More Companies Discover The Economic Wisdom Of Energy Efficiency

Good investments are hard to find in this economy. Housing prices are falling. Spiking oil prices send shock waves through the stock market. Some experts worry about the safety of municipal bonds. It is tough all over.

But one investment is almost a sure bet. It's not a standard investment, such as a mutual fund. And you don't earn money as much as you save money. But the result is the same: more money in your bank account.

What is this sure-fire investment? It is energy efficiency.

Minimum investment can lead to maximum returns. According to this report, every $1 investment in energy efficiency leads to a savings of $4. The consulting firm of McKinsey & Company reports that energy-efficiency programs could save $600 billion by 2020.

Some companies are reaping large returns from energy-retrofit projects. AT&T saved $44 million in 2009, Dow Chemical is investing $100 million in efficiency measures and News Corp has saved a bundle.

More on those efforts is available here, here and here.

The owners of the Empire State Building and University of North Carolina at Chapel Hill also are believers . There is a reason why federal energy officials call efficiency the low-hanging fruit of clean energy.

But, like many investments, there are upfront costs and other barriers to entry.

It has been an uphill slog in many ways. Some politicians propose deep cuts to efficiency programs, PACE programs (which would provide a financing mechanism for property owners to finance energy upgrades) were all but curtailed and budgets are in disarray.

But a potential $600 billion in savings awaits. And a strong energy-efficiency program could have a significant impact in places such as the San Joaquin Valley of Central California. In Fresno, where I live, my summertime power bill can exceed $500, and is my second-largest expense behind my mortgage.

Incomes here are low. The unemployment rate exceeds Appalachia figures. We have some of

worst concentrated poverty in the nation. Lower power bills would enrich residents, provide jobs and potentially stimulate the economy.

Photo of University of North Carolina at Chapel Hill by earthfirst.com

Would You Spend $30,000 To Save $250,000?

We here at the San Joaquin Valley Clean Energy Organization - which is based in Fresno, one of the hottest regions of California and with some of the highest power bills in the state - are all about energy efficiency.

Frankly, it boggles my mind that more property owners, legislators and policy makers still don't understand that energy retrofits are a great investment. Wouldn't you, as the headline to this article says, commit $30,000 to save $250,000 in expenses later?

Is there any investor who would not think that was a good return? Certainly, Chris Martin, director of energy management at University of North Carolina at Chapel Hill, thinks so. He led one of 14 teams across the country that participated in an EPA-sponsored Biggest Loser-style contest to shed the most energy weight, according to this New York Times story.

The Chapel Hill team spent $30,000 upgrading a residence hall on campus, and wound up slashing energy expenses $250,000, much of it by adjusting the heating and cooling system to run slower during moderate weather. All combined, the school cut energy use 36% .

The university engaged residents of the hall in the process. CityBiz Magazine said a touch-screen computer was installed in the dorm's lobby so students could track energy consumption. Each floor held energy-saving competitions, and reminders were posted in elevators, bathrooms, and common areas.

That means more money in university coffers. I don't know if Chapel Hill is strapped for cash, but I know a few campuses in California that would love the extra money.

Chapel Hill has seen the light, so to speak. Upgrades to 100 buildings on campus saved nearly $4 million last year, according to the New York Times. The average savings per building was $33,000. The average per-building investment: only $7,000.

"The payback is on the order of months, not years," Martin told the newspaper.

Other teams also got good returns for their investments. A Sears store in Maryland cut energy consumption 31.7%. A JC Penney outlet in Orange, Calif., reduced energy use 28.4%. Together, the 14 teams saved $950,000 on power bills.

Businesses and others in the San Joaquin Valley could probably reap good returns too. After all, temperatures reach triple digits in the summer. Businesses and families pay the price with heart-stopping power bills.

Retrofits and modifications such as these are the low-hanging fruit of the whole greening movement. Consider the iconic Empire State Building. A $20 million energy-efficiency upgrade, which includes more than 6,000 new windows, will shave $4.4 million annually off the power bill.

That's a payback of 4.5 years. Simply amazing.

Commercial building space in the United States covers a total of 79 billion square feet, and buildings, 80 percent of which are more than a decade old, are one of the leading sources of energy consumption and carbon emissions, said a recent report on commercial building energy efficiency by Boulder, Colo.-based Pike Research.

The report, "Energy Efficiency Retrofits for Commercial and Public Buildings," estimates potential annual energy savings of more than $41.1 billion if all commercial space built as of 2010 were included in a 10-year retrofit program.

Unfortunately, shredded budgets, the freezing of Property Assessed Clean Energy programs and an economic recession make it harder for businesses, homeowners and landlords to finance the upgrades.

But those who can manage it might enjoy a nice financial return.

(Photo of Morrison Hall by online wsj.com)