Keep an Eye on Virginia: State Group Positions to Transform Energy Efficiency Market

March 31, 2014
Virginia may be a lowly 36 in a national state-by-state ranking for energy efficiency, but a new report shows that the state could soon change its stars.

It’s my home state so I’ll admit it, Virginia is no Massachusetts* when it comes to energy efficiency. The southeast state ranked a lowly 36 in the 2013 scorecard by the American Council for an Energy-Efficient Economy.

But change is afoot here, as evidenced by the first-ever energy efficiency census report released today by the Virginia Energy Efficiency Council.

“We’re not as sexy as solar or wind turbines or as well recognized as power plants, but this report confirms that energy efficiency is a critical part of the Commonwealth’s energy mix,” said Bill Greenleaf, a member of the VAEEC governance board.

This is the first-time Virginia’s energy efficiency industry has spoken in one voice to influence state policy and law. The report documents the role energy efficiency plays in Virginia’s economy, and proposes a path to avert at least some of the new power plants likely to be built here. Virginia will need more than 7,000 MW of new electricity capacity by 2020, the equivalent of 3 ½ North Anna nuclear plants.

Conservative estimates by VAEEC indicate that energy efficiency is a $289 million industry in Virginia, employing 9,400 people. The findings likely understate the market because of the limited number of companies that responded to the survey – largely those in building science and energy efficiency implementation.

Missing are insulation and HVAC companies that do not perceive themselves to be in the energy efficiency business, so did not respond. This occurred despite the fact that a single HVAC business might employ “hundreds of workers as installers, service technicians, estimators, and salespeople for high efficiency heating and cooling products,” the report said.

Thus, VAEEC estimates that only 25 percent of the state’s energy efficiency companies responded to the survey. So industry revenue is likely to be two to three times higher than the reported $289 million. The organization plans to work on encouraging the missing companies to participate in future census undertakings.

What’s ahead

Since 2000, the energy efficiency business has grown by 191 percent in Virginia, largely in the building sciences, the report said. Enormous opportunity exists for growth. Trane estimates that $1 billion in performance contracting opportunities remain, following a $550 million run of projects from 2001-2012.

Further, Virginia’s government has set a goal to reduce electricity use 10 percent by 2022 (over 2006 levels). The largest utility Dominion Virginia Power expects to reduce electricity use by 5.1 percent. That leaves 4.9 percent on the table¸ says the report.

Virginia also is home to an innovative effort to build a virtual power plant. See an update on the project here.

The energy efficiency industry offers true value to the state because the work remains local. Retrofitting buildings can’t be outsourced to a foreign country.

“More than three-quarters (78 percent) of the energy efficiency/ building sciences companies serve their local markets within 100 miles of their offices. An additional 32 percent serve regional markets,” the report said.

VAEEC laid out a series of recommendations, among them formation of a gubernatorial commission that would come up with practical strategies to reach the state’s 10 percent energy savings goal. The three-year-old group also called for:

  • More state support for the residential Home Performance with Energy Star program
  • Creation of a statewide commercial PACE (Property Assessed Clean Energy) program for nonresidential buildings
  • Expanded performance contracting in state-owned buildings
  • Adoption of IECC 2012 building code for new residential construction without revisions

“These recommendations represent the first time policymakers and regulators have heard the collective voice of the energy efficiency industry,” Greenleaf said. “We’ve outlined specific ways we can further bolster the industry, spur economic growth and meet our energy demands.”

The report is part of a larger four-state effort to gauge the clean energy market in the Southeast. The region has been seen as an industry laggard, especially when compared with areas like the Northeast and West Coast.  But recently the Southeast has taken several steps to boost its clean energy sector.

Virginia was the only state to focus its data gathering almost solely on the energy efficiency industry. The other states – North Carolina, South Carolina and Georgia – looked closely at renewable energy, as well. The Southeast Clean Energy Industry Census estimated regional clean energy revenue of $7.5 billion annually, based on self-reported data of 1,283 companies.

The Virginia Energy Efficiency Industry Census is available here and The Southeast Clean Energy Industry Census  here.

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*ACEEE has named Massachusetts No#1 state for three years running in the organization’s highly regarded annual scorecard that evaluates energy efficiency policy state-by-state.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

Twitter: @ElisaWood

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