Is small business left out of the EE boom?

By Elisa Wood

October 1, 2009

The US has about 29.6 million small businesses and they employ over half of the nation’s private sector. They hire 40% of our high tech workers, make up 97.3% of our exporters, and generate most of our innovations, according to SCORE. http://www.score.org/small_biz_stats.html

Still, we hear small business often say it gets the shaft when it comes to public policy; it just doesn’t have the political clout of big business.

What’s this got to do with energy efficiency? I’ve been wondering – suspecting actually – that small business is getting left out of the energy efficiency boom sweeping the United States.

I admit that my evidence is purely empirical and cursory. I have been trying to collect case studies from the Eastern states for an energy efficiency guide that I am collaborating on with my colleagues at RealEnergyWriters.com. I’ve put out a request for the case studies from small businesses to my many good sources, as well as through the social media.

I’ve received profiles of schools, colleges, hospitals, and manufacturing facilities – all non-profits or large energy users. Where I wonder is the dry cleaner, the Mom & Pop shop, the car wash?

I don’t mean to imply there are no small business efficiency programs. Several people have directed me to Efficiency Maine’s program, which does not target small businesses per se, but does serve many. I’ve also received some great examples from United Illuminating in Connecticut.

Manufacturers and data centers are low-hanging fruit that energy service companies like to pursue. Homeowners have consumer groups pressing state regulators on their behalf. But who is pushing before state utility commission’s to be sure small business gets its fair share of the vast amount of efficiency funding now being distributed?

Perhaps the fault lies with small business, itself. Overwhelmed by trying to operate in this economy, do small business owners have the time to think about energy efficiency? It’s likely few even realize funds and financing mechanisms exist in several states to help them with upfront capital costs.

Small business may well fall victim to some of the market failures Environment Northeast points out in its October 1 report, “Energy Efficiency: Engine of Economic Growth.” http://www.env-ne.org/

These failures are:

* Liquidity Constraints – when a consumer or business has inadequate access to capital to purchase efficient equipment or improve building energy performance

* Split Incentives – when the owner of a piece of equipment or building (the landlord) does not pay the energy bill and is thus unlikely to invest in efficiency improvements that would benefit the resident/renter

* Information Problems – when purchasers do not know the future energy costs of a product or property and are thus unlikely to invest in the more efficient option with a higher upfront cost

* Behavioral Problems, such as bounded rationality – when the complexity of a decision is beyond the ability of a consumer to make an economically optimal choice.

So this blog does not really reach a conclusion, but asks a question: Are small businesses getting left out of the energy efficiency boom? If so, what’s the problem? If not, please direct me to success stories!

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter.