One Third of Major U.S. Businesses Show Interest in Generating Their Own Electricity, According to New Market Survey

Latest RKS Study Finds Increasing Energy Use by Leading Corporations, Plus Need for Steady, Reliable Power Supply, Driving Business Interest; “Green” Enterprises Emerge as Viable Niche Market

NORTH SALEM, N.Y. — Amid increasing concerns about energy deregulation, the adequacy of the national power grid, and rising costs of doing business, significant numbers of American enterprises show interest in generating their own electricity, according to a new national survey. These companies, selected from a sample of energy-intensive industries, report they are using much more electricity to power their businesses than five years ago, and three quarters say their need for steady and reliable supplies of power is more important today than ever before. For these reasons, more than a third of businesses surveyed — 34 percent — now express interest in generating their own electricity, either to replace or supplement the supply of power delivered by their current energy provider. Further, the survey confirms that the field is wide open for new entrants; indeed, eight out of 10 businesses say it doesn’t matter which company provides their electricity, as long as the power supply is steady and reliable. In terms of strategy, respondents express a clear preference for outsourced generation solutions over buying or leasing their own equipment, a finding that gives an edge to suppliers with the ability to offer a packaged product including financing, installation, and service. Moreover, the same survey finds that protecting against power interruptions is exacting a financial toll on U.S. business. For example, a significant 30 percent of the firms say they have purchased insurance to protect against business interruptions related to power outages. More than a third of the selected businesses — 34 percent — claim they have suffered financial losses because of power problems. In addition, half of the companies surveyed already own or lease backup generating equipment, and nearly a quarter of these users are considering expansion or upgrades. Half of the businesses surveyed — 51 percent — believe that self-generation is the best strategy for meeting their growing electricity needs. By contrast, energy conservation programs and new power plant construction are favored by less than 25 percent of the companies in the national study. At the same time, the survey finds that two thirds of U.S. companies address environmental protection in their mission statements; these “green” enterprises are measurably more independent and less cost-conscious than other companies, and may represent a promising niche market for distributed technologies, the survey’s authors assert. These results are part of the year 2000 Distributed Generation business market assessment performed by RKS Research & Consulting, a nationwide market research and public opinion polling firm based in North Salem, N.Y. In all, RKS completed telephone interviews with 831 energy-decision makers in eight separate industries across the U.S. — from agriculture and food processing to manufacturing, lodging and high-tech. The segments were selected because of their experience with and potential interest in on-site generation. “From the findings, it’s clear that electricity — its availability, quality and cost — is a growing source of concern for businesses as they struggle with expenses and their competitive position,” said David J. Reichman, RKS president. “The data also suggests that the time is right to begin educating these customers and developing new strategies for deploying distributed generation as a solution that appeals to the dual desires for environmental benefits and energy independence.” More than three quarters of the companies surveyed — 76 percent — say their energy use has increased over the last five years. More important, a similar proportion of respondents — 78 percent — report their need for stable and reliable power has increased and continues to grow. This need is felt most critically in three network-intensive industry segments — communications (telephone and cable television providers), pharmaceutical manufacturing, and financial services (banks, investment brokerage and insurance data centers). The distinctive “green” market that emerges among some business customers bears close attention, RKS points out. For example, three quarters of the companies that include environmental stewardship in their mission statements express a preference for electricity generated from renewable resources. Nearly six in ten of these firms — 58 percent — express interest in generating their own electricity in order to reduce demand. The business customers surveyed by RKS show measurable interest in three generating technologies: fuel cells, reciprocating engines and microturbines. Respondents rate reliability, costs, and energy independence as critical factors in assessing the technology options, according to the RKS analysis. And these same customers would turn first to their local gas supplier — not the electric utility or the equipment manufacturer — for service and support. “The surprisingly strong environmental ethic articulated by so many businesses suggests that distributed generation can be packaged and marketed positively as a `green’ technology rather than a simple defense against power quality and reliability issues,” Reichman said. “This creates a challenge for the incumbent power suppliers serving these companies: will these providers be seen as the source of the solution, or part of the power problem?”