In May 2009, the Energy Trust of Oregon announced new energy incentives for industry - raising the per-kilowatt hour incentive for electricity savings from 20 cents to 25 cents. By the end of 2009, those incentives will increase to 60 percent of project cost, up from the normal rate of 50 percent. The Energy Trust believes that enhanced incentives, coupled with Oregon Business Energy Tax Credits, will spur many companies to move ahead with energy upgrades - helping industry keep pace, ultimately making them more competitive. With the current federal and state stimulus plans having no funds designated for industry, and with costs for materials, transportation and other expenses on the rise, industrial customers of all sizes benefit from lower energy costs.

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Energy Trust of Oregon Executive Director Margie Harris answers your questions about the business case for energy efficiency investment.

What is Shift the Focus?

1. Why is energy efficiency important to business?

The goal of any business is to make a profit. Many costs go into operating a business, and one of these is energy. A business can exert some control over how much electricity or natural gas it uses by conserving energy and investing in energy-efficiency equipment, building an energy-efficient building, or by installing renewable resources such as solar. So, while businesses cannot control some cost increases, energy consumption and energy cost is an area where they can manage costs for greater profitability.

There are also significant non-energy benefits to investing in energy efficiency improvements and installing renewable energy. Increasingly consumers are voting with their dollars by supporting businesses that demonstrate environmentally sustainable practices. Businesses also find that energy improvements result in a more comfortable environment and more attractive lighting environments, which enhances their workplace for both customers and employees.

Also, as regulation for carbon emissions nears, the businesses that are lowering their carbon profile by using less energy and using renewable energy will have a distinct competitive advantage over those businesses that are not addressing carbon in a strategic way.

2. How can energy efficiency play a role in global competitiveness and industry health?

Efficiency in business has been a science for many, many decades. Traditionally, businesses have made strategic decisions to locate and relocate globally or acquire source materials depending on such factors as inexpensive labor and energy. With energy costs rising, the smartest business leaders see an opportunity to make energy efficiency a bigger part of their business plan. Global warming adds another layer to the context for business competitiveness.

3. What is the correlation between energy efficiency investment and job creation?

There’s a very strong connection, in a couple of different ways. On the first tier is the development of a clean energy business sector that creates, produces and installs high quality clean energy solutions. Since Energy Trust started operating in 2002, we’ve helped create more than 1800 clean energy jobs in Oregon. Contractors, engineers, architects, and manufacturers are growing professional capabilities and capacity to meet increasing market demand for their products and services. These are family-wage jobs, based right here in Oregon.

On a second level, when employers are spending less money on energy costs due to investments in energy efficiency, they are able to redirect those funds to other areas, including payroll through increased production, longer operating hours, higher wages and more. This helps businesses remain competitive and stay strong by managing energy costs, a variable they can change to their benefit.

On the statewide or regional basis, the clean energy economy is a significant piece of Oregon’s economic development strategy. We’ve already seen a number of successes in this area—decisions by solar manufacturing companies such as SolarWorld and Sanyo to locate in Oregon are just a couple. We will likely see more as Oregon becomes a clean energy center for the country. This strategy is creating direct jobs and many more indirect jobs for our state.

4. What do you see as some of the major barriers to demonstrating ROI for energy efficiency?

The first barrier for energy efficiency is the same barrier for any sort of investment: availability of capital for businesses. We’re trying to help in this area through our relationship with Umpqua Bank and their favorable loan program for small businesses, GreenStreet Lending. The commercial loan product is designed to offer preferential loan rates to small companies who want to lower their operating costs through energy efficiency and clean renewable resources, and need a little bit of help.

During this economic slowdown we’ve seen that while new construction on both the commercial and residential side has slowed substantially, investment in energy upgrades has remained strong. This tells me that more business owners understand the positive ROI on energy efficiency. Here’s an example: if you reduce your facility’s energy use by 30 percent, it’s like increasing your net operating income by five percent. That’s a pretty good ROI and it’s totally achievable with lighting and lighting controls, HVAC and equipment that is available today.

We’ve created and posted a great ROI worksheet on our Web site, called “Pencil it out” (http://www.energytrust.org/newbuildings/leadin.html) that’s designed to do the math on energy investments. Just plug in the details of your project and your energy rates and the payback estimates will automatically be calculated.

5. Over the past five years, what shifts in behavior and prioritization have you seen among business leaders, with regards to prioritization of energy efficiency and renewable energy?

Since Energy Trust began offering programs in 2002, we’ve seen a big shift in how business leaders think about energy. Many businesses want to save money on energy, but they lack the time and the expertise to figure out their best options. Energy Trust experts can help them with the incentives to lower the upfront cost, and identify what to do first by conducting a walk-through audit of the business. The business owner can see the opportunity to save and Energy Trust can provide the incentive.

As energy costs have grown in recent years, the business case for energy efficiency has become more compelling. Nevertheless, it’s still tough for most businesses, especially small businesses, to invest the necessary capital to make these investments. In Oregon we’re fortunate because Energy Trust incentives can be combined with Oregon Department of Energy’s Business Energy Tax Credits to make it financially feasible for more companies to better manage the impact of energy costs and take advantage of renewable energy.

6. Forecasting ahead 20 years, what energy decisions should businesses make today that will position them well for future business health?

Reduce your carbon footprint. The companies that figure out how to control their carbon emissions will be the winners. Energy efficiency and renewable resources are the first choice for a company to reach this goal. While right now companies are investing in energy efficiency to save money, looking to the future, it will be carbon reductions that will be driving these investments.

7. Energy reduction/efficiency – what energy efficiency best practices can be transferred from the NW region to the rest of the country?

The Northwest in general and Oregon in particular are acknowledged across the country as an energy efficiency innovation center. The work we’re all doing here is being watched and noted, and copied, around the country. New England and part of the Midwest are also ahead of the curve in energy efficiency and renewable energy developments.

A specific example of best practices coming out of Oregon is the commercial foodservice program offered through Energy Trust. We’ve built strong relationships with the Oregon Restaurant Association and with foodservice equipment dealers and distributors. We also have an extraordinary track record in gaining both electricity and natural gas savings through the installation of high efficiency equipment such as freezers, refrigerators, fryers, steamers, icemakers, dishwashers and more. The US Department of Energy and the US Environmental Protection Action have honored Energy Trust twice for our success and innovation with this initiative.

8. Can you provide examples of companies who’ve successfully integrated energy efficiency programs into their business models?

Since 2002, Energy Trust has helped more than 7000 businesses become more energy efficient or install renewable resources.

As one example, Doubletree Hotels at Lloyd Center is a leader in the hospitality industry. They are moving through their operation and finding energy savings in many places – lighting and lighting controls, kitchen equipment, HVAC and HVAC controls, even energy efficient nightlights for guestrooms. In addition to this they have an active “green team” that has initiated a wide range of sustainability activities including food composting.

Providence Health System was an early leader in understanding the value of energy efficiency. Hospitals and medical offices are energy-intensive operations. As a system, they have prioritized energy efficiency and are working through a comprehensive strategy to save them millions of dollars each year in energy.

Roseburg Forest Products has invested in a series of improvements at their wood products facilities that are saving the company more than $2 million in energy costs every year. Investments of this nature are helping companies in hard-hit businesses weather the economic downturn and will only make them stronger when things pick up.