How Can We Fix the EE Industry's Lack of Diversity?

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Utilities across the Midwest have invested billions of dollars in energy efficiency programs over the past several years, causing the energy efficiency workforce to flourish. However, the industry remains largely homogeneous and lacks diversity in trade ally suppliers, implementers and other program administrators.

Important steps could be taken to identify and engage minority-owned and women-owned businesses to ensure access to opportunities and increase their participation in energy efficiency programs. To their credit, several utilities and states across the region have undertaken supplier diversity initiatives, with each approaching the diversification in different ways. 

In our new whitepaper, Winning Contracts and Developing Skills: Supplier Diversity and Workforce Development in the Midwest Energy Efficiency Industry, we compare initiatives across the region and suggest how we might improve these efforts. We also take a deep dive on Illinois, which has recently stepped up its efforts to address supplier diversity and equitable workforce development. 

Illinois’ Future Energy Jobs Act Makes Inclusion a Priority

The Future Energy Jobs Act (FEJA) is one of the most significant and comprehensive pieces of energy legislation to date in Illinois and pivots Illinois to the new clean energy economy. To better serve marginalized communities within Illinois, FEJA prioritizes community workforce development and the state’s already established supplier diversity initiative. Both supplier diversity and workforce development are part of FEJA’s goal to remove barriers for women-owned and minority-owned businesses and bring diverse perspectives into the clean energy economy.

Prior to FEJA, there was no legal directive requiring utilities to include employment opportunities for minority-owned and women-owned businesses. Illinois had attempted to rectify the historical lack of supplier diversity in utilities through voluntary efforts, utility reporting on diverse suppliers and public policy sessions. Due in part to these efforts, utility spending on diverse suppliers increased by more than $1.4 billion from 2012-2016. Under FEJA’s mandatory framework, supplier diversity is expected to increase even more.

Illinois Utility Diverse Supplier Spend (2017)

Utility

Diverse Supplier Spend

Percentage of Spend

Energy Efficiency Total Diverse Spend

ComEd

$711 million

36% total supply chain spend

$14 million

Nicor

$180 million

27.5% total spend

$2.83 million

Peoples North Shore Gas

$125.5 million

18.7% total procurement spending

$312,480

Ameren

$216.7 million

36.5% of overall

$1.27 million

Utilities submitted their first post-FEJA energy efficiency plans to the ICC on June 30, 2017. These plans were to cover 2018-2021 and included provisions responsive to FEJA requirements. We are already seeing progress in terms of an increase in diverse spending, the pool of diverse candidates and the number of contracts that were awarded.

What's Happening Outside of Illinois? 

Supplier diversity efforts are not confined to FEJA or Illinois. Iowa’s Alliant Energy, Michigan’s DTE Energy (DTE) and AEP Ohio are three utilities across the Midwest with supplier diversity initiatives. Examining these different utility voluntary efforts offers the opportunity to gain a broader understanding for supplier diversity initiatives in other states across the region.

Alliant Energy

Alliant Energy measures supplier diversity based on the percentage of spend. This internal program is aimed at increasing the utilization of minority-owned, women-owned, service disabled veteran-owned, lesbian, gay, bisexual, and transgender-owned and designated small businesses.

Alliant Energy’s Diverse Spend (2013-2017)

Year

Diverse Spend

Diverse Spend (millions)

2013

12.6%

$129

2014

11.9%

$129

2015

17.4%

$200

2016

12.1%

$158

2017

14.0%

$212

Although Alliant has a strong supplier diversity program, there are still some challenges that the utility must work to overcome. As the energy mix changes and Alliant moves into new business opportunities, it is not easy finding new diverse contractors. Alliant is working to understand the new market and where the diverse businesses are within that sector to fulfill the utility’s supplier diversity goals moving forward.

DTE Energy

DTE has enacted its own internal and voluntary supplier diversity initiative with a 2018 diverse spend goal of 19.5%, which DTE defines as small businesses owned by women, veterans or minorities.

DTE Energy’s Diverse Spend (2014-2018)

Year

Diverse Spend
(% of total)

Diverse Spend (millions)

Total Spend
(billions)

2014

17%

$357

$2.1

2015

18%

$378

$2.1

2016

18.5%

$389

$2.1

2017

19.4%

$446

$2.3

2018

19.5%

$448

$2.3

AEP Ohio

AEP Ohio’s voluntary supplier diversity initiative focuses on two main areas: The Small Business Program, which started in 2013, and the Supplier Diversity Program, which launched in 2017. AEP Ohio has established a 10% spend goal for diverse suppliers by 2023 Aside from the 2023 goal, AEP Ohio is also working toward a 1% increase in diverse spend for 2018.

Get the Full Story in our New Whitepaper

Though many of these supplier diversity initiatives are in their preliminary stages, the Midwest has made some promising moves forward on inclusivity.

For a deeper dive on diversity initiatives across the region, download our brand-new report, Winning Contracts and Developing Skills: Supplier Diversity and Workforce Development in the Midwest Energy Efficiency Industry. Our comparative analysis highlights key takeaways and recommendations that could help improve these initiatives.

Interested in MEEA’s work in this space? Have questions about the new report? Contact Sophia Markowska at smarkowska@mwalliance.org.

 

Photo credit: Marcela Gara, Resource Media