An Alternative to Alternative Energy Companies -- Companies that Save Energy
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Investors seeking ways to participate in the movement toward commercializing alternative energy sources have serious risks to consider such as: Will the technology work? Is it commercially feasible now? Will it ever be?
Investors can certainly profit from companies that increase our energy supply through innovative new sources of energy, but another way to approach this sector is to seek out companies that reduce demand, those that provide products or services that help us use less energy. In addition you can look for companies that are serious about implementing energy savings strategies because that translates into cost savings that flow to their bottom line. And instead of buying shares in yet-to-be-proven companies whose stocks have sometimes scary volatility, you can invest in some of the best known and persistently profitable corporations in America. You can be green with much less worry.
One developing market is energy savings in buildings, and for good reason. According to the U.S. Department of Energy, households and commercial buildings account for almost 40 percent of the total energy used in the United States -- perhaps surprisingly, more than the transportation or industry sectors.
We know about the pain at the pump consumers feel from today's historically high gas prices, but did you know there's pain at the HVAC unit for owners of buildings, too? There is, because the average building's heating and cooling system accounts for more than 40 percent of its energy usage.
The impetus toward implementing energy savings in buildings is driven by the rising costs of electricity, but also a sense of urgency about reducing greenhouse gas emissions and dependence on foreign oil.
Verizon Wireless, a joint venture of Verizon Communications (NYSE: VZ) and Vodafone (NASDAQ: VOD), is the operator of the nation's largest 4G LTE network, serving 93 million retail customers. The company has made a major commitment to improving the environmental performance in its retail stores. Its "green" store design has earned pre-certification in the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program, one of only eight U.S. retailers to receive this designation and the only wireless company. Besides energy savings, particularly from more energy efficient lighting, the new store designs are expected to save the equivalent of 455,000 glasses of water. You wonder how they come up with such exact forecasts; are they sure it's not 456,524 glasses? Are they 8 ounce glasses? 12 ounce? Pity the poor financial analyst who had to stay late at the office producing these numbers for the press release.
Technology of course will provide these energy saving solutions that are increasingly in demand. Carrier, part of United Technologies Corp. (NYSE: UTX), is a leader in heating, air conditioning and refrigeration technology. The company has introduced a software product called the eDesign Suite to help building designers optimize building performance and reduce energy consumption. This group of software tools comes with a streamlined user interface and the ability to generate a complete model of the building and its HVAC systems in a matter of minutes. The user can quickly compare annual energy costs for different configurations of HVAC designs. For the design engineers, the Carrier solution saves them valuable time, and for the building owner, energy savings will be significant and ongoing.
Products and services for energy savings in buildings -- including homes -- is a relatively new, emerging market that investors should keep an eye on. Exciting, or at least mildly intriguing, technologies are being developed to meet this need and established companies are entering the market space recognizing the size of the opportunity -- there are more than 110 million households and nearly 5 million commercial buildings in the U.S.
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