Three Distinctive Features of Tennessee’s Energy Economy: Part One

As in every state, the potential for the expansion of advanced energy technologies will be shaped by economic factors and assets that are unique to Tennessee. TAEBC identified three distinctive features of Tennessee’s energy economy that together reflect the challenges and opportunities for the expansion of advanced energy technologies:

  1. High Per-Capita Energy Consumption
  2. A Gap in Personal Income
  3. The Potential of Three Major Players (and Who are They?)

We’ll elaborate on Tennessee’s high per-capita energy consumption for this blog post and explore the other features in subsequent posts. 

The most distinctive feature of the state’s energy economy – and perhaps the greatest opportunity for an investment in advanced energy technologies – is the fact that Tennessee ranks as the 20th largest user of energy, per capita, in the U.S. The average residential consumer uses far more energy than consumers in almost all other states. In 2011, the average Tennessean used 87.8 million Btu’s of electricity, ranking Tennessee the 4th highest consumer of energy in the residential sector.[i]

In terms of industrial and commercial energy consumption per capita, Tennessee ranks as the 25th highest user. However, roughly 47 percent of energy consumed in Tennessee is for industrial and commercial purposes, while only 24 percent of Tennessee’s total consumption is for the residential sector. Approximately 29 percent of Tennessee energy consumption falls in the transportation sector.[ii]

TVA’s decision in 2007 to promote energy efficiency initiatives offers hope that historic patterns of energy consumption in Tennessee might gradually be reversed through the adoption of a combination of new energy technologies, government policies and TVA incentives designed to reduce residential demand for electric power. By 2010, energy efficiency programs had resulted in a savings of 143,000 megawatts of power, or about .14 percent of the state’s power consumption.[iii]

The introduction of new advanced energy technologies, particularly in the automotive industry, holds the promise of substantial reductions of energy use, both in the manufacturing of vehicles and in the amount of transportation energy used by the vehicles. The incorporation of similar technologies could have equally significant energy reductions for large commercial companies such as Federal Express.

Linked to TVA’s effort to reduce energy consumption is the agency’s parallel desire to lower the volume of emissions from coal-fired plants that provide more than one-half of the state’s electricity. The implementation of new energy technologies, some of which may be developed in Tennessee research institutions, can assist TVA in reaching that goal. In some instances, the ability to move these advanced energy technologies into the market will depend upon providing entrepreneurs with available capital and the support services required to stand up a new company.

The effort to reduce emissions from coal-fired plants is supplemented by initiatives to reduce the use of fossil fuels in Tennessee’s transportation industry. Joining with Oak Ridge National Laboratory, the state of Tennessee has allocated substantial funds to promote research and deployment of biofuels. Working with the same two partners, in 2011 Nissan chose Tennessee as one of the first five states to introduce the company’s electric car. Memphis Bioworks Foundation has been a major catalyst for business-led approaches to commercial advanced biofuels, biomass and feedstocks across Tennessee and the Mid-South.

Tennessee’s largest employer, Federal Express, is partnering with the Department of Energy to test the ability of hydrogen fuel cells to reduce carbon emissions while simultaneously lowering costs in Fed Ex’s enormous fleet of delivery trucks by as much as 40 percent. Managed through a partnership that includes Smith Electric Vehicles and Plug Power, the $3 million project will equip 20 delivery trucks with lithium-ion batteries combined with a 10-kilowatt Plug Power hydrogen fuel cell system.[iv]

[i]Energy consumption per capita by end-use sector, 2011, U.S. Energy Information Administration., Retrieved from http://www.eia.gov/state/seds/data.cfm?incfile=/state/seds/sep_sum/html/rank_use_capita.html&sid=US.

[ii] Tennessee: State Profile and Energy Estimates, 2014, U.S. Energy Information Administration., Retrieved from http://www.eia.gov/state/?sid=TN#tabs-2

[iii] Clean Energy in My State: Tennessee Residential Energy Consumption, 2010. Department of Energy, Energy Efficiency & Renewable Energy. Retrieved from http://www.eere.energy.gov/states.

[iv] Energy Department Invests Over $7 Million to Commercialize Cost-Effective Hydrogen and Fuel Cell. Energy.Gov. U.S. Department of Energy. Retrieved from Technologies http://energy.gov/articles/energy-department-invests-over-7-million-commercialize-cost-effective-hydrogen-and-fuel.

America’s largest companies save $1.1 billion annually through advanced energy initiatives

Now we’re talking. A new report released last week found that 53 Fortune 100 companies reporting on climate and energy targets are collectively saving $1.1 billion annually through their emission reduction and renewable energy initiatives – which certainly qualify as advanced energy.

Fortune 100 and Fortune 500 companies are increasing the demand for cleaner, more efficient sources of energy. The states that provide not only the energy source, but also the technologies and the workforce will win. Why not Tennessee?

215 companies in the Fortune 500 have set targets in one of three categories and will be looking for ways to meet them: 1) greenhouse gas reduction commitments, 2) improving energy efficiency and 3) procuring more renewable energy. Many of these companies have Tennessee ties (including FedEx and General Motors) or would be welcome additions to our state.

The latest report adds to our evidence that Tennessee’s advanced energy sector is poised for a period of sustained growth. The Tennessee Advanced Energy Business Council (TAEBC) was created to help facilitate this growth by championing the use and manufacture of advanced energy technologies as an economic development strategy.

The Advanced Energy Now 2014 Market Report, published by Advanced Energy Economy, indicated strong growth globally and nationwide in the advanced energy market. Globally, advanced energy represents a $1.1 trillion-dollar market. With estimated revenues in 2013 of $169 billion, the U.S. now represents 15 percent of the world market, up from 11 percent in 2011.

TAEBC sees in these national trends an enormous opportunity for Tennessee. The opportunity includes, through the adoption of affordable technologies, a chance to grow Tennessee’s economy.

The University of Tennessee, the Tennessee Valley Authority (TVA), Oak Ridge National Laboratory (ORNL) and the state’s expanding automobile sector (as well as other key clusters) provide Tennessee with unique assets that together offer an unparalleled platform for collaboration, innovation, testing and implementation of advanced energy technologies.

Our goal is to help business and government view Tennessee’s advanced energy assets and challenges as an emerging sector that will play an increasing role in the state’s economic development.

 

Guest Blog: TAEBC board president Tom Ballard answers, “What is TAEBC?”

Tom Ballard

Tom Ballard

By Tom Ballard, Director of Innovation and Entrepreneurial Initiatives, Pershing Yoakley & Associates, and President of the Board of Directors, Tennessee Advanced Energy Business Council

The name of our organization – Tennessee Advanced Energy Business Council – is a mouthful, and our acronym – TAEBC – does not roll off the tongue easily.

Nevertheless, no one would question the important role that this new, statewide not-for-profit organization plays in advancing the interests of a burgeoning and important contributor to the Volunteer State’s economy.

From Renewable Algal Energy in Johnson City to the Memphis Bioworks Foundation about 550 miles to the west, Tennessee is home to a vast array of established commercial entities, research organizations, and start-ups focused on technologies that contribute to our nation’s energy independence.

TAEBC takes a broad definitional view of the term “advanced energy.” As such, we are pleased to include as members and partners global players like Alstom (nuclear energy) and Schneider Electric (energy management), technology start-ups like Silicon Ranch Corporation (solar) and Top Five Corporation (composites), top research organizations like Oak Ridge National Laboratory, and energy consulting firms like Strata-G.

As Tennessee’s only organization focused solely on companies in the advanced energy space, TAEBC has established a strong track record in its formative two years.

  • We worked with the Tennessee Department of Environment and Conservation and Pathway Lending to produce Tennessee’s Advanced Energy Asset Inventory, the first document of its kind dedicated to promoting the use of advanced energy technologies and assisting the development of Tennessee businesses in the emerging advanced energy sector.
  • We held three listening sessions – one each in Chattanooga, Knoxville and LaVergne – that drew more than 150 participants. During two of these sessions, we facilitated vibrant feedback sessions with top administrators from the U.S. Department of Energy.
  • We have partnered with the Energy Foundation to capitalize on that organization’s strong network and draw on its history of “best practices.”

In the months ahead, we will be hosting additional listening sessions, including West Tennessee, as we focus on understanding how to best serve this important industry sector.

You don’t have to be directly in advanced energy to be a member of TAEBC; certainly my employer is not. PYA does believe that technology advancements are critical to our state’s economy. If you share similar views, I invite you to join our organization and become an advanced energy evangelist. It’s as simple as clicking here.

Pershing Yoakley & Associates is the nation’s 10th largest privately held healthcare consulting company. Headquartered in Knoxville, PYA also has offices in Atlanta, Kansas City, Nashville, and Tampa. Tom Ballard is Director of Innovation and Entrepreneurial Initiatives for PYA and also Chief Operating Officer of PYA Analytics, LLC. The author has retired twice – from the University of Tennessee as Vice President for Public and Governmental Relations and from Oak Ridge National Laboratory as Director of Partnerships.

Just call him Ernie

Secretary Moniz at the University of Tennessee, Knoxville

Secretary Moniz at the University of Tennessee, Knoxville

U.S. Senator Lamar Alexander introduced U.S. Department of Energy Secretary Ernest Moniz to a packed auditorium at the University of Tennessee Law School by telling the audience, “he likes to be called Ernie.”  It’s fitting. Especially for a man whose most distinguishing feature is his wavy mop of mostly white hair. He once told the Knoxville News Sentinel he thought all the attention paid to his hair was, “absolutely excellent!”

The Tennessee Advanced Energy Business Council (TAEBC) was on-site to not only see that hair in person, but to also listen to the former Massachusetts Institute of Technology physicist discuss the Administration’s “all of the above” energy policy.

It was exciting to hear the Secretary gush about Tennessee’s role (in particular Oak Ridge National Lab) in meeting our nation’s energy challenges. The challenges and opportunities Moniz described are the reasons why we created the Tennessee Advanced Energy Business Council–to champion advanced energy as an economic development and job creation strategy.

We might be a little biased but, we think Tennessee is uniquely positioned to meet those challenges and gain its (more than) fair share of the $1 trillion global advanced energy market.

Economic assets that are unique to our state will shape the potential for the expansion of advanced energy technologies in Tennessee. Oak Ridge National Lab and the close relationship it enjoys with the University of Tennessee is certainly one of those assets.

Our ability to understand what our unique assets bring to the discussion, as well as their willingness to combine these assets in support of advanced energy technologies will, to a large extent, shape the opportunities for expansion of the industry in Tennessee. That’s the role TAEBC seeks to fill.

Catch highlights from Ernie’s lecture on our twitter feed (tweet from May 25 pictured below) or check out the Howard Baker Jr. Center for Public Policy website for his complete remarks.

Secretary Moniz was at the University of Tennessee last month to provide the Baker Distinguished Lecture on Energy and the Environment.

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