The Next Generation of
Energy
The Renewable Energy and Energy
Efficiency Industries in Washington State
The Next Generation of
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4. Methods for Measuring the Clean Energy Industry
ECONorthwest identified and studied more than 300 companies and other organizations involved in energy efficiency and renewable energy activities in Washington state. A number of utilities, nonprofit organizations, and government entities appeared in our assessment; some of them are noted for information purposes, but we did not include their contribution to our calculations of total employment and gross business income.
Methods for Identifying Clean Energy Firms
We employed a range of resources in researching the energy efficiency and renewable energy industries in Washington state. We identified companies in these industries through trade associations, publications, government agencies, Internet searches, existing company directories, limited use of Standard Industrial Classification (SIC) codes, and interviews with company leaders and other experts in the field.
The relevant companies cut across many different business sectors. For example, a large civil engineering firm may be involved in a broad range of infrastructure projects, including a few small-scale hydroelectric facilities. A maker of industrial boilers may produce only a few products that are specifically designed to use biomass fuels or municipal solid waste (MSW). A lighting manufacturer may classify 30 percent of its products as energy efficient.
Since no comprehensive information source currently exists for this diverse set of companies, we focused our study on companies that identified themselves as having a renewable energy or energy efficiency focus and those which other organizations had already classified as belonging in the industry (that is, companies included in existing databases). Since we generally relied on self-identification, we expect that our estimates of industry employment and revenues will be conservative.
A limitation of the self-identification approach is that it likely underestimates the overall extent of the energy efficiency and renewable energy industries. For example, this approach might identify a small specialty purveyor of solar-powered appliances, but it could fail to capture a major chain of hardware stores that sells a significant number of solar-powered yard lights among its many other product offerings, even though the total renewable energy business activity at the hardware store is greater. In some cases, self-identification could also lead to overestimation in cases where companies consider the extent of their energy efficiency or renewable energy business activity in very broad terms. For example, most of the lighting and control manufacturers we talked with described their businesses as fully dedicated to energy efficiency.
Association Membership Lists and Trade Journal Directories
To identify relevant companies, we obtained the membership lists of various associations of the energy efficiency industry and specific sectors of the renewable energy industry. We also interviewed association staff members and reviewed relevant trade journals and other association publications.
Existing Databases and Online Resources
We obtained information on about 100 of the energy efficiency companies from a database of energy efficiency companies in the Pacific Northwest that the Bonneville Power Administration developed. We also conducted Internet searches and reviewed relevant directories of companies in the energy industry, including such online resources as the Gridwatch Power Directory, The Source Guide to Renewable Energy Businesses, and the International Energy Administration’s GREENTIE (Greenhouse Gas Technology Information Exchange) directory.
SIC Codes
We located some companies in the solar energy sector through a search of six-digit Standard Industrial Classification (SIC) codes using American Business Disk’s company directory. Based on discussion with several energy researchers, we determined that using SIC codes for most sectors was not a feasible analytic approach, given their lack of specificity regarding many energy efficient and renewable energy technologies. Additionally, the two state agency databases we used to obtain employment and revenue data classified companies by four-digit, rather than six-digit, SIC codes, which are insufficient to distinguish most categories of energy efficiency and renewable energy companies.
Interviews and Correspondence with Companies and Industry Experts
We located additional companies through interviews with industry experts in academia, government agencies, nongovernmental organizations, and other resource centers, such as the lighting industry’s Lighting Design Lab in Seattle. We also identified additional businesses through our interviews with companies in the energy efficiency and renewable energy industries. We specifically asked companies about their competitors as well as their suppliers and downstream users of their products and services.
Methods of Estimating Employment and Business Income
We developed our assessment of the energy efficiency and renewable energy industries using revenue information from the Washington State Department of Revenue and employment data from Washington State Employment Security’s ES-202 data series. [Note 8] These data cover the period from July 1996 through June 1997. This time period represents the Department of Revenue’s Fiscal Year 1997, and corresponds with Employment Security’s third and fourth quarter of 1996 and first two quarters of 1997.
All of the individual company data used to conduct this analysis are confidential. Strict procedures to ensure the confidentiality of companies’ employment and revenue records were observed. The data were only used to assess the overall size of the industry sectors.
We analyzed data from a total of 396 employment sites, including multiple locations of single firms. This number was reduced to 307 by combining the data for all multiple-location sites into a single record for each firm based on the Uniform Business Identifier (UBI) number for each company.
To develop an overall picture of the energy efficiency and renewable energy industries, we calculated three main figures for each of the businesses identified: annual revenue, average annual employment, and annual wages paid. The annual revenue figure was taken directly from the Department of Revenue’s database of gross business income used for calculating the state’s Business and Occupation (B&O) Tax. The B&O tax is based on gross receipts from business activity in the state, and almost all companies located in Washington or conducting business here are subject to the tax, including corporations, partnerships, sole proprietors, and nonprofit organizations.
We calculated average annual employees by summing the employees reported in each month and dividing the total number by twelve months. Wages paid were reported to the state as quarterly totals, so we summed the four quarters to calculate an annual figure. We did not adjust the employee or wage figures to account for incomplete reporting. For example, if a company of 10 employees went out of business after the sixth month, their average annual employment would appear as 5 (that is, 10 employees reported for six months divided by 12 months).
Two other adjustments were made to the data to develop a representative overview of the industry. First, as part of the interview process, we questioned each company with more than 50 employees about the portion of their business devoted to energy efficiency and renewable energy activities. Then we adjusted the annual totals for revenue, wages, and employment according to the percentage of the business reported as relating to energy efficiency and renewable energy. For example, if a company spent $100,000 in salaries during the year and 50 percent of its business is related to renewable energy, the adjusted annual wages would be $50,000.
Additionally, in some cases we were unable to contact or obtain UBI numbers for a few companies. In these cases, we made an assumption that these were smaller firms and calculated their annual totals based on an average of the bottom quartile of the entire sample. Based on the calculated average of the bottom quartile, with some rounding, we estimated that these are two-person firms with annual revenues of $150,000 and annual wages of $60,000. By making this assumption and calculation, we are able to include these firms in the overall calculation for the sector and present a better picture of the industry. Some firms with missing UBI numbers may have gone out of business or have either higher or lower actual figures for employment and revenues.
Methods for Conducting Company Interviews
ECONorthwest conducted interviews with over 50 representatives from Washington energy efficiency and renewable energy firms. From the database of several hundred firms, we developed a list of potential interviewees designed to represent the diverse range of sectors within the industries. For renewable energy, the interviewee list contained companies from solar energy, wind energy, biomass or municipal solid waste, small-scale hydroelectric, geothermal energy, and other miscellaneous companies. For energy efficiency, energy service companies, consulting firms, lighting companies, HVAC, utilities, and other companies were included on the list. We also focused on large companies to ensure that we accounted for their relative weight within the industry; that is, we placed a priority on contacting the key companies in each sector.
CTED’s Energy Policy Group reviewed and approved the proposed list of interviewees before we conducted the interviews. When the company contact person listed in our database was not available (due to vacation schedule, unwillingness to participate in the study, or a move to another company) we selected alternate contacts in the same sector from the database of companies. Completion of the interviews involved more than 200 phone calls to energy efficiency and renewable energy companies, including follow-up calls to companies already contacted.
Most people interviewed were principals of the company or senior managers. The interviews contained questions about the company, other firms in the industry, industry trends, and public policies. Typically the interviews took 20 to 30 minutes, and some lasted nearly an hour. We developed questions tailored to each industry. A list of the companies interviewed appears below, and a more detailed listing with contact names is included in Appendix A. Copies of the telephone interview questionnaires for energy efficiency, renewable energy, and utilities are included in Appendix C.
Table 2. Companies Interviewed Regarding Industry Trends
| ENERGY EFFICIENCY | RENEWABLE ENERGY |
| ENERGY SERVICE
COMPANIES (ESCOs) AND RELATED ENGINEERING FIRMS Archos Corporation Art Anderson Associates The Bentley Company EMCOR Honeywell Iverson Elder Johnson Controls Landis and Staefa, Inc. MC Squared Efficient Energy Systems Northwest Energy Services Onsite Energy The Opportunity Council Professional Energy Management Proven Alternatives Stoner Associates Utility Bill Advisory Services one unnamed company LIGHTING CONTROLS HEATING, VENTILATING, AND AIR-CONDITIONING (HVAC) |
SMALL-SCALE
HYDROELECTRIC Canyon Industries HDR Infrastructure Hydro West Group R.W. Beck Sverdrup Civil, Inc. BIOMASS SOLAR AND RELATED WIND ELECTRIC VEHICLES OTHER |
Note 8. ES-202 data is confidential and was used only for the development of industry-wide statistical profiles.
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The print version of The Next Generation of Energy: The Renewable Energy and Energy Efficiency Industries in Washington State will be available soon. To order, contact Tony Usibelli at (360) 956-2125, or send e-mail to wepg@ep.cted.wa.gov.