Bill Paul

For my money, energy efficiency (aka, the “fifth fuel”) is the best alternative energy sector for investors because it’s primarily about saving money, only secondarily about saving the planet.

The energy services industry reportedly has grown by more than 20% per year every year since 2004 and efficiency service providers now pull in an estimated $5.6 billion a year just on U.S. commercial buildings. Pike Research says there is a reservoir of untapped projects worth $400 billion. “There’s this huge untapped potential” for energy efficiency, a U.S. Environmental Protection Agency spokesperson was recently quoted as saying. Indeed, of the approximately 70 billion square feet of U.S. office space, only about one billion is believed to have undergone retrofits.

Although Washington can be as dull as a 40-watt light bulb, eventually DC is going to figure out that energy efficiency is the best way to create green jobs here in the U.S., unlike all those other green jobs – like making solar and wind components – that are going to China and Europe. When that finally happens, look for Goldman Sachs (Symbol GS), Morgan Stanley (Symbol MS) or some other big outfit to put out a report that wakes the world up to energy efficiency’s tremendous potential.

By then, investors should have already taken action. Like so much in energy, the bigger the company, the more likely it is to pull in big-buck contracts, so it may be worth laying a few bob on the leaders of the energy efficiency services industry, namely: Johnson Controls (Symbol JCI), United Technologies (Symbol UTX), IBM (Symbol IBM) and my personal favorite: Siemens (Symbol SI). (For more on Siemens, please see If I Could Own Only One Alternative Energy Stock, It Would Be . . ..)

DISCLOSURE: No position.

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Bill Paul is Managing Editor of  EnergyTechStocks.com.