Are You Throwing Money Away By Following the “2-Year Payback” Rule? C lose the Efficiency Gap: Use Profits to Drive the Capture of Value
DOI:
https://doi.org/10.13052/dgaej2156-3306.1536Abstract
This article suggests that profitable energy efficiency measures
are often foregone due to the internal structure of most American cor-
porations, in which energy functions are managed by cost centers
rather than profit centers. This limits access to capital and fosters use
of financial decision rules such as the “2-year payback” criterion that
lead to suboptimal investment. The authors propose that corporations
restructure their operations so that energy functions are managed by
profit centers that can implement energy efficiency measures in other
business units, realize a profit, and return it to their parent company.
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References
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