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Advanced Energy in Texas TEXAS ADVANCED ENERGY BUSINESS ALLIANCE ADVANCED ENERGY IN TEXAS Industry size, trends, and companies Prepared by Navigant Research February 2015 TEXAS ADVANCED ENERGY BUSINESS ALLIANCE About the Texas Advanced Energy Business Alliance The Texas Advanced Energy Business Alliance includes local and national advanced energy companies seeking to make Texas’s energy system more secure, clean, reliable and affordable. “Advanced energy” encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. Among these are energy efficiency, demand response, natural gas electric generation, solar, wind, hydro, nuclear, electric vehicles, biofuels, and smart grid. TAEBA’s mission is to raise awareness among policymakers and the general public about the opportunity offered by all forms of advanced energy for cost savings, electric system reliability and resiliency, and economic growth in the state of Texas. Visit us at www.texasadvancedenergy.org About Navigant Research Navigant Research, a part of Navigant Consulting’s Energy Practice, is a market research and advisory group that provides in-depth analysis of global clean technology markets with a specific focus on the commercialization and market growth opportunities for emerging energy technologies. Our client base includes Fortune 1000 multinational technology and energy companies, government agencies, utilities, investors, industry associations, and clean technology pure plays. We provide these companies with market research reports, custom research engagements, and subscription-based research services. Navigant is focused across four research programs: Energy Technologies, Utility Transformations, Transportation Efficiencies, and Building Innovations. http://www.navigantresearch.com ADVANCED ENERGY ECONOMY texasadvancedenergy.org © 2015 Texas Advanced Energy Business Alliance TEXAS ADVANCED ENERGY BUSINESS ALLIANCE EXECUTIVE SUMMARY Few industries have as a deep a connection to the U.S. economy, policy, and innovation as the energy industry. Today, new technologies and business models are fundamentally changing the way we make, manage, and use energy. At the Texas Advanced Energy Business Alliance (TAEBA), we call these technologies “advanced energy,” and they are leading toward a prosperous future powered by secure, clean, and affordable energy. Advanced energy encompasses a broad range of technologies, products, and services that constitute the best available technologies for meeting energy needs today and tomorrow. This report, prepared by Navigant Research, is the first-ever analysis of the advanced energy industry in the Lone Star State, highlighting the market size, key trends, and companies in the state. In each of the seven segments that make up advanced energy – Transportation, Fuel Production, Fuel Delivery, Building Efficiency, Industry, Electricity Generation, and Electricity Delivery and Management – Navigant applied strict definitions in order to distinguish advanced energy from conventional energy products, making this a conservative estimate of the industry’s presence in Texas. In total, the Texas advanced energy market in 2014 is estimated at $16 billion, representing approximately 8% of the total U.S. market – enough to buy the Dallas Cowboys five times over. With $5.5 billion in revenue, the Building Efficiency segment is the largest advanced energy market inTexas. This includes an estimated $1.9 billion in energy efficient lighting in commercial and residential settings, $678 million in commercial building energy retrofits, $518 million in commercial HVAC upgrades and $372 million in improvements at public and commercial buildings by Energy Service Companies (ESCOs). With the Lone Star State being the largest consumer of electricity in the United States1 and home to twice as much installed wind capacity as any other state,2 the Electricity Generation segment is the second leading advanced energy segment in the state, with $3.6 billion in revenue last year, $2.3 billion of that from wind energy installations. Fuel Production, which includes compressed and liquefied natural gas for vehicles, is the third largest segment with $2.7 billion in revenue. Advanced Energy: A $16 Billion Texas Industry Electricity Delivery and Management Transportation $1.2 billion $2.3 billion Electricity Generation $3.6 billion Fuel Production $2.7 billion Industry $659.7 million Fuel Delivery $25.8 million Building Efficiency $5.5 billion 1. http://www.eia.gov/electricity/data/state/ 2. http://www.eia.gov/state/?sid=TX texasadvancedenergy.org Thanks in part to natural gas vehicles, hybrid and plug-in electric vehicles, and the fueling infrastructure to support them, the Transportation segment saw revenue of $2.3 billion in 2014. Driven by transmission projects required for integrating larger amounts of advanced energy into the transmission system, the Electricity Delivery and Management segment reached $1.2 billion. The Industry segment, which includes combined heat and power (CHP) systems in wide use in oil refineries and the petrochemical industry,3 had revenue of $660 million. Fuel Delivery was the smallest segment, with $25.8 million in revenue from natural gas fueling stations in 2014. Within and across these industry segments, a few important trends are currently driving the Texas advanced energy market: Wind, Natural Gas, and Solar Balance the Electricity Portfolio: Texas has more than 14 GW of wind energy installed, producing over 10% of the state’s electricity, with an additional 10 GW in the pipeline.4 Solar is on the launch pad, with 10 GW of new capacity expected by 2029.5 With abundant natural gas in greater use as well, Texas is developing a complementary mix of homegrown energy sources for economic growth. Energy Efficiency Provides Reliability and Savings: Energy efficiency and demand response are already big in Texas, saving money for customers and helping prevent blackouts. But with efficiency measures one-third the cost of power generation, there is vast untapped potential for savings and peak load reduction. Energy Storage is the New Frontier: With potential to end a range of electricity system problems and inefficiencies – fluctuating demand, idle capacity, variable resources, minute-to-minute frequency control – and steep cost reductions expected, energy storage is now within reach. As the dynamic advanced energy market grows and evolves, companies are increasingly looking to Texas for business opportunity. The full report profiles three of the many local and national advanced energy companies doing business in Texas: Opower, First Solar, and RES Americas. Also, readers will get to meet an employee of CLEAResult, an Austin-based energy efficiency company that is helping utility customers save money in Texas, across the country, and all the way to Canada. 3. http://www.ercot.com/content/meetings/lts/keydocs/2014/0113/0._ERCOT_2014_LTSA_Intro_RPG.ppt 4. http://www.ercot.com/news/press_releases/show/51654 5. http://www.ercot.com/content/meetings/lts/keydocs/2014/0113/0._ERCOT_2014_LTSA_Intro_RPG.ppt TEXAS ADVANCED ENERGY iv BUSINESS ALLIANCE TEXAS ADVANCED ENERGY BUSINESS ALLIANCE ADVANCED ENERGY IN TEXAS Texas has become a testing ground for many of the most important challenges facing the U.S. energy system today. The state lives up to its reputation for being “big” in a number of ways: • The top electricity consumer in the United States Did You Know… • The top state for wind power • Texas has the 2nd highest potential for biogas generation from from landfills, • The first state to enact an Energy Efficiency Resource wastewater treatment, and organic Standard (EERS) waste. Texas shows every sign of continuing to be a dominant • Texas is one of the top three states for force in the energy sector even as it changes. Though well hydrogen production (in conjunction with known as the center of the traditional oil and gas industry, oil production). Texas is also home to a growing advanced energy industry in areas such as natural gas and electric vehicle fueling • Texas has the 4th most installed stations, natural gas turbines, energy storage, and advanced capacity of commercial combined heat building controls that maintain comfort for the state’s growing and power (CHP) systems with 449 workforce in the state’s sweltering summers – and also save MW. money for building owners and manufacturers. • AEP Texas has deployed 875,008 Much of the credit for advanced energy growth in Texas advanced meters; 240,000 are expect- goes to the state’s pro-business, pro-growth spirit combined ed for customers of Texas New Mexico with deliberate policy. Such policies include the Legislature’s Power by 2016. decision, as part of restructuring the electric industry, to set a modest goal of 2 GW, then 6 GW, of renewable energy, • Texas has several strong regional EV a target that has now been exceeded two times over. The Readiness Plans and is one of the EERS, which was first enacted in 1999, now has utilities top-tier states for EV charging station seeking a 30% reduction in annual demand growth through infrastructure. energy efficiency measures; going forward, utilities will be focusing on controlling peak demand not just overall usage. Today’s advanced energy market continues to boom in response to steep reductions in technology costs, increasing private investment, immense resources in wind and solar – and a growing list of advanced energy companies doing business in Texas. Central to the Texas advanced
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