When people hear the term “investment,” they often think of Real Estate or the Stock Market. Not until recent years, people never considered energy efficiency to be a form of investment. In the opinion of Thomas Neyhart PosiGen, CEO, Energy efficiency is not just an investment; in his expert opinion, Energy Efficiency is the best investment.
The investment potential of energy efficiency might not be apparent; however, the decision to go solar is a win-win for everybody. Here are five reasons why we at PosiGen believe an investment in energy efficiency is the right choice.
Potential to Make Significant Returns
Like every investment, the primary goal is to make an appealing return on your investment. According to McKinsey and other experts in the finance industry, they have estimated that at least $37 billion worth of energy efficiency investments has to be made annually to yield high financial returns in the next twenty years. This prediction is based on available technology. That figure grows every day as the world’s economy grows and technology advances.
Several organizations are beginning to plan towards implementing efficiency upgrades that will reduce their energy expenses by 10% to 30%. And in the long run, the reduction in costs would be able to pay back the upgrade cost. It takes about three to five years to break even, sometimes much faster.
The reduction in expenses translates to a yearly return on investment of 30% and more in some cases. With or without the extra benefits of energy efficiency, the decision to invest in energy efficiency makes good business sense. The period with which your investments yield returns is just part of why energy efficiency outperforms stock market returns.
According to Thomas Neyhart, the other part is that the returns from efficiency are protected from the economy’s instability. Investing in energy efficiency involves installing new equipment that makes buildings smarter energy users. Once the system is installed, it saves energy and money no matter the volatility of the economy.
In addition, due to some incentives offered by the United States government, you can enjoy both immediate and long-term returns on your investment. In particular, solar renewable energy credits (SREC) and net metering are two advantages of solar energy that allow you to earn bill credits. With bill credits, your utility bills reduce, and your return on investment increases. In this case, you are getting reimbursed for the power generated by your solar panels.
Energy Efficiency Creates an Opportunity for Impact
Our planet has taken so many hits over the past years. With our excitement for development, we entirely missed the potential effects our technological advancements would have on the planet. When the changes to the climate eventually began to be noticed, most countries ignored the issues. As the world unites in this current struggle for the planet we live on, there is no better way to contribute to the climate than investing in energy efficiency and renewable energy.
Investments in Energy Efficiency are not just profitable or reliable in terms of monetary gains. Investments into Energy Efficiency are investments into the climate. Implementing energy efficiency strategies will benefit local, national, and global communities and prevent two of the world’s most critical issues.
According to Thomas Neyhart, energy efficiency is the most economical path to energy security. Energy security is the first issue energy efficiency solves. Italy is a country that is heavily dependent on external energy; 80% of the energy consumed comes from abroad. But in times when political conflicts affect an energy-producing region and energy prices rise. When this occurs, the global economy is concerned. The best way to reduce exposure to this risk is to adopt energy efficiency strategies. It is projected the energy consumption is cost-effectively reduced by approximately one-quarter with suitable investments in energy efficiency.
Secondly, energy efficiency is essential for stopping the threat of climate change. Global warming, which is becoming a rising issue, is primarily caused by emissions from the burning of fossil fuels. Long term, global warming poses a sizeable economic risk to the worldwide economy. At the same time, the precise effect of a given amount of warming is difficult to quantify. Experts advise that an urgent reduction in emissions is needed. According to Stern Review, climate change can reduce global economic productivity by 5%-20% over the coming decades.
A collective effort to invest in energy efficiency can go a long way in solving climate change says, Thomas Neyhart. The benefits make us richer in the short term and improve our energy security.
Energy Efficiency Benefits Us All
Thomas Neyhart also explains that investments in energy efficiency are profitable, especially when it comes to lifestyle. A significant part of energy efficiency is creating systems that are able to adapt to the needed change, especially when the change in question regards the use of renewable energy sources. Energy efficiency also means a better quality of life as a result of lower bills. The less money businesses have to spend on running costs like energy, and the more capital is available to expand and develop their product. The ripple effect of the cutbacks that energy efficiency provides is that there is a lot more money on the table to help create products that are useful in making the world better. For instance, if there is a renewable energy source for a lab, all that is required is for the researchers to focus on their research. This also applies to manufacturers and businesses in general.
As renewable energy technology improves, The cost of renewable energy elements has gone lower and lower. Components like batteries, controllers, inverters, and conductors are now more reliable and have better performance. One of the most significant Energy technological advancements is in the area of Energy Storage. Newer batteries that are being developed have been equipped with huge storage capacities, which increase performance and efficiency. As the technology for energy storage becomes more advanced, there is still conscious effort made to ensure that all the products are made from green energy products or recycled materials.
There is a World of Possibility in Energy Efficiency
There is a general world consensus that energy efficiency is the next big thing regarding investment and climate control. Unfortunately, despite this general acceptance of reality, not a lot is actually being done to scale up energy efficiency improvements. The reason for this disconnect between the awareness of energy efficiency and its actual application is relatively straightforward. There is a fundamental lack of funds needed for the necessary changes that are required to be made.
Thomas Neyhart notes that for smaller organizations like churches, schools, and small or medium business enterprises, there is simply no access to the funds that are needed. In the rare instances where these funds might be made available, the time required to access them is way too long and eventually discouraging. This means for investors that there is still a large potential for investment in the Energy Efficiency space. The investment opportunities may come in the form of equity in startups or actually creating companies that can be taxed with an unlimited demand with the ability to provide hassle-free supply. There is also the option of developing financial models that will provide suitable structures to people who are potentially interested in Energy Efficiency.
The Stock market is a sure and proven investment alternative, but with energy efficiency, there is a lot more to gain and a world full of possibilities to explore. As the world gravitates towards renewable energy and energy efficiency, investors need to work in tune with the developmental shift to receive the best value for their investments. Like many other visionaries, PosiGens’ CEO Thomas Neyhart believes strongly that renewable energy is more than a trend. It is the future.