Investors and public back energy efficiency

Energy efficiency finally has transitioned from being a good idea to a good business – to a very good business.

Money poured into the industry last year, pumping up total deal values by 664.7% and making 2009 energy efficiency’s break-out year, according to Peachtree Green Advisors. http://peachtreemediaadvisors.com/green/downloads/2009GreentechM&ARound-Up.pdf.

This increase for EE — from $164 million to $1.3 billion — came despite a 4.1% drop in overall transaction value for the green tech sector.

“VCs and angels—have targeted the energy efficiency as the next frontier in green tech investing,” the report said, noting that “a slew of money” was channeled into software technologies that manage energy use, as well as electric and hybrid cars.

What’s ahead for 2010? Much may depend on how the industry describes itself.

The Peachtree report warns that once federal stimulus money dries up, green projects may be shelved. Placing a carbon value on energy would bolster the industry, but that will take tremendous “political willpower,” says Peachtree.

And political willpower seems scarce in Congress, particularly with the surprise election this week of Republican Scott Brown to the open US Senate seat in Massachusetts. Those already nervous about voting for cap and trade see the Brown vote as a surprise indictment of not only Obama’s healthcare agenda but also his energy policy. http://www.bloomberg.com/apps/news?pid=20601087&sid=aLrXr50OGPR0&pos=9

But the electorate’s sentiments are hard to read right now. And it may be off the mark to assume that Brown’s election means weak public backing for cap and trade. In fact, an interesting poll by Frank Luntz indicates just the opposite. http://www.edf.org/language

Issued January 21 by the Environmental Defense Fund and NRG Energy, the poll shows Americans eager for Congress to act on climate legislation that would promote energy independence and a healthier environment. And the support crossed party lines.

Much depends, though, on how the issue is framed, according to Luntz. Discard the words “carbon neutral,” he says: “People want companies to focus on greater energy efficiency and a healthier environment – not on being carbon neutral.”

In fact, energy efficiency got the top response (47%) when pollsters asked, “If a company was genuinely interested in energy and environmental issues, which of the following do you most want them to focus on?” After efficiency, poll participants said they want a healthier environment (41%), a cleaner environment (32%), reduced energy consumption (29%), greater environmental stewardship (24%), carbon neutral (12%), none of the above – it’s a waste of time, (8%).

If this poll is correct, fearful lawmakers may again be misreading the public sentiment. A carbon cap and trade bill still can be won, if it is presented correctly to the public. The word from investors is that efficiency is a good bet.  The word from the American public appears to be the same. Now we await word from Congress.

Visit Elisa Wood at http://www.realenergywriters.com/ and pick up her free Energy Efficiency Markets podcast and newsletter.