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Businesses Invest in Energy Efficiency Measures

May 21, 2007

New research, commissioned by Johnson Controls, shows businesses investing in energy efficiency measures to combat rising energy costs.


MILWAUKEE, WI /PRNewswire/ -- Results from a first-time survey of North American business leaders indicate they expect energy prices to continue to rise, and plan to invest in energy efficiency measures to help fight rising costs. Despite the trend toward sustainability, executives cite a desire to decrease energy expenditures within their organizations as a greater motivator than environmental responsibility.

Those are some of the findings of the research commissioned by Johnson Controls, Inc., a global leader in creating smart environments. The Johnson Controls Energy Efficiency Indicator research identified individuals from a wide range of facilities and locations who were decision-makers for energy management issues within organizations and asked how they were responding to rising energy costs, defined as electricity and natural gas costs. Members from the International Facility Management Association were included as survey respondents. The research was conducted in March and released today. Johnson Controls plans to repeat the Energy Efficiency Indicator research annually.

Just over half—52%—of the executives surveyed say costs savings as either entirely or somewhat the driver for their decision to invest in energy efficiency measures. Thirty-five percent say cost savings and environmental responsibility are equal motivators, while only 13% cite environmental concern as the greater motivator.

The executives appear to have reached a consensus that energy costs will continue to rise in the near future. Seventy-nine percent say they believe that electricity and natural gas prices will increase significantly during the next 12 months, with an average price hike of 13.25% expected.

Consistent with the rising energy cost forecast, 62% say their companies are paying more attention to energy efficiency today than five years ago. As a result, they are acting on it. Almost 57% expect to make energy efficiency improvements using their capital budgets in the next 12 months, spending an average of 8% of those budgets. In addition, 64% anticipate using their operating budgets, allocating 6% to energy efficiency improvements.

Most executives choose basic measures
Despite the pain of rising energy costs, executives are generally limiting their investments to more conservative energy management solutions. Of respondents who have already made energy efficiency investments:

  • 70% educated staff and other facility users on how to be more efficient
  • 67% switched to energy efficient lighting
  • 60% adjusted HVAC controls
  • 46% installed lighting sensors

Commercial buildings consume about 40% of natural gas and 60% of the electricity generated in the U.S. So it's not surprising that three-quarters of executives with companies that are building or planning to build new facilities, or are launching retrofits in the next year, say that energy efficiency will be a priority in the design of those projects.

When it comes to energy supply-related matters, 36% have negotiated energy contracts with suppliers. Only 14% are putting energy price hedging strategies in place. In addition, 11% currently have a stated carbon reduction goal.

"This survey provides a valuable snapshot of how organizations are reacting to rising energy prices, and I think we're going to see even more attention paid to this in the future," said C. David Myers, president of the Johnson Controls Building Efficiency business. "There's a growing realization of the role commercial and industrial facilities play in energy consumption, and the role they can play in making the economy more energy efficient. Johnson Controls believes that employing effective energy management strategies can help mitigate the impact of those costs and improve our country's energy self sufficiency."

Whatever the motivation for making energy efficiency investments, companies have by and large not relaxed their payback requirements for such measures. About two thirds of companies (64%) have a maximum payback period of between two and five years. Overall, only 18% of those surveyed say their companies would allow a longer payback period today than five years ago. About 45% say the required payback period has not changed compared with five years ago.

Executives responsible for larger facilities (500,000 square feet or more) are an exception. They spend a bigger part of their budgets on energy, are planning to invest more of their budgets on energy efficiency measures, and will tolerate a longer payback period.

"This report is a step in the right direction to show that companies are making positive steps in energy efficiency, for this is the greatest long-term method for stretching limited resources," said David J. Brady, president and chief executive officer of IFMA.

About Johnson Controls
Johnson Controls is a global leader in automotive experience, building efficiency and power solutions. The company provides innovative automotive interiors that help make driving more comfortable, safe and enjoyable. For buildings, it offers products and services that optimize energy use and improve comfort and security. Johnson Controls also provides batteries for automobiles and hybrid electric vehicles, along with systems engineering and service expertise. Johnson Controls (NYSE:JCI) has 136,000 employees in more than 1,000 locations serving customers in 125 countries. Founded in 1885, the company is headquartered in Milwaukee, Wisconsin. For additional information, please visit the company's Web site.

About IFMA
IFMA is the largest and most widely recognized professional association for facility management, supporting more than 18,500 members. The Association's members are represented in 125 chapters and 15 councils in 65 countries worldwide. Globally, IFMA certifies facility managers, conducts research, provides educational programs, recognizes facility management degree and certificate programs and produces World Workplace, the largest facility management-related conference and exposition. For more information, visit its Web site.

CONTACT: Darryll Fortune of Johnson Controls, +1-414-524-7770, mobile, +1-414-791-8464, darryll.l.fortune@jci.com; or Tina Daniell, +1-414-227-3475, mobile, +1-414-534-7850, tdaniell@ckpr.biz, for Johnson Controls.


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