Last year, the U.S. Department of Energy’s (DOE) decades-old weatherization program received a serious jolt of stimulus that added $5 billion to its coffers. Under the new stimulus, community-action agencies can spend up to $6,500 to add insulation to the walls, floors, foundations, ceilings and attics of low-income family homes, or to seal or replace windows and sometimes provide new equipment, such as furnaces. According to the DOE the $6,500 would reduce annual energy bills by $437 on average – a horrific 15 year simple return on investment.

However, there were also some new strings attached to the new cash. According to the Wall Street Journal, states are now required to draft plans detailing how they would use the extra weatherization money. These plans are then reviewed by the DOE – a lengthy and time consuming process. One of the largest reason for delays in the program, however, was a provision in the stimulus bill to apply the Davis-Bacon Act, which requires that workers receive the local “prevailing wage,” as determined by the Department of Labor. Federally subsidized weatherization work had never been subject to Davis-Bacon before, so no wage rates existed. However, without an “approved rate” work could not commence. So, to determine the rates, the Department of Labor issued a survey in July 2009 to find out the prevailing wage in every county in the U.S. Many of the questionnaires went to the very same community groups and weatherization workers to which the money would eventually flow.

Can anyone say “conflict of interest”?

After nearly a year of wrangling, weatherization programs got off the ground earlier in this year. But the number of homes retrofitted has not even reached 30% of the target. When the project is over in the next several years, expect a few hundred thousand residential retrofits – approximately 0.5% of the country’s housing stock – each of which will shave on average a respectable 10% off the building’s energy footprint. Given that roughly 20% of the U.S.’s primary energy use for residential buildings expect the program to reduce the nation’s energy expense by a whopping 0.002%. Obviously the program was geared more towards job creation rather than energy savings. While we don’t expect many polar bears saved from global warming, thousands of home repair specialists were probably saved from the unemployment rolls.

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In the next decade, the expanding use of advanced fluorescent lamps, light emitting diodes (LEDs), and automated control technologies will all help reduce the energy used to power direct lighting by an estimated 1 trillion kWh, or a whopping 60%. That means that, even as the developed world expands its floor space by approximately 11.3 billion ft2 per year, the cost to illuminate it will actually decline from $174 billion today to $119 billion in 2020.

This week’s Graphic comes from the recent Lux Research report, “The future is so bright: Energy, carbon, and cost savings through better lighting (Client registration required),” and illustrates how energy savings break down by application.

Residential lighting clearly improves the most, but from the lowest base. Residences comprise nearly 80% of the world’s floorspace, and have far less efficient lighting systems that still rely heavily (i.e. 45%) on 16 lm/W incandescent bulbs. However, a steady infiltration of CFLs will produce up to 80% of the residential light in 2015 followed by adoption of LEDs, bringing average lamp efficacy up from 42 lm/W in 2010 to more than 100 lm/W in 2020; a 245% improvement. With smart lighting controls, Lux projects overall savings of 0.79 trillion kWh – a 43% reduction of total direct energy used by 2020.

Use of smart lighting controls in government building floorspace, and advanced lighting used to illuminate commercial and industrial space will have a combined effect. Together, they will shave 110 billion kWh off the direct energy expended these buildings in 2020. On top of that, the growing use of T5 fluorescent tubes, LEDs, and other advanced lighting will improve energy efficiency of 70%, signaling direct lighting energy savings of 0.26 trillion kWh in 2020.

The smallest gains will be in decorative and exterior illumination and task lighting which, by 2020, will see energy savings of 0.002 trillion kWh and 0.025 trillion kWh, respectively.

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Buildings consume more energy and materials than any other human activity – a reality that, for decades, has fueled interest in any technology that saves energy and reduces costs. As energy prices continue to rise and resources dwindle, interest in these technologies will spark a “green buildings” market that will grow from $144 billion today to $277 billion in 2020 – a 6.1% compound annual growth rate (CAGR).

That forecast and this week’s graphic come from the inaugural State of the Market report for the newly launched Lux Green Buildings Intelligence Service, which will provide clients with ongoing research on market and technology trends in green building technologies – defined, by Lux Research, as any service, equipment, or material that improves the energy efficiency or reduces net material consumption of a building over and above that of the standard used at the time of original construction.

Rather than take the conventional approach of measuring the market based on property values, the report instead analyzes the revenue and growth potential of the market’s enabling technologies. It classifies these technologies as either “established green” – well-understood technologies that have already entered the market in earnest within the last 5 to 10 years – or as “emerging green” – technologies that are either lab phenomena or only in the beginning phases of market introduction.

Most of the revenue predicted in 2020 will derive from established green segments – about 70% or $195 billion. However, it’s the $82 billion of 2020 revenue from emerging green segments – up from $7.8 billion in 2009, a 29.6% CAGR – that will attract attention from executives and investors focused on higher-risk, higher-reward opportunities. Breaking the forecast down by category, we found that:

• The energy-saving equipment category will gear up to reach $146 billion in 2015. The market’s largest segment, green building equipment, comprises lighting, HVAC and water heating systems; as well as energy-generation technologies, such as rooftop solar, building-integrated PV, and combined heat and power systems. The segment represented an impressive $67 billion in 2009, but new growth in LEDs, smart lighting, and advanced heat technologies will help sustain a 7.3% CAGR through 2015.
• The services segment will deliver the most robust growth. The green services category encompasses energy service companies (ESCOs), demand response, building energy management, and smart meters. In 2009, it represented only 11% of the green building market with $16 billion in revenues. But strong expansion of emerging technologies, like demand response, will expand the segment’s revenues to $55 billion in 2020, reflecting a robust 12% CAGR.
• Materials are the slowest growing segment, with a few bright spots. Energy-saving green building materials, such as insulation, windows, and structural materials amounted to $62 billion in 2009; the segment will reach $75 billion in 2015, a relatively slight 2% CAGR. Emerging technologies to watch, however, include electrochromic, thermochromic, and thermoreflective windows, which control how much sunlight windows admit.

Source: Lux Research report “Diamonds in the Rough: Uncovering Opportunities in the $277 Billion Green Buildings Market.” (client registration required)

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