Briefing Summary: State-Utility Partnerships

Sept. 22, 2010 — Partnerships between American manufacturers and federal, state and regional stakeholders are essential to achieving widespread implementation of energy efficiency in the industrial sector.

Subject experts speaking at “Engaging American Manufacturers,” the latest Capitol Hill briefing in the Alliance Efficient Enterprises series, provided insights into how such partnerships advance energy efficiency throughout the U.S. industrial sector.

Energy Offices and Industrial Companies: Building Relationships State by State

According to David Terry, Executive Director of the National Association of State Energy Officials (NASEO), a growing number of state energy offices are collaborating with local industrial companies.

State programs are constantly evolving to keep pace with various energy-related developments in public policy, regulatory obligations and funding opportunities.  NASEO helps state energy offices maintain current, useful resources. While noting the good work of the U.S. Department of Energy, regional organizations, states, universities, and the nonprofit community, Terry believes the coordination of available resources can improve on reducing redundancies and maximizing support of the industrial sector.

Utilities and Industrial Customers—Creating Energy Efficiency Programs of Value

Providing a more administrative perspective, Greg White, Commissioner of the Michigan Public Service Commission, discussed Michigan’s policy activity spurring development and deployment of renewable energy and energy efficiency.

White discussed the impacts of the recent recession, including the flurry of industrial efficiency improvements that came about as a means to capture energy cost savings. He also lauded a revolving loan fund for Michigan’s small manufacturers that was created by a reinvigorated state energy office.

White called on utilities to encourage their industrial customers to improve energy efficiency in their facilities. For instance, White suggested that utilities grow and promote energy efficiency programs and offerings for their industrial customers so they won’t need to build new power plants.

Addressing Barriers to Initial Investments

Among the “gold standard” of state-level industrial efficiency programs is Wisconsin’s Focus On Energy. John Nicol, Industrial Program Manager for Focus On Energy, discussed their approach to partnering with manufacturers in Wisconsin.

Nicol explained that working with the industrial community is challenging because of the wide diversity in operations, but he noted that efficiency outcomes tend to be highly cost-effective. Nichol also highlighted some barriers to improving energy efficiency such as limited access to capital, low ROI and perceived production risks.

To overcome these barriers, Focus On Energy uses tools and financial incentives that reduce the simple payback periods on many projects to clear companies’ internal hurdle rates. This significantly increases the likelihood of project implementation. In addition, Focus On Energy works with utilities, trade associations, the Wisconsin Manufacturing Extension Partnership, the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy (DOE) to leverage resources for maximum energy efficiency improvements.

Since 2001, Focus On Energy has enabled industrial plants in Wisconsin to save 484,000 MWh and 37 million therms of natural gas annually.

3M: A Model for State- and Federal-Level Partnerships

From the end-user perspective, one industrial company with a long history of fruitful partnerships and a h2 record of energy efficiency is 3M. Steven Schultz, 3M’s Corporate Energy Manager, discussed how 3M’s senior management committed to energy efficiency in 1973 and has enjoyed more than 37 years of continuous improvement in energy efficiency. In fact, 3M reduced its energy intensity (total Btu's used per dollar of net sales) by 40 percent since 2000. During this time period, 3M participated in voluntary state and federal programs, and won the ENERGY STAR Sustained Excellence Award six years in a row.

According to Shultz, partnerships provide 3M with a wide array of valuable resources, tools and incentives, as well as generate fresh ideas and ambition to achieve energy efficiency goals.

“3M has really benefitted from working with the EPA’s ENERGY STAR for industry and the DOE’s Save Energy Now LEADER programs,” Shultz said. He added that 3M’s involvement in demonstrating the Superior Energy Performance program and the application of the ISO 50001 Energy Management Standard could be useful for many firms.

Power Point Presentations

• Partnerships: Engaging American Manufacturers
  Steven Schultz, Corporate Energy Manager, 3M
   
• State and Regional Industrial Energy Efficiency: Planning, Collaboration and Implementation
  David Terry, Executive Director, NASEO
   
• Successful Engagement of Manufacturers Through a State-Wide Program
  John Nicol, Industrial Program Manager, Wisconsin's Focus On Energy