federal support for energy efficiency in u.s. industry collaboratively addressing energy management...

FEDERAL SUPPORT FOR ENERGY EFFICIENCY IN

U.S. INDUSTRY

Collaboratively Addressing Energy Management in Small- and Medium-

Sized Manufacturers (SMMs)

What is the Alliance to Save Energy?

The Alliance to Save Energy

Policy Leaders

Environ-mental Groups

Academia

Business Leaders

Mission: To promote energy efficiency

worldwide to achieve a healthier economy, a cleaner environment, and greater energy security.

Organization: Staffed by 60+ professionals 32 years of experience $12 million annual budget Recognized as the premier

energy efficiency organization in the world

Alliance Associates ProgramBusiness ▪ Government ▪ Public Interests

Sponsorship and participation of more than 160 organizations Involvement by businesses in all economic sectors Initiatives underway in research, policy advocacy, education, technology deployment, and

communications

• Direct SMM jobs• Sector supports another 6.8

million service jobs indirectly• Manufacturing multiplier

Effect

Innovation

• 13-14 times more patents per employee

Agility• Nimble production• Mobility around

R&D breakthroughs

• ~350,000 small- and medium-

sized manufacturing (SMM) facilities

(99% of U.S. plants)

• Represent 70% of U.S.

manufacturing jobs (10.2 million)

Economic Engine

Core Benefits of Small Manufacturers

Other Key Benefits of a Healthy Manufacturing Sector

In 2008, manufacturing value-added GDP was valued at $1.63 trillion (11.5% of total)

U.S. competitiveness

Attracting foreign investment“Insourcing”: $153b in 1990>>>$519b in 20041 in 12 American manufacturing professionals are

now employed by a foreign owned firm

Energy

Universal Need for Energy

GHG Emissions—Climate Change

Energy Security

U.S. Competitiveness

Jobs/Domestic Economy

Feedback Loop—Healthy Tax

Base

Energy as a Fundamental Public Interest

Industrial Assessment Center

(IAC) Program

• 26 universities

• Free technical assessments

• Average of $55,000 savings/assessment

• Technical teams >> students & staff—training!

Manufacturing Extension

Partnership (MEP) Program

• 1600 specialists in 392 locations

• Serviced 25,000 SMMs in 2006

• Productivity, training, tech transfer, technical oversight and engineering

Green Suppliers Network

• ‘Lean & Clean’ assessments (~$7,500)

• Supplier Focus

• Deployed through MEP network

• ~3:1 return on investment

Small Business Development Centers

(SBDCs)• 63 lead SBDCs

• Network of additional 1,100 service providers

• Management assistance focus

• New energy audit program & technical assistance for EE tech manufacturers

Key Federal Resources Supporting Industrial Energy Efficiency

“ENERGY” “LEAN” “POLLUTION PREVENTION” “COMPETITIVENESS”

Other Federal Resources

U.S. Department

of Labor

• $500m in training grants for ‘high growth/emerging industries’ under ARRA

• $105m earmarked for advanced manufacturing

• 11 states have received money for proposals that include training in the manufacturing sector

U.S. Department

of Agriculture

• Rural Business Enterprise Program (97.5% of U.S. land considered ‘Rural’)—includes some $$$ specifically for energy efficiency

• Rural Energy for America Program (REAP): loan guarantees/grants for rural SMEs in support of EE or RE projects

• Business & Industry (B&I) Guaranteed Loan Program: covers facility improvements, expansion, equip’t upgrades, pollution control and biofuel production

“RURAL DEVELOPMENT”

“WORKFORCE TRAINING”

Dangers of Programmatic Stovepipes• Federal programs appear disparate

and disjointed

• Competing for Manufacturers’ Time, Attention and $$$

• “The whole is greater than the sum of its parts.”

• Tunnel Vision: “Stepping over a steam leak to investigate material flow.”

• Inefficient Use of Federal Funds

The ChallengeThere are an estimated 350,000 small- and medium sized manufacturing

facilities in the United States, dispersed widely across the nation.

Achieving a Broad Reach:

NIST’s Manufacturing Extension Partnership (MEP) Program

• 392 centers across the nation with more than 1600 field staff

• Located in every state and Puerto Rico

• Relies heavily on technical experts from local engineering/consulting firms

• Serviced nearly 25,000 manufacturers in 2006 alone

IACs Rural Development OfficesEPA P2 Programs

• 26 University-based centers

• 63 lead SBDCs with a network

of over 1100 service

affiliates

• Largely regional EPA offices, state agencies and

SBDCs

• 47 state offices and 800

area/local offices

SBDCs

-Best Practices in Engaging Small Manufacturers-

Leverage Business & Technical Relationships

SMMs

Vendors & Technical Experts

Utilities

State Agencies, Trade Associations,

Non-profits

Lenders/

Financial Institutions

Explore Local Utilities’ Offerings

Challenges Facing UtilitiesEnergy Efficiency Tactics

DSM Programs: Energy Audits, Financial Incentives

Operations & Maintenance (O&M) Training; Technical

Consultation

Rate Incentives for Load Shedding/Shifting Participants

• Energy Efficiency Resources Standards

(EERS)

• Peak Load Reduction

• Emissions Regulations??

• Financial incentives/resources• Fast-tracked permitting• Tax credits• Determines local regulatory environment

Work with Municipalities, State Energy Office and Other State Agencies.

….clean, healthy, profitable manufacturers are a win-win.

• Jobs• Tax base• Attracts new business

Utilize State and Local Agencies & Organizations

ENERGY EFFICIENCY

State & Municipal $$$EECBG

(Energy Efficiency & Conservation Block

Grants)

$3.2B distributed through municipalities; Focus on pollution prevention, energy efficiency and the creation/retention of jobs

State Energy Programs

(SEPs)

Other Industrial EE Funded

Under ARRA

Existing State Incentive Programs

$3.1B in SEP formula grants; State Awards range from $21m-$226m; Industrial EE retrofits1 of 5 high potential programs

• $3.84m going to 11 state agencies• $2.5m going to regional partnerships

• $149.3m to specific industrial EE projects

Includes other grants, loans/loan guarantee programs or access to revolving loan funds; >360 active programs listed in

DOE ITP’s State Incentives and Resource Database

• Lender have little/no in-house energy expertise

• Short ROI requirements—EE investments perceived as high-risk

• Energy savings are not assets, but future cash flows

• Leverage federal offerings (eg: loan guarantees) to limit lenders’ risk

• Include trusted investors in an energy assessment ‘out brief’

• Explain facility operations and company strategy to investors

• Ensure investor understands ‘non-energy benefits’ of energy efficiency projects

Loop-In Local Investors…clearing investment hurdles

Keep SMMs Abreast of Regulatory and Policy Developments

SMMs need lead time to comply with impending legislation/regulation- Ideally, should factor into strategic thinking

and equipment upgrades

Trade associations do not have the reach to touch all SMMs

Assistance navigating regulatory environment provides a real benefit

May be subject to local requirements as well- Can SMM energy savings contribute to EERS

requirements??

Promote Technology Transfer

Many SMMs operate without dedicated energy personnel—no bandwidth to evaluate new technologies

Technical experts are a trusted resourceTechnological capacity to understand/evaluate different technologiesSee lots of plantsAccess to lots of data—hard figures and anecdotal

Develop a Federal/State database(s) cataloguing capabilities and deficits of emerging industrial technologies:

Energy consumption, Functionality, Reliability, Market maturity, Implementation Costs, etc.

Enable Information Exchange Convene energy personnel of similar

(or different) plants- Forum to discuss energy questions,

challenges, strategies

- Sharing engineering expertise—system optimization, project planning, share outside consultants

• Small Manufacturers more inclined to exchange information on a ‘pre-competitive’ basis (?)

• Plant tours can be valuable in seeing new approaches/techniques

• O&M protocols

Involve Owners/Executives Where Possible

• Close the loop in communication between floor staff and front office

• Streamline decision making and project implementation

• Ensure a mutual understanding of technical and fiscal constraints

Develop a Comprehensive Service Offering

Lean Manufacturing Techniques

(MEPs)

Pollution Prevention

(Green Suppliers Network)

Energy Efficiency(IACs)

Strategy/ Profitability

(MEPs, SBDCs)

-Federal Collaboration in Action-

Economy, Energy, Environment

E3(Economy, Energy,

Environment)

Department of Commerce

Environmental Protection Agency

Department of Labor

Department of Energy

Small Business Administration

Capitalizes on core strengths of each agency

Offers a dynamic framework that can be tailored to participating localities

Stretches individual agency investment

Avoids competition among agency programs

Effective delivery of a comprehensive offering

Snapshot of San Antonio E3 Pilot

**Data gathered by U.S. EPA

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($200,000)

($150,000)

($100,000)

($50,000)

$0

$50,000

$100,000

Annual Cost Savings

Company Investment

Simple Payback (years)

2.52

2.05

5.40

1.481.28

4.99

0.56 2.21

1.421.79

Pilot Totals:Total Demand Reduction: 557 kW

Total Annual Energy Reduction: 2,902,454 kWh

Total Annual CO2 Reduction: 1,744 mtCO2

THANK YOU ON BEHALF OF THE ALLIANCE INDUSTRIAL TEAM

Paul Bostrom

Associate, Industrial Team

Pbostrom@ase.org

R. Bruce Lung

Project Manager, Industrial Team

Rlung@ase.org

Jeff Harris

Vice President, Programs

Jharris@ase.org