Many U.S. Companies Want to Generate Their Own Electricity

A significant numbers of U.S enterprises are interested in generating their own electricity to address their increasing concerns about energy deregulation, the adequacy of the national power grid and the rising costs of doing business, according to a new survey.

NORTH SALEM, New York – Companies in energy-intensive industries 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, according to the survey by RKS Research & Consulting. For these reasons, more than one third of companies expressed interest in generating their own electricity, either to replace or supplement the supply of power delivered by their current energy provider. Half the businesses believe that self-generation is the best strategy for meeting their growing electricity needs, while less than one quater favour energy conservation programs and new power plant construction. The survey also finds that two thirds of U.S. companies address environmental protection in their mission statements and 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 distinctive green market bears close attention, notes RKS. Three quarters of 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 express interest in generating their own electricity in order to reduce demand. “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,” says RKS president David Reichman. “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.” “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,” adds Reichman. “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?” Th ‘2000 Distributed Generation’ assessment covered both residential and commercial sectors. The North Salem research company interviewed 831 energy-decision makers in eight industries 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. In its survey of residential users, RKS found that a discernible market is emerging among upscale households, where nearly one third expressed interest in generating their own power on site. The 838 homes with annual income above $50,000 report increasing frequency of electrical interruptions and power fluctuations that required the resetting of home appliances and equipment. The RKS survey found a strong correlation between environmental consciousness and interest in on-site power. Three quarters of the affluent households advocate the use of renewable resources to produce electricity while six in ten favor self-generation of power, compared to only a 20 percent level of support for building new central power plants. The survey confirms that the field is wide open for new entrants, with eight of ten respondents saying that it does not matter which company provides their electricity, as long as the supply is steady and reliable. Respondents expressed 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. Businesses show measurable interest in three generating technologies: fuel cells, reciprocating engines and microturbines. Respondents rated reliability, costs, and energy independence as critical factors in assessing technology options, and the same customers would turn first to their local gas supplier for service and support, not their electric utility or equipment manufacturer. Thirty percent of survey respondents say they have purchased insurance to protect against business interruptions related to power outages. More than one third claim to have suffered financial losses because of power problems and half already own or lease backup generating equipment. RKS has conducted surveys for 27 years.

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