
monopoly control over large pools of money,
or a deeply motivated contractor ecosystem naturally pushing projects through.
At the same time, the people inside WES increasingly acknowledge that they themselves cannot actually shepherd projects through execution.
They can:
educate,
coordinate,
track,
triage,
and support.
But they cannot realistically:
run procurements,
own deployment,
manage contractors,
or drive owner decisions to completion.
That has to happen somewhere else in the market.
This creates the billion-dollar strategic question:
how do you orchestrate contractors and deployment infrastructure in a way that is fundamentally more advantageous to owners?
Because if owners are genuinely happy:
owner acquisition becomes easier,
trust compounds,
and owner demand itself becomes leverage over contractors.
That is potentially a radically different model than the current utility ecosystem.
Another important observation:
there are far more owners than contractors.
The traditional utility model works partly because:
a relatively small number of contractors can drive enormous program volume.
But there are actually:
fewer manufacturers than contractors.
And that may matter.
The emergence of more appliance-like technologies is especially interesting here.
Historically, manufacturers depended almost entirely on contractor distribution.
But newer technologies increasingly:
reduce installation complexity,
standardize deployment,
compress labor requirements,
and potentially weaken contractor gatekeeping power.
That creates a different strategic possibility:
what if the deployment system becomes organized around owner outcomes and manufacturer-enabled simplicity rather than contractor-centric workflows?
Willdan does not naturally think this way because they emerged from a world where:
manufacturers sell through contractors,
contractors drive projects,
and utilities manage incentives.
But increasingly appliance-like electrification systems — may point toward a different future.
The more interesting question is:
how do you create leverage over the market in a way that is structurally advantageous to owners?
The current utility ecosystem creates leverage through:
scarcity,
rebate control,
and contractor dependence on incentive dollars.
That system works operationally, but it often produces poor owner outcomes and distorted deployment incentives.
The question for Cadence is whether a different kind of leverage can emerge.
Importantly, the following hypotheses are not mutually exclusive.
They may reinforce one another.
For example:
Daisy Chain could function as an attractive “no regrets” first step,
while also serving as an entry point into larger J-51-enabled electrification pathways.
The core question is:
what kinds of offerings, incentives, and workflows actually motivate owners and market actors to move projects forward?
Hypothesis 1 — Cadence can package a financially compelling enough offer that a large number of decision makers actually say “yes” / pay money for something
Aggregating owners in order to gain leverage over contractors requires giving owners a compelling solution.
One thing that has already effectively been proven over the last 4 years:
free access to a scope-builder platform without consulting support is an “offer owners can easily refuse.”
The emerging hypothesis is that owners may respond much more strongly to:
packaged pathways,
compelling economics,
reduced uncertainty,
and operationally understandable first steps.
Daisy Chain may potentially function as such a wedge.
But importantly:
Daisy Chain alone is probably not enough.
Daisy Chain may potentially function as a first step wedge if the economics that they tout really prove out.
But in this case, we really need to be more than just a connector between Daisy Chain and buildings (otherwise, they are the platform and not us).
I hypothesize that scope builder needs to present Daisy Chain as step 1 in a multi year plan, especially since Daisy Chain, on its own, does nothing for LL97 compliance.
I also believe that there is an opportunity to offer a deeper feasibility study that feeds into a potential managed heat pump procurement if the Daisy Chain electrical sub collects additional data on site and puts it into Momentum.
This is an old idea I have always had that the first contractor to get into a building is well positioned to collect the kind of structured ground truth data that can better inform subsequent steps.
So in this case, Momentum value would come from:
The enhancement of Momentum outputs with non public data collected as part of a process already happening
packaging the economics of Daisy Chain with other measures
contextualizing the opportunity as far as LL97
and framing it as a credible pathway toward future optionality.
This offering also does not need to work for every building.
What level of customer success effort is required?
Does the wedge create follow-on opportunities?
Concrete things Marc will do in the next 60 days: #
Execute transaction fee agreement with Daisy Chain
Execute energy program manager channel agreements with Akam and First Service Energy
Roll up my sleeves with Daisy Chain to figure out how to package our offerings together
Test out sales process with at least 10 building decision makers through both direct and channel sales
Hypothesis 2 — Other sources of money may be a shortcut to build a more optimal ecosystem for owners
The utility ecosystem works largely because it controls money.
That creates leverage.
The question is whether Cadence can create a better owner-aligned version of that dynamic.
The potential J-51 extension is important because:
the amount of economic value potentially unlocked may rival or exceed portions of Con Edison’s multifamily rebate ecosystem.
If J-51 is extended in a meaningful way, there may suddenly be:
enormous pools of economically viable projects,
and enormous owner demand for help accessing that value.
The hypothesis is:
if Cadence and its partners can make it dramatically easier and safer for owners to access J-51 benefits, then Cadence may gain significant deployment leverage.
Importantly:
this leverage would potentially be more aligned with owner outcomes than much of the current rebate ecosystem.
The current utility system often optimizes around:
program rules,
rebate maximization,
and engineering abstractions.
An owner-centered system would instead optimize around:
Can Cadence help create owner pull for appliance-like solutions?
Can OEMs become strategic partners in customer acquisition and deployment?
Can standardized offerings dramatically reduce project-development friction?
Can technologies be bundled into highly understandable owner offers?
Can installation and financing become simple enough to resemble appliance adoption rather than capital projects?
The deeper possibility is:
the future winning deployment models may look less like engineering consulting and more like highly orchestrated product distribution systems built around owner trust, economic clarity, and operational simplicity.
Concrete things Marc will do in the next 60 days: #
Get transaction fee agreements in place with Ephoca, Middea, Gradient, Copper
Support Urban Green on their case studies intended to bring more confidence around deploying packaged heat pumps
Strategy Notebook
As much as I dislike many aspects of the current utility rebate ecosystem, I increasingly think it is important to understand why the system works before trying to build out an alternative.
One of the more illuminating conversations I had recently was with someone at Willdan describing how they historically ran Con Edison’s small-to-medium business (SMB) rebate program.
The structure was surprisingly simple.
There were roughly:
The contractors themselves:
Willdan’s role was not really to develop projects.
Their role was to:
The leverage came from several places:
This created a world where Willdan could effectively “twist contractors’ arms” because contractors needed access to the program.
Importantly, this system works even though many aspects of it are deeply suboptimal for owners (and policymakers concerned with real market transformation).
The building science logic behind many rebate measures is often weak or distorted. Contractors learn how to game incentive structures. Certain measures become favored because they model well theoretically rather than because they create the best real-world outcomes.
You get situations where:
And notably:
Why? #
Because consultants generally lack the business motivation to push projects through a bureaucratic and operationally messy process.
Instead, a strange intermediary layer emerges.
You get companies like Stratco — organizations that are not really contractors in the traditional sense, but instead specialize in navigating the rebate bureaucracy while subcontracting actual field work to others.
In some cases they may capture enormous portions of rebate value simply because they know how to operate inside the system.
For all its flaws, the system works for two core reasons:
1. Willdan Controls Scarce Economic Value #
Willdan effectively controls access to rebate dollars.
That creates leverage.
2. Contractors Have Strong Economic Motivation To Drive Projects #
Contractors are willing to:
because doing so directly generates revenue.
But it is not even all contractors who will do this… it is just the subset of contractors who decide to make the investment in the internal resources to deal with the program bullshit. So by definition, owner choice is restricted in many cases.
But it does mean Willdan can largely sit above the system and:
That is an extremely important insight.
Because it clarifies what Wildan is struggling with with the Accelerator.
In an Accelerator context, Willdan does not really have either:
At the same time, the people inside WES increasingly acknowledge that they themselves cannot actually shepherd projects through execution.
They can:
But they cannot realistically:
That has to happen somewhere else in the market.
This creates the billion-dollar strategic question:
Because if owners are genuinely happy:
That is potentially a radically different model than the current utility ecosystem.
Another important observation:
there are far more owners than contractors.
The traditional utility model works partly because:
But there are actually:
And that may matter.
The emergence of more appliance-like technologies is especially interesting here.
Historically, manufacturers depended almost entirely on contractor distribution.
But newer technologies increasingly:
That creates a different strategic possibility:
Willdan does not naturally think this way because they emerged from a world where:
But increasingly appliance-like electrification systems — may point toward a different future.
The more interesting question is:
The current utility ecosystem creates leverage through:
That system works operationally, but it often produces poor owner outcomes and distorted deployment incentives.
The question for Cadence is whether a different kind of leverage can emerge.
Importantly, the following hypotheses are not mutually exclusive.
They may reinforce one another.
For example:
The core question is:
Hypothesis 1 — Cadence can package a financially compelling enough offer that a large number of decision makers actually say “yes” / pay money for something
Aggregating owners in order to gain leverage over contractors requires giving owners a compelling solution.
One thing that has already effectively been proven over the last 4 years:
The emerging hypothesis is that owners may respond much more strongly to:
Daisy Chain may potentially function as such a wedge.
But importantly:
Daisy Chain may potentially function as a first step wedge if the economics that they tout really prove out.
But in this case, we really need to be more than just a connector between Daisy Chain and buildings (otherwise, they are the platform and not us).
I hypothesize that scope builder needs to present Daisy Chain as step 1 in a multi year plan, especially since Daisy Chain, on its own, does nothing for LL97 compliance.
I also believe that there is an opportunity to offer a deeper feasibility study that feeds into a potential managed heat pump procurement if the Daisy Chain electrical sub collects additional data on site and puts it into Momentum.
This is an old idea I have always had that the first contractor to get into a building is well positioned to collect the kind of structured ground truth data that can better inform subsequent steps.
So in this case, Momentum value would come from:
This offering also does not need to work for every building.
It may only need to work extremely well for:
Initial test: #
Key questions: #
Concrete things Marc will do in the next 60 days: #
Hypothesis 2 — Other sources of money may be a shortcut to build a more optimal ecosystem for owners
The utility ecosystem works largely because it controls money.
That creates leverage.
The question is whether Cadence can create a better owner-aligned version of that dynamic.
The potential J-51 extension is important because:
If J-51 is extended in a meaningful way, there may suddenly be:
The hypothesis is:
Importantly:
The current utility system often optimizes around:
An owner-centered system would instead optimize around:
Key questions: #
Concrete things Marc will do between now and whenever the dust settles on J-51: #
Hypothesis 3 — Appliance-Like Solutions May Create a Significant Disruption Opportunity
There may be far more disruption potential in:
than in bespoke engineering-heavy retrofit pathways.
Historically:
But newer technologies increasingly:
This creates a potentially different strategic landscape.
Questions worth testing: #
The deeper possibility is:
Concrete things Marc will do in the next 60 days: #