American billionaire Warren Buffett earned his wealth by focusing on the long-term value of his investments rather than the short-term pricing of stocks. There is an easy way Alaskans too, can make sane smart, long-term investment decisions that made Mr. Buffett successful: energy efficiency. While it’s not as “sexy” as a shiny new wind turbine or gas pipeline, energy efficiency can deliver a stronger return on investment than the stock market, often times paying for itself in just a few short years. Alaska has a goal to increase energy efficiency 15 percent per-capita by 2020, however in order to get there great strides must be made. As construction booms across the state, I encourage developers to help us reach that goal by channeling their inner Buffett and thinking of energy efficiency as a solid long-term investment for Alaska.
When considering energy efficiency upgrades, many building owners are reluctant to take on the additional up-front costs associated with these retrofits. While high efficiency light bulbs, appliances and insulation can increase construction costs by 1 to 2 percent, the long-term payoffs are very real. When looking at the cost of a building over 40 years, experts have determined only 11 percent of a building’s life-cycle costs were associated with construction, while 50 percent came from operation and maintenance -- including utilities. Knowing this, why not invest a little more upfront to reduce your building’s utility costs in the future?
Some building owners are taking this to heart. In 2012 the Alaska Native Tribal Health Consortium completed construction on their new Healthy Communities Building in Anchorage, receiving LEED Silver certification for the extensive efficiency measures implemented there. By using advanced lighting systems, occupancy sensors and a well-insulated building envelope, ANTHC will see a substantial drop in its utility bills. Realistically, this building could be standing in 100 years, making the upfront investment in efficiency small compared to the long-term savings it will accrue.
While Southcentral Alaska has been blessed with affordable natural gas, utilities are now struggling to sign gas supply contracts for the near future. Meanwhile, the cost of energy in rural Alaska is prohibitively high. The hard truth is Alaskans are spending nearly $6 billion a year on heat, electricity and transportation. Many people in Alaska’s rural communities are now spending over 50 percent of their take-home pay on energy. Nearly all of this money is leaving our local economies to pay for imported fuel. Going forward, we can either continue to pay for energy waste, or pay for energy improvements that will save money over time. If you think like Warren Buffett, you’ll choose the second option, focusing on long-term investments that will protect you from fluctuating fuel prices in the future.
By making long-term investments in energy efficiency, we can dramatically cut our heat and electric bills and keep more money in our local economies. This has proven to be true on the residential level. To date more than 31,000 homes have participated in Alaska Housing Finance Corporation’s Home Energy Rebate and Weatherization programs, saving Alaskans tens of millions of dollars a year on heating bills and creating thousands of local jobs both directly and indirectly. If our state’s commercial buildings followed suit, their energy savings would be astronomical. Experts have determined that Alaskan businesses could be saving up to $400 million a year if all private commercial buildings received an energy audit and implemented necessary efficiency measures. Similarly, the State could be saving up to $125 million a year if all public commercial buildings received energy efficiency upgrades. This is money that would stay in our local economies and not be exported to pay for fossil fuels.
In honor of October being Energy Awareness Month, I encourage all Alaskan building owners to get an energy audit and consider making smart, long-term energy investments Warren Buffett would approve of. By reaching our goal to increase energy efficiency 15 percent per capita by 2020, we will keep more money in our local communities and ensure a secure energy future for our state. I think that’s something we can all celebrate.
Shaina Kilcoyne is the energy efficiency director for the Renewable Energy Alaska Project (REAP), a non-profit energy coalition of more than 85 diverse stakeholder organizations working to increase the production of renewable energy and promote energy efficiency in Alaska.
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