“Since the new construction sector is currently at a virtual standstill throughout much of the world, and because of
increasing energy prices and government energy mandates, it
is evident that energy-efficiency renovation projects represent
the strongest and most promising market for electrical wholesalers and electrical contractors today and for the foreseeable
future,” said Willy Goldby, managing director of the Danish
electrical wholesalers’ association and host of the convention.
But the question is how many U.S. electrical contractors
have thought about this and are willing or able to make the necessary changes in their business lifestyle to treat this adverse
situation as an opportunity.
“I’ve been surprised and frustrated by how slowly and
reluctantly people in this industry accept change,” said Stan
Lazarian, president of Electric Service & Supply Co. (ESSCO),
Pasadena, Calif. “Either they don’t see the opportunities, or
they just choose to keep doing business as usual in the way
that’s kept them alive—up until now.”
The energy-efficiency renovation situation varies significantly
depending on your location in the United States, but it could be
argued that the poster state for this opportunity is California.
A considerable amount of the Los Angeles area’s energy
once came from the now-shuttered San Onofre nuclear power
plant. To stretch generation resources even thinner, the
gas-fired Huntington Beach plant also was closed for
environmental reasons. Unfortunately, local utility
Southern California Edison hadn’t developed a feasible alternative strategy, according to area sources.
On top of this, a number of aggressive legislative measures have been enacted, especially Title
24 of the California Code of Regulations, which
stipulates a net-zero requirement for all residential
structures by 2020 and for commercial buildings
by 2030. As a result, each structure has to be outfitted to produce as much or more energy than
Fortunately, local government and the private
sector have stepped up to the plate and offered
some economically workable solutions.
“Financing for energy-efficient retro-
fits is much easier to procure than it was a
few years back,” said Joe Sullivan, director
of energy solutions for the International
Brotherhood of Electrical Workers (IBEW),
the National Electrical Contractors Associ-
ation (NECA) and the Labor Management
Cooperation Committee (LMCC) in Los
Angeles. “Moreover, federal tax credits
have made deeper
retrofit projects pen-
cil out. For example, the
energy funding programs allow
the borrower to ally the loan to
his property tax, so it’s an assessment
on the tax bill and it stays linked with the
property, not the balance sheet. This changes
the conversation to one in which the point is these
energy measures improve your cash flow with no debt
or money out of pocket.”
According to Sullivan, NECA’s Los Angeles Chapter and
the IBEW local have been working together for five years to
provide training programs for contractors on the new technolo-
gies involved and on regulatory issues, utility incentives and
the mechanics of financing available to potential customers.
“Quite often, the customer doesn’t know what kind of money
is available,” Lazarian said. “In one case, we had finally sold
a project to a school that involved lighting retrofit, advanced
lighting controls and an air conditioning upgrade. We were discussing available financing with them, and it turned out they
were eligible for state funding. This significantly increased the
scope of the work.
“There are incentives including investment tax credits and
accelerated depreciation for renewable-energy installation.
Also, the tax credits available to publicly owned or nonprofit
businesses that don’t pay taxes can be passed on to any entity
involved in the design of an energy-efficiency installation project. Unfortunately, most ECs don’t know very much about these
things,” Lazarian said.
Not business as usual
For electrical contractors interested in entering the energy-efficiency renovation market, the first thing to understand is that
it is an interlocking field of fire involving technology, financing,
utility policy and regulatory mandates. It’s not a question of
cherry picking two or three out of four. It requires total immersion and commitment.
“At ESSCO, we decided we could no longer rely solely on the
kind of traditional work we’d been doing for 70 years,” Lazarian
said. “We decided to go after energy-efficiency jobs that would
help us through difficult times, and we did our first project in
the mid ’90s. Our volume increased from one green project a
year, then four to five, and this work continues to increase so
that it now represents about 35 percent of our work.”
The company had done installations for solar companies
earlier, so it targeted photovoltaic (PV) work at the beginning.
ESSCO now handles complete installation projects on a design/