Renewable Energy Markets Help Offset Declines for Some Distributors

At the recent Heating, Airconditioning & Refrigeration Distributors International meeting in Hawaii, many distributors and suppliers said they were seeing strong growth and increasing demand in geothermal markets. In fact, some said the percent of their overall sales from geothermal was in the double digits now, a welcome development given difficulties seen in other markets such as residential construction.

We Deliver Distribution News to Your Inbox Sign up below to receive MDM Update, your free weekly distribution news update by email.

In one meeting I sat in on, distributors and suppliers talked about how they got into the market, and the importance of training and creating a specific initiative focused on products and services surrounding geothermal energy. Those who had been successful in geothermal seemed passionate about the opportunities there.

Geothermal energy – heat from the Earth’s interior – can be used for electricity and for heating or cooling. The latter can be done without involving a power plant or heat pump, according to the Geothermal Energy Association’s primer on the energy source. It appears, according to a recent report from the GEA, that the market will continue to grow.

According to the group’s U.S. Geothermal Power Production and Development Report earlier this year, the number of geothermal projects and prospects under development was up 12 percent. Most of the industry is concentrated in the West, but some projects are being built out East, as well. Forty-three states have companies involved in geothermal production, according to the GEA, which attributes growth in geothermal in part to government incentive programs.

And a recent Google-funded research project found significant geothermal resources across the U.S. capable of producing more than 3 million megawatts of green power – 10 times the installed capacity of coal power plants today. Read about that report here.

As outlined in an MDM feature, Alternative Energy Markets: To Serve or Not to Serve?, more distributors are diversifying into alternative and renewable energy markets. In that article, I wrote that the dilemma over whether to invest in these markets is a big one – given that hype can sometimes overshadow reality. But in truth, some of these markets have provided great growth opportunities for distributors that went in with the understanding these markets are not a Promised Land. Instead the successful ones have approached serving these markets as strategically as any other market, taking the time to get to know their unique qualities.

The advice given in Building a ‘Green’ Strategy can be applied here.

As Bill Bean, president of Green Planning & Coaching, said, a strategy to reach these markets needs to be well-developed, not just a side idea trying to capitalize on a perceived market fad. Also, finding the right person to lead the charge and working with the right channel partners to get the right information and right products to market is critical.

On a related note, I spoke with now HARDI Past President Richard Cook of Johnson Supply recently for the MDM Executive Briefing 7 Minutes With … feature. He speaks about HARDI’s new Center for Energy Efficiency initiative in the following interview.