What is Market Transformation?

Market transformation is a proven strategic process of intervening in a market to create lasting change. In the context of CalMTA’s work, these changes work to deliver cost-effective energy efficiency and support California’s other goals on greenhouse gas (GHG) reduction, workforce development, and equity. 

 

The purpose of market transformation programs is to accelerate diffusion — or market share — of the desired energy-efficient technology or practice. Diffusion is the process by which market adoption spreads over time across consumer groups of innovators and early adopters to a tipping point of acceptance. The diffusion of innovation curve that illustrates this concept (see graph above) was developed by E.M. Rogers.

By reducing barriers to the adoption of specific energy-efficient technologies or practices and capitalizing on market opportunities, a market transformation approach can yield measurable benefits that remain long after active market interventions have ended.

Anatomy of an MTI

Market Transformation Theory Illustration

The process of developing a market transformation initiative (MTI) begins with identifying the market opportunity and context for an energy efficiency technology or practice that is well-suited for a market-level intervention that will result in transformative change. We look for structural barriers preventing growth in market share to help identify market interventions that will have large-scale, long-term impact.

The CalMTA team refines the product or practice definition to target the specific technology or behavioral attributes that will be most responsive to strategic interventions and yield the highest-value benefits. Clearly defining the MTI target market allows us to focus on segments with the greatest potential for leverage and influence. Based on this refinement, we can then understand the opportunities for market adoption and a growth trajectory.

A market characterization informs development of a market transformation theory, which guides the MTI’s development and implementation, and centers on a logic model: a systemic and visual presentation of specific barriers and opportunities and how strategic interventions in the market would affect sustained change.

We also seek to exploit leverage at key points to create the changes that will allow the targeted product or practice to become a regular or even preferred offering. Leverage points can include incentives offered by other programs, motivated market actors, voluntary regulatory requirements, or product ratings such as the ENERGY STAR® label. MT theory also maps out the potential for market diffusion (increase in market adoption) and a mechanism for longevity of market changes.

As the MTI is deployed in the market and we begin to see the expected outcomes and benefits realized, we track our progress through independent third-party evaluation against established market progress indicators (MPIs). An adaptive management process allows us to respond to ongoing changes in the market landscape, the product or practice, and the target market, as well as what we learn through our metrics and data.

Evaluation findings also help us determine when barriers have been removed or reduced enough that the market will continue to transform without further intervention — in some cases, with the targeted technology or practice locked in as a code or standard. At that point, the MTI reaches its end state.

See MTIs under development

CalMTA currently has seven market transformation ideas moving through the market transformation initiative (MTI) development process. These ideas have high potential to create market-level change that drives adoption of products and practices that deliver lasting, cost-effective efficiency. Two of the ideas have full MTI Plans that are pending approval from the California Public Utilities Commission (CPUC).

Learn more about our work

CalMTA ‘s market transformation initiatives aim to help California achieve its climate goals for energy efficiency, decarbonization, workforce development, and equity.

An equity lens

CalMTA recognizes the historical inequities of efficiency investment and is using an equity lens in our approach to developing a market transformation portfolio for California that delivers benefits to environmental and social justice communities.

Want to learn more about Market Transformation?

The California Market Transformation Administrator (CalMTA) develops and manages market transformation initiatives in the state to reduce energy use and reduce greenhouse gas (GHG) emissions.

CalMTA seeks to help meet California’s energy efficiency and decarbonization goals by accelerating adoption of energy-efficient products and practices through market transformation. Market transformation is a proven strategic process of intervening in a market to create lasting change.
Young Korean female chef working in restaurant kitchen

CalMTA follows a rigorous process for reviewing, scoring, and then developing relevant, timely market transformation initiatives. The process supports market transformation initiative creation from concept to program development to market deployment, as well as the eventual exiting of the market.

The Market Transformation Advisory Board (MTAB) provides expertise and unbiased, non-binding recommendations on CalMTA’s market transformation initiatives. Register here for an upcoming advisory board meeting.
Learn more about CalMTA’s planning and research on energy efficient technologies and our work to build California’s market transformation portfolio, and access quarterly and annual progress reports.
Want to learn more? Join our mailing list to stay informed about upcoming meetings and events, RFI and RFP announcements, and more.  

Subscribe

Name(Required)

Get in touch

We welcome your questions and suggestions.

Have questions or comments about CalMTA?
Use our contact form to connect with us, or reach out to:

CalMTA

Resource Innovations
719 Main Street, Suite A

Half Moon Bay, CA, 94019

(888) 217-0217

Contact Us

Name(Required)

All Advisory Board meetings are open for public comment. If you’re unable to share your thoughts during an MTAB meeting, access our comment form to to provide your opinion.

Subscribe

Want to learn more? Sign up for our mailing list to receive twice-monthly updates about upcoming events, including Advisory Board meetings, informational webinars, important RFI deadlines, and more.

Subscribe

Name(Required)