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Energy efficient houses foreclose less, worth more
A recent study investigated the connection between energy efficiency and the ability to pay a mortgage. The study found the risk of mortgage default is one third lower for energy efficient, Energy Star rated homes.
House hunters are also willing to pay a premium price for efficient homes. A study involving an large sample of 1.6 million homes sold in California between 2007 and early 2012 showed, with all other variables constant, a green certification label on a house adds an average of 9% to its selling value.
How much extra it costs to build an energy efficient home really depends on what efficiency features are added. Builders claim the average payback of the additional building costs to make a home efficient is 3-4 years in saved energy costs. If you own the home for 4 years, you benefit from the increased property value, and reduced energy costs.
Energy efficient businesses with lower energy costs have higher profit, minimized risk
There is data to back up the financial impact of energy efficiency in the residential market, but what about businesses?
Let’s use the Retail industry as an example, which is under enormous pressure from customers to increase transparency of their operations. Energy STAR states “a 10 % decrease in energy costs has an equivalent impact on operating income as a 1.26% increase in sales for the average retail store. For Retailers operating on a slim margin, a 1.26% increase is huge.
Energy efficient businesses have usually implemented a strategic energy plan and taken steps to optimize energy and resource consumption across their enterprise. An energy efficient enterprise tends to have less waste across the organization, resulting in a more competitive, leaner company. A more efficient company has minimized its risk to outside factors such as energy price increases and lower sales figures due to changing consumer demand. The intangible benefits of increased brand loyalty and more productive employees are the icing on the cake. Energy efficient companies with sustainable practices experience reduced energy costs, reduced risk, higher profits and increased goodwill, which also translate into a higher share price and valuation.
Ensure a positive return on investment (ROI) for your projects
In order to capture a positive ROI, each initiative or improvement needs to be reviewed carefully to ensure that the benefits outweigh the cost, taking into consideration unique situations. For a house it might mean ensuring you don’t invest more than what the market will pay a premium for, and for businesses it means weighing all factors for every initiative to ensure it makes sense for your business.