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T H E M E T R O P O L I T A N B U S I N E S S P L A N N I N G I N I T I A T I V E BROOKINGS
A P R O S P E C T U S F O R C A T A LY Z I N G
G R O W T H I N T H E P U G E T S O U N D ’ S
E N E R G Y E F F I C I E N C Y
T E C H N O L O G Y C L U S T E R
I N N O VAT I O N M E E T S D E M O N S T R AT I O N
ThePugetSoundeconomyisstrong—andfortunate.Ifitweren’tfordecisionsbythelikesof
BillGatesandBillBoeing,wewouldn’tbetheleadinginnovativeandentrepreneurialregion
thatwearetoday.Andwhileweareproudofoursuccess,wealsoknowthatrelyingonluckis
notaneffectiveplan.Intoday’scompetitiveglobaleconomy,restingonyourlaurelsistanta-
mounttosteppingbackwards.Instead,weneedtobestrategicinourthinkingandintentionalinouractions,
maximizingourresourcestowardensuringjobcreationandlong-termprosperityforourregion’sresidents.
WhichiswhytheProsperityPartnership—ourregion’scoalitionofmorethan350business,government,
nonprofit,labor,andeducationorganizations—hasbeensoexcitedtoparticipateintheMetropolitan
BusinessPlanningInitiative.
Tous,theMetropolitanBusinessPlanapproachtakeseverythingweknowabouttheingredientsfor
successfulregionaleconomicdevelopmentandputsitintoacomprehensive,holisticframework.Itfocuses
ourregion’scollectiveactiononhowouruniqueassetsandcapacitiesinteracttocreateprosperity,andit
enablestheidentificationofthosekeyinitiativesthatwillcatalyzeourregion’seconomy.Inatimeoflimited
capacityandfunds,businessplanningallowsustoidentifythemostpromising,bottom-lineorientedinitia-
tivestospureconomicgrowthandlong-termcompetitivenessinthecentralPugetSound.
Inparticular,weknowthatwemustconsistentlyfosternewstrengthsevenaswecontinuetonurture
existingones.Givenglobaltrends,andourmixofindustries,humancapital,innovationcapacity,and
environmentalconsciousness,thecleantechnologyindustrygenerally—andtheenergyefficiencyindustry
inparticular—isanaturalfocusasapotentialnextmajorcluster.ThePacificNorthwestisalreadyahubof
energyefficiencyactivity,withmultipleprograms,policies,andfundingstreamsthataddressthedeploy-
mentofexistingenergyefficiencyproductsandservices.Thekeyistofindthenichethatwillnotjustgrow
locally,butcompeteglobally,andbuildfromandstrengthenallaspectsofoureconomy.Oneofthecentral
findingsofourMetropolitanBusinessPlanisthehugepotentialthatthegrowingdemandfortechnologies
toachieveenergyefficiencypresentsforourregion.Tograspthisopportunitytocreateadominantnew
cluster,wemuststrengthenandcatalyzetheconvergenceofourexistingbaseofindustries,humancapital,
andinnovation.
TheBuildingEnergy-EfficiencyTestingandIntegration(BETI)CenterandDemonstrationNetworkissuch
acatalyticinitiative,carefullydesignedtosupporttheemergenceofapowerfuladvancedenergyefficiency
technologiescluster.Byallowingnewinnovationstodemonstratetheireffectivenessinreal-worldsettings,
wearefacilitatingthepipelineformoreeffective,moreintegratedsolutionstotheenergyefficiencychal-
lengesofbuildingsthroughouttheworld.Workingwithourpartnersinbusinessandgovernmentatthe
local,stateandnationallevel,welookforwardtomakingBETIanationalresourcetoincreasethedevelop-
mentandexportofcleantechnology.
Mayor Ray Stephanson Phyllis M. Wise Norman B. Rice
CityofEverettand InterimPresident PresidentandCEO
PugetSoundRegionalCouncilPresident UniversityofWashington SeattleFoundation
Phillip K. Bussey John Gardner
PresidentandCEO VicePresidentforEconomicDevelopmentand
GreaterSeattleChamberofCommerce GlobalEngagement
WashingtonStateUniversity
M E T R O P O L I T A N B U S I N E S S P L A N C O - C H A I R S
A M E S S A G E F R O M T H E P U G E T S O U N D R E G I O N
METROPOLITAN
BUSINESS
PLANNING
INITIATIVE
PUGET SOUND
1
I N N O VAT I O N M E E T S D E M O N S T R AT I O N
A P R O S P E C T U S F O R C A T A LY Z I N G
G R O W T H I N T H E P U G E T S O U N D ’ S
E N E R G Y E F F I C I E N C Y
T E C H N O L O G Y C L U S T E R
1775 Massachusetts Avenue, NW
Washington D.C. 20036-2188
telephone 202.797.6000
fax 202.797.6004
website www.brookings.edu
BROOKINGS INSTITUTION METROPOLITAN POLICY PROGRAM © 2011
To stay on the competitive edge, the
Puget Sound region must foster the
growth of new cluster opportunities.
Specifically, our region believes the
technologies that will be the backbone
of the clean technology industry gener-
ally—and the energy efficiency industry
in particular—hold exciting potential for
future job growth.
BROOKINGS
METROPOLITAN
POLICY
PROGRAM
2
the
pro
po
siti
on
METROPOLITAN
BUSINESS
PLANNING
INITIATIVE
PUGET SOUND
3
Ourproposednew Building Energy-Efficiency Testing
and Integration (BETI) Center and Demonstration
Networkisavitalingredientincatalyzingtheestab-
lishmentofaninternationallyrecognizedclusterin
energyefficiencysoftwareandautomationtechnology.
Itspecificallyaddressesthechallengesoftechnol-
ogycommercializationbyloweringtwoofthekey
marketbarriersforlocalcompanieswith“smartand
efficient”products:thevalidationoftheireffective-
nessinreal-worldsettingsandtheirintegrationwith
otheraspectsofbuildingefficiency.Morebroadly,
BETIharnessesourexistingadvantages—exceptional
strengthininformationtechnology,theenvironmental
ethosofourresidents,thelonghistoryofpolicyand
programmaticsupportforenergyefficiency,andthe
majorinvestmentsbeingmadebycompaniesandlocal
jurisdictions—tosupportahighlynetworked,innova-
tiondriven,entrepreneurialregioninitseffortsto
takeadvantageofthe21stcenturyglobaleconomy.
This innovative proposal matches regional strengths
with business opportunity. In particular, BETI will:
➤ Builduponandreinforcecomplementaryinitia-
tivestostrengthenhumancapital,innovationand
relatedindustrieslikeinformationtechnologyand
manufacturing
➤ Drawontheregion’sexistingcompetitiveadvan-
tageinthebuildingenergyefficiency(EE)sector
➤ Fillavitalcommercializationgapbetweentechnol-
ogydevelopmentandmarketadoptionbyproviding
verificationservicesforpromisingnewproducts
➤ TapintoahugeEEmarketexpectedtotop
$700billionintheU.S.aloneby2030
➤ Sustainitselffinanciallythroughfee-for-service
revenueswithinfiveyearsofstart-up
➤ Benefitfromtheleadershipofawiderangeofpub-
licandprivatesectorentitiesthatarecommittedto
makingthePugetSoundaleadingregionalEEhub
Both private and public sector leaders will benefit
from engagement in BETI:
➤ Businesseswithintheclusterorrelatedclusters
willexpandtheirefficiency,marketsandoutputs,
whileotherbusinesses—fromrealestatedevelopers
toutilities—willbeabletoincorporatenewenergy
efficiencygoodsandservicesdevelopedbyBETI,
reducingcostsandhelpingthemmeetconserva-
tionrequirementsandbuildingenergyusecodes
➤ Stateandlocalgovernmentswillreapthebenefits
ofexpandingeconomicactivityandjobs,while
maximizingtheirreturnoninvestment
➤ Federalagencieswillreapthebenefitsofexpanded
economicactivity,whilebetterachievingtheir
goalsaroundinnovationclusters,exportpromo-
tion,andgreentechnologydevelopment
T H E P R O P O S I T I O N
ThecentralPugetSoundregionisoneofthenation’smostvibrant
economies,rankingatornearthetopofthelargest100U.S.
metrosonmeasureslikeproductivity,talentattraction,andinnova-
tion.Yet,tostayonthecompetitiveedge,PugetSoundmustfosterthe
growthofnewclusteropportunities.Specifically,ourregionbelievesthe
technologiesthatwillbethebackboneofthecleantechnologyindustry
generally—andtheenergyefficiencyindustryinparticular—holdexcit-
ingpotentialforfuturejobgrowth.Capitalizingonthisopportunitywill
requirecomplementarystrategiesaddressinghumancapital,innovation,
governance,andtheroleofotherindustryclusters.
the
big
pic
ture
BROOKINGS
METROPOLITAN
POLICY
PROGRAM
4
T H E B I G P I C T U R E
PugetSoundiswell-positionedforfuturesuccessinthe“next”
Americaneconomy.
LEADING THE NATION. The Puget Sound met-
ropolitan area is a recognized leader in regional
economic competitiveness.In2008,theregion’s
percapitaproductivity(measuredasper-worker
grossmetropolitanproduct)reached$100,233,fully
35percentabovethenationalaverage,anditsjob
growthof11percentbetween2002and2008was
morethandoublethenationalrate.Itisalsoatop-10
metroexporter(whencomparedtothe100largest
U.S.metros),hometoahighly-educatedpopulation,
andahighlydiverseeconomydevelopedoverdecades
inknowledge-intensivefieldslikeinformationtech-
nology,aerospace,cleanenergy,andlifesciences.
Asaresult,PugetSoundhasweatheredtheGreat
Recessionbetterthanmanyotherpartsofthecoun-
tryandispoisedtoleadinthenexteconomy.
LOOKING FORWARD. Continued economic prog-
ress will require expanding beyond the region’s
current industry base to drive future growth. While
ITandaerospaceremaintop-performingregional
industriestoday—andlargeregionalclustersliketrade
andlogistics,tourism,andthemilitaryhaveremained
relativelyconstant—theregionmustidentifythose
nextopportunitiesthatwilldrivejobcreationintothe
future.EE,alongwiththeinteractivemediaandglobal
healthsectors,isagrowinginnovationclusterthat
hasthepotentialtomeetthoseneeds.
FOCUSED ON THE NEXT ECONOMY. National
trends point to a post-recession economy that will
be lower carbon and increasingly innovation- and
export-oriented. WhilePugetSoundisalreadywell-
positionedalongtheselines,itisalsoproactively
workingtoboostitsfutureprospectswithinthese
contours.Energyefficiencytechnologyisastrong
exampleofthekindsofindustriesthatwillsucceed
inthefuture,andtheregionalreadyhassignificant
strengthinthissectoruponwhichtobuild.Puget
Soundisalsoenhancingitsregionalinnovation
systemtobettersupportcommercializationofnew
technologiesandtobetterattractanincreasingshare
ofnationalventureinvestments.
TARGETED APPROACH. In the “next” economy,
the energy efficiency niche has great potential to
be a new high-value growth sector and regional
economic driver for Puget Sound. Outofapproxi-
mately22,900cleantechjobscurrentlyintheregion,
40percentarealreadyinfieldsrelatedtobuilding
EE,spanningallmajorindustryaspects.Giventhe
region’sconsiderableassetsinIT,greenbuilding
andretrofitting,andprecisionmanufacturing,Puget
Soundwillturnthisexistingstrongconcentrationinto
aleadingregionalexportsectorandakeysourceof
futurejobcreation,focusedparticularlyonenergy
managementsoftware,services,andtechnologies.To
helpcatalyzethegrowthofthistargetednichecluster,
PugetSoundwillcreateBETItotest,verify,andfacili-
tatethecommercializationofnewEEtechnologies.
5
the
ven
tureT H E V E N T U R E
TheproposedBuilding Energy-Efficiency Testing and
Integration (BETI) Center and Demonstration Network will
allowEEinnovatorstotest,evaluate,andintegratepromisingproducts
andservicesbeforelaunchingthemtomarket.
DESIGNED FOR IMPACT. Withparticularfocuson
energyservices,energymanagementsoftware,and
informationandcommunicationstechnology-enabled
integratedsystems,BETIwillhelpcommercializenew
products,growcustomerbases,increasemarketpen-
etration,andultimatelyspurregionalbusinessgrowth
andattraction.Itssuiteofserviceswillfocusontwo
mainactivities:
➤ Laboratory testing and integration: Acontrolled
facilitywillsimulateavarietyofbuildingtypes
andoperationssouserscanverifytheeffective-
nessofnewbuildingenergymanagementsoftware
andautomationtechnologiesandtesthowwell
variousproductsandinstallationdesignswork
together
➤ Field demonstration and testing: Anetworkof
ownersandoperatorsofdiversebuildingtypes
(residential,commercial,industrial,andinstitu-
tional)willprovideopportunitiesfordemonstrating
theperformanceofnewtechnologiesovertime
under“realworld”conditions,verifyingtheir
energysavings
Inaddition,BETIwillensurethatitsclientsare
connectedtopotentialcollaborators,aswellasthe
servicesthatwillallowthemtoaddressawidevariety
ofrelatedbusinessissues:
➤ Facilitated Industry Collaboration: Intra-industry
interactionacrossPugetSound’smanyexisting
EE-relatedtradeassociations,consortiums,and
REVENUES (cash only, excludes in-kind) 2011 ($) 2012 ($) 2013 ($) 2014 ($) 2015 ($)
RestrictedStateAppropriation 5,500,000
FederalGrants 3,500,000
Otherdonations/grants 150,000 1,250,000
BETI-generatedfeesandincome 1,125,000 3,165,000 4,770,000 6,515,000
ResearchGrants 150,000 375,000 500,000
RentsandMarkingCo-OpIncome 105,000 105,000 105,000
TOTALREVENUES 150,000 11,375,000 3,420,000 5,250,000 7,120,000
EXPENSES (cash only, excludes in-kind)
Legalandconsultantfees+PSRCstaff 118,000 90,000 10,000 10,000 10,000
BETIstaff 386,208 663,000 663,000 663,000
RevolvingLoanFundcapitalization 1,500,000
FacilitiesBuild-out+Rent 1,325,000 1,050,000 1,050,000 1,050,000
LabEquipment,Maintenance 4,000,000 200,000 200,000 200,000
BETILabContract+NetworkCosts 1,100,000 2,500,000 3,250,000 4,455,500
Otheroperatingexpenses,includingweb 785,000 1,526,000 1,526,000 1,526,000
TOTALEXPENSES 118,000 9,186,208 5,949,000 6,699,000 7,904,500
NETOPERATINGGAIN/LOSS 32,000 2,313,792 (1,779,000) (449,000) 215,000
BETI FIVE-YEAR PRO-FORMA BUDGET SUMMARY
BROOKINGS
METROPOLITAN
POLICY
PROGRAM
6
How BETI fills gaps along the technology commercialization pathway
BETI will serve this space
MARKET ADOPTION
Continuous product improvement feeds back through the process
NEW ENERGY EFFICIENCY/TECHNOLOGY IDEA
Developed by:•ResearchUniversities
•Businesses•Entrepreneurs
Select Puget Sound Assets:•UWandWSU
•ExistingITandmanufacturingindustrybasedandassociatedtalent
TECHNOLOGY DEVELOPMENT
Conducted using:•Incubators/accelerators
•Commercializationassistance•Privateinvestment
Select Puget Sound Assets:•UWC4C
•McKinstryInnovationCenter•NWEnergyAngels
•RobustVCnetworks
TECHNOLOGY PROOF OF CONCEPT AND INTEGRATION
Tested and achieved via:•Laboratorytesting
•Modeling/simulation•Collaboration
TECHNOLOGY TESTING IN SITU (TO DETERMINE
RESULTS IN REAL-WORLD USE)
Tested via:•User-occupiedbuildings
ofvarioustypes
Stakeholders
Users/clients
Members
Partners
Services
Laboratorytesting
andintegration
Fielddemonstration
andtesting
Facilitatedindustry
collaboration
BusinessAssistance
Accessible Resources
Labandnetworktestingfacilities
Industryoutreachandprogramming
Specificprogramsandevents
Eligible Users
Potentialusersvettedbyapplicationevaluatingprevi-
oustestingattemptsandproducts’marketreadiness
Productsandservicesvettedbyaselectioncommittee
ofBETIstaffandboardmembers
Allusers/clients,members,partners
Allusers/clients,members,partners
Fees/Costs
Fee-for-serviceonaslidingscalebasedonclient’s
annualbudget
Varyinglevelsofannualdues
Alacartepayments
Fees/Costs
Fee-for-serviceonaslidingscalebasedonclient’s
annualbudget
Fee-for-service;Arevolvingloanfundmayalso
beusedtocoversomecoststhatusesprojected
energycostsavingsforpayback
Alacartepayments
Alacartepayments
researchnetworkswillhelpmotivatedifferentbusi-
nesses,researchers,utilities,andotherplayersto
worktogethertoaddresssharedtechnicalchal-
lengesandmarketopportunities
➤ Business Development, Commercialization, and
Regulatory Assistance: Referralstoresourcesfor
financing,businessplanning,regulatoryassistance,
exportpromotionandotherserviceswillfacilitate
thecommercializationofnewproductsandser-
vicesbyBETIusers
BETI FEE AND SERVICE STRUCTURE
METROPOLITAN
BUSINESS
PLANNING
INITIATIVE
PUGET SOUND
7
ADDRESSING MARKET BARRIERS.BETI’s
serviceswilltackletwomajormarketbarriersthat
inhibitregionalEEentrepreneursfromsuccessfully
launchingnewproductsintothemarket.First,BETI’s
performanceverificationanddemonstrationservices
willhelpalleviatethefirstbuyerchallengesthatresult
whenbuildingownersandoperatorsareuncertain
hownewandemergingenergyefficiencygoodsand
willactuallyperformin“real-world”conditions,and
thuswithholdinvestment.Second,BETI’sintegration
serviceswilladdresstheneedforimprovedtechnol-
ogyintegrationsothatinnovatorscanidentifyand
improvehownewEEgoodsandservicesinteract
withthewholecomplexsystemofdesign,materials,
software,andoperationsthattogetherdeterminea
building’senergyefficiency.
FOCUSING ON IMPLEMENTATION.BETIwill
operateinthePugetSoundasapublicentity,gov-
ernedbyaboardoftheregion’skeypublicandprivate
stakeholders.Aleansix-personmanagementstaffwill
handleoperations,whileahiredmastercontractor
willprovidetheobjective,reliabletechnicalexpertise
tomanagelabandfieldtestingservices.BETIwill
sustainofficeandlaboperations,staff,andcontrac-
torsonself-generatedrevenuesfiveyearsafterinitial
implementationfundingissoughtandgainedfroma
mixofprivatesponsorshipsandstateand
federalgrants.
SEIZING MARKET OPPORTUNITIES.
BETIwillenablePugetSound’sEEinnova-
torstomakegreatstridesintappinginto
theindustry’shugeandgrowingmarket
potential.McKinsey&Company’sJuly
2009“UnlockingEnergyEfficiencyinthe
U.S.Economy”reportestimatedaneedfor
domesticinvestmentof$520billionthrough
theyear2020totakeadvantageofthefull
potentialoftheenergysavingsavailableto
thiscountry.Moretargetedprojectionsindi-
catethatby2030,thetotalU.S.EEmarketis
expectedtotop$700billion,upfrom$300
billionin2004.Specifically,theU.S.market
forbuildingautomationandcontrolstechnol-
ogyisprojectedtogrowto$6.8billion.
GlobalestimatesforsomeofPugetSound’s
primarytradingpartnersindicatehuge
internationalmarketpotentialaswell.Forexample,
HSBC’s“SizingtheClimateEconomy”reportfrom
September2010projectsa$59billionbuildingenergy
efficiencyindustryintheEuropeanUnion,$58billion
inChina,$24billioninIndia,$10billioninJapan,and
$9billioninBrazilin2020.
BRINGING TOGETHER ALL THE STAKE-
HOLDERS. BETI’sserviceswillbeavailableto
individualsororganizationswishingtotestand/
orverifypromisingnewEEinnovations,including
researchers,start-upbusinesses,establishedproduct,
service,andsoftwareproviders,andnationaland
internationalcustomers.Inaddition,BETI’sindustry
outreachandprogrammingactivitieswillinvolve
potentialmemberentitieslikethePacificNorthwest
NationalLaboratory(PNNL),theUniversityof
Washington(UW),WashingtonStateUniversity(WSU),
regionalutilities,energyservicecompanies,thebuild-
ingtrades,cleantechinvestors,andlarge-scaleEE
companies/integrators.BETIwillalsoinviteparticipa-
tionfrompotentialpartnersinterestedingrowingthis
nichecluster,suchasstate,regional,andlocalgovern-
ments,commercializationorganizations,workforce
developmentprograms,militaryfacilities,andbanks
andinvestmentfirms.
BETI will help the region capitalize on numerous market opportunities
GREEN BUILDING
$140 BILLION(2013)
RESIDENTIAL BUILDINGS
$39 BILLION(2004)
SMARTGRID
$15.8BILLION (2015)
ENERGYMGMT SYS
$6.8 BILLION(2020)
APPLIANCES &ELECTRONICS
$68 BILLION (2004)
COMMERCIALBUILDINGS
$51 BILLION (2004)
INDUSTRIAL BUILDINGS
$75 BILLION(2004)
Market size
of EE sector
Source: American Council for an Energy Efficient Economy, Pike Research, Lux Research
the
team
BROOKINGS
METROPOLITAN
POLICY
PROGRAM
8
T H E T E A M
BETIboastsanimpressiveleadershipteamcommittedto
propellingtheproposalfromconcepttoreality.
LEAD PROJECT MANAGEMENT.PugetSound
RegionalCouncil(PSRC),whichservesasbothcentral
PugetSound’smetropolitanplanningorganization
andregionaleconomicdevelopmententity,isrespon-
siblefororganizingBETIandgettingitofftheground.
PSRCalreadycapablymanagesadeepportfolioof
region-wideeconomic,transportation,andlanduse
activities,andgeneratessignificantstakeholder
supportandinputonpriorityregionalinitia-
tivesthroughits350-memberstrongProsperity
Partnershipcoalition.
PROJECT CO-CHAIRS. Averyexperiencedgroup
ofregionalleadersrepresentativeofBETI’sbaseof
stakeholdersdirectedthedevelopmentoftheBETI
proposalandremaininvolvedinoverseeingitsimple-
mentation.Theyincludelocalelectedofficials,the
presidentoftheUniversityofWashington,andheads
ofboththeGreaterSeattleChamberofCommerce
andtheSeattleFoundation.Withtheperspectivesof
theseinstitutionsrepresentedinBETIplanning,the
proposalisalreadygeneratingbroadregionalbuy-in.
PROJECT STEERING COMMITTEE. Forty
representativesfromindustry,community,andthe
workforceandeconomicdevelopmentfieldsserved
ontheBETIprojectsteeringcommittee,helpingto
ensuretheproposalisgroundedinmarketand
implementationrealities:
•Battelle/PacificNorthwestNationalLab
•BoeingCompany
•CityofEverett
•CityofSeattle
•CypressVenturePartners
•EnerG2
•GreaterSeattleChamberofCommerce
•KitsapCounty
•McKinstryCompany
•MicrosoftCorporation
•NorthwestEnergyEfficiencyCouncil
•PortofTacoma
•PugetSoundEnergy
•SeattleFoundation
•SeattleNorthwestSecurities
•ShoreBankEnterpriseCascadia
•SnohomishCountyPublicUtilitiesDistrict
•SouthSeattleCommunityCollege
•U.S.Navy
•UniversityofWashington
•Verdiem
•WashingtonStateDepartmentofCommerce
•WashingtonStateUniversity
•WorkforceDevelopmentCouncilofSeattle-
KingCounty
the
ask
METROPOLITAN
BUSINESS
PLANNING
INITIATIVE
PUGET SOUND
9
T H E A S K
Business,regional,state,andfederalleadersallhaveastake
inBETI’simplementation,andhaveimportantrolestoplayin
helpingensureitssuccess.
BUSINESS.ForbusinessesintheEEindustry,
BETIwillprovideauniquesuiteofservicesnot
availableelsewhere,helpingcompaniesattainvital
productperformancedataneededtosecurebuyers
fortheirproductsandservices.Forthosebusinesses
inrelatedfields—fromutilitiestorealestatedevelop-
ers—BETIwillfacilitatethedevelopmentofproducts
thatwillhelpmeetconservationgoalsandbuilding
energycodes.Tosupporttheseoutcomes,these
businessescan:
➤ Investstart-upfundingtosupportBETI’sinitial
operationsandprogramdevelopment
➤ BecomecustomersofBETI’sfee-for-service
programs
➤ Provideboardleadership
REGIONAL CIVIC AND GOVERNMENT
LEADERS.ForPugetSoundleaders,BETIcan
ultimatelyenhancefutureeconomiccompetitiveness
forthewholeregionbyboostingentrepreneurship,
jobcreation,exportpotential,andenergysavings.
ToadvanceBETI,theseleaderscan:
➤ CoordinateBETI’sactivitieswiththeirrelated
EEpolicies,programs,andinvestments
➤ Seedarevolvingloanfundtohelpfinancereal-
worlddemonstrationsofbuildingEEinnovations
➤ AllowtheirfacilitiestobeusedintheBETI
demonstrationnetwork
STATE GOVERNMENT.ThroughBETI,thestateof
Washingtoncancontinuethegreatmomentumand
organizationalcollaborationdevelopedduringthe
region’srecentbidfortheDepartmentofEnergy’s
EnergyEfficientBuildingSystemsRegionalInnovation
Cluster(E-RIC)grantawardandsupportgoalsout-
linedintheCleanEnergyLeadershipCouncilstrategy.
Inparticular,thestatecan:
➤ AppropriatefundstoconstructBETI’sfacilities
andpurchaseneededequipment
➤ ConnectBETItootherstateEEinitiativesaimed
atretrofitsandweatherization
➤ OpenstatebuildingstoparticipateintheBETI
demonstrationnetwork
FEDERAL GOVERNMENT. BETIoffersfederal
leadersawaytoaddressnationalgoals,suchassup-
portingregionalinnovationclusters,doublingexports,
bolsteringcommercializationsupportstructures,and
producingbuildingsthatuselessenergy.Tosupport
BETI,federalpolicymakerscan:
➤ Betteraligntheeffortsofthemanyagen-
ciesthatBETI’sstrategycaninvolve(e.g.,the
EconomicDevelopmentAdministration,theSmall
BusinessAdministration,theInternationalTrade
Administration,andthedepartmentsofEnergy
andDefense,amongothers).Thisincludesgreater
federal-levelinteragencycoordinationtodeliver
integratedresponsestothesekindsofopportuni-
ties,aswellasregion-levelfieldofficecoordination
toprovidea“one-stop”forregionalimplementers
➤ Providemoremulti-agencyfundingopportunities,
likethefederalE-RICcompetitionbutwithmore
modestgrantamounts
➤ Improveenergyefficiencyexportpromotiondata
trackingandtechnicalassistance
➤ OpenfederalbuildingstoparticipateintheBETI
demonstrationnetwork
the
retu
rns
BROOKINGS
METROPOLITAN
POLICY
PROGRAM
1 0
T H E R E T U R N S
BETIwillresultin1,000newjobsfortheregionby2020,and
$140millioninannualeconomicimpact—areturnoninvest-
mentofalmost18:1.
WiththeU.S.marketforbuildingautomationand
controlstechnologyprojectedtogrowto$6.8billion
by2030andwithacommensuratemarketinterna-
tionally,theoverallmarketopportunityis$14billion.
Therefore,areasonableassumptionofa1percent
increaseinmarketshareforthePugetSoundregion
by2020wouldresultina$140millionannualeco-
nomicimpact.This1percentgrowthisinlinewith
HSBC’sestimationthattheUnitedStatesasawhole
willincreaseitsglobalmarketshareintheenergyeffi-
ciencyindustryfrom20percentin2009to21percent
by2020.
BETI’simpactcomesfromtwosources.Firstisthe
directimpactthatBETIserviceswillhaveonits
clients’abilitytoexpandtheirmarketshare.Second,
morebroadly,isBETI’sroleinestablishinganinter-
nationallyrecognizedenergyefficiencysoftwareand
automationtechnologyhubintheregion,whichwill
attractnewcompaniesandnewinvestmentwhile
facilitatingincreasedexports.
COMPANY EXPANSION, CREATION, AND
ATTRACTION. Atfullscale,BETIwillbework-
ingwithapproximatelyadozenclientsatanyone
time,rangingfromlargecorporationsdoingmultiple
buildingteststosmallentrepreneurswithmore
limitedscale.Onanannualbasis,thismeansthat
24to48newtechnologiesarebeingvalidatedand
sentintothemarketplace.Forexistingcompanies,
BETIserviceswillallowforanexpansionofstaffto
supporttheincreasedmarketsharetheycanexpect
fromhavingasignificantmarketadvantageover
theirnon-validatedcompetitors.Forentrepreneurs,
BETIdemonstrationwillallowthemtoconverttheir
ideasintoviableproducts,spurringnewfirmcreation.
Finally,astheinternationalbrandofthisregionalclus-
tergrows,nationalandinternationalcompanieswill
wanttorelocatehere,bothtocollaboratewithothers
aswellastoaccessBETIservices.Overall,theimpact
ofthisbusinessexpansion,creation,andattraction
willresultina10percentincreaseinourregion’s
energyefficiencyindustry,generating1,000newjobs
forourregion’sresidents.
INVESTMENT ATTRACTION. Byhelpingitsclients
refinetheirproductsandimprovetheirreadinessfor
marketlaunchandsuccess,BETIwillboosttheoverall
attractivenessofitsclientstopotentialinvestors.
Infact,byhelpingtobrandthePugetSoundasan
internationalhubforthedevelopmentofthiskindof
technology,morecapitalwillflowtotheregion’sEE
industryingeneral,astopcleantechinvestorscome
lookingfor“thenextbigthing.”WhileWashington
stateattracted$200millionincleantechventurecapi-
talin2008,Californiaattracted$3.5billion,andso
wecanexpectasignificantshiftfromcurrentregional
levels.Aconservativeestimatewouldbeatleasta
25percentincreaseinregionalEEventurecapital
investment,oranadditional$50million.
EXPORT PROMOTION. Approximately75percent
ofsalesgrowthfromBETIclientswillcomefrom
domesticmarkets,duetoproximityandeaseofdoing
business;commensurately,around$100millionof
theeconomicimpactofBETIwillbefromU.S.sales.
However,throughacombinationofBETIsupportand
relatedlocal,stateandfederalactivity,weforeseea
25percentincreaseininternationalsalesofenergy
efficiencysoftwareandautomationtechnologyby
localfirms.Again,thesecompanieswillbemorecom-
petitiveintheinternationalmarketbecauseofthe
third-partyvalidationoftheirproducts.Topmarkets
forinitialexportwillbeCanada,France,andGermany,
aswellasJapanandSouthKorea.Washingtoncur-
rentlydoes$17billionintradewiththesecountries,
andsoa$40millionincreasefromEEtechnology
salesisareasonableassumption.
chal
len
ges
METROPOLITAN
BUSINESS
PLANNING
INITIATIVE
PUGET SOUND
1 1
I M P L E M E N TAT I O N C H A L L E N G E S
InpursuingBETI,stakeholderswillhavetosuccessfullynegotiatea
numberoffactors.
COMPETITIVE LANDSCAPE. NearlyallU.S.
regionsarevyingforsomeroleinthecleanenergy
economyandmanyoftheseplacesalsohavepar-
ticularstrengthsintheenergyefficiencyniche.For
example,SiliconValleyboastsalargenumberof
EEcompaniesandaninternationally-admiredinno-
vationecosystem;Denverhasastrongcleantech
industrybaseandislocatedincloseproximitytothe
DepartmentofEnergy’sprimarylabforenergyeffi-
ciencyresearchanddevelopment;andPhiladelphia
istherecentwinnerofthepotentiallycatalytic
$122millionE-RICgrantfromtheDepartmentof
Energy.However,thePugetSoundcancompeteinthis
landscape,giventhestrengthofitsexistingEEindus-
tryprofile,itsnationalreputationasagreenleader,
andtheBETIplantofacilitatethevalidationandmar-
ketadoptionofnewenergyefficiencytechnologies.
INDUSTRY CHALLENGES.Anumberofaspects
uniquetotheEEsectormakeeconomicdevelopment
engagementinthisspacedifficult.Forstarters,the
sectorisextremelyfragmentedacrossavarietyof
players,includingbuildingowners,designers,technol-
ogydevelopers,andutilities.Further,theuniqueness
ofresidentialandcommercialbuildingsmeansthat
structureshavefewcommonfeaturesthatcanbe
upgradedatscale,andfinancingtoolsforretrofitsare
stillinshortsupply.Nonetheless,theEEmarketisa
growthmarket,anditsstandoutsegmentsalignfavor-
ablywiththePugetSound’sindustryassets.BETIwill
directlytacklesomeofthesechallenges,facilitating
collaborationandloweringthetechnologicaluncer-
taintythatservesasadisincentiveforinvestment.
POLICY UNCERTAINTY. AlthoughEEisapriority
forfederal,state,andlocalgovernments,andpublic
andprivateutilities,theprograms,policies,andincen-
tivestheyoffervarygreatlyacrossplaceandtime,
makingitdifficulttobuildscale.Furthermore,theend
offederalfundingflowsforEEthroughtheAmerican
RecoveryandReinvestmentAct(akaARRAorthe
2009“stimulus”bill)createsuncertaintyaboutthe
leveloffuturefederalcommitmentinthisarena.One
wayBETIaddressesthepublicpolicychallengesisby
explicitlyconnectingwithprivatesectorstakeholders
whohavemarketincentivestoengageinEEdem-
onstrationandtestingandwhohavetheresources
tosustaintheBETIeffortinthelongerrunwithout
publicsubsidies.Atthesametime,BETIwillmaximize
theimpactofwhatlimitedpublicinvestmentcanbe
madeinEEtechnologydevelopment.
the
rig
ht
idea
BROOKINGS
METROPOLITAN
POLICY
PROGRAM
1 2
T H E R I G H T I D E A I N T H E R I G H T P L A C E AT T H E R I G H T T I M E
Overall,theproposedBETIhasallthepiecesinplace
tosucceed.
THE RIGHT IDEA. Buildingsareresponsiblefor
40percentofallprimaryenergyuseintheUnited
States,andpolicyleadersashighupastheenergy
secretaryhavesaidthatreducingU.S.buildingenergy
consumptionprovidesoneofthefastest,cheapest,
andmostdirectroutestohelpingmeetU.S.andworld
greenandcleanenergygoals.PresidentObama’s
BetterBuildingInitiativecatalyzesthisefforteven
further.Againstthisbackdrop,BETI’svalueproposi-
tionisclear:Theprovisionoftesting,demonstration,
andbusinessassistanceservicestoPugetSoundEE
innovatorswillhelpthemtakeadvantageofnational
andglobalmarkettrendstobettergrowthisregional
cluster,turnitintoamajorexportsector,andbrand
theregionasleaderinthisindustryniche.
THE RIGHT PLACE. ThePugetSoundisrecognized
asaleadingregionintheinnovationeconomy,having
supportedthebirthandincrediblegrowthoftechnol-
ogy-drivenheavyweightslikeMicrosoft,Boeing,and
manyothers.Theregionalsohasconsiderableexperi-
enceinplanningandexecutingregionalinitiatives.
Moreover,theregionboastsanarrayofassetsthat
canbedeployedtohelpimplementBETI,including
progressiveutilities;strongresearchcapabilitiesat
UW,WSU,andPNNL;majormilitarybaseswithorders
toreduceenergyconsumption;relatedlargeindustry
clustersinITandmanufacturing;andawell-devel-
opedinternationalbusinessinfrastructurecapableof
sellingenergyefficiencygoodsandservicestothe
world.
THE RIGHT TIME. Trendspointtomajorgrowthin
thenationalandinternationalenergyefficiencymar-
ketsoverthenextcoupleofdecades,andthepolicy
environmentgrowsincreasinglyfavorableofgreen
buildingpursuits.IntheU.S.alonetheenergyeffi-
ciencysectorisprojectedtoexpandto$700billionby
2030,upfrom$300billionin2004.Withthisindustry
sectorreallypoisedtotakeoff,pursuingBETInow
isasmartstrategyforhelpingtopositionthePuget
Soundattheforefrontofstakingaleadershipclaim
inthisnichebeforeanyotherregionfullyestablishes
itselfasaregional,national,orinternationalenergy
efficiencyhub.
PH
OT
OG
RA
PH
Y:
© C
OR
BIS
AN
D I
ST
OC
KP
HO
TO
A B O U T M E T R O P O L I TA N B U S I N E S S P L A N N I N GThisprospectusisapartofalargermetropolitanbusinessplanninginitiativeledbytheMetropolitan
PolicyProgramatBrookingsincollaborationwithBrookingsNon-ResidentSeniorFellowRobert
Weissbourd.ThreeregionalbusinessplansandassociateddocumentswithmetropartnersinNortheast
Ohio,MinneapolisSaintPaul,andthePugetSoundregionhavebeendeveloped.Eachplansituatesthe
currentmarketpositionofthepilotmetro;detailsemergingregionalstrategiesforgeneratingmetro
prosperity;andadvancesadetaileddevelopmentinitiativeinonepressingareathatpromisestodeliver
successfulmetrogrowthinanextAmericaneconomythatismoreexport-oriented,lower-carbon,more
innovation-fueled,andopportunityrich.Thesebusinessplansalsosolicittailoredresponsesfortheir
achievementfromfederal,state,andlocalleaders.
A B O U T T H E B R O O K I N G S - R O C K E F E L L E R P R O J E C T O N S TAT E A N D M E T R O P O L I TA N I N N OVAT I O NThisispartofaseriesofpapersbeingproducedbytheBrookings-RockefellerProjectonStateand
MetropolitanInnovation.
StatesandmetropolitanareaswillbethehubsofpolicyinnovationintheUnitedStates,andtheplaces
thatlaythegroundworkforthenexteconomy.Theprojectwillpresentfiscallyresponsibleideasstate
leaderscanusetocreateaneconomythatisdrivenbyexports,poweredbylowcarbon,fueledbyinnova-
tion,richwithopportunity,andledbymetropolitanareas.
A C K N O W L E D G M E N T STheMetropolitanBusinessPlanninginitiativeinPugetSoundwouldnothavebeenpossiblewithoutthe
projectmanagementprovidedthePugetSoundRegionalCouncil,includingSherryAmbrose,JoanChen,
ChrisEndresen,andEricSchinfeld,andthewritingandresearchassistanceprovidedbyMichaelLuis.
TheinitiativealsobenefittedfromthemanyPugetSoundleaderswhohaveprovidedvaluableinputto
thiswork,includingtheprojectco-chairs:MayorRayStephanson,cityofEverettandPSRCPresident;
PhyllisWise,InterimPresident,UniversityofWashington;JohnGardner,VicePresidentforEconomic
DevelopmentandGlobalEngagement,WashingtonStateUniversity;NormanRice,PresidentandCEO,
SeattleFoundation;andPhilBussey,PresidentandCEO,GreaterSeattleChamberofCommerce.Special
thankstothecityofSeattleforfundingthedevelopmentofthebusinessplan.
ProjectconsultingwasprovidedbyGretchenKoskaroofRWVentures,andMarkMuro,SarahRahman,
andKenanFikriatBrookings;thoughtfulreviewwasgivenbyBrookings’BruceKatz,AmyLiu,and
JulieWagner;andgenerousfinancialsupportwasprovidedbytheJohnD.andCatherineT.MacArthur
Foundation,theGeorgeGundFoundation,theHeinzEndowments,theF.B.HeronFoundation,the
RockefellerFoundation,andTargetCorporation.
Brookings,inparticular,alsothankstheMetropolitanLeadershipCouncil—abipartisannetworkofindi-
vidual,corporate,andphilanthropicinvestorsthatprovideitfinancialsupportbut,moreimportantly,are
trueintellectualandstrategicpartners.Whilemanyoftheseleadersactglobally,theyretainacommit-
menttothevitalityoftheirlocalandregionalcommunities,arareblendthatmakestheirengagement
evenmorevaluable.
The Brookings Institution is a private non-profit organization. Its mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations for policymakers and the public. The conclusions and recommendations of any Brookings publication are solely those of its author(s), and do not reflect the views of the Institution, its management, or its other scholars.
Support for this publication was generously provided by the Rockefeller Foundation.
Brookings recognizes that the value it provides to any supporter is in its absolute commitment to quality, independence and impact. Activities supported by its donors reflect this commitment and the analysis and recommendations are not determined by any donation.
F O R M O R E I N F O R M AT I O N
Thisinvestmentprospectusisadistilledversionofafull-length,
fullydocumentedregionalbusinessplanthatcanbefoundhere:
www.prosperitypartnership.org/businessplan.htm
EricSchinfeld
ProgramManagerforEconomicDevelopment
PugetSoundRegionalCouncil/ProsperityPartnership
eschinfeld@psrc.org
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