Ameresco Inc (AMRC), Johnson Controls, Inc. (JCI): The Cheapest Megawatt

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The winds of change are blowing through our energy economy, and it won't be long before they're at gale force. The simple fact is that we can't maintain our prosperity and growth without energy, and we can't continue to produce energy the way we've been doing it all along. Everything about the way we generate, transmit, and consume energy is going to have to change. This creates plenty of investment risk, but it also offers extraordinary opportunity for those who see the big picture. Ameresco Inc (NYSE:AMRC) The cheapest Megawatt U.S. Deputy Secretary of Energy Daniel Poneman had a lot to say about energy efficiency at the recent Bloomberg New Energy Finance (BNEF) Summit. "Life is too short to work on second-class problems," he said by way of opening. Poneman views the transformation of our energy economy as the challenge of our generation, emphasizing that we cannot resist the transition to sustainability: We must lead it. The U.S. energy economy has reached 100 quadrillion British thermal units (btu) per year. This is nearly 20% of the world's energy, even though the U.S. has only 5% of the world's population. Astonishingly, more than half the energy we use is wasted. Poneman asks us to think about what we could do with that energy, or with the money saved from not buying it. This isn't just about the environment, Poneman points out. Former Energy Secretary Steven Chu says, "I believe in energy efficiency because I'm cheap." The cost of waste goes straight to the nation's bottom line. Poneman says we could save tens of billions of dollars that could be plunged right back into investment. "Sometimes we have a lack of imagination," he says. The cheapest megawatt, Poneman says, is the one you don't have to generate: "We have got to do better than 45% energy efficiency. Einstein himself said that we cannot solve problems by using the same kind of thinking we used when we created them." Sarbjit Nahal, head of thematic investing strategy at Bank of America Merrill Lynch, recently published an anvil-heavy tome positing the theory that the next five to 10 years will be devoted to a serious bid to improve energy efficiency, and guiding equity investors through strategies to capture opportunities on that front. The efficiency possibilities touch every sector: Serious improvements could be made in the way buildings run, data centers are cooled, semiconductors power devices, and lighting illuminates. Michael Liebreich, chief executive of BNEF, said at the recent BNEF Summit that energy efficiency had the potential to be a game-changer.
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