Extensive research, interviews, and roundtables with stakeholders and experts in Minnesota have identified energy efficiency as having a high potential for economic development. The energy efficiency sector can move technological innovation forward, create middle-class jobs for Minnesotans, and elevate the state’s companies in the global marketplace.
Minnesota is well-positioned to benefit from rising global demand for energy efficiency products given its base of 450 companies, leading research universities with expertise in energy efficiency technologies, strong innovative workforce, and attractive business climate. Opportunities to leverage these strengths and momentum to further serve growing regional, national, and global markets offer vast potential benefits for the state economy and Minnesota residents.
However, there are several barriers hindering Minnesota’s energy efficiency progress and preventing the industry from reaching its full potential. These barriers to growth range from policies that discourage capital investments to a shortage of skilled workers, a lack of access to capital for growing businesses, and changing workforce demographics.
To take full advantage of opportunities in energy efficiency technologies, state leaders can pursue strategies to solidify the foundation for industry growth and help Minnesota businesses grow, innovate, and outcompete regional, national, and global competitors. With forward-thinking policies, Minnesota’s energy efficiency industry can support over 26,000 direct, indirect, and induced jobs annually through 2030.
Summary of Policy Recommendations
The analysis presented in this report culminates in recommendations for Minnesota’s leaders based on best practices in the United States and abroad. Each recommendation identifies opportunities for removing barriers and growing the energy efficiency sector. While the recommendations are intended to be complementary and would be more powerful if adopted as a package, each can also be viewed as a stand-alone option.
Create a Local Market
Institute Energy Benchmarking and Disclosure for Public and Commercial Buildings to Encourage Efficiency Upgrades: Strengthen the B3 Benchmarking Program by requiring participation and covering both public and commercial buildings. A statewide requirement would help monitor building energy performance, illuminate potential energy savings opportunities, and achieve environmental benefits.
Update Utility Combined Heat and Power (CHP) Policies to Incentivize CHP Implementation: Streamline projects and update utility policies to access untapped energy savings and mitigate barriers such as confusing standby rates, inconsistently applied interconnection standards, and lack of financial incentives.
Access to Capital
Establish a Fund of Funds to Stimulate the Investment Environment: Create a state-initiated fund of funds to bolster Minnesota’s investment environment and provide critical capital for early-stage ventures and small businesses in the state’s clean energy economy. Minnesota could sell insurance premium tax credits to leverage insurance companies for investment capital.
Offer Working Capital Loans to Support Small Clean Energy Business Operations: Ensure long-term financial security for companies that innovate and manufacture energy efficiency technologies by providing either direct loans or increasing access to private loans through credit enhancements.
Develop Degree and Certificate Programs on High Performance Buildings: Ensure an adaptive, skilled workforce by encouraging Minnesota’s colleges and universities to develop cutting-edge programs to ensure Minnesotans are prepared for the jobs of the future.
Establish an Industrial Assessment Center in Minnesota to Increase Access to Efficiency Training and Technical Assistance: Explore options to establish industrial efficiency centers (IACs) on university campuses. As part of an effort under the U.S. Department of Energy, IACs provide free energy audits and efficiency recommendations for small and medium-sized manufacturers. Because faculty and students conduct services, IACs offer a unique skills training resource for students.
Develop Employee Engagement and Retention Strategies to Support Minnesota’s Changing Workforce: Address Minnesota’s severe workforce shortage, due to an aging population and underutilization of minority groups, by capturing the value and expertise of minority groups. Minnesota could convene stakeholders to develop a diversity and inclusion toolkit that offers engagement and retention strategies for businesses and employment centers.
Organize an Energy Efficiency Business Association to Drive Cluster Development: Facilitate better collaboration and cooperation by encouraging business leaders to share knowledge and resources, maintain a supply chain database, and advocate for business interests, among other activities.
Target Foreign Direct Investment to Expand the State Energy Efficiency Value Chain: Conduct targeted investment missions to address supply chain gaps and expand employment opportunities for Minnesotans. Foreign direct investment is when an international business locates operations in the state or buys a stake in an in-state company.