Energy efficient buildings continue to attract capital

August 9, 2012

The role of capital in any industry is unparalleled, as no matter what the goals and motivations of those working for these companies are, they cannot make any progress without money to invest in the given project.

The energy efficient buildings industry is aware of this issue, and this is why the U.S. Department of Energy created an innovation Hub to try and attract investment to transform the commercial real estate sector.

The Energy Efficient Buildings Hub (EEB Hub), located in Philadelphia, Pennsylvania, has relied on the brightest minds from government, academia, private companies and the energy development sector to try and spur this change.

By using the building stock of Philadelphia as an example for how cost-efficient green upgrades and retrofits can be, the EEB Hub is hoping to spread this message to cities across the country.

But, according to Sustainable Business, there may be enough available money to initiate a change, thanks in part to venture capitalists.

There has been more than $4 billion injected into the industry over the past 12 years, according to the news outlet, but there is likely to be much more in the near future. This is due in part to a new strategy within the sector.

"Early VC investors are looking for exits for the first wave of successful green buildings startups and the seeds of the next crop are being sown in on-site generation and sustainable materials," said Ryan Castilloux, analyst for Lux Research and lead author of "Building a Green 21st Century: Tracking Venture Investments in Green Buildings to Uncover New Opportunities."

Much of the cash has been injected into buildings in North America, as this represents a significant portion of the market and an area that can make the biggest improvement, when compared to Asia and Europe.

According to Sustainable Business, there are a number of trends that have emerged in the sector, in terms of where the money is going, as energy efficient lighting, hybrid water heating and smart grids and energy management systems have all grown in popularity.

Europe has mirrored this investment capital push, as the European Investment Bank noted that energy efficient buildings are the wave of the future.

"In the current severe economic and social crisis, low energy buildings are safe and viable investments for society and private investors. The construction sector should see this as an opportunity to innovate and attract new talent," said Vice President Antonio Tajani, Commissioner for Industry and Entrepreneurship.