Addressing the needs of small to medium-sized manufacturers

Barbara Vergetis Lundin writes on the FierceEnergy website about the role that the manufacturing sector plays in energy efficiency in the US.

Manufacturing key industry for energy efficiency programs

The manufacturing sector, which accounts for about one-third of the energy consumed in the United States, is increasingly relying on generating energy savings to meet efficiency targets set by states and energy utilities, and more energy efficiency programs are beginning to address the needs facing small to medium-sized manufacturers (SMM), according to a new report from the American Council for an Energy-Efficient Economy (ACEEE).

SMM make up about 90 percent of manufacturing establishments and use about 50 percent of the energy consumed by industry, according to ACEEE. Despite using less energy at a given facility than their larger counterparts, SMM are good targets for energy efficiency programs. Not only do they pay higher prices for energy and are less likely to have dedicated onsite energy managers, but smaller energy savings projects tend to save a higher percentage of total consumption.

Despite their candidacy, there are barriers, including a lack of staff resources, capital constraints, and a dearth of expert information on energy efficiency opportunities, as the ACEEE research points out.

To overcome some of these barriers, energy efficiency programs offer SMM a suite of program models, including energy audits, prescriptive rebates that provide low-hassle incentives for common measures, custom rebates to provide incentives for more complex or unique measures, and workshops and informational materials to help manufacturers build internal capacity for identifying energy efficiency opportunities.

A key to successful energy efficiency programs is reaching out to and developing relationships with customers. This is true for all manufacturing, but it is particularly challenging when trying to reach a large number of smaller facilities. ACEEE recommends reaching out through trade allies and partnering with existing organizations like local manufacturing trade associations, industrial assessment centers, manufacturing extension partnerships and state energy or economic development offices. In many cases, trade allies already have relationships with SMM based on goods and services they have provided in the past.

Another opportunity for energy efficiency programs targeting SMM is to help secure financing for projects. Promising strategies include on-bill financing, in which the utility provides financing and customers pay for it through their energy bills, and Property Assessed Clean Energy (PACE) programs, in which energy efficiency projects are supported through a property tax assessment. These tools reduce the upfront cost of energy efficiency improvements, a crucial barrier to SMM.

Finally, efficiency programs can leverage existing resources such as state and federal tax credits. One often overlooked group of resources are the programs run through the United States Department of Agriculture, including the Rural Energy for America Program (REAP), the Business and Industry Guaranteed Loan Program, and the Rural Business Enterprise Grant Program.