Saturday, September 4, 2010

Inertia vs. smart money: Can financing make people change a light bulb?

Financial structures exist that allow lighting retrofits to pay for themselves with the energy savings. Amazingly, potential customers aren't biting.

Imagine this conversation:

If you could change your light bulbs to energy efficient ones, without without spending any more money than you are now, would you do it?


But when the lightbulbs are paid off with the energy savings, you'll spend less money each month on your energy bill.


Look. Your warehouse uses those lights 24 hours a day, seven days a week. In a few years, after the energy saved pays for the lights, you could be paying half as much to power those lights. That means free money in your pocket. Will you sign up?

-Not interested. Bye.

This is roughly the sales situation lighting retrofitters are describing. The lights can be paid for using the energy savings and leased from the company until they're owned outright. It should be an easy sell.

Let's see. Divert some money from utility companies to pay for the lights over time. Spend no extra money. In several years, realize free savings on more efficient lights.

You can't get that kind of guaranteed return in the stock market, but people invest lots of money there.

It's certainly not very exciting, but conserving energy is a practical way to save money. Moreover, thanks to some financial structures, sometimes you can do it without even spending any money.

Maybe there are other problems with the lighting, but if you get the lights for free (paid for by energy savings over time) and then you save the money forever, it's worth a serious look.

Strangely enough this is a hard sell. Inertia is hard to overcome, even when there's money on the table.

But not for you. You're sharp. You can see the payoff a few years out. You want it. Go get that money.

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  1. May be more of a generalization. Do you have the backup research? From what I see sophisticated new applications are doing it already

  2. Yes, it's a generalization. The smart companies are on it, and saving money already. This column was inspired by a conversation with someone from a company who is running into this problem, even with financing terms that would be totally positive to the company. Thanks for your comments!