Monday, October 20, 2008

Corporate Spending on Green Energy

Author: Anne-Marie Fleming

Corporate Spending on Green Energy

Reducing Dependency on Foreign Oil, Current Energy costs, and Tax Incentives Drive Adoption of Renewables and Energy Efficiency Products

By Ann-Marie Fleming, February 2006

The incorporation of energy savings systems, environmentally friendly processes and renewable energy technology has found its way into many business models for corporations and government agencies.

Whole Foods Market® (NASDAQ: WFMI), the world's leading natural and organic foods supermarket, made history this month with its purchase of renewable energy credits that completely offset the Company's total electricity use. This move represents the largest purchase of wind energy credits in Canada and the United States. Michael Besancon, Whole Foods Market Southern Pacific Regional President and Green Mission task force leader recently stated, ""Whole Foods Market is a leader in the natural and organic foods movement, and that involves caring about our communities and respecting our environment. This purchase of wind energy credits is a natural extension of that leadership and is integral to our core values. Offsetting 100% of our electricity use with renewable, clean energy strengthens our commitment to be a leader in environmental stewardship by helping to clean the air and reducing our dependence on fossil fuels.""

This move by Whole Foods Market places renewable energy and in particular wind technology into mainstream business. Further evidence of mainstream acceptance of 'green' technology for energy efficiency and cost savings is seen in Wal-Mart's actions in this arena. With a philosophy that entails corporate and environmental responsibility as one of the largest companies in the world, Wal-Mart (NYSE: WMT) has made a commitment towards 'green' solutions. Wal-Mart identified three key goals in a corporate presentation; to be supplied 100 percent by renewable energy, to create zero waste, and to sell products that sustain our resources and environment.

Helping Wal-Mart reach these goals is a focus on specific areas within the company such as improving fleet efficiency. As the largest trucking fleet in the U.S., Wal-Mart feels that moves towards increasing efficiency means corporate savings, environmental protection and the beginning of a new 'green' conscious trend in business. ""By being the leader, we will not only change OUR fleet, but eventually change trucks everywhere in the world. We will do ourselves a big favor, clean the air for our children, create new jobs, improve U.S. productivity, positively impact our country's energy security, and more,"" stated Wal-Mart's CEO Lee Scott, in his Twenty First Century Leadership speech.

Wal-Mart is also focusing on improving efficiencies within its stores through innovative technology in energy, heating, cooling, compressors, lighting, refrigeration etc. with a goal in mind of eliminating 30 percent of the energy used by their stores.

""Increasing our efficiency in energy not only reduces dependence on oil and saves money; it also avoids greenhouse gas emissions,"" described Scott.

To help meet their corporate goals, Wal-Mart has turned to Rocky Mountain Institute (RMI), a non-profit organization dedicated to helping businesses, civil society, and government to design integrative solutions that create true wealth. As described by Cory Lowe, RMI Outreach Coordinator, ""The Walmart project is twofold. One half entails helping Walmart to increase the efficiency of their trucking fleet, which is one of the biggest in the country, through various technologies and techniques; while the other half of the project is focused on the 'green' design of their stores. RMI is going to help design more efficient stores including increasing the amount of daylight that gets into stores so that customers feel more comfortable. We are also aimed at reducing the amount energy needed for heating and cooling through more passive heating and cooling systems. Walmart is looking to 'green' their image and improve the efficiency of their operations, which they realize will help them cut costs and increase profits over time.""

Federal Agencies:

Corporations are not the only entities turning to renewables and energy efficiency products to cut costs, protect the environment and improve the bottom line; federal agencies are also pursuing this path. Helping to facilitate the process are companies like Honeywell International (NYSE: HON), who continues to contribute to this movement.

According to Steve Craig, Honeywell's Director, Federal Business Unit, National Energy Solutions, ""Organizationally, we are staffed with trusted energy experts with a wide range of technology experience as well as having the engineering, design, and project management experience to create and implement comprehensive integrated energy solutions. Financially, Honeywell is investing every day in people and assets to continue our goal of being a leader in turn-key energy conservation programs.""

Honeywell utilizes a vehicle called ESPC (energy savings performance contracting). ""This is a financial vehicle where end users can upgrade their energy infrastructures using the guaranteed energy savings generated from the project as a funding source, not stretched capital dollars. What we are able to do is spread the costs of doing the project out over a period of time and have the guaranteed energy savings pay for the project versus capital dollars,"" explains Craig.

Key Drivers:

Green strategies are being supported by a variety of incentives, from tax credits to corporate image, to overall improvement of the bottom line. George Burnes, CEO of SmartCool Systems (TSX.V: SSC; OTC.PK: SSCFF), a marketer of advanced energy saving technologies describes, "" As this trend continues and more pressure is placed by governments, the financial industry, consumers and shareholders of large corporations, new technology will become a driving focus by energy managers to implement in their reduction strategies.""

In addition, companies, agencies and ultimately consumers are looking for alternatives as a means of offsetting the high costs of traditional energy and rising demand. An extension of this is the country's quest for reducing the dependence on foreign sources of oil as a matter of national security. ""Virtually everything we touch, use, or eat has employed the use of electricity in its manufacture, packaging, marketing, and sale, states Mr. Tom Djokovich, CEO of XsunX Inc. (OTCBB: XSNX), ""Due to a combination of rising power costs, and in many regions insufficient access to even enough power, the international business community is adopting the use of renewable energy technologies to reduce operating costs, gain competitive advantages, and improve customer perception and retention.""

Steve Craig attributes several factors to the growth of corporate and federal adoption of strategic initiatives in clean energy such as ""reducing our dependency on foreign oil, current commodity costs, emission reduction mandates and Federal Government Legislation (Epact 2005). In addition, financial incentives, tax credits, improved technology bringing the cost to implement down, and flat out common sense are helping to spur this trend,"" states Craig.

Enabling Technology:

Helping corporations and federal agencies pursue the 'green' path are innovative technologies that provide opportunities for energy savings, independence and an overall protection of the environment. ""An innovative new way to accomplish this is through the use of Building Integrated Photovoltaics or (""BIPV"") which allow photovoltaic material, in the form of photoelectric panels, to be incorporated into the design of building materials; thus, providing a new and smart way to integrate additional sources of power production into the operation of buildings,"" describes Djokovich. ""To address the growing BIPV opportunity XsunX is developing Power Glass®, a PV thin film that may soon convert ordinary exterior glass curtain walls into BIPV power producing systems. ""We see the use of BIPV renewable technologies to reduce dependency on utility or grid supplied electricity as part of an inevitable and growing trend in all building designs. At XsunX we believe that the BIPV market is in the early stage of an adoption cycle that may see years of growth and opportunity ahead,"" concluded Mr. Djokovich.

Honeywell's work with Luke Air Force Base in Glendale, Arizona entailed a photovoltaic solar-integrated roof that is believed to initially produce more than 120 kilowatts of power and provide free, zero-emissions energy for the base for decades. In addition to using BIPV, Honeywell also utilizes energy-saving water conservation strategies and treatment services, high efficiency lighting, energy management control systems as well as HVAC occupancy controls.

Working with companies to help them to realize their goals for energy efficiency, Smartcool believes they are specifically positioned through their unique product offerings to help companies reduce energy costs. ""Reducing costs address not only the operating costs that continue to rise as the pressure on supply and demand face the industry, but as companies focus on the green energy initiatives and seek to purchase energy credits, Smartcool provides them a solution that allows them to position themselves as a Company engaged in a strategy to reduce emissions and become more energy efficient. The Smartcool energy management system allows managers to retro fit existing plant or design new construction with a proven solution used by Fortune 500 companies around the world. Introducing this technology to the North American market will allow us to impact the political pressures facing the industry,"" explains Burnes.

Ann-Marie Fleming Ann-Marie Fleming completed her MBA in the United States, where she attended Webster University. She also holds an Honors B.A from the University of Toronto. She has over fifteen years of experience within the financial industry to include retail banking and brokerage, investment banking, and mortgage brokerage within the United States and Canada, with a firm background in corporate research.


©Copyright InvestorIdeas 2005

About the author: Ann-Marie Fleming completed her MBA in the United States, where she attended Webster University. She also holds an Honors B.A from the University of Toronto. She has over fifteen years of experience within the financial industry to include retail banking and brokerage, investment banking, and mortgage brokerage within the United States and Canada, with a firm background in corporate research.


At 1:27 PM , Blogger Tracy said...

Hi Paul,

I’m working with a green bank called ShoreBank to promote their Online High-Yield Savings Account. Please contact me directly at if you would like to know more about what they are doing to promote environmental initiatives. Thanks!


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