Cam-Air takes great pride in knowing that we guide and assist companies reduce their carbon footprint and making great strides in helping the environment. But, let’s face it, 99% of the projects are based on one thing: money.
- How much money will it take to do the project?
- How much money will we save?
- How are we going to pay for it?
- Is it worth the financial investment?
With so many questions and so many things to consider, why choose to perform an energy efficient upgrade?
- 1. It is a one time investment the results in permanent savings
- 2. The cost of electricity continues to rise
- Enhanced facility means more production
- It is a low risk investment with predictable savings
- Cheap, easy financing available to fund projects that create a positive cash flow without any money out of pocket
- Energy efficiency projects outperform any financial investment a company can make—BY FAR.
Per the Rhodium Group’s Study: Unlocking American Efficiency: The Economic and Commercial Power of Investing in Energy Efficient Buildings, see the following:
The Business Case for Building Efficiency
With the global economy still recovering from the Great Recession, companies are more cautious than ever in their investment planning. Business face an uncertain policy landscape in developed countries as Washington, Brussels and Tokyo all grapple with large fiscal deficits and rapidly evolving competitive landscape in global markets thanks to the rise of China, India and other emerging economies. So while corporate profits have improved in recent years, companies are careful about reinvesting those profits in new business lines or expanded production (there are record shares of US corporate assets currently being held in cash or other low-risk, low-return liquid assets).
Today’s global energy prices add to the uncertainty businesses face. American business spent $740 billion on energy gin 2011, up from $380 billion in 2000. And the rise in prices has been even more pronounced outside the US. Globally, companies now pay more than twice as much for energy than they did a year ago. And with growing demand from emerging economies, the International Energy Agency predicts that energy prices will rise by a further 17% over the next two decades. While the unconventional oil and gas boom has helped soften energy prices in the US, and could potentially do so in other parts of the world, energy price volatility will not go away.
In this environment of economic uncertainty, building efficiency is an attractive corporate investment strategy. Improving the energy efficiency of a company’s building portfolio increases the productivity of existing assets, guards against future energy price hikes and offers some of the most attractive rates of return available to the business community today.
Your Investment Opportunity
In corporate finance terms, these investments have an internal rate of return (IRR) of 28.6% over a 10 year period. IRR was calculated by scoring the 10 year energy cost savings result from the efficiency investments (at a 7% annual discount rate) against the cost premium of the energy efficient technology or design option relative to the conventional alternative. An IRR of 28.6% is four times better than average corporate bond yields or average equity performance and more than double the returns even high-performing venture capital firms enjoy (Figure 9). That’s because the more attractive efficiency technology and design options cost the same or only slightly more than conventional alternatives, but deliver significant energy cost savings.