Study: energy efficiency spending is up, incentives less important

 

Johnson Controls and IFMA are out with their latest survey on the 2010 energy efficiency spending outlook for North America, based on their survey of executives with direct oversight and control of energy budgets.

Aside from the larger conclusion that survey respondents intend to spend more in 2010 on energy efficiency than in prior years, comes a “sub-conclusion” that incentives were not as high a priority among executives as  most of us would think.

Specifically, the answer to the of ‘ how influential are government/utility incentives in the organization’s energy efficiency decisions’ was ranked as “somewhat, very, or extremely” significant by a lower percentage of respondents in the 2010 study than in prior years.

When asked about the ‘significance of greenhouse gas emission reductions on their organization’s energy efficiency decisions’, a greater number indicated that GHG emission reductions were “somewhat, very, or extremely” significant than in 2009.

From there, Johnson Controls and IFMA conclude that incentives have dropped in importance.

There are a couple of related items of note, that remain unexplained by the summary presentation notes.

- in a subsequent question of “which options will  your organization consider to pay for energy efficiency and renewable energy projects over the next 12 months“, the option of grants or tax credits were chosen by 20% answering. It was the number two most selected option. Number one, with 52% answering, was capital budgets.

- large and public organizations (read: those with more cash these days) answered as being most likely to invest in energy efficiency. The retail sector was noted as lagging in this category.

- they note that respondents’ investment criteria, 44% of which answered as being a 3.2 year payback, remains unchanged.

To be sure, this study is definitely not one in advocacy, as the unchanged 3.2 year payback represents a 31.25% return on investment, which is well beyond the returns most investments can deliver.

Also, it appears that most of the respondents were not from the investment real estate community, but mainly the corporate community. So, while its great to hear that more money will be spent on building energy efficiency, one can also see that there is still an intense  focus on the low-hanging fruit.

Even though it appears that the study was directed more towards exciting the Johnson Control customer base, it nonetheless provided some insights into current thinking on investing in energy efficiency in the corporate world. From that standpoint, it is worth a read.

For more fun — and insight, these exact questions should have been asked of institutional real estate investors and managers in a separate group, so that we could compare their answers with those responding to Johnson Controls here. I suspect that there would be quite a divergence in opinion on some of the questions.

For even more perspective, they should also be asked of lenders separately, too, about the projected spending of their borrower clients and loan portfolios on energy efficiency.

Perhaps, next year.

Happy reading!