At first blush, the economics of energy efficiency seem straightforward.

A business installs lighting controls or some other improvement. The business then sees its energy costs drop. From the savings, the business repays the investment over weeks, months or years, and then turns a profit on the asset.

While that equation holds true, analysts increasingly value the worth of energy efficiency in other more complex ways as well. The energy efficiency industry, for example, is creating new jobs. Energy efficiency also improves US energy intensity, the amount of energy it takes to support each dollar of economic activity.

And now a report by PwC links a business’ sustainability story with its success undertaking an initial public offering (IPO) before the US Securities and Exchange Commission (SEC).

“It literally can pay to ask: if the company files its registration statement with the SEC tomorrow, what sustainability and corporate responsibility story would it tell to prospective shareholders?” says ‘Factoring Sustainability into IPO Planning: Disclosure trends reveal a changing landscape,’ by PwC Transaction Services.

The report looked at 120 IPO-related filings before the SEC from 2010 and early 2011 across eight industries sectors. PwC found that companies are increasingly addressing energy efficiency and other sustainability issues as part of a larger corporate accountability trend.

In fact, over 84% of IPO filings had some level of disclosure related to sustainability – and not just because they were required to do so by regulators. About 68% of sustainability disclosures came about for other reasons, such as in discussions about weather-related risk or to showcase corporate accomplishment.  A full one-third of companies in the consumer sector reported either energy efficiency or emissions reductions programs.

Moreover, the report found public companies, in general, now focus more dollars on sustainability efforts. Roughly $1 of $8 under professional management in the U.S. today involves a strategy of socially responsible investing. In addition, such investments are trending upward. While the universe of professionally managed assets rose only 1% during 2007-2010, assets related to sustainable and socially responsible investing grew 13%.

The report says that companies can increase value when going public by capitalizing on sustainability efforts. PwC recommends that before undertaking an IPO companies develop a clear understanding of how their sustainability story positions them against competition and enhances their appeal to investors. Companies also should consider how sustainability programs can increase revenue and decrease expenses for their goods and services.

This advice comes at a time when IPOs appear to be on the rise after losing steam following the 2008 collapse in financial markets.  While there has been some recent volatility, a “robust pipeline” of companies remains in the process of going public as of third quarter 2011, according to a separate PwC report. And as they do so, their energy efficiency becomes an increasingly important part of the economic story they present to the investment world.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

photo: twicepix

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In my inaugural post, I went over why solar makes sense from a financial perspective. It is a sound investment that will provide you at least a 10 percent return on your initial investment for the next 30 years.  Now the question is, “Hey Chris, how do you make money on solar?”

The answer is that solar saves you money through a program called net metering.

To start off this explanation, it is good to review your utility bill.  Your utility bill has in it many line items for supply and delivery broken out into many different costs per kilowatthour (kwh). Kilowatt-hours are measurements of power used by you over a period of time, usually the billing cycle.

The simplest example is that if you leave the room and don’t turn off that lamp.  Say that lamp has a 60-watt bulb and you don’t return to the room to turn it off for two hours. You have just used 120 watt-hours.  We figure this out by taking the wattage of the bulb (60 watts) and multiplying it by the number of hours it was on (two hours):

60 watts X 2 Hours = 120 watt-hours

So what’s a kilowatt-hour?  A kilowatt-hour is 1,000 watt hours.

Are you getting the drift? Your utility charges you by the kilowatt-hour.

Next question: How much am I paying for my electricity?

Answer: Figure out how much you are paying per kilowatt-hour. Take your total electrical portion of the bill (ignore the gas/oil portions), which usually says something to the effect of “total electricity costs,” and divide this number by the number of kilowatt-hours listed on the bill.

So for example, the bill says $100 and the number of kilowatt-hours used that month is 500, then you are paying $0.20 per kilowatt-hour:

$100 / 500 kilowatt-hours = $0.20/kilowatt-hour

Now that you know how much you are paying per kilowatt-hour, you can figure out how much you can save by using solar energy.  But first, let’s go over how solar electricity saves you money.  By installing a solar electric (photovoltaic) system on your roof or in your backyard, you are producing your own electricity.  The electricity being produced is being used right away.  If that lamp is on during the day, then your solar system is powering that lamp.

Any excess power that the system creates during the day that is not being used will be sent back to the utility grid. In this case, your utility meter will (drum roll, please) spin backwards.

I cannot tell you how exciting it is to see the meter spin backwards.  All these years, the utility meter is spinning forward, racking up all these charges that will be sent to you on your bill. Now, it is your turn to declare your independence, create your own power, send it back to the utility and watch the meter spin backwards.

Through this program called “net metering”, the utility commits to buying back the power you create at the same rate that it is charging you for the power.  So during the day, your system produces power, sends the excess power back to the grid, and you receive credit for it.  Then at night, when the system is not producing power, your electricity will come from the utility grid.

You save money by producing your own power and receiving credit from your utility.  As utility prices go up,  you receive that much more money for power you produce.

To quote William Wallace in Braveheart, “Freedom!”

photo: Nico Macdonald

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In recent years a greater emphasis on MPG during car shopping has emerged. Between fluctuating gasoline prices, a broader selection of hybrid vehicles, and the promise of plug-ins and battery electric vehicles, and mandated increases in CAFE standards, fuel economy is becoming an important vehicle characteristic for many consumers.

Makers of ICEs are looking to accentuate the efficiency of many of their “traditional” models to meet federal requirements and better compete with hybrid vehicles. This includes the addition of a turbocharger, which enables manufacturers to use smaller engines while increasing fuel economy by up to 20 percent. Turbochargers reduce emissions as they burn exhaust gas as fuel, and also provide additional power for acceleration.

Honeywell, which makes turbocharger equipment, put out a study claiming that 80 percent of consumers who understood a turbocharger’s impact on fuel economy would be interested in buying a turbocharged vehicle.

Honeywell’s press release adds “According to the Department of Transportation, nine out of the ten most popular vehicles purchased in the recent ‘Cash for Clunkers’ program were equipped with smaller and more fuel-efficient versions of conventional technology engines.”

This overall trend towards the importance of fuel economy when designing vehicles is significant not only for its immediate impact on emissions, but also because it forces everyone — both hybrid and conventional automakers — to continue to up the ante. Hopefully the 35.5 mpg requirement for vehicle fleets by 2016 will be a floor upon which automakers will seek to distinguish themselves.

“Fuel economy as a feature” has a growing audience that auto manufacturers (such as with the Ford Focus) are tapping into. This affinity for higher MPG ratings — and therefore the desire to buy hybrids — is similar to the desire for other vehicle features, such as the imposing size of the Hummer, the power to do 160 mph, or the roar of the Harley. It does not have to be grounded in economics or reality, it just has to be something people want.

Over the years much analysis has been written about how hybrids don’t make economic sense because the added cost may not be offset by fuel savings. Just like turbochargers, the economics don’t have to add up to a fast payback, and that will carry over to plug-in hybrids as well. For some middle aged couple with kids off to college, the hybrid plate is just as important as the Porsche, Jaguar or Maserati name is for another type of consumer.

For those who believe in the importance of reducing emissions, oil imports and trips to the gas station, diesel vehicles should have equal mindshare even though they have been eschewed by American buyers. As an example of luxury meets diesel turbocharging, there’s the new BlueEFFICIENCY Diesel SUVs from Mercedes. Europe has always been way ahead of the U.S. in embracing diesels, but that may slowly be changing.

Appearing courtesy of Matter Network.

[photo credit: Flickr]

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“We will have solar energy as soon as the utility companies solve one technical problem – how to run a sunbeam through a meter” — anonymous

There is a lot of buzz going on these days about the role solar will play in the current clean tech revolution occurring around the world. Many people find solar interesting but don’t know how it works, why it is gaining so much popularity and how they can get involved. Below are some of the resources I have used to make the world of solar easier to understand.

First question to answer: What is solar? For this you should read the wiki description of solar power.

Now that you understand some of the history of solar power, you may want to understand one of the most common ways that solar power is converted into electricity, for this you should read about photovoltaics or PV.

If you are like me and don’t have a science/engineering background, it may be easier to understand what all the wiki information means after the concepts are explained in an instructional video. Luckily PG&E, a giant utility company in California, has made a wonderful video available that explains PV, how to determine whether PV makes sense and a great financial breakdown for the cost of PV. The instructor also touches on thin-film and solar hot water heaters. I like the 1h47m version on PG&E’s website, but check out the video below if you only have 7 minutes.

To learn a bit more about solar hot water systems, the US Dept of Energy site provides a pretty clear explanation.

The knowledge you just received about solar and its associated costs/benefits can now be put to use as you peruse an innovative website, sf solarmap, that uses mapping technology to show the potential costs and savings for every roof in the city of San Francisco.

What are some of the other things happening in solar? A simple to follow talk on solar trends held by NPR provides some good information.

In the NPR talk, they cite solar thermal as having huge future potential. If you want to see a bit about how solar thermal works, check out one of my favorite sites; Ted.com. This is a talk by the founder of idealab on what his company has been working on.

Also, don’t forget to check out the CleanTechies Blog for articles on solar energy written by professionals working in this industry. For example, Levent Bas compares photovoltaics with solar thermal in his article, and Ceylan Oney analyzes differences between solar energy in Germany and California.

To learn more about typical roles in the solar industry and what kind of skills and experiences solar companies expect you to have, I suggest you read the Solar Job Guide by Frank Marquardt. You can get 20% off the original price when you order the book through CleanTechies.

Watching videos and reading about solar is great but how do you get hands on experience with solar? One fantastic way is as a volunteer. There is an exciting non-profit company out of Oakland, California named GRID Alternatives that trains volunteers on how solar works so that they may help install solar on the home of a low income family. GRID Alternatives works only with PV but that may change in the future. Below is a video showing some background on the company and how they do a PV installation. If you are outside the bay area consider getting in touch with your local utility or solar installation company to see how you can get involved.

Obviously the resources I’ve listed are by no means exhaustive so if you have some sites/resources you have found particularly useful in your solar research, please leave a comment so that we may all benefit from your knowledge.

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A crash program to improve the energy efficiency of American homes, offices, and factories could slash energy consumption by 23 percent by 2020 and produce $1.2 trillion in savings, according to a report by the McKinsey consulting firm. McKinsey said that taking steps such as better insulating buildings, replacing old appliances, and sealing ducts is the fastest and best way to cut the country’s energy consumption. The firm recommended an investment of $520 billion in energy efficiency programs over the next 10 years, an amount that dwarfs the $10 billion to $15 billion included in the Obama administration’s economic stimulus package.

McKinsey executives acknowledged that carrying out such an efficiency program on a large scale faces numerous challenges, including the reluctance of homeowners and businesses to invest sizeable sums of money and a lack of tax breaks and other financial incentives for efficiency improvements. Still, the McKinsey report said that better education of homeowners and businesses, tighter building codes, stricter efficiency requirements for appliances, and the creation of greater incentives could go a long way toward cutting the U.S.’s wasteful energy use.

This article originally appeared on Yale Environment 360 at http://e360.yale.edu

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Is the world warming, cooling or does it matter? Most of us will say it matters, a lot, at least in public anyway. And especially if you are hoping to pay rent or retire one day with a career based around the belief that Amsterdam, New York and Dubai will no longer exist unless we cut greenhouse gases and stop the icecaps from melting. But what has happened now that the earth cooled over the past year? Not to mention former NASA Chief Scientist Dr. Joanne Simpson’s claim last year that now that she is “no longer affiliated with any organization nor receive any funding” that she can publicly say that she “remains skeptical.” Recently the name was changed from ‘global warming’ to ‘climate change’ – what is really going on? Or does it matter?

This blog, by the way, is not about proving or disproving global warming, global cooling, or that the earth’s warming and cooling cycles over the past 6 ice ages really were the fault of mankind. This is about the fact that it does not matter what is happening with temperatures but that reducing both greenhouse gas emissions and energy use and creating renewable energy makes complete sense even without climate change political debates.

Republican, democrat, socialist or communist, the following 3 ideas for cutting greenhouse gases without relevance to climate change are hard to argue, but if you can I welcome you to comment below:

1. Releasing black substances that cause cancer into the air in which we breath is not healthy. As if it weren’t obvious enough, the EPA finds greenhouse gases pose a danger to health. That’s for any skeptics out there that think that ‘the solution to pollution is dilution’ and that puffing on a tailpipe is good for your skin. No reference to climate change here.
2. It costs money to put these black cancerous gases into the atmosphere. It is our extreme use of carbon based fuels, oil and coal, for transportation and electricity that our money is going to instead of being used for health care, education, infrastructure and your dividend payout. Who can argue that energy efficient policy and using energy efficient products, therefore, reduces the amount of these black gases that enter the atmosphere while basically paying you to do it. More legitimate reasons with no reference to climate change.
3. Politically and financially we cannot afford to continue to use finite sources of fossil based fuels, that create greenhouse gases, to power our lives. Some believe it is the left’s fear factors that say the earth is running out of oil to push their agenda. Even if true, definitely not the whole picture by any means. Briefly, China and India’s population and need for energy is skyrocketing while oil discovery is steadily declining (left). Therefore the most simple supply/demand curve from your first economics class will explain what that means for our future cost of energy. Renewable energy that does not create pollution nor depend on other nation’s economies and that does not put gases into the air solves more than one problem without the mention of climate change.

Simple enough? So depending on your argument there is a way to curb climate change for some, put money in the pockets of others and finally if neither of those are your flavor, how about not breathing poisonous gases? By using common sense and not trying to pinpoint who is right and wrong, we can appease the masses in one way or another by decreasing energy use and turning to renewable sources of energy. If you are able to think of it, what is a way to argue climate change that does not touch on the topics of health, immediate financial benefits or protecting us from the future cost of energy?

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