Energy efficiency terms

The Top 18 Energy Terms People Don't Understand

By Megan Porter

Terms like “energy efficiency,” “green business” and “sustainability practices” get thrown around a lot these days. But their actual meaning, importance and how to implement them in a business can be much harder to nail down.

What makes a lack of understanding of energy management terms so unfortunate is that without comprehension, business owners are less likely to take part in available programs and/or begin habits that lead to massive savings. That means businesses are losing hundreds or even thousands of dollars a year to waste and inefficiency, while also creating a less desirable, unsustainable environment. By understanding key energy terms, California business owners will be empowered to successfully take on their own energy efficiency projects.

Utility glossary for business owners and managers
The following utility glossary is intended to make some of the more commonly used energy management terms a little more accessible for business owners and managers. The terms are sorted by category and will help to make the world of energy an easier one to navigate for those interested in building a more efficient business (and saving money at the same time).

Energy efficiency terms:

  • Air sealing: Often the most cost-effective way to improve energy efficiency. Contractors identify any leakages both before and after any sealing is performed. Based on air leakage readings, contractors use caulk, insulation, foam and other products to limit leakage.
  • Retro-commissioning: (RCx) is a systematic process for identifying less-than-optimal performance in your facility’s equipment, lighting and control systems and making the necessary adjustments. While retrofitting involves replacing outdated equipment, RCx focuses on improving the efficiency of what’s already in place.
  • Economizer: An HVAC (heating, ventilation and air conditioning) component that uses outside air to reduce the need for mechanical cooling. It does this by utilizing outside air to cool a building’s interior when outside air is cooler than the air inside the building.
  • Energy management system (EMS): A system of computer-aided tools designed to help building owners and managers monitor, control and optimize the performance of the power generation and/or transmission system.
  • LED (light-emitting diode): The latest in energy efficient light bulbs and fixtures, LEDs are semiconductor devices that produce light when an electrical current pass through them. They are far more efficient than incandescent bulbs, produce less heat while lighting, easily adapt to dimmers and other lighting controls, and come in a variety of colors.
  • Retrofit: The act of adding a component to a building or system that it did not originally have. In the case of energy efficiency, retrofitting usually refers to work done on lighting or HVAC systems that improves efficiency and reduces long-term utility costs.
  • Split system: A two-component air conditioning or heat pump system. The condensing unit is outside and the air handling unit is inside. The two work together to improve heating and/or cooling more efficiently.

Demand Response/Energy Rates:

  • Base load: The average amount of electric power that a utility company must supply at a given time.
  • Demand: The amount of electricity that utility customers are using, or trying to use, at one time.
  • Demand response programs: Incentive-based programs that encourage utility customers to temporarily reduce their demand for power at certain, often peak demand times, in exchange for reduced utility bills.
  • Load management: Activities undertaken by a utility company that are designed to influence the timing and amount of electricity customers may use.
  • Off-peak: Times when there is low demand for electricity (i.e. at night or early morning).
  • Real-time pricing: Pricing determined by utilities based on conditions at the time of pricing (or within 24 hours of the time of pricing). When combined with efficient modern technologies like smart thermostats, real-time pricing can lead to significant energy and cost savings.

Renewable energy:

  • Biodiesel: A fuel made from vegetable oils, animal fats or recycled grease that can be used instead of petroleum-derived fuel.
  • Fuel cell: A generating technology that uses hydrogen (typically formed from natural gas) to produce electrical energy.
  • Geothermal energy: Energy that comes from hot water or steam that is extracted from the Earth’s crust. It can be used to operate geothermal heat pumps, to heat water, and to generate electricity.
  • Solar water heating: This term comprises various technologies that convert sunlight into renewable energy that heats water using a solar thermal collector.
  • Other forms of renewable energy: Other forms of renewable energy that are growing in popularity include wind power, ocean thermal energy, wave power and tidal energy.

These basic and not-so-basic energy terms and technologies can be used as a basis to learn more about energy efficiency and how it can be used by businesses to reduce energy usage and associated financial costs. Download PG&E’s free eBook, “20 Sustainable Products,” to discover effective ways businesses can learn to save money and energy.


  1. Conservation Services Group
  2. Pacific Gas and Electric Company

The Top 18 Energy Terms People Don't Understand
  • SMB Blog Author
    Megan Porter
    Senior Program Marketing Manager at PG&E, is a recognized leader in solutions marketing for small and medium-sized businesses. Megan uses her proven and practical expertise to bring energy efficiency education to businesses in every industry. In this vital role, she develops and oversees highly successful initiatives that result in the adoption of more efficient long-term energy management behaviors.

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