Energy Efficiency More Important Than Ever, But Hard to Invest In, Survey Says

Energy efficiency is more important than ever for North American companies — and they plan to invest less money in it this year.

That's the contradictory, yet predictable, conclusion of a survey released Wednesday by building automation heavyweight Johnson Controls and the International Facility Management Association.

The survey of 1,400 North American business executives showed that, while nearly three-quarters of them are paying more attention to energy efficiency than they were a year ago, they're also predicting a 10 percent decline in energy efficiency investment this year compared to last year.

Both results make sense, given the poor economic climate. Energy efficiency will come under the spotlight as companies seek to cut costs, but the same economic pressures that guide that focus will also limit the capital available for investment, the survey noted. 

Tight budgets also tighten the payback period companies demand from energy efficiency investments, the survey noted. Nearly half the executives surveyed said they need those investments to pay themselves back in three years or less. While 42 percent cited limited capital as a reason for cutting back on investments, 21 percent cited unattractive payback times, the survey found.

Given the pressure to improve efficiency with less capital available to do it, it's little surprise that a growing number of executives are looking toward government or utility incentives to cut their energy use. Such incentives will be "extremely" important for 44 percent of those executives, up from 38 percent of them last year, the survey found.

Johnson Controls has a dog in this fight. It and companies like Honeywell, Siemens, Echelon Corp. and, most recently, Cisco Systems, are making a big push to increase their presence in the building automation market, with an eye on energy efficiency primarily for commercial buildings (see Cisco Jumps Into Energy Management for Computers, Buildings and Echelon Beefs up LonWorks).

Then there are the demand response aggregators like EnerNoc, Comverge and CPower, which link utilities and their customers in programs to turn down power use during times of peak demand. That's one way utilities are giving incentives for reduced energy use, if only during the scarce few hours of the year when they find themselves reaching the limit of their power generation capacity.

But once a company has hooked up a system to cut power for demand response programs, using it to save energy and money during off-peak hours is a natural next step. A host of startups have developed such efficiency solutions for different market segments. PowerIt Solutions and EPS Corp. focus on industrial sites (see PowerIt Lands $6M for Industrial Energy Efficiency and EPS gets $30M to Cut Power at Factories), while Cimetrics and Tririga target commercial or retail real estate (see Controlling Energy Consumption, A Million Square Feet at a Time).

Then there are the wide array of companies working on reducing the energy needed by building systems like air conditioning (Optimum Energy and Ice Energy), lighting (HID Laboratories) and computers and other IT equipment (Sentilla, Verdiem and others, including Cisco). And that's not to mention the companies building more energy efficient and environmentally friendly building materials, such as Serious Materials, Integrity Block, CleanBoard, BottleStone, Arrx and others (see Startups Following Serious Materials Into Green Walls) 

There's a good deal of federal stimulus money headed toward building energy efficiency, but most of it is aimed at federal buildings ($5.5 billion) and low-income homes ($8  billion) (see Obama Signs Stimulus Package and Doe Doles Out $780M For Weatherization). 

But to squeeze the most energy efficiency out of buildings will require a lot more incentives, according to a report released last week by the World Business Council for Sustainable Development (see Builders Urge Green Building Subsidies).