TODAY’S STUDY: HOW NEW ENERGY GROWS JOBS – THE ILLINOIS EXPERIENCE

Clean Jobs Illinois; An In-Depth Look at Clean Energy Employment in Illinois

March 2014 (Clean Energy Trust et. al.)

Introduction

In 2013, Clean Energy Trust commissioned BW Research Partnership, a national leader in workforce and economic development research, to conduct a survey of Illinois clean energy firms to better understand employment in the sector. Clean Jobs Illinois™ is based on survey research data collected by BW Research Partnership and was developed in partnership with Environmental Entrepreneurs, The Environmental Law & Policy Center and the Natural Resources Defense Council, which contributed financial and staff resources to support the research and report.

Clean energy refers to a wide variety of technologies that create or conserve energy and help us meet our 21st century resource challenges. Energy innovation lessens our dependence on fossil fuels and foreign oil and helps keep our air and water clean. In Illinois, clean energy is creating jobs for workers and lowering utility bills for families and businesses. It is increasingly recognizable in our daily lives, from wind turbines and solar panels that harness clean, safe energy sources that won’t run out; to electric vehicles that eliminate the need to stop and pay for gas; to thermostats that learn our behavior and respond to lower our electric bills. Illinois has an important role to play in accelerating the development and adoption of clean energy. Located at the connecting point between two of the country’s major electric grids, Illinois is the third largest producer of electricity in the U.S. It is home to world-class research institutions and universities, leading corporations and businesses and a thriving entrepreneurial and startup community. The state’s economic c and geographic diversity sustain a full range of clean energy technologies – from farm fuels to advanced batteries.

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On a number of fronts, Illinois is leading on clean energy. It ranked eighth in the 2013 U.S. Clean Tech Leadership Index of states with the strongest policies for reducing environmental footprints. Strong building codes and the combination of a Department of Energy national laboratory, a top-ranked green MBA program and a clean energy incubator were cited among differentiating factors. Illinois also cracked the top ten for energy efficiency leadership for the first time in 2013, thanks in large part to utility efficiency standards that went into effect in 2008. Additionally, the City of Chicago, a major economic driver in the state, has made efficiency in buildings a top priority through passage of energy efficiency ordinances and initiatives like Retrofit Chicago’s Commercial Building Initiative.

On other fronts, clean energy faces challenges. Illinois’ renewable energy standard – the Renewable Portfolio Standard (RPS) – requires that by 2025 at least 25 percent of the electricity supply comes from clean sources, which is positive. However, the RPS has faced implementation challenges because of changes in the structure of the Illinois energy market. Additionally, on-again off-again tax incentives at the federal level – including the expiration of the Wind Production Tax Credit -- – have made renewable energy investors wary. The effects of these challenges are evident in the survey results. Respondents noted maintaining a strong RPS as the top area of importance in terms of growing their clean energy businesses in Illinois. Policy uncertainty led to employment declines in renewable energy and supporting services, which dragged down the otherwise impressive clean energy industry growth rate.

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Meanwhile, other states are moving ahead in clean energy leadership with innovative policy measures, like the new formula Minnesota regulators are using to assess the value of solar; higher energy efficiency targets for utilities in states like Massachusetts, California, New York, Oregon and Vermont; energy storage goals in California; and a Green Bank for funding clean energy projects in New York that is capitalized in part by revenues from the Regional Greenhouse Gas Initiative.

Clean Jobs Illinois offers an in-depth look at clean energy employment in Illinois – where it is today and where it is headed. It employed a rigorous, survey-based methodology in which 1,599 firms provided information on their clean energy activities and 415 firms completed the full survey. Surveys were fielded from a universe of known employers and a representative sample of unknown employers throughout October and November 2013. The total effort included placing more than 27,000 phone calls and sending more than 9,000 emails.

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The survey methodology is closely aligned to how employment estimates are generated by the Bureau of Labor Statistics. It is similar in design to several other highly regarded studies, including the National Solar Jobs Census series and the Massachusetts Clean Energy Center Industry Reports. Unlike other reports, it does not rely on revenue estimates or economic models and assumptions.

For purposes of the study, clean energy was defined as energy efficiency, renewable energy, clean or alternative transportation and greenhouse gas management. The survey counted only those workers who have clean energy related jobs at organizations that are directly connected to the clean energy industry. While this narrow definition likely undercounts the total number of workers who have work responsibilities connected to clean energy, the definitions are critical to prevent over counting jobs that are only marginally connected to the industry. Even with a conservative approach, Clean Jobs Illinois affirms that the state’s clean energy industry is a significant source of jobs and an economic engine with tremendous potential for continued growth.

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Key Findings

Clean energy is a significant part of the Illinois economy.

There are 96,875 Illinois workers who spend some portion of their day supporting clean energy activities – that’s enough to fill Soldier Field one and a half times over. In fact, the clean energy industry is larger than the real estate and accounting industries combined.

Clean energy provides good jobs for Illinois workers.

More than a third, 35 percent, of clean energy jobs are in engineering, research, manufacturing and assembly – many in STEM careers (science, technology, mathematics, and engineering). These are good jobs with good benefits, and they make Illinois’ economy more productive and competitive. Nearly another third, 30 percent, of clean energy workers are in the installation and maintenance sector. These are local jobs done here in Illinois that will stay here in Illinois.

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Clean energy is as much about how we use energy as it is about how we produce it.

A majority of firms in the clean energy sector, 62 percent, operate primarily in the energy efficiency industry. Renewable energy is the second leading industry, with 21 percent of clean energy companies. Alternative transportation makes up 5 percent of the sector with 1 percent of firms focusing on managing greenhouse gas emissions. Another 12 percent are categorized as other, many of which are professional service firms or other service providers that work mainly with clean energy firms.

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Clean energy companies are growing and are optimistic about 2014.

Illinois’ clean energy industry is projected to grow by 9 percent and top 100,000 workers in 2014. Certain clean energy sectors experienced rapid growth in 2013, including alternative transportation (21 percent), greenhouse gas management (5 percent) and energy efficiency (3 percent). In 2014, 40 percent of firms in the clean energy sector expect to add workers.

Policy challenges are weighing down growth among renewable energy companies.

Between 2008-2012, Illinois was a top-five state for renewable energy development. Due in significant part to policy headwinds, renewable energy industry employment contracted in 2013 by 0.2 percent. While most clean energy sectors were moving forward, renewable energy lost jobs and weighed down overall clean energy industry growth in Illinois. Maintaining a strong Renewable Portfolio Standard law was cited by clean energy firms as the top area of importance for growing their business.

Illinois is ready to lead in clean energy.

Quality of life, proximity to customers and access to educated and skilled workers were top reasons clean energy businesses chose to locate in Illinois. World-class universities and research institutions and strong professional networks were also cited as advantages to locating in Illinois. Thanks to its rich clean energy ecosystem, Illinois ranked eighth among states for clean tech leadership in 2013. And Illinois can again be a leader in renewable energy, as it was when it ranked in the top five among states for wind energy development between 2008-2012.

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Research Findings: Industry Sectors

Clean energy encompasses a wide variety of technologies that create or conserve energy and help us meet our 21st century resource challenges. This section provides a look at the overall breakdown of industry sectors that make up Illinois’ clean energy industry, as well as a closer look at each individual sector. Table 1 provides the sector breakout of clean energy businesses in the state, and Table 2 shows which technologies were included in the survey definitions of each sector. It should be noted that when more than one response was allowed, there was significant overlap between renewable energy and energy efficiency firms, suggesting that many firms are engaged in both focus areas.

Energy Efficiency

Energy efficiency technologies include low-energy lighting, heating and cooling controls and energy automation systems, which deliver cost savings and comfort. They also include next-generation technologies s like advanced batteries and smart grid systems and controls. Energy efficiency is the primary focus for 62 percent of clean energy firms. The significance of this sector shows that clean energy is as much about how we use energy as it is about how we produce it.

Energy efficiency is helping families and businesses reduce their carbon footprints, save money and improve their bottom lines. Thanks to energy efficiency technologies, household electricity use in the U.S. has fallen to the lowest levels since 2001. And between now and 2016, electricity demand in the Midwest is projected to decline annually by almost 1 percent.

Illinois’ robust energy efficiency sector is due in part to the state’s energy efficiency standards. Illinois efficiency standards say that utilities must reduce electricity demand by 2 percent each year but spend less than 2.015 percent of rates paid by customers on efficiency projects, The Illinois Commerce Commission recently reaffirmed these goals, informed by input from survey partners Environmental Law & Policy Center and Natural Resources Defense Council.11 Energy efficiency is the primary focus for 62 percent of clean energy firms. The strength of this sector has helped make Illinois the number one state in the U.S. for green buildings and shows that clean energy is as much about how we use energy as it is about how we produce it.

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Energy Efficiency In Focus: Energy Storage

One of the most important technology areas for advancing clean energy is energy storage. This includes any technology that can store energy for use at a later time – the most recognizable of which are batteries and fuel cells. Energy storage enables other clean energy technologies. For example, a high-capacity battery linked to a solar energy system can store energy while the sun shines and deliver it after dark. Likewise, energy storage helps resolve the intermittency of wind power and enables electric vehicles that can go farther on a single charge. While energy storage technology is a growing part of all sectors of the clean energy industry, most businesses working on energy storage identified themselves as energy efficiency firms.

Illinois is at the forefront of energy storage technology as home to the Joint Center for Energy Storage Research (JCESR) – a U.S. Department of Energy-supported $120 million public-private partnership based out of Argonne National Laboratory in Lemont, Illinois that is working to develop next-generation batteries. Clean Energy Trust is a key commercialization partner of JCESR, which has a 5x5x5 goal: creating batteries with five times the energy density of today’s batteries at one fifth the cost in five years. Energy storage is an important sub-sector of Illinois’ clean energy economy, and the economy as a whole, as it combines a number of advanced industries – materials science, chemistry, manufacturing and engineering.

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Renewable Energy

Renewable energy was reported as the primary technology area by 21 percent of businesses. It is perhaps the most widely recognized clean energy sector, from wind farms and biofuels refineries that dot Illinois’ countryside to increasingly common rooftop solar arrays. Other renewable technologies include geothermal energy, bioenergy, combined heat and power and hydropower.

The survey found that wind businesses in Illinois are 41 percent larger than the average solar firm. Today, wind farms in Illinois generate enough electricity to power 750,000 homes with energy that is secure, clean and affordable.13 In contrast, Illinois’ solar sector is less mature in its development but, surprisingly, Illinois has better solar intensity than the world’s leading solar markets, Germany and Japan. Illinois’ Renewable Portfolio Standard has incentives for both utility scale and smaller scale, or distributed, solar energy, which if fully implemented will result in consistent demand for solar energy through 2025 and beyond…

Alternative Transportation…Greenhouse Gas Management…Other…

Industry Growth…Clean Energy Firm Characteristics…Clean Energy Workforce…Illinois Business Climate…

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