Energy Efficiency Market in California
In a recent half day summit attended by the top researchers and advisors in the energy industry, it was pointed out that commercial or industrial buildings in the United States consume at least 40 percent of the energy used in the country. Experts from the Office of Energy Efficiency and Renewable Energy, the U.S. Green Building Council, and other representatives from some of the big names in the energy industry who attended this summit all agreed that energy efficiency is vital in the nationwide push to conserve energy – and help put the nation back to its feet.
In line with this, most of the states have put forward their own energy efficiency and clean energy policies, creating energy efficiency portfolio standards, and set their individual annual target for energy savings. In California , a big market opportunity is presenting itself to the market, spurred by the state’s Long Term Energy Efficiency Strategic plan which was also adopted by the California Public Utilities Commission. This plan aims to transform the operating standards in businesses, commercial establishments and utilities by incorporating energy efficiency.
Existing Market Outlook and Opportunities in California
2008 was a really bad year for the US economy as gross domestic product slipped below 1%. This brought a tremendous negative implication on major industries resulting to sharp declines in energy consumption per person. This trend was carried over to 2009 where energy consumption per person dropped to 310 million Btu – the lowest rate registered since 1968.
On the Annual Energy Outlook for 2010 however, as reported by the US Energy Information Administration, this year appears to be a better one in terms of energy usage per capita, registering a slight increase in conjunction with the rebounding US economy. The EIA predicted however, that usage will again fall by 2013 not because of the economic situation but would come as a result of higher energy efficiencies brought about by structural changes and new standards for vehicles and lighting.
The energy service industry actually grew by 7% during the 2008 recession periods and continued at an annual growth of 26% which is expected to persist until 2011. While the biggest percentage of this growth came from the MUSH market (municipal/state governments, universities, schools, hospitals), the highest growth rate was registered by the commercial sector.
California ’s long term strategic plan is aimed at achieving energy savings by conducting more energy-efficient structural changes and by changing the mindset of how Californians make use of energy. This presents a big opportunity for the energy efficiency market as the plan tries to eliminate all barriers and transform the market across the state’s economy. Energy efficiency now holds its role as the highest priority among all resources needed to meet the state’s energy needs.
More than 500 individuals and organizations are actively participating in this long term strategic plan, with inputs coming from more than 40 workshops and public meetings. All participants is aiming to transform California ’s energy usage patterns and make energy efficiency a way of life.
Market Outlook for Commercial and Industrial Energy Efficiency beyond 2010
A report from McKinsey and Company stressed the importance of increasing energy efficiency in order to meet future energy demands. Optimizing energy efficiency for the country would yield over $1.2 trillion in terms of gross energy savings with a reduction of energy consumption of up to 9.1 quadrillion Btu. This value would be equivalent to a least 23 percent of the projected energy demand for the coming decade.
In California , the state is adopting four big bold strategies to increase energy efficiency and gain significant savings. The goal is ambitious but it presents a wide range of opportunities for the energy efficiency market and this includes:
  • Zero net energy from residential construction by 2020
  • Zero net energy from commercial construction by 2030
  • Reshaping of the Heating, Ventilation and Air Conditioning (HVAC) industry towards more optimal equipment performance
  • Low-income homes will be energy-efficient by 2020
California was among the top states recognized by the Center for American Progress and Energy Resource Management Corp for making significant headway in state policies that promulgate energy efficiency. The American Council for an Energy-Efficient Economy or ACEEE also identified California as among the best states with an emerging energy efficiency program.
What this further implies is that the construction industry will eventually pull out from its present economic slump, creating more jobs as investments pour in to upgrade residential as well as commercial and industrial office buildings.