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Corporate America Turns Out the Lights - Surprising Reduction in US Corporate Energy UsageCopyright © 2008 Paul CartonA huge shift is occurring in the way corporate America views energy usage. In a March ChangeWave survey of 1,400 respondents knowledgeable about their company's energy spending, more than one-in-five (22%) reported their company is Very Concerned about reducing its energy usage. Another 35% say they’re Somewhat Concerned. The increased levels of concern are ushering in a transformational shift in U.S. corporate energy consumption - with an astounding 26% of respondents saying their company has used Less energy than normal over the past six months. By comparison, only 16% say they’ve used More energy. In a related finding, nearly a quarter of respondents (23%) report their company’s spending on energy efficient products and technologies will Increase over the next six months; three-times the percentage that see a Decrease (8%). “The perfect storm of rising energy costs and concern over global climate disruption is forcing companies to rethink the most basic ways they use energy,” said ChangeWave analyst Joshua Levine. “A tremendous shift in corporate perception is occurring and it’s going to impact virtually all industries and create investment opportunities in the process.” To track the corporate race towards greater energy efficiency, we asked respondents which technologies and products their company is actually using. Two technologies - solar power and LED lighting - stand out far above the rest. Alternative Technologies - Here Comes the Sun Corporate use of “off-the-grid” energy technologies is gaining momentum, with 8% of respondents saying they currently use alternative sources to generate power. Going forward, better than one-in-five (21%) say they’ll install and make use of alternative energy sources within the next five years. The shift to alternative energy is great news for solar power, which dominates the landscape. Solar is far ahead of other alternative energy options, both in terms of current corporate usage (51%) and future planned users (72%). Wind Power is relegated to a distant second for current (24%) and future users (19%). Solar Flares According to the survey, an unattractive payback period (24%) still ranks as one of the big barriers to corporate use of alternative power technologies, second only to initial capital investment (39%). And when asked how long they think it will take to achieve a payback for their current solar energy investments, the consensus estimate among respondents is seven years (for future solar energy investments it’s 6.4 years). But despite this, with crude oil prices hitting new all-time highs the solar industry clearly has momentum and is helping bring about a transformational shift in corporate energy use. “Solar’s rapid expansion on the corporate energy efficiency front is good news for companies in the solar food chain,” says Josh Levine. “Polysilicon producers, solar cell manufacturers and solar installation firms are all likely beneficiaries of the trend toward the sun.” Adding to solar’s attraction is the near certainty of continued tax credits. U.S. lawmakers appear likely to pass an extension of a key solar industry tax credit. The bill, if passed, would extend the 30% commercial tax credit by eight years, the residential credit by one year and would remove a $2,000 cap on residential systems. Importantly, utilities would be able to take advantage of the credit for the first time. According to Levine, the companies best positioned to ride this solar wave are the major photovoltaics manufacturers like First Solar (FSLR), SunPower Corp. (SPWR) and Suntech Power Holdings (STP) - each of which are leading the solar energy industry ever closer to the “Holy Grail” of alternative energy economics - grid price parity. LED Lights Up Along with solar power, there is another standout in the corporate race towards energy efficiency. Overall, the survey points to lighting as the single easiest area for businesses to reduce their energy usage. It is little wonder then, that energy efficient lighting is the top product/technology companies will be purchasing over the next six months to improve energy efficiency. And while Compact and Regular Florescent Lighting had the highest market share over the past six months - LED Lighting (21%; up 7-pts) is set to be the clear momentum leader going forward. We note that the biggest barrier to the more widespread adoption of LED lighting technology is price. Nearly three-in-four respondents (74%) say their company would only consider switching all of its lighting with LED if the cost were lower than $5 per bulb. But despite pricing issues, the survey definitively shows LED lighting as a prime spending area in the world of corporate energy efficiency. This is a boost for major lighting firms like Philips Electronics (PHG) and General Electric (GE), who are the leading LED manufacturers and distributors. However, Levine believes the smaller pure-plays in LED lighting technology are poised to be the biggest winners. “Among the handful of innovators that have developed LED technologies, Cree Inc. (CREE) stands out as a likely candidate to be eventually acquired by a lighting giant,” says Levine. “The light fixture market is a 2.5 billion unit market worldwide, and Cree’s technologies are clearly addressing this enormous opportunity.” About The Author:
*** Digital Reprint Rights *** *** Author Notification *** We ask that you notify the author of publication of his or her work. Paul Carton can be reached at: agolub@changewave.com *** Print Publication Reprint Rights *** If you desire to publish this article in a PRINT publication, you must contact the author directly for Print Permission at: agolub@changewave.com
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