How Small Businesses Can Join the Green Revolution

The green revolution, once relegated to the environmental fringe, is real and gaining momentum as oil prices remain persistently high in the face of growing worldwide demand. Global warming, now widely accepted as science fact instead of fiction, is also contributing to the growth of green technologies. But do small businesses fit in?

As it turns out, they do, in a big way, both directly and indirectly. Like most other emerging industries, small businesses are playing an integral part in the green revolution. And, opportunities are not just limited to exotic, high-tech firms. What’s surprising is the number of traditional businesses -- from machining and manufacturing firms to electrical contractors, engineering firms and even plumbing, heating and air conditioning firms -- that are finding new markets for their services.

"Although we also have a number of big companies like General Electric and BP, most of our more than 1,500 members are small businesses," says Gregory Wetstone, a Washington lobbyist for the American Wind Energy Association. "These companies produce critical wind turbine components like gears, bearings and electrical parts. They make composites for blades, and provide maintenance for wind turbines. They’re in the shipping and transportation business and they work construction as wind farms go up around the country."

Wetstone was one of several green industry executives who testified recently before the House Small Business Committee. The hearing provided some insights into how green technologies tied to environmentalism and energy conservation are creating new opportunities for small businesses. In fact, the wind power industry is a case study of the potential the green revolution holds for economic growth and development.

Once considered a "boutique power source," wind energy is now being viewed as a critical alternative to traditional coal and other fossil fuel electrical plants. The domestic wind power industry currently generates more than 18,000 megawatts of electrical power in 34 states, enough to power more than 5 million homes. Over the past three years, wind has been second only to natural gas as a source of new electrical capacity.

The rate of industry growth has escalated dramatically since 2007, when new installations more than doubled and wind provided 35 percent of the nation’s new electrical capacity.
During that time,  28 new wind industry manufacturing plants opened or were announced in Arkansas, California, Colorado, Idaho, Illinois, Iowa, Michigan, Montana, Nebraska, New York, North Carolina, Oklahoma, South Dakota, Texas and Wisconsin.

A recent study by the U.S. Energy Department of Energy (DOE) concluded that it is feasible for the wind industry to provide 20 percent of U.S. electricity needs by the year 2030. So far the industry has attracted more than $9 billion in investment. An expansion on that scale would create 500,000 American jobs, according to the report.

"A wind turbine has some 8,000 parts, and a turbine assembly plant can be expected to rely on some 400 sub-suppliers, many of which are typically small businesses," says Wetstone. For example, small manufacturing and machining companies that used to supply automotive and other heavy-equipment industries -- such as steel providers, foundries, and fabricators -- are now providing the raw materials, metal castings and machining for wind turbines, he said.

A case in point is K&M Machine Fabricating Inc., in Michigan. It once primarily served the mining and construction industry. But today, K&M generates much of its business from wind power. Because of its new market, the small business expects to add 120 jobs over the next two years in a state that is suffering through a recession as the auto industry reels and cuts back because of rising oil prices.

The green revolution is providing similar opportunities for small businesses in solar energy as well. James Resor is chief financial officer for groSolar Inc., in White River Junction, Vt. It’s a national distributor, integrator and installer of solar photovoltaic systems for residences and commercial enterprises. In less than two years the company has grown from about 25 employees to more than 100 employees, has raised about $15 million in investment capital, and has established a national network of customers and offices.

Resor says the company has hired engineers, installers (e.g. electricians, construction workers), managers and sales persons. "In many cases, we are hiring people from other industries that are contracting due to the economic slowdown. These jobs cannot be exported to other countries, since our work involves the hands-on design and installation of solar systems. These jobs truly represent the broad foundation of an emerging alternative energy economy," he says.

The company’s customers includes food distribution centers, agricultural operations, schools, municipal buildings, general office buildings, multi-unit residential complexes, sports stadiums and resort properties. "These solar installations are tied to the local electric utility ('grid-tied')," says Resor. "Customers retain access to their electric utility while generating electricity from solar power." Solar power is effective in nearly all regions of the country.

Solar thermal energy is another facet of the industry that has exploded since 2007. Such systems often perform simple tasks, such as providing environmentally friendly heat for household water and interior space, or they can be used to heat a swimming pool. The systems collect the sun’s energy to heat either air or a fluid. The air or fluid then transfers solar heat to your home or water.

About 80 percent of all new homes in the United States are incorporating green practices into the development, design and construction of new units, according to the National Association of Home Builders. About 70 percent of builders polled in a recent survey by McGrawHill Construction said they will have at least moderate involvement in building green next year. About 40 percent said that it is easier to market green homes than traditional homes in the current down market, which is one of the worst since the Great Depression.

The opportunities go well beyond building. Green technologies are creating new businesses to improve lot design, preparation and development; increase energy and resource efficiency; conserve water; improve indoor air quality; operate and maintain equipment; and provide homeowner education.

Traditional businesses, such as plumbing firms, have emerged as a major player in the energy and water conservation movements, says Kevin Tindall, who testified on behalf of the Plumbing-Heating-Cooling Contractors -- National Association. "Plumbing contractors have taken the lead in advocating for and installing new water and energy efficient systems through installation and use of green technologies," he says.

Of course, these developments haven’t occurred spontaneously. Over the past few years, the federal government has primed the pump with a number of tax breaks and incentives to foster the green revolution. Now, some of those tax incentives are about to expire, and small businesses need to join the effort to convince Congress to extend them.

For example, the wind power incentive, known as the Production Tax Credit (PTC) will sunset this year.  Expiration of the tax credits would place 76,000 wind industry jobs and more than $11 billion in clean energy investment at risk, according to a recent private industry study by Navigant Consulting.  "It is absolutely critical that Congress act quickly to find a way through the current impasse and enact a full-value, long-term extension of the PTC," says Wetstone.

Restoring the credit is a good starting point for a healthier economy and cleaner energy future. The green revolution promises to deliver both, and small businesses should be leading the charge.