Gauging Opportunities for Job Growth in the Energy Efficiency Industry

In a "Energy Efficiency Supply Chain Study" released in October of 2010 the Workforce Development Council focused on understanding where component parts installed during a commercial building retrofit are manufactured; and identified likely opportunities for local job creation.

This study can help inform colleges on what courses to offer students from the trades that are seeking employment in the energy efficiency industry.

Key industry participants, retrofit contractors and component distributors and local firms in the energy efficiency retrofit industry were interviewed for this report.

Results of the report identified some market constraints, solutions to some of those constraints and the potential for growth in the building retrofit industry.

• Demand for energy retrofits is not as robust as other areas of the country because of our comparatively low cost for energy. (Not mentioned in the report was that areas of the country dependent upon coal for electricity also suffer the effects of air and water pollution. Thus health concerns are another motivating factor particularly in the Eastern States.)
• The current economy has deterred investment in building retrofits among private building owners.
• The return on investment for an energy retrofit may be too uncertain or too long for some existing building owners to be motivated enough to invest.
• The Puget Sound region is " at the forefront of energy efficiency services." A number of energy service companies such as McKinstry develop, install and arrange financing for energy efficiency projects greatly contributing to a concentration of expertise in building energy efficiencies.
• Most components involved in a commercial building retrofit are not manufactured in the Puget Sound region, but concentrated in the Midwest, south and eastern US.
• For manufacturers located in Washington State they are able to compete against the larger multinational firms because their markets are oriented around service to the regional and local markets; they have selected market with fewer competitors; and specialize in emerging markets.

Reasons for optimism:

• The market is being driven by federal energy policy, utility companies (It is cheaper to increase conservation of energy than to identify and develop new sources of energy), "rising energy prices, and increasing social responsibility."
• "An American Council for Energy Efficiency Economy report has estimated US spending on energy efficiency technologies and infrastructure will grow from $300 billion tin 2004 to 4600 billion in 2030."
• The biggest push for energy retrofits is occurring in institutional buildings thanks to American Recovery Reinvestment Act funds. Currently spending from ARRA on local retrofits is approaching $118 million. In private buildings it is estimated that in the Seattle downtown core there is a market for 36.5 million.
• Although most of the manufacturing for components used in energy efficiency retrofits are done outside the Puget Sound region "the presence of local firms in the energy efficiency retrofit market has demonstrated that the region can be competitive in specialized, emerging markets, particularly in support of the region's expertise in energy efficiency services."

Puget Sound's Major Competitive Assets:

• Utilities will continue to play a key role in energy policy and the promotion of new efficiency measures
• Local ESCO's represent knowledge and skill base in energy efficiency know-how
• IT/Software clusters are increasingly core competencies in energy efficiency work. As buildings get "smarter", they need more complex and integrated control systems.
• Energy-oriented research centers will be involved in innovation and commercialization
• Quality of life, our region ranks high as a place to live and work
• The Northwest's moderate climate is prime testing ground for building efficiency design and performance monitoring

According to the report there is currently a glut in the workforce of people with manufacturing skills to draw from. However, employers are looking for people who have mechanical training plus other specialized skills. This integrated training and experience is needed to ad electronic control systems to existing building infrastructure. (example someone who knows HVAC and software) Employers are either recruiting outside the region or spending significant resources to train experts.

This represents an opportunity for community colleges to offer training that integrates mechanical experience with electronics so that more people can be hired locally.

To address the issue of uncertain returns the Prosperity Partnership has proposed the creation of an Building Energy-efficiency Testing and Integration Center (BETI) as part of their Metropolitan Business Planning process. "BETI is designed to catalyze innovation in the system integration area by providing an arena for the testing and demonstration of new products so they can be introduced to the marketplace."

By working collaboratively with companies such as McKinstry Innovation Center to develop and grow local firms in the energy efficiency industry Puget Sound could become a market leader.

It is estimated that the building controls market could reach $7 billion in 2020 creating between 25,000 to 50,000 jobs in the industry. Depending upon how successful the BETI program is Puget Sound could dominate the market.

Industry experts interviewed thought this segment of the energy efficiency industry would need general skills in

• Engineering
• Software and programming
• Building design
• Energy auditing
• More specialized skills in the installation building controls and component system optimization
• Technical expertise to support product operation

The final paragraph in the report concludes that those firms working in innovations to the systems integration/building performance area will be the first to benefit from economic development in the industry. Building solution oriented innovations will create demand in retrofit construction projects where trades such as plumbers, electricians, metal workers are employed.