Washington's 'Green' Agenda To Aid Building Efficiency Cos
By Kate Zhao, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- The Empire State Building's windows are getting a
makeover, and Johnson Controls Inc. (JCI) is set to cash in.
Like many buildings and homes across the U.S., the landmark building is
turning more environmentally friendly. Johnson Controls is one of a handful of
companies that are poised to benefit from that and other opportunities as energy
efficiency becomes more popular and as the Obama administration pushes its "
green agenda" aggressively.
Johnson Controls, which provides products and services that optimize energy
use in buildings, won't disclose exactly how much it is getting for its work on
the Empire State Building. Among other energy management improvements, the
Milwaukee company will help refurbish the building's windows to cut its summer
heat load and its winter heat loss.
Empire State Building Co. is spending $20 million for the energy efficiency
upgrades, which include the work being done by Johnson Controls and other firms,
and expects to cut its energy use by 38% annually.
Johnson Controls has been awarded about $25 million in government contracts
under the American Recovery and Reinvestment Act's stimulus package, which makes
allocations to improve energy efficiency. It is bidding on 2,700 stimulus funded
projects worth about $800 million that will help in coming quarters.
The stimulus plan, enacted to drag the U.S. economy out of the downturn by
increasing government investment in infrastructure, is set to become a major
alternative source of revenue for suppliers of "green" products and services.
Under this act, the government is offering rebates and tax credits to companies
that adopt green technologies. The act has authorized $4.5 billion for the
transformation of federal facilities into "green" buildings.
Johnson Controls is also an automotive supplier, and the benefits from "green"
incentives could help offset some of the pressures it has felt from the slump in
the automobile and construction industries.
Honeywell International Inc. (HON) also recently received orders from the U.S.
Army Corps of engineers to make federal facilities more energy efficient. The
pact could bring in as much as $650 million over three years.
While Johnson Controls and Honeywell are some of the larger players in the
field, small and mid-sized companies are also benefiting.
Echelon Corp. (ELON), a marketer of systems that make everyday products more
energy efficient, recently signed a contract with the city of Palo Alto, Calif.,
to upgrade its street lights with new technologies to control individual lights.
To be sure, green suppliers still face an uphill battle. Many potential
customers are still unaware of the potential long-term financial benefits of
energy efficiency.
"The largest barrier to adopting a green building policy nationwide is buyer
awareness of the significant savings that can be achieved by incorporating these
features," said Helen Kendrick, spokeswoman for SunPower Corp. (SPWRA), which
supplies solar panels to buildings.
According to Kendrick, for an average solar customer who wants to install
panels, the net cost stands at about $10,000 to $20,000 for each building after
rebates from the state and federal government. The payback is energy bill cuts.
For example, SunPower has worked with Japan's Shiseido Co. (4911.TO) to help its
New Jersey-based plants save more than $100,000 annually.
On July 9, the Treasury Department issued its long-awaited rules and
procedures for applying for cash grants or tax deductions under the stimulus
package. Eligible applicants may receive tax credits or a deduction of up to 30%
of the cost of refurbishing their properties to improve energy efficiency or
changing them into renewable energy facilities.
Some of the benefits to these companies may linger on even after some of the
credits and rebates have expired. Ron Bernstein, executive director of LonMark
International, a nonprofit that works in the renewable energy space, says
building owners themselves will jump in later on when they see real, justifiable
returns on investments.
Despite the potential benefits of government awards, it hasn't been smooth
sailing. Johnson Controls recently said that stimulus-related projects are being
awarded at a slower-than-expected pace, but it expects the stimulus program to
help its financial performance in the second half of fiscal 2010. The company's
fiscal year ends in September. Bruce McDonald, chief financial officer of
Johnson Controls, in a recent conference call said the company is "still seeing
temporary contracting delays as the funding guidelines aren't clear."
-By Kate Zhao, Dow Jones Newswires; 212-416-2665; ying.zhao@dowjones.com
(END) Dow Jones Newswires
07-28-091126ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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