Investing our way out of the Recession

I recently ran across this blogpost from a man I really respect. He says, “However, Paulson acknowledged to NPR host Scott Simon, the “conundrum” is that to spur the economy, we now need to spend more and create more jobs. Paulson did not offer a solution to this impasse.

Indeed, this contradiction is now paralyzing the nation’s political life, as Americans are worried about both high unemployment and record deficits. The Obama Administration and Congress are now walking a tightrope between these anxieties.

Investment as Solution. The solution to this jobs vs. savings conundrum is to invest money now, into projects that when completed will help us individually and as a nation to save more.”

The blog post goes on to offer some recommendations and I would visit it here:

My recommendation is to focus only on the built environment. According to a Navigant study funded by the Energy Foundation, there are 15,000,000 Commercial buildings in the US. out of a total of 130,000,000 million structures. There has been huge movement in the non-recourse financing space since SunEdison pioneered financing for solar PV in 2003. Today Property Assessed Clean Energy (PACE) bonds and utility on-bill payment mechanisms can bring interest rates for non-recourse energy efficiency bonds down to below 8.5% over 20 years. Not bad!

Companies like Pulse Energy, SCI, and others have software/hardware solutions that for less than $15,000 per building to perform retro-commissioning/continuous commissioning solutions to save over 10% of total electricity used in the Commercial sector — or around 150 terawatt hours. Given the 80/20 rule you would focus your efforts on the 3,000,000 buildings that are the largest opportunities or $45B in investment. The savings from these 20% of buildings would exceed 100 terawatt-hours per year or $10B per year. With interest the customer pays an extra $1,000 per year and savings of over $3,000 per year.

Job creation occurs from this one cost effective technology alone is almost a half a million job years. Taking energy audits that have already been completed for deeper energy retrofits and giving them a non-recourse financing solutions gives you a 2-3X multiplier on this opportunity. Cost effective solar, demand response, ice storage, and other consumer technologies multiply this by another 3X. LBNL estimates that the opportunity is around $440B using today’s technology.

The job creation from the work is important but not really what we are after. Money that is freed up from the sleepy electricity industry is usually redeployed in much more value creating areas — new businesses, consumption, savings

The multiplication effect here is what we are after. The Carbon War Room has recently launched the Green Capital Global Challenge to go after this opportunity.

There are so many investment opportunities that do not need federal government financial support — simply some assistance on removing market barriers. Smells like an opportunity!

Jigar Shah
Founder of SunEdison
CEO of the Carbon War Room

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