Export opportunity for US energy efficiency?

For a long time the energy efficiency industry operated largely under the two-guys-and-a-truck-model: local businesses made up of small contractors.

Then the ‘super’ energy efficiency service companies (ESCOs) emerged, big operations taking on big contracts often for government, schools or hospitals, like the $35 million deal that Pepco Energy Services signed with the Prince George’s County Maryland Public Schools this week. http://www.pepcoenergy.com/

The US energy efficiency industry has continued to expand. Is it ready, now, to make serious headway exporting goods and services into international markets?

The International Trade Administration seems to think so. Anna Chittum, research associate for the American Council for an Energy Efficiency Economy, says in her blog that the ITA has been seeking comment on a national export strategy for both renewable energy and energy efficiency. http://www.aceee.org/blog.

Part of a federal goal to double exports by 2015, the strategy is due to the Obama administration in September.

What might US energy efficiency companies export?

Possibilities are discussed in the 2010 Energy Industry Assessment, posted on the ITA Energy Team Home page. http://www.ita.doc.gov/td/energy/

The report points out that little export of energy services has occurred so far, although some US companies have established a foothold in international markets, such as Rockwell Automation, Honeywell, and Johnson Controls. But the potential is large for US ESCOs, especially in parts of the world where demand for energy is rising and reliability questionable. China and India are obvious candidates.

Export opportunity also may exist for companies that develop district energy and combined heat and power, according to industry assessment report. China, the Middle East, and India are prime markets.  For example, China plans to invest $360 billion over the next decade in district energy and US companies could capture at least $8.2 billion in sales, the report says. The Middle East is expected to invest $7 billion in district energy over the next decade and $15 billion over 20 years.

Of course, obstacles exist for U.S. companies in these markets. The report points out lack of protection for intellectual property, particularly in India and China, and demands for unconditional guarantees on letters of credit, and in some cases, no cap on economic losses in contract guarantees.

Should the export strategy work, large ESCOs may find a wealth of new prospects. Of course, at home we will still need two-guys-and-a-truck, much like the HVAC contractor (one guy and a truck) who installed the new efficient heat pump in my home — and to whom, I must say, I am deeply grateful when I open my electric bill now and see it has dropped by half.

More information about the ITA’s export strategy is available at this US Department of Commerce page http://www.ita.doc.gov/td/energy/.  Insight into the global energy efficiency market can be found here: http://www.globalbusinessinsights.com/content/rben0238m.pdf.

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