The Market

The clean-tech industry is a multi-billion dollar global industry comprising several market sectors including: energy efficiency, water and wastewater, recycling and waste, LED lighting, energy storage, alternative energies and renewables, batteries/storage, smart grid electrical distribution system, alternative transport, and green buildings, as well as various green business, research, and financial services.

Blue Earth, Inc. is focusing its efforts in the multi-billion dollar energy efficiency services sector of the clean-tech industry.  The energy efficiency sector is comprised of several market segments including building efficiency, industrial manufacturing, alternative energy, transportation, etc.   Energy efficiency companies, sometimes referred to as energy services companies, generally develop, install, and arrange financing for projects designed to improve the energy efficiency of buildings and other facilities.

According to a September 2010 Lawrence Berkeley National Laboratory study, the energy efficiency services sector (“EESS”) is poised to become an increasingly important part of the U.S. economy.  In 2008, the EESS spending is just over $18 billion in the U.S. EESS spending is forecast to increase more than four-fold, to over $80 billion in 2020 under the high growth scenario. This spending is the result of activity in the various sub-sectors (ARRA funds for energy efficiency, rate-funded energy efficiency programs, ESCO revenues, low-income weatherization, and spending in building and mechanical insulation markets).  The forecast for the low-growth scenario for spending on EESS activity is over $37 billion by 2020.

In 2008, spending in the U.S. directly for energy efficiency program administrators, program implementation contractors, program support contractors, and associated building and construction industry is $5.224 billion or 29% of the $18 billion for EESS spending.

Key drivers for EESS growth include the large infusion of funding from the American Recovery and Reinvestment Act (“ARRA”) to support state and local government energy efficiency programs, increased spending in ratepayer funded energy efficiency programs, and increased customer interest in strategies that mitigate higher utility bills and/or address environmental emissions.

According to a 2009 MCKinsey & Company report, there are a total of $130 billion worth of energy saving opportunities annually in the U.S. economy that go unrealized.  The central conclusion of the report states that energy efficiency offers a vast, low-cost energy resource for the U.S. economy.  Significant and persisitent barriers will need to be addressed at multiple levels to stimulate demand for energy efficiency, and manage its delivery across more than 100 million buildings and literally billions of electronic devices. If executed at scale, a holistic approach would yield gross savings of more than $1.2 trillion, well above the $520 billion needed through 2020 for upfront investment in efficiency measures (not including program costs).  Such a program is estimated to reduce energy consumption in 2010 by 9.1 quadrillion BTU’s, roughly 23% of projected demand, potentially abating up to 1.1 gigatons of greenhouse gases annually.

Investment levels in energy efficiency in buildings in the private and public sectors and industrial manufacturing facilities have remained strong despite the global recession, according to the Energy Efficiency Indicator (EEI) recently released by Johnson Controls, Inc. The EEI tracks energy management priorities, practices, and investment plans among decision makers responsible for managing commercial buildings and their energy use.

Across all regions surveyed, energy management is considered an important priority among commercial decision-makers.  While motivations differ from region to region, cost savings is consistently the most important factor driving investments.  After cost savings, lowering greenhouse gas emissions is the second most important motivator for energy efficiency in all regions except North America, where boosting public image and taking advantage of government/utility incentives rank higher in importance.

Globally, 63 percent of respondents plan to make capital investments in energy efficiency, and 70 percent plan operating budget expenditures in efficiency programs over the next twelve months.  Eighty-five percent plan to make efficiency a priority in their new construction and retrofit projects.