What is the advanced energy economy?
It’s a fair question because until just a few years ago, Americans were accustomed to relying solely on our local power company to supply energy to our homes and businesses. We flipped a switch, and the lights came on. When the utility bill arrived in the mail, we paid it. Most of us didn’t give energy another thought.
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But the development of innovative technologies to help meet America’s energy demands has allowed the emergence of an advanced energy sector that now accounts for the employment of more than 25,000 Arkansans, according to a new study released by the Arkansas Advanced Energy Foundation.
The months-long industry survey by Histecon Associates economist James Metzger of Little Rock identified more than 770 advanced energy companies doing business in Arkansas. These companies report annual sales of more than $1.7 billion and employ about 16,000 workers. Another 9,300 jobs in related industries with $1.1 billion in sales bring total impact of advanced energy on the Arkansas economy to 25,300 workers and $2.8 billion in output, according to the UALR Institute for Economic Advancement.
This makes the total size of advanced energy occupations in Arkansas larger than computer and mathematical occupations (20,000 jobs) and protective services (23,000) and puts them on track to close the gap with health care support occupations (35,000), based on the latest Arkansas Occupational Employment survey.
The Arkansas advanced energy jobs study is the first in-state survey of this fast-growing sector, which is defined as services and technologies that make America’s energy supply more secure, clean and affordable. These technologies and services include energy efficiency, demand response, smart grid, natural gas electric generation, solar, wind, hydro, nuclear, electric vehicles and alternative fuels. Advanced energy technologies have also expanded the business models for Arkansas HVAC, electrical and plumbing contractors, many of whom say that energy efficiency makes up more than 50 percent of their business volume.
Companies across the state in the advanced energy sector include large manufacturers like Baldor Electric in Fort Smith, FutureFuel Corp. in Batesville and Danfoss Scroll Technologies in Arkadelphia. The sector also includes entrepreneurial energy solutions companies like Viridian of Little Rock, Pinnacle Energy Services of Fayetteville and Powers of Arkansas in North Little Rock.
Advanced energy work pays well in Arkansas, according to the AAEF study. The average annual salary of an advanced energy skilled worker is $52,000, which ranks higher than oil and gas workers and most other skilled trades in Arkansas.
By far, the survey responses show that energy efficiency accounts for the largest segment within advanced energy in Arkansas, which is not surprising given the state’s public policies that encourage purchase of energy-efficient appliances and water heaters, the installation of equipment like LED lighting and systemwide building solutions.
In fact, another study sponsored by AAEF and released in October showed that the state’s utility energy efficiency incentive programs administered by the Arkansas Public Service Commission are being delivered by more than 650 companies that employ about 9,000 Arkansans.
In Arkansas and on a national scale, energy use has been declining in recent years, and there appears little question that energy efficiency and advanced energy technologies are largely responsible. Customers are saving energy costs, and there is an emerging advanced energy business sector that is growing faster than overall economies in most states, including Arkansas.
Advanced energy CEOs told AAEF that they are planning to increase employment in 2015, ranging from 20 percent among companies with more than $1 million in annual sales to 30 percent among smaller firms.
At the same time, they expressed concern about potential barriers to future growth, with workforce preparation being their No. 1 concern. Lack of education and training were most commonly referred to as workforce preparation issues.
In addition, company leaders said they are concerned about any potential rollback of state or federal incentives that emerging technologies depend on to level the playing field with traditional energy sources and to encourage energy customers to break from the status quo.
Both workforce education and business incentives will remain a priority of the Arkansas Advanced Energy Association (AAEA) in 2015.
A recent report by Navigant Research showed that advanced energy firms nationally grew by 28 percent since 2011. With its latest report, AAEF has documented for the first time from an in-state perspective that the advanced energy sector has not only taken hold in Arkansas but also reflects national growth trends and is an important engine for the overall state economy.
The full report, “The Economic Impact of Advanced Energy in Arkansas: A Survey of Business Activity in 2014,” can be viewed or downloaded at ArkansasAdvancedEnergyFoundation.org.
Steve Patterson is executive director of the Arkansas Advanced Energy Association. He can be reached at Steve@Arkansas AdvancedEnergy.com.