Tuesday, April 12, 2011

Kudos to the Nevada State Office of Energy

With 50 states plus a number of territorial authorities, we're starting to see a fairly impressive cross-section of stimulus-funded energy efficiency programs. Just one example comes from Nevada. Per their website:

"The mission of the Nevada State Energy Office (NSOE) is to ensure the wise development of the state’s energy resources in harmony with local community economic needs and Nevada’s natural resources by leading the nation in renewable energy production, energy efficiency and conservation, and exportation. The NSOE strives for this by facilitating cooperation between key stakeholders, leading initiatives to stimulate economic development and attracting every energy-related business venue including energy education, retrofitting, manufacturing, site development, generation and production, interstate and intrastate transmission."

Trying to move the needle on energy efficiency in an otherwise libertarian business community is a challenge, to say the least. The folks in Nevada are nevertheless making it happen, as duly noted by the U.S. Department of Energy.

The NSOE, like its counterparts in other states, has an opportunity to boost its effectiveness through more compelling outreach to the business community. Communication has always been the key here, specifically with respect to demonstrating fiscal impacts of energy choices. Virtually all commercial/industrial programs suffer from the same handicap: promoting 21st century energy solutions with 1920s investment metrics (i.e., simple payback). Here's hoping for a modern approach to energy improvements that demonstrates not only costs and savings, but also:

- the cost of "doing nothing" by refusing energy efficiency
- the ratio of the cost to buy vs. the cost to save each unit of energy
- a simplified business proposition that shows investors "what they get" and "what they give up" when they choose to accept or reject energy improvements.

Industry leaders need to understand that their refusal of energy improvements is not without cost. The negative cash flow of energy waste is capital recovery in reverse, which can be quantified like any other investment. By refusing energy improvements, businesses actually destroy capital (as evidenced on their balance sheets by a reduction of retained earnings).

This concept will be the subject of a white paper I'm presenting at the Industrial Energy Technology Conference in May 2011.



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