Why the biggest hurdle to energy efficiency isn’t necessarily money

The U.S. economy could reduce annual non-transportation energy consumption (i.e., energy consumed in buildings) by more than 20 percent and eliminate more than $1.2 trillion in wasted spending by 2020. All it would take is an investment of about $520 billion, according to a recent study by McKinsey & Co.

 

This reduction in energy usage would also avoid more than a gigaton of greenhouse-gas emissions per year — the equivalent of taking the entire U.S. fleet of passenger vehicles and light trucks off the roads — not to mention increasing the resiliency of our aging power grid and creating thousands of jobs.
Seems like a win-win, no matter what side of the political fence you’re on, right?
It turns out that while most people agree that there are significant economic and environmental benefits to be gained, there are significant barriers to achieving the full investment potential that energy efficiency promises.

 

How can you measure the absence
of something?
First, the energy efficiency marketplace is highly fragmented, with few recognized standards and precious little actuarial data to work with. On top of that, energy efficiency projects are complex and engineers and contractors are not able to effectively sell the benefits to a financial decision-maker who doesn’t speak “energy efficiency” — if they can even get that far.
Then there’s the upfront cost, and the challenges of “measuring savings.” How can you measure the absence of something? All this adds up to a massive market failure.
I’ve spent my entire career in energy efficiency and conservation, developing ways to overcome these barriers and move the industry forward. I often joke that I’m a translator, trying to develop a common language that will help the real estate and energy efficiency “tribes” to communicate.
Ultimately, we’re trying to achieve market transformation by forging greater alignment between utilities, regulators, government agencies, manufacturers and energy consumers. And when the market begins to function, huge amounts of money will be made.

 

Learning to walk before you crawl
After transitioning from the nonprofit world to start my own consulting firm, I faced a difficult question: What is my goal with all of this? Should I continue to invest my time enabling the market, or should I become a direct market actor? Will I miss an opportunity if I don’t make a move now?
I began to resent the investors I was helping to understand the market, feeling like a sucker for not raising a fund of my own.
Ultimately, I realized that the industry is still only learning to crawl, and that I wanted to do what I could to make sure it learned to walk — that I would be more personally gratified by having contributed to the growth of the industry than by trying to establish a financial beachhead before the flood of projects.
I’m not a patient person by nature, but ultimately it came down to a gut check — mission or money? I believe in the “power of the and,” so I hope to achieve both one day. But for now, I’m sticking to the mission. ●