NEW YORK (
) -- A zero-energy house is one with a net energy consumption of zero.
The house is connected to the electrical grid through the local power company interface (commonly called a meter) that provides electricity to the house when it is needed and accepts energy back to the grid when the house produces more than it uses.
discussed its objective of providing the technology (with partners) July 14 at a General Electric Global Research Symposium in Niskayuna, N.Y.
GE wants to have the entire technology package in place for mass usage in less than six years. GE states that the total cost difference over conventional construction will be 10%. A diagram showing all the elements to be incorporated can be seen here. The elements involved include:
- Smart Meter: A communications gateway between the smart grid and the home.
- Home Energy Manager: The central nervous system for the home will help optimize energy consumption. This will communicate directly with the utility smart grid.
- Energy Storage: Battery storage for back-up power and peak loads.
- Solar: Photovoltaic arrays.
- Wind: Small wind turbine.
- Hot Water: Heat-pump water heater.
- Appliances: GE Diamond Response appliances operating in cooperation with smart grid via the Smart Meter and the Home Energy Manager.
- Lighting: High efficiency, CFL, LED and OLED lighting.
- Geothermal Heat Pumps: Heat exchange with the earth and ground water reduces HVAC and water heating energy requirements.
Does the extra expense make economic sense for the buyer? The following table says it definitely does. The payback is from 7.4 to 11.2 years, depending on future energy costs and size of the home.
The payback, after 25 years, in reduced energy consumption is about 42% of the construction cost, including the 10% premium, with an average of 5% per year increase in energy cost.
With today's energy costs, the 25-year savings are slightly above 20%. With an average increase of 10% per year in energy costs, the savings are nearly 50% of construction costs. All numbers would become much more favorable if alternative energy tax credits were applied (which they weren't).
So this project shows promise for future home owners, but how should investors react? The majority of the GE partners in this project are small and privately held, but there are a few publicly traded companies in this space. (See the table below.) Smart meter maker
could see business grow dramatically if there were a widespread adoption of the GE concepts, but they do have significant competition from privately held European companies Elster and Landis + Gyr. Both of these companies have established business relationships with a number of U.S. utilities.
Makers of high-efficiency lighting devices have a lot of room to grow as their products become more widely used, not only in zero-energy homes, but everywhere people decide to save money and reduce carbon footprints.
is well-positioned in LED technology. The privately held manufacturers of energy-efficient lighting fixtures will face competition from the big three: General Electric, the Osram and Sylvania divisions of
. The impact on the overall revenue of these giants will never be large, no matter how widely popular energy-efficient lighting becomes.
In addition to the three conglomerates listed in the table, a number of companies have projects directed toward future products promoting energy efficiency. Among these are
. Because of their massive size, the impact of any commercial efforts in energy efficiency would be quite diluted in their large revenue streams.
Developments in the areas of smart grids, zero net energy homes and commercial buildings are in their infancy. These may eventually provide significant revenue to one or more of the giant corporations now trying to get involved, but that is not likely to be seen in the early years of implementation. In the areas discussed here, interested investors would do well to watch the small fry and look for one or more to gain advantage and go public.
A major related area to what was discussed here is energy storage. Technologies such as batteries, flywheels and thermal storage are additional areas of potential future growth, but that is a topic for another day. Also deferred to the future are the general topics of distributed solar and wind electricity generation.
Reported by John Lounsbury in Clayton, N.C.
John B. Lounsbury is a financial planner and investment adviser, providing comprehensive financial planning and investment advisory services to a select group of families on a fee-only basis. He worked for 34 years with IBM, and spent 25 years in R&D management and corporate staff positions. He also was a Series 6, 7, 63 licensed representative with a major insurance company brokerage for nine years.
Specific interests include political and economic history and investment strategy analysis. He holds degrees from the University of Vermont, Columbia University and the Illinois Institute of Technology, where he studied chemistry, physics and mathematics. He is a contributor to Seeking Alpha and his own blog,