- -Eric A. Woodroof, Ph.D., CEM, CRM, PCF
Energy Investments BEAT Wall Street
Energy Investments Outperform Wall Street (by Double) By Eric A. Woodroof, Ph.D., CEM, CRM, PCF Buildings Magazine January 2018
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Many of us have seen greater returns on our 401K accounts and other stocks during the past 15 months. However, no one can guarantee that such performance is going to continue. In fact- the stock market could drop suddenly and there is little you could do about it. We have zero control over Wall Street’s performance. Beyond that fact, a typical energy project (in which you do have some control) is a better investment anyway!
The example below compares the Dow Jones Index’s performance for the past 10 years versus a typical energy efficiency project that yielded a conservative 5-year simple payback (or 20% Return on Investment). Here is the year by year comparison of value if you invested $1 and then re-invested the gains each year (either into additional energy projects or the Wall Street Fund). At the end of 10 years, the Energy Project would have yielded $6.19 for every dollar invested (net gain of $5.19), while the DJI would have yielded only $1.86 for every dollar (net gain of $.86).
Suppose we consider an alternative comparison and we remove the year 2008, because that was a “bad year” for Wall Street. In this case (below) the Energy Project would still have yielded $5.16 for every dollar invested (net gain of $4.16), while the DJI would have yielded only $2.82 for every dollar (net gain of $1.82).
If you look objectively at the data… Energy Projects beat Wall Street overall and they beat Wall Street in 8 out of the last 10 years… and we aren’t even accounting for the fact that most EE projects carry very little risk!