By Graham Richard
Energy is a highly regulated industry, at both the state and national level. But which is more important for growth: policy actions or market dynamics? For the advanced energy industry, the two are intertwined, and the economic impact is powerful.
At just under $200 billion in revenue, advanced energy is now bigger than the U.S. airline industry, equal to the pharmaceutical industry, and nearly as large as consumer electronics. In 2014, the U.S. market for advanced energy products and services grew 14 percent, five times as fast as the economy overall. Growth was strong across market segments like energy efficiency, demand response, renewable energy, and electric and natural gas vehicles. (These are some of the findings in Advanced Energy Now 2015 Market Report, Advanced Energy Economy's third annual market analysis, containing four years of revenue.)
Looking across the market and policy landscape, I see five drivers of market growth for advanced energy companies, now and into the future:
For reducing carbon emissions from the electric power sector, advanced energy is the answer. Energy efficiency and demand response: low-emission natural gas generation; zero-emission renewable energy; advanced grid technologies and energy storage. These are the measures states can use to meet EPA standards and modernize their electric power systems for the 21st century.
Over 23 percent of the wind power contracts signed in 2014 were with corporate buyers and other non-utility groups, including universities, military installations and units of government. These contracts between wind developers and commercial and industrial companies, governmental agencies, and educational institutions totaled more than 1,700 megawatts in 2014.
In California, Gov. Jerry Brown has proposed a bold set of new goals: 50 percent renewable energy, 50 percent more efficient buildings and 50 percent less use of petroleum by 2030. New York is taking a leadership position in utility regulatory and business model reform, with its Reforming the Energy Vision proceeding before the Public Service Commission. North Carolina is a leader in solar power, and Arkansas is making strides in energy efficiency – and building an industry. Many other states are stepping up, setting goals, and creating a prosperous economy powered by secure, clean and affordable energy.
More than 1,000 mayors across the country have set specific goals for sustainability and carbon reduction in their cities. Mayors are also leading the way in applying advanced information and communication technology to their infrastructure – water as well as energy. This is the smart cities movement, and it’s taking hold in cities from San Antonio to Pittsburgh. Navigant Research estimates that investment in smart city technology infrastructure will total $108 billion in this decade.
California has more than 431,000 advanced energy jobs – 2.4 percent of the state’s workforce, half as many as are employed in the state’s marquee motion picture, radio and television sector. With employers reporting plans to hire at a 17 percent clip in the coming year, California is well on its way to more than half a million people doing advanced energy work. With 88,000 advanced energy workers, Massachusetts matches California in the percentage of its workforce involved in advanced energy. Advanced energy employment in the Bay State has grown 47 percent since 2010. Illinois just topped 100,000 clean energy jobs, up nearly 8 percent from the year before.
These are the key forces that make the future bright for advanced energy companies, and for an economy based on energy that is secure, clean and affordable. With these drivers already in motion, we’re looking at a prosperous future powered by advanced energy.
Image credit: Pixabay/skeeze
Graham Richard is CEO of Advanced Energy Economy, a national business association.