Investor class has discovered the huge returns in energy efficiency

The San Jose Mercury News has written a glowing story about energy efficiency (I know, it’s all the rage) and its move from the backwater of the clean energy movement to the forefront. What makes the Merc’s story interesting is something not emphasized often enough by people who pitch energy efficiency to businesses, homeowners and policy makers.

It makes the point that energy efficiency is not just the resource of choice for energy insiders and utility pros. It’s where the smart money is headed. The story points out that U.S. venture capitalists–not typically motivated by altruism or rates of return found by investing in regulated utilities–completed a record 115 investment deals in energy efficiency companies in 2009, worth a total of about $1 billion. Comparatively, the solar industry recorded about $1.2 billion in VC investments last year, a 64 percent drop from 2008.

“In 2009, there was a pullback and realization by investors that because of the capital intensity of solar, there may be safer places to put their money,” Scott Smith, U.S. cleantech leader for Deloitte, told the Merc.

Now that the financial class has realized that an energy efficiency upgrade generating a 33 percent simple return on investment (a three-year payback of the intitial investment, in other words) is a good deal, we fully expect the bulls to rush the energy efficiency market forthwith.

Tags: homepost