Primarily known for its work as a government contractor for defense-related projects, Lockheed Martin is now using its technological expertise to help companies improve their energy efficiency. What are the major trends in the world of efficiency? Who is leading the way? What is needed from policymakers to help make efficiency mainstream? During today's OnPoint, Tom Grumbly, vice president of energy and security services for Lockheed Martin, discusses his company's energy efficiency projects and the business community's push to go green.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Tom Grumbly, vice president of Energy and Security Services for Lockheed Martin. Tom, thanks for coming on the show.
Tom Grumbly: Thanks for the invitation, I appreciate it.
Monica Trauzzi: Tom, Lockheed has made its name as a government contractor primarily for defense related projects. But you guys have stepped into the world of energy efficiency now. Why has Lockheed entered the energy business?
Tom Grumbly: Well, I think there are two or three reasons. First, Lockheed Martin is one of the great advanced technology companies in the world and, as a result, it's important for us to be at the forefront of everything that's happening in technology. And, goodness knows, energy is at the forefront of it today. Secondly, Lockheed Martin and its predecessor companies have been in the energy business for more than 30 years. We manage and do research at Oak Ridge National Laboratory, at Sandia National Laboratory, and we do all of the nuclear propulsion for the Navy. So we have a natural affinity for energy as a whole and over the last couple of years we made the decision that energy is important enough as a sector and, surely, it's important in a national security sense that we want to be part of the action.
Monica Trauzzi: And do you feel like you can provide your customers with an extra edge because of your technological advantages?
Tom Grumbly: We do. We think that as one of the great technology integrators and systems integrators that we have the ability to take a lot of the things that are happening in technology, in energy technology today, and work with the regulated utilities of the United States and, to some extent, the rest of the world to try to make sure that the best technology is hooked in with existing technology to drive consumer prices down and to make the utilities more efficient and effective.
Monica Trauzzi: So, gives us a sense of some of the projects that you work on. Are they primarily commercial, residential? What's the makeup of the projects?
Tom Grumbly: Well, we work in all three sectors; industrial, commercial, and residential. We work for several public utilities in the United States, for example, Pacific Gas and Electric, Southern California Edison. We work for nonprofit entities that are set up by the electricity rate payers, like the Energy Trust of Oregon. We work for state regulatory authorities like the New York State Energy Research and Development Authority. We are the kind of people who come in, we will make recommendations about what will make your business, for example, more energy-efficient, how you can drive down your costs of energy and how you can make yourself more productive. And then actually take the steps to help you implement what's happening. So we're not only a consultant in this, we actually work to make sure that the technology gets installed. We're also involved in transforming markets in this area, in particular the residential market, where we really are working to help people install Energy Star appliances, where we're working with retail outlets believe it or not, in order to get people to change their buying behaviors so that over time American consumers are able to spend less money on energy for the same things that they're doing or if they want to continue to do even more things, at least do it with a level of the electricity in particular that they're doing it now.
Monica Trauzzi: There are some in the energy sector and on the Hill who would argue that energy efficiency doesn't necessarily need to be the key. We should just meet all of our energy demands by producing cleaner energy, but we don't necessarily need to use less of it. Where do you stand on that debate and do you think that we should have sort of a potpourri of things out there that are helping us meet our demands?
Tom Grumbly: Well, I think we need to have a strategy that does both, that both works on the supply side of the equation as well as on the demand side of the equation. On the supply side of the equation we definitely need to push for more renewable energy. We need to push for cleaner conventional forms of energy. But right now, in terms of making a difference for the average American, the major thing that we can do is drive down energy usage through energy conservation and energy efficiency. One of my colleagues, Jim Rogers, who runs Duke Energy, is fond of calling energy efficiency the fifth fuel at this point. And something that's extremely important. And I think he's right about that. We can save 15, 20, maybe even 25 percent of the energy that we use today if we make a determined effort to deal with energy efficiency and really stop treating energy as a free good.
Monica Trauzzi: Legislatively though, what do you think is needed to make what you do easier and to make the idea of energy efficiency more mainstream?
Tom Grumbly: Well, I think that in the long-run rising energy prices will probably take care of a lot of the things themselves. But in the near term, what you have to do is you need to have incentives, whether they be tax incentives or whether they be direct dollar incentives, so that the payback period for people installing stuff is sooner rather than later. Rather than making an investment seem like a daunting thing where I have to spend $4000 more today in order to get a return over three or four years, the government needs to provide incentives, whether it be at the federal level or at the state level, to make that an easier choice for citizens while the price of the technology comes down. So, anything that the Congress can do, whether it be to renew tax incentives in this area or to provide direct incentives in terms of dollars available to utilities or to your average citizen to make that decision to be more efficient an easier decision for people that's what we need to do.
Monica Trauzzi: And this plays directly into a debate that was just happening on the Hill relating to the renewable energy tax credits. Are you surprised at how difficult it's been to extend those tax credits?
Tom Grumbly: Well, a little bit. I think we'll get there. My best sense of this is that the Congress probably well at least pass these tax incentives for another year before they adjourn for this year. And then next year, in the Congress, right off the bat I think our objective ought to be as a nation to get energy efficiency and perhaps energy technology legislation passed at a very early stage in the Congress. I think you can bring together people from all sides of the fence around efficiency and around the need for more R&D in the area. And we ought to push very hard to get the next president an early success in this area.
Monica Trauzzi: So, who should be leading the way? Should it be the policy makers or should it be the private sector? Who needs to be making those first steps?
Tom Grumbly: Well, I think in fact the public is making the first steps now, in terms of its reaction to higher utility rates, to its reaction to four dollar a gallon gasoline prices. I mean in our country the people rule and I think the people are speaking loud and clear that they want change in this area. And I think you will be amazed over the next few months to see how utilities, governments, everybody else will follow that lead and come out of what I think right now is a relatively chaotic period in energy policy to make something important happen during the next Congress, no matter who's the next President of the United States.
Monica Trauzzi: OK. And looking at the presidential candidates, what's your take on their positions on energy policy?
Tom Grumbly: Well, I think they both recognize that energy policy is in the forefront of people's minds at this point. And, of course, when it comes to climate change, both Senator McCain and Senator Obama have taken leadership positions on this, something I think is extremely heartening for those of us who have been involved in energy for a long time to see it lose at least some of its partisanship. I actually think that, again, once some of the near-term problems of getting elected are dealt with, we'll see a lot more subtleness in the policies that either candidate puts forward.
Monica Trauzzi: What are some of the major trends you're seeing emerging in the energy efficiency world and are there leaders emerging as well in terms of companies that are taking action?
Tom Grumbly: Well, traditionally of course, it's been the companies that have been on the coasts in the places that have the highest electric rates that have been the leaders in energy efficiency. So, so the state of New York, for example, has been a leader, the state of California, the entire West Coast have been leader states in trying to do some things to limit the rate increases that their consumer face. So they've probably been farthest ahead. But quite recently a lot of the Midwestern states and particularly those states that are dependent upon coal for their main source of electricity have begun to step up to the plate quite rapidly and start major energy efficiency programs. I think about Illinois and Missouri in particular. So, I think you're seeing this trend towards efficiency really spread across the United States at the moment. And I would expect that you're going to see spending in this area go from its current number of about $4 to $5 billion a year up to double, triple, maybe even quadruple that over the next 10 years.
Monica Trauzzi: Is Lockheed leading the way? What has your company done to be more energy efficient?
Tom Grumbly: Well, every single facility that Lockheed Martin is building at the moment, new facility, is LEED certified. So we are making sure that we are walking the walk so to speak on this. We have also taken steps in the literally millions of square feet of industrial facilities that we have around the United States, because, after all, we do make airplanes, to get about 10 percent more energy efficient over the last three to five years. We have a ways to go, like everybody does, but there's a commitment from the top of the corporation, our CEO Bob Stevens, to make us one of the leading energy efficiency companies in the United States. You know, we're also involved in climate change issues and trying to take a responsible stance on all of the problems that face Americans these days.
Monica Trauzzi: OK. We're going to end it right there on that note. Thanks for coming on the show.
Tom Grumbly: Thank you very much for having me.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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