Many electrical contractors wonder if energy services will remain a viable market in 2013 and beyond. This concern is understandable, given the uncertainty in the domestic and global energy markets today. There is no doubt that energy markets are changing rapidly and both ECs and their customers will be affected by these changes in the coming years. However, because of this turmoil, we can be assured that the energy services market is not only here to stay but will continue to grow.
By the time this article is published, we will know if the federal government avoided or went over the “fiscal cliff” and the possible ramifications for ECs and their customers. In addition, there should be some clarity about the future of government and private-sector economic incentives and support for building energy and alternative-energy production projects set to expire. It is generally believed that, without financial incentives and guarantees from federal, state and local governments, investment in alternative-energy projects will fall because most of these technologies have not yet reached grid parity. These incentives extend to utilities and private-sector entities, such as energy service companies (ESCOs), which use them to promote energy conservation and alternative-energy production to their customers; these projects will be affected as well.
If this weren’t enough, the United States is evolving into a petroleum producer and exporter. Recent technological innovations are allowing the oil and gas industry to recover and process huge deposits of oil and natural gas that were previously thought to be technologically and economically out of reach. The coal and rail industries are already feeling the effect of a growing domestic natural gas supply as electric utilities across the country shelve plans for constructing new coal-fired generating units or upgrading and extending the life of existing coal-fired generating units. Similarly, the planned resurgence of the U.S. nuclear power industry has been curtailed not only by concerns about safety and nuclear waste disposal but also the expected continued growth in natural gas production. Ample natural gas supplies, low cost and reduced environmental impact, along with other construction and operational advantages, are causing generating utilities and independent power producers (IPP) to build gas turbine and combined cycle units instead of building and upgrading traditional coal and nuclear units. This also is affecting the construction of alternative-energy projects because of the economic advantages and the reduced environmental impacts associated with natural gas.
The perfect storm
Taken alone, these economic issues would certainly cause someone to question the future viability of the energy services market. However, we have been and are currently in the midst of a perfect storm that involves energy economics and a growing scientific understanding of the environmental impact of fossil fuel use and increasing societal awareness and concern about energy and environmental issues. For example, fresh water supplies are down in many parts of the country. This water is needed for drinking and food production, but it is also essential for the operation of coal-fired and nuclear power plants.
Even though energy economics may appear to be pushing us back to a time when we built and operated power plants to meet our growing demand for electric energy, this is not the case. Other inputs besides fuel and environmental factors will become the constraints that drive the economics of electric energy production.
The electrical construction industry was born out of change. Electric energy has revolutionized architecture by allowing the use of electrical lighting; heating, ventilating and air conditioning systems; elevators; and other technologies. Over the past two decades, ECs have adapted to the changing communications and control market and helped customers plan and install data, communications and control systems in their buildings; these systems are currently evolving into integrated building systems. Similarly, the energy services market is evolving rapidly, and there will be a great deal of opportunity for ECs who spot the trends early and adapt. Tomorrow’s energy services market will not look like today’s as changes in technology, energy supplies, the environment and other factors shape it. As the future unfolds, customers will increasingly need the EC’s expertise in planning, designing, installing and maintaining energy conservation, efficiency, production and reliability projects that are the core of its energy services market.
The author thanks ELECTRI International Inc. for its sponsorship of the research project, “Energy Roadmap: Electrical Contractor’s Guide for Expanding into the Emerging Energy Market,” on which this article is based.