Energy efficiency is one of the most important areas of the clean Tech sector.  “The greenest, cleanest and cheapest energy is that which you don’t use.”  Increasing efficiency can allow economies to broaden usage without dramatically increasing the need for power and fuel production.   If usage can broaden through more efficient appliances and delivery systems (such as smart grids), then consumption per person may actually decrease therefore production does not need to increase on par with the growth in population served.  This is the attraction for public sector investment in energy efficiency.

By making our homes, vehicles, business and industries more energy efficient is a mostly untapped potential solution to addressing global warming, energy security, and fossil fuel depletion. These are not new ideas and have been part of the overall energy discussion for decades.  The 1973 oil crisis brought energy and especially fossil fuel dependency to the forefront. In the late 1970s, physicist Amory Lovins popularized the notion of a "soft energy path", focusing primarily on energy efficiency. Lovins popularized the notion of negawatts -- the idea of meeting energy needs by increasing efficiency instead of increasing energy production.

Energy efficiency is an efficient and cost-effective way to build an economy without necessarily growing energy consumption, as environmental business strategist Joel Makower has noted. The average American household consumes about 10,000 kwh of electricity every year. Each kwh that is used equals two pounds of carbon dioxide let into the atmosphere.  Making homes, vehicles, and businesses more energy efficient is seen as a largely untapped solution to addressing global warming, energy security, and fossil fuel depletion. Governments and institutions are looking to ways to increase energy efficiency as the best near term and short term solutions to the energy and climate challenges facing the world.

California’s three-step plan for new energy resources puts energy efficiency first, renewable electricity supplies second, and new fossil-fired power plants last. California began implementing energy-efficiency measures in the mid-1970s, including building code and appliance standards with strict efficiency requirements. During the following years, California's energy consumption has remained approximately flat on a per capita basis while national U.S. consumption doubled.

The Vienna Climate Change Talks 2007 Report, under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC), clearly shows "that energy efficiency can achieve real emission reductions at low cost."  The Rocky Mountain Institute, founded by Amory Lovins, points out that in industrial settings, "there are abundant opportunities to save 70% to 90% of the energy and cost for lighting, fan, and pump systems; 50% for electric motors; and 60% in areas such as heating, cooling, office equipment, and appliances." In general, up to 75% of the electricity used in the U.S. today could be saved with efficiency measures that cost less than the electricity itself. A report published in 2006 by the McKinsey Global Institute, emphasized this point as well.

The universe for investing in energy efficiency is wide and presents many opportunities for technological developments.  Investing in energy efficiency technological developments can produce solid upside for those speculating through investing in energy efficiency.  Companies with winning technologies can produce the best investments for energy efficiency and tremendous returns. Many areas for consideration include, devices that increase energy efficiency for large installed bases of consumer or industrial products, as well as energy efficient appliances,  building designs, industrial products, after market vehicles parts, etc  Other opportunities for investors to watch for are energy intensive companies that are implementing energy efficiency technologies as these may increase their long term profitability.