The investment potential and wider economic benefits of energy efficiency have not been effectively communicated to consumers, suggests Jonathan Maxwell, chief executive officer and founder of Sustainable Development Capital LLP (SDCL).
Energy efficiency refers to the process of reducing the amount of energy required to perform tasks, from lighting up a living room to insulating an entire office block.
The intention is to reduce costs, cut down greenhouse gas emissions, decrease the general demand for energy imports, and improve indoor conditions for residents and workers.
While the term has become increasingly popular in investment circles, it is however, also associated with ambitions such as Net Zero. This is when total carbon emissions are equal or below the amount being let in to the Earth’s atmosphere.
Among multiple organisations and democracies pushing for this goal, the UK government is aiming to create a Net Zero future by 2050. However, the end point is not without controversy, with particular focus being put on the potential rising cost of household bills and whether it is an even plausible aim in the first place.
Mr Maxwell believes that while energy efficiency can actually provide attractive discounts in costs alongside greener solutions for environmentally concerned businesses and households, the case has not been made as proactively as he believes it should be.
The CEO felt there was a massive opportunity to improve the way that the case was put.
He explains: “I think that the articulation around energy efficiency has not been as good as it could be over the past decade. But what we're finding is a great improvement in the cost efficiency and track record of technology and success in the sector.”
Commenting on the cost reductions associated over the long term, Mr Maxwell noted that SDCL’s primary area of interest and expertise was the industrial and commercial sector, such as manufacturing plants and offices.
Nevertheless, he remained convinced that the long-term consequence of energy efficiency was saving money.
He said: “This isn't going to put cost on bills, it's going to reduce them. There's not going to be a disadvantage or compromise for consumers, it's going to be better. It’s going to improve productivity. We've got a 10-year track record of being able to achieve that.”
In order to highlight this success, Mr Maxwell pointed to multiple case studies conducted and published by the firm, reflecting the improved reliability, sustainability and financial viability provided by investing in energy efficiency. He outlined grand projects like steel mills in the US which had become energy efficient, alongside more quotidian landmarks such as implementation of LED and solar panels at UK high street stores such as Tesco and Santander. SDCL has also been involved in retrofitting NHS buildings to make them lower carbon, lower cost and more resilient generally.
Mr Maxwell added: “We're not talking theory anymore. We're talking reality and we're able to demonstrate that.”
SDCL was established by Mr Maxwell in 2007, with the intention of focusing on a previously under-appreciated aspect of the energy market – namely that so much of it was wasted. The firm targets the commercial space, where up to two thirds of energy is not put to use.
Currently 40 percent of the world's energy is used in buildings, while only 20 percent of energy is sustainably used with transport. Addressing these kinds of wastages is a key part of the company’s goal, with SDCL encouraging investors to buy in to its portfolio and support on-site power generation methods in industrial buildings such as solar rooftops. Mr Maxwell runs SDCL with 45 people, while its portfolio employs 200 people full time.
Previously, the firm committed to a £100 million IPO for its public company in December, 2018. It has reached £800 million since that date.
In his view, this reflected that reality that investors are capable of driving capital into this market.
He said: “The energy efficiency market has struck the agenda of public sector, of business and investors in a way that it really has never done before. If you look back over the last 10 years, everybody's been excited about renewable power coming into the grid. This includes energy, and carbon and everything else.”
Forecasting the future, Mr Maxwell anticipated that energy efficiency could boost productivity, a persistent problem in developed economies, alongside the environmental and business benefits that initially lure investors in.
He said: “If you look forward over the next 10 years now in a post pandemic world, governments and companies are going to have to focus on productivity. They’re going to have to focus on productivity. Energy efficiency and decentralisation, has a very big role to play in productivity in a post pandemic world.”