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Is American Renewable Energy Falling Behind?

In last week’s article, we took a look at how Germany’s investing heavily in renewable energy as part of what they call the Energiewende, which translates to energy transition or energy shift in English.

 

renewable energy, image by huffington post

renewable energy, image by huffington post

 

Let’s Take a Look at How American Renewable Energy Production Stacks Up Against the Europeans

Are we falling behind? In some ways renewable energy has pretty much fallen off the radar for most US manufacturers thanks to the revolution in unconventional extraction technologies, like fracking. Fracking has brought us an abundant surplus of natural gas, which in turn has helped American manufacturers by lowering their energy costs. As we discussed last year, these lower energy costs are one reason that American heavy industry manufacturing has stayed relatively competitive. So just where are we with renewable energy production capacity in the U.S.?  In the chart below which we created from data provided by the U.S. Energy Information Administration, we show the percentage breakdown, or mix, of energy production capacity (not usage) during July 2014.

 

Renewable energy sources only made up 16% of US energy production capacity in July 2014. Fossil fuels dominate with 73% of capacity. Data courtesy US Energy Information Administration (eia.gov)

Renewable energy sources only made up 16% of US energy production capacity in July 2014. Fossil fuels dominate with 73% of capacity. Data courtesy US Energy Information Administration (eia.gov)

 

Based on this graph, things don’t look particularly auspicious for renewable energy. Fossil fuels are the 800 pound gorilla in the room at 73% of energy production capacity.

 

Let’s Dig a Little Deeper and See the Effect of Our Domestic Natural Gas Boom

When we look at the detailed break out in the next chart, it’s clear that natural gas at 40% has overtaken both coal at 29% and petroleum liquids (fuel oil) at 4%. Nuclear power and hydroelectric power are running neck and neck at 9% and 8%, respectively. Among the renewable energy production capacity, hydroelectric is the largest 8%, but surprisingly wind is not too far behind at 6%.

 

When broken down further, we see Natural Gas (40%) followed by Coal (29%) dominated US energy production capacity in July 2014. Nuclear (9%) barely edged out Hydroelectric (8%). Data courtesy US Energy Information Administration (eia.gov)

When broken down further, we see Natural Gas (40%) followed by Coal (29%) dominated US energy production capacity in July 2014. Nuclear (9%) barely edged out Hydroelectric (8%). Data courtesy US Energy Information Administration (eia.gov)

 

Current Renewable Energy Capacity is Still a Minor Player Today, but What About Projected Growth?

You may recall that we wrote about a surprising development that took place last week: the wealthy heirs of oil tycoon John D Rockefeller announced they were divesting from fossil fuel energy stocks. We asked if this was an environmental advocacy publicity stunt or if there really was a legitimate business case at play. Well, we crunched some more numbers provided from the U.S. Energy Information Administration, and we came up with our next chart, the horizontal bar graph below.

This graph illustrates the EIA’s latest energy capacity projection, for the period from July 2014 to July 2015. There’s no two ways about it: the projected growth in solar energy capacity — at 56% — is a barn-burner. Even the second-fastest projection for wind at 11% is still in the double digits. If both these renewable energy sources could continue this growth rate it wouldn’t take too many years for wind and solar to become top-tier players in U.S. energy production.

 

The US Energy Information Administration (eia.gov) reports projects capacity changes from July 2014 to July 2015. Only Solar (56%) and Wind (11%) are projected to grow at double digits. Both Coal and Petroleum energy source capacity are projected to decline.

The US Energy Information Administration (eia.gov) reports projects capacity changes from July 2014 to July 2015. Only Solar (56%) and Wind (11%) are projected to grow at double digits. Both Coal and Petroleum energy source capacity are projected to decline.

 

As we continue to look at the horizontal bar graph above, we note that coal capacity which (pardon the pun) has come under fire from the EPA due to air pollution, is projected to decrease by 4%. Petroleum liquids (fuel oil) are also down, by 2%. Nuclear is flat, with a 1% decrease. Given the natural gas bonanza brought about by fracking, one might have expected something higher than the 2% projected growth in natural gas energy production capacity.

 

How Does US Renewable Energy Capacity Compare with Europe and Germany?

Now we are going to shift gears a little bit to see if the Europeans are onto something in the renewable energy production market that we aren’t (or vice versa), by making some head-to-head comparisons. In the next graph, we show the relative mix of US renewable energy production capacity reported for July 2014. Only wind and hydroelectric break the double-digit capacity barrier.

 

Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is for July 2014, courtesy US Energy Information Administration (eia.gov)

Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is for July 2014, courtesy US Energy Information Administration (eia.gov)

 

How Similar or Dissimilar is this to European Renewable Energy Capacity?

To analyze this, we researched publications from the European Union (EU). Fortunately, the EU’s reporting agency, EuroStat, has recently published information we are looking for, but unfortunately, the newest data available is for the year 2012, not 2014. Nonetheless, when we put the renewable energy production from the 28 nations of the European Union into our graph format below we see the overall European renewable energy mix is dramatically different than here in the US.  

 

Here is European Union renewable energy capacity formatted in a similar graph as the one for the US above. Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is 2012,  courtesy of EuroStat (epp.eurostat.ec.europa.eu)

Here is European Union renewable energy capacity formatted in a similar graph as the one for the US above. Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is 2012, courtesy of EuroStat (epp.eurostat.ec.europa.eu)

 

In the EU, one dramatic outlier that catches your eye immediately: renewable energy capacity from wood, wood waste and biomass, which weighs in at over 65%! Coming in second at bit above 15% is conventional hydroelectric, which you may recall, is the largest of renewable energy capacity in the US.

 

Given the Great Publicity Around the Energiewende, is Germany’s Renewable Energy Capacity Market Markedly Different?

Having read so much about Germany’s initiatives for wind turbines and solar energy, the next graph is not what we expected to see! Certainly wind and solar are higher renewable energy contributors compared to Europe overall. But what was unexpected — at least for us — was that wood, wood waste and biomass constitute more than 70% of the German renewable energy mix! Of course we wish we had this year’s figures to see what changes have happened over the last two years, but clearly we have a lot to learn about this biomass renewable energy category, which was not on our radar from our admittedly American-centric perspective.

 

Here is German renewable energy capacity formatted in a similar graph as the ones for the US and EU above. Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is 2012,  courtesy of EuroStat (epp.eurostat.ec.europa.eu)

Here is German renewable energy capacity formatted in a similar graph as the ones for the US and EU above. Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is 2012, courtesy of EuroStat (epp.eurostat.ec.europa.eu)

 

So please look for a future report from us on biomass, wood and wood waste energy sources as it looks like there is something interesting going on here! We also plan to take a look at some of the nuts and bolts — or some might say blocking and tackling — necessary to make the projected rapid growth in wind and solar energy production capacity a reality. In particular, we will take a look at a key component, construction of new long-distance transmission lines that extend our current electrical grid by hundreds of miles to connect population centers with remote solar and wind turbine farms. Stay tuned.

 

Formaspace Brings New Energy to Your Workplace mobile-lab-island-01

Whether you are an energy producer, manufacturer, researcher, educator or professional, Formaspace technical furniture can bring new life to your existing workplace  — or new facility under construction. Our American-made technical furniture solutions feature clean, efficient and modern designs with flexibility and longevity built-in. We are so confident in what we build for you we back it up with our 12 year, 3 work shift furniture warranty— the best guarantee you’ll find in the industry.

Give us a call today at 800.251.1505 to find out more about the Formaspace line of stock, semi-custom and custom-made computer workstations, industrial workbenches, laboratory furniture, lab benches and dry lab/wet labs — as well as our design / furniture consulting services. Join the roster of satisfied Formaspace technical, manufacturing and laboratory furniture clients — including Apple Computer, Boeing, Dell, Eli Lilly, Exxon Mobile, Ford, General Electric, Intel, Lockheed Martin, Medtronic, NASA, Novartis, Stanford University, Toyota and more.

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Formaspace Industrial Workbenches Help Power the Labor Market

As we look forward to celebrating Labor Day this coming weekend, it’s clear that we are not the only ones thinking about the state of our domestic labor market and in particular the role that manufacturing plays in the U.S. economy. After all, we ourselves have a vested interest in the role that our industrial workbenches, cabinets, computer workstations and material handling stations that we build here at our factory in Austin, Texas play in our nation’s industrial economy.

 

Electronics Assembly Line with Custom ESD Work Surface

 

Speakers at U.S. Manufacturing Summit Predict a Resurgence in American Manufacturing

Just this past week it was with great interest we watched Walmart and the National Retail Federation convene the “U.S. Manufacturing Summit” in Orlando, Florida with nearly 500 suppliers and 1,500 people in attendance. Among the speakers were U.S. Commerce Secretary Penny Pritzker (who formerly led The Aspen Institute’s ‘Skills for America’s Future’ policy initiative), the governors of eight U.S. states, and Bill Simon, Walmart President and CEO. You can watch the summit presentations online.

 

Walmart U.S. Manufacturing Supplier Summit

Image by Walmart

 

One of the key presenters was Hal Sirkin, Boston Consulting Group Senior Partner and Managing Director, who made the presentation: “The Case for U.S. Manufacturing”. To recap, Sirkin predicts the combined effect of domestic labor becoming less expensive relative to overseas labor and continued lower domestic energy costs into the foreseeable future (thanks to the natural gas/fracking boom) together will drive a resurgence in American manufacturing. Will this come to pass? Well Senior Vice-President for Home at Walmart, Michelle Gloeckler, speaking on Bloomberg TV, did pledge a commitment to buy an additional $50 billion in American-made products over the next 10 years, which certainly will help. And we may see a resurgence in demand for American-made products among younger consumers, like the Millennial Generation, that has already strongly adopted the DIY movement on websites like Etsy and Make Magazine.

Will this come to pass? Well Senior Vice-President for Home at Walmart, Michelle Gloeckler, speaking on Bloomberg TV, did pledge a commitment to buy an additional $50 billion in American-made products over the next 10 years, which certainly will help. And we may see a resurgence in demand for American-made products among younger consumers, like the Millennial Generation, that has already strongly adopted the DIY movement on websites like Etsy and Make Magazine.

 

Innovation Clusters Hold Key to American Manufacturer’s Success

Trying to capitalize on this trend, Alex Bogusky, a former ad executive, has been in the news launching the Boulder, Colorado-based ‘Made Movement’ which promotes the ‘coolness’ factor of buying American at retail stores like “STORY” in Manhattan. You can learn more about Made Movement by visiting their ‘Million American Jobs Project.’ So, if we take stock here… there are several positive trends coming together to kick start an American revolution in manufacturing. We have relatively lower domestic labor costs, quite possibly the lowest domestic energy costs in the world, the third largest employer in the world (Walmart) wanting to sell American products and perhaps now a burgeoning trend to build demand to ‘buy American.’

 

Image by The Denver Egotist

The Made Movement, Image by The Denver Egotist

 

What else do we need? Many economic planners are zeroing in on the idea that single actors — even those as large as a Walmart, or a GE that is reportedly hiring 1,000 people to make light bulbs in the USA — are not powerful enough by themselves to give the needed boost to tip us toward sustainable growth in manufacturing. Instead, according to Rebecca O. Bagley, who spoke recently on a Brookings Institution panel with Gene Sperling, director of the National Economic Council, what we need to focus on is regional concentration centers of manufacturing supported by a balanced infrastructure in order achieve sustained manufacturing growth. In an article appearing in Forbes magazine, Bagley believes that regional innovation clusters hold the key to making American manufacturers successful over the long term.

“Since cluster development targets the entire value chain from fundamental research to final production, it recognizes the essential role manufacturers play in the commercialization process. Regional clusters also encourage businesses to share technologies and know-how, provide access to skilled employees and open doors to industry-specific funding opportunities, all of which benefits manufacturers,” wrote Bagley.

Bagley states that an economic region first needs to identify which emerging growth industries, such as high-tech energy applications, flexible electronic circuits or water technologies, it is going to pursue. Then, to be successful, it has to ensure the region has:

  • Sufficient concentration of suppliers to build a regional culture of innovation
  • Resilient infrastructure including energy grid, communications and transport
  • Advanced research laboratories to drive product innovation
  • Educational institutions providing workers with appropriate high-tech manufacturing skills

 

As a case study, Bagley points to promising results from the Regional Economic Development Strategy (RECS) group which was established to promote industry in the northeast Ohio region, an area once traditionally strong in manufacturing but hit very hard in the downturn of the recession. RECS has brought together businesses, foundations, universities and economic development organizations to align regional resources to support the rapid growth of emerging industries. This regional ‘holistic’ approach seeks to address each problem area one by one, including one that is bedeviling manufacturing facilities across the nation: the mismatch between the type of skills manufacturers need in their workforce and the type of education workers are getting from schools and universities. Amy Sullivan has a provocative article on this topic, titled “Why Jobs Go Unfilled Even in Times of High Unemployment.” RECS is taking this worker education issue very seriously and is working hard to make sure Ohio area schools provide the high level of skills demanded by today’s manufacturing processes.

Already, there are signs of success in the RECS region. Manufacturing grew 4.2% in 2011 and 3.1% in 2012. The area’s best known, breakthrough manufacturing success story is Reflex® brand plastic liquid crystal displays (LCDs) manufactured by Kent Displays. This company has tripled its capacity and doubled its revenue and employment in just over two years. As we look forward to celebrating the coming Labor Day, we salute the efforts of the RECS and its member manufacturers, like Kent Displays.

Heavy Duty Bench

Formaspace helps power the labor market by supporting the Made in America Movement. We are proud to serve this country and actively participate in its economy. A resurgence in American manufacturing is something we can all celebrate together. Be safe and have a great holiday weekend!    

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