By Devin Day, SEDAC Engagement and Program Specialist
The coronavirus pandemic has created an unprecedented level of uncertainty for industries the world over. First responders, healthcare practitioners, and frontline workers in hospitals, food service, and essential infrastructure continue to be a source of hope and inspiration, and we can find solidarity in staying home to prevent greater loss of life. But “pausing” the economy is already creating far-reaching consequences for an historic number of laid off workers, furloughed employees, indebted employers and small business owners forced to close their doors.
The energy efficiency sector is no different. Research from E2 and BW Research Partnership out last week shows dire predictions for nation-wide layoffs and work gaps—106,000 clean energy jobs lost in March with as many as 500,000 more in the months to come. However, this is not a foregone conclusion. With the ingenuity, innovation, and passion energy efficiency professionals are known for, EE can become a response to uncertainty and a means of attaining resilience in the face of a struggling economy.
Impacts of the health crisis on energy efficiency
As the E2 and BW Research Partnership brief demonstrates, industry forecasters are beginning to adjust the previously rosy outlook for job growth. According to the 2020 US Energy Employment Report (USEER) released in March and authored by the National Association of State Energy Officials (NASEO) and the Energy Futures Initiative (EFI), energy efficiency added more jobs in 2019—over 54,000 (1,500 in Illinois)— than any other energy sector, bringing the national total to almost 2.38 million jobs. This 2.3% bump (1.7% in Illinois) from 2018 continues an upward trajectory for energy efficiency jobs over the past few years.
Much of this growth appears to be driven by demand for efficient technology and building upgrades within the construction trades, which account for the majority of energy efficiency jobs (more than 1,323,000, or nearly 56% based on the 2020 USEER). The report predicts 3% growth nationwide in 2020 and 4% growth in Illinois, already a downgrade from the state’s previously predicted 8.3% growth for 2019 (2019 USEER). It is clear that the pandemic will have a significant impact on this projected job growth.
Table 1. 2020 USEER report findings, in Illinois and nationwide.
|EE Employees in 2019
|EE jobs added in 2019
|% EE job growth in 2019
|Predicted % EE job growth in 2020
Planning for emergency capacity
Because energy efficiency jobs are often project-based and customer-centric, the coronavirus has greatly disrupted workflows and employment. In a pandemic planning and informational brief published at the end of February, the Edison Electric Institute (EEI) estimated that up to 40% of the utility workforce “could be out sick, quarantined, or might stay home to care for sick family members” (2020). On top of that, not all utility employees or partnered contractors are deemed "essential workers." The EEI brief explains that to ensure critical functions,
"Electric companies’ pandemic preparedness plans are designed to ensure that operations and infrastructure are properly supported so that they can continue to provide reliable electricity throughout an emergency. To do so, electric companies identify those functions critical to their continued operations and the people needed to fill those positions."
These positions frequently include “power plant operators, lineworkers, and call center representatives” (EEI, 2020). Other personnel, such as contracting vendors, suppliers, and implementers for customer-facing programs confront the prospect of furlough or unemployment if they can’t immediately shift to remote work. For many contractors, remote work is off the table: face-to-face services like energy retrofits, audits, and home surveys would potentially risk the health and safety of customers and employees alike.
Energy efficiency programs focused on residential and commercial buildings have been suspended, shut down, or are experiencing significant delays. Duke Energy, Oklahoma Gas & Electric, Arkansas Oklahoma Gas, Georgia Power, Lime Energy, ConEd, Florida Power & Light, and Dominion Energy are only a few of the many utility companies who have postponed non-essential in-home energy efficiency activities. The same is happening to the Department of Energy’s federal Weatherization Assistance Program (WAP). Administered by states and implemented through local nonprofit community action agencies, offices have either closed or shifted to remote intake services with no expectation of any in-home energy efficiency implementation. A recent article in Utility Dive, an online trade publication, reports that 20 states have suspended their WAP programs, and other states have deferred to local decision makers, resulting in more shutdowns. With 45 states now executing variations of stay-at-home directives, very few of these energy efficiency programs still operate.
These emergency decisions obviously create ripple effects for customers and partnering contractors, many of whom have lost jobs or have been furloughed. According to E&E News, another trade publication, Lime Energy “has furloughed about 200 employees—about two-thirds of its workforce” (Iaconangelo, 2020). Julian Boggs, policy director of the Keystone Energy Efficiency Alliance, told Utility Dive that “his organization has heard reports of some companies furloughing or cutting salary for 80% of their staff. A few companies have laid off half their staff” (Walton, 2020). Smaller EE contractors, who often operate businesses with 20 or 30 employees, have seen 50-80% of their work dry up (Thill, 2020). EEI’s 40% estimate actually seems low given these staggering numbers.
In Illinois, both major electric utilities—ComEd and Ameren Illinois—have ceased non-essential home energy efficiency programs. For customers who rely on these low- and no-cost offerings, and especially for income-qualified residents of Illinois, the home energy efficiency and federal weatherization programs are a lifeline. Both companies have suspended disconnections and instituted forgiveness of late payment fees for non-payment through May 1, which coincide with a state prohibition on shut-offs and late fees during the health crisis. No one knows for sure how long the crisis will last, but most federal health officials now believe it will last into the summer. ComEd’s pandemic response plan has measures in place up to August.
Impacts on energy efficiency demand and legislation
Demand for energy efficiency services will be severely impacted in the future as well. Supply chain delays, shortages, and price increases for efficient products only compound the industry’s challenges, as manufacturers and distributors scramble to find alternatives within the US. Right now utilities aren’t seeing widespread energy demand destruction as the load shifts from commercial and industrial to primarily residential demand, but there could be a considerable drop off as unemployment through the rest of the economy peaks. The nation will undoubtedly enter a recession—Illinois along with it—signifying a stark course reversal after nearly a decade of sustained growth. Considering the outsized role of construction jobs in EE and the generally delayed effects of recession on the construction industry—typically 12 to 18 months—energy efficiency could struggle for quite some time.
Delays in the state and national legislative agendas make matters worse. Illinois assembly leaders and US congressional leaders move slowly in the best of times, and the pandemic makes their work much harder when practiced from home. COVID-19 has pushed other priorities to the backburner. The Illinois Clean Energy Jobs Act (CEJA), a proposed complement to the Future Energy Jobs Act that promoted ratepayer energy efficiency programs and additional funding, would grow the EE workforce and help keep energy bills down for low-income households. It would also shift energy generation to more renewable sources. If CEJA does not pass in the current legislative session, which ends May 31, the energy efficiency sector in Illinois could face a much more difficult, much longer recovery period. With households under increased stress from the pandemic, bills like CEJA that create jobs and decrease the cost of energy are more important now than ever.
At the national level, EE policy groups and other advocates are pushing for energy efficiency to be included in future stimulus bills to combat the worsening economic situation brought on by COVID-19. They’re calling “for an expansion of energy efficiency tax credits, increased funding for the Energy Department's weatherization and research and development programs, and resurrection of a $3.2 billion efficiency and conservation block grant program from the 2009 stimulus” (Iaconangelo, 2020). Though the American Recovery and Reinvestment Act of 2009 had its setbacks, many EE organizations used funding to successfully increase demand for services. EE contractors looking for support should pursue resources built into the recent federal stimulus package and stay abreast of legislation to come. Low-interest loans are available to ”businesses with fewer than 500 employees . . . to keep workers on payroll for eight weeks. The loans can also be forgiven if that term elapses” (Iaconangelo, 2020).
Change begets opportunity
There’s room for hope: schools in particular prefer to implement retrofits and construction projects during the summer, when buildings are mostly or completely unoccupied. The same can be said of other public sector buildings, where many facilities managers are still working because of their essential services to the public. With ingenuity and planning, contractors can explore EE assessments and upgrades through the use of virtual technology and careful execution of social distancing guidelines. Some firms have continued to work in states where stay-at-home guidelines for the construction industry and critical infrastructure leave room for interpretation, relying on customers to explain project priority and need. In these circumstances, employers make health and safety paramount, clearly communicating expectations, allowing for individual decisions if workers prefer to stay home, and even requiring regular temperature checks at the beginning and end of the day. Any EE professionals who opt to continue on-site work should follow these precautions and stay up-to-date with reliable information from the CDC and state sources.
With any luck, these unprecedented times will soon change as the virus peaks and hospital capacity improves in response to social distancing and stay-at-home orders. With change comes opportunity. It would behoove EE stakeholders and lawmakers to place the industry on firm footing when it does. Though perhaps energy efficiency is “non-essential” during an active state of emergency, the services EE professionals and programs provide offer more comfortable, healthier, better spaces in which to live and work. They save residents, businesses, and municipalities money for times like this, when they need it most. And they help mitigate the adverse effects of climate change, which poses an existential threat to our very way of life. Ultimately, energy efficiency makes people and the organizations we create stronger. More resilient. Maybe even resilient enough to weather a pandemic.