Businesses need to Face the Energy Efficiency Challenge

MOST companies are not seizing the opportunity to benefit from the millions of dollars available through energy efficiency according to a new report.

Energy efficiency is described as the cheapest and fastest way to meet current and future energy needs, by the findings of "Show Me The Money: Energy Efficiency Financing Barriers and Opportunities."

During research for the report, released yesterday, the authors, representing the Environmental Defense Fund (EDF), U.S. Environmental Protection Agency (EPA) and Nicholas Institute for Environmental Solutions, heard a variety of reasons for why energy efficiency projects weren't being tapped by businesses.

Often the excuse of high upfront costs was used for delaying action, allied with assumed long payback periods, perceived risk and an uneasiness over accurately measuring energy savings.

Yet the potential for energy savings is massive, as some of the points reported by

  • One example is from EDF's Climate Corps, the programme that matches MBA students with companies who are looking for energy efficiency opportunities. Fellow Jen Snook, who discovered that installing lighting sensors in AT&T's central offices across the country could trim lighting energy use by 80 percent because lights were turned on about half of the time, but the spaces were occupied just 10 percent of the time. The company invested in 4,200 energy efficiency projects in 2010, saving AT&T an estimated $44 million a year.
  • Diversey invested $14 million in its bid to reduce its greenhouse gas emissions by 25 percent, but expects savings to total $32 million by 2013.

These companies found ways of meeting the challenges by internally investing in efficiency, sometimes by broadening their investment criteria or altering evaluation methods to accommodate energy efficiency projects, such as going beyond ROI requirements to also give more weight to future savings.

Co-author of the report Namrita Kapur is optimistic on the prospects of energy efficiency projects becoming a prime investment opportunity, reckoning that there is a potential 17 percent rate of return estimated by McKinsey and the Conference Board.

"There is a rate of return to be had in this market," Kapur added. "I do believe it will be the next new asset class. It's just a matter of time. For us, one of the biggest conclusions or a-ha moments was the sense that projects aren't there, and there's not a scalable way to identify and aggregate those projects."

"If anyone of these players mentioned was contacted by a company who said I want you to do an audit, what are opportunities for energy efficiency, they would willingly do that, and I guarantee it would be very cost-effective."

"They see the return. Getting them to identify projects and make themselves accessible to these players in marketplace, that would be huge. They're throwing away money by not focusing on this." Kapur concluded.

Tuesday 26th July 2011

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