According to Environmental Business Journal, global renewable energy [RE] revenues totaled $6.4 billion in 1997, an increase of $2.5 billion over 1993 revenues for photovoltaic systems, solar thermal, geothermal, wind power, biomass, and related services.  EBJ estimates worldwide revenues for the industry will reach $7.4 billion in 1999, a 90% growth rate for the seven-year period 1993-1999.

The growth of the RE market is attributed to increased global demand for energy in developing countries, market opportunities created by deregulation of electricity in the United States and Europe, and international agreements to reduce greenhouse emissions caused by past reliance on fossil fuels.  In addition, the ability of the RE industry to compete with lower-priced energy alternatives is improving through new technologies, and government policies that help compensate for the environmental cost of fossil fuel based utilities.

Overall, the majority of Colorado RE companies are not currently experiencing growth commensurate with growth trends worldwide.  This can be attributed to the small number of manufacturing and other direct RE firms, and the low level of participation and interest in international trade.

The composition of renewable energy industry in Colorado is largely retail, wholesale, and support organizations, with only 30% of organizations involved in direct industry functions such as manufacturing, construction, design, engineering, and R&D.  Retail and wholesale functions account for 47% of the Colorado industry, while 23% provide support functions such as trade associations, training, policy, and planning.

Colorado organizations participating in renewable energy activities are small, with 81% having 10 or fewer total employees in 1997 and 50% having only 1 employee involved in renewable energy activities.

About 36% of these organizations generate less than $100K in total annual gross revenue, and for 55%, less than $100K in gross revenue is attributable to renewable energy products and services.  The majority [64%] of these organizations generate all of their revenue from RE sources.

Because various segments of the Colorado RE industry overlap somewhat, it is necessary to look at each segment.  These segments include the National Renewable Energy Laboratory [NREL]; government, university, electrical producers; and the RE-related companies.

In 1997, the estimated impact of NREL was as follows:
NREL awarded $21.5 million in purchase orders, research, and subcontracts to Colorado companies and small businesses.
In addition, NREL employed 750 workers with wages for Colorado employees of approximately $38 million.

In 1997, the estimated impact of the government, university, and electrical producers was 75 RE-related employees with annual wages of $2.6 million.

In 1997, the estimated impact of 237 RE-related companies was as follows:
Approximately 1,075 RE-related employees have annual wages of $31.4 million.
These companies have annual estimated RE sales of $97.3 million.  Approximately $31.4 million of these sales are within Colorado, while $65.9 million are sales to organizations or end-users outside the state.  (These sales amounts include subcontracts and expenditures by NREL.)
These companies annually spend approximately $36 million for raw materials and supplies, product components, finished products, manufacturing equipment, contract services, and transportation.  Approximately $12 million is spent inside Colorado and about $24 million is spent outside Colorado.

The final estimates on the size and composition of the industry in Colorado are based on analysis of ES202 data; extraction of survey data to the projected RE Colorado population; and personal interviews with government, NREL, and university officials.  The process of gathering information from these three sources has provided a set of checks and balances to help test the reasonableness of the final numbers.

The Colorado RE industry is very small, with approximately 1,875 RE employees working at 348 organizations.  Total 1997 wages for the renewable energy workers are $72 million.  The average 1997 annual wage is $38,400, compared to the overall average wage for the state of $30,057.  This industry wage is higher than the state average because of the high percentage of research workers.

The annual sales for the RE companies can be determined based on an extrapolation of annual RE sales data provided by companies responding to a survey conducted by the CU Business Research Division.  The estimated 1997 RE sales for the 237 companies was $97.3 million.  This excludes NREL, the universities and government organizations, and the electric producers.  Slightly more than 32% of these sales, $31.4 million, are within Colorado.  A majority of the smaller companies sell almost exclusively within Colorado, while the larger companies have more diverse markets.  Survey data were also extrapolated to determine that these 237 RE companies spent a minimum of $12 million in Colorado for raw materials and supplies, product components, finished products, manufacturing equipment, contract services, and transportation.

An estimated gross profit margin can be established by reviewing the 1997 Robert Morris and Associates Summary of Annual Statements.  By evaluating selected SIC Codes, we can assume that the gross profit margin for the companies in this study is approximately 28%.  This allows us to estimate that the 237 RE companies spent approximately $24 million outside Colorado for raw materials and supplies, product components, finished products, manufacturing equipment, contract services, and transportation.

Public and consumer education was identified as the most important factor that could impact profitability.  The next most important factor was policies that would increase local market demand.  Grants to develop and commercialize RE technologies were also important.  Factors of least value to Colorado organizations were RE-specific export assistance, the establishment of an RE industrial park/incubator, and industrial development bonds.  Technical expertise and debt financing are two important and unmet service needs.  A total of 45% of RE organizations will change their facilities in the next five years due to the need to lower costs, adapt to changing space requirements or because of personal factors.

Colorado's primary economic advantage appears to be the potential for industrial development based on new technology developed by NREL, universities, and company research.  Breakthrough technology that increases the efficiency and lowers the cost of RE products could result in a competitive and profitable product with national and international applications.  This would positively impact Colorado's economy, however, only if production of the product is based here.

To Request a copy of the full report, contact Office of Energy Conservation, Alexa Majors at 303.620.4292 or e-mail to amajors@csn.net.

This report summarizes results of primary research conducted in late 1998 by the University of Colorado's Business Research Division and CU Business Advancement Center to assess the current economic impact and growth requirements of renewable energy activities in the state.  The intent of the study, funded by Colorado's Office of Energy Conservation, is to obtain information about the renewable energy [RE] industry in Colorado and to help assess whether policy initiatives are needed to support state participation in global industry growth trends and generate economic benefits to the state economy.

Information in the report is based on published industry literature, secondary data sources, and a survey of Colorado renewable energy [RE] organizations.  A detailed report of survey data and methodology are attached as an Appendix.

Table of Contents for full report:

Executive Summary
I.   Worldwide Energy Markets
II.  Profile of Colorado Renewable Energy
Business
III. Economic Impact in Colorado
IV. Industry Growth Requirements
V.Conclusions
VI.Appendix  : 1998 Renewable Energy Industry Survey