Monday, 2 January 2012

Free efficiency: The ‘secret sauce’ to 2012 tech success

What does 2012 hold for the smart-energy sector? Expect organizations in the coming year to keep looking for
ways to save energy through improved efficiency - with the prevailing mantra being not, "Help me become greener," but, "Show me the money."

That spells opportunity for technology and service companies that can deliver the best - and fastest - returns on investment. On the other hand, investments with longer-term or hard-to-quantify payoffs will be increasingly difficult to justify, especially as government stimulus spending (think smart-grid grants and loans) begins to dwindle.

Under those circumstances, the business model with great potential is the one where efficiency solutions can be had for no upfront cost at all on the customer’s part; that is, one where companies can implement new technologies or services that lower their energy bills steadily over time, with all or part of those savings going to the technology or service provider in the form of residual-like payments.

That’s a model already in use by quite a few solar-energy companies that use power purchase agreements to motivate homeowners to install photovoltaics on their rooftops. Under such leasing arrangements - offered by firms like SolarCity, SunRun, CT Solar Lease and Sungevity - customers have gotten solar panels on their roofs for little or no upfront cost, with the installing company earning revenues through homeowners’ ongoing lower utility bills.

Even with solar-energy costs approaching parity with traditional electricity sources, such leases typically last for 20 years to make them worthwhile for PV companies. Other efficiency improvements, though, can pay for themselves more quickly, and that’s where we can expect to see a lot of activity in the coming year. Think 'free cooling' solutions like Iceotope’s for data centers, demand response services such as EnerNOC’s and low-cost behavior-based ways to lower energy costs (GreenRoad’s approach for reducing fuel consumption, for example).

As the Great Recession drags into yet another year, efficiency will continue to be good - but cheap, or - better yet - free, efficiency will be even better.

02 January 2012