Energy efficiency is becoming the new boom business of the sustainability industry.

The Arizona Corporation Commission recently established energy-efficiency targets for utility companies under its purview to help the state not have to build new power plants. Federal stimulus money has been pouring into programs to help lower-income folks tighten up their homes.

As a result, energy auditors’ business is thriving. Those in construction and other trades are flocking to them to cash in on the growing number of home and business owners looking to save a few dollars by using different light bulbs or upgrading heating and cooling systems.

“What I’m finding is it’s contractors and subcontractors,” said Carrie Smith, chief of in-home services at the Foundation for Senior Living. “People are starting to follow the money.”

Big interest

For years, the Foundation for Senior Living has been training businesses how to do energy audits. The group was one of the beneficiaries of about $55 million in American Recovery and Reinvestment Act funds sent to Arizona to train workers to do energy audits.

The Foundation for Senior Living has seen attendance at its Southwest Building Science Training Center soar in the past year. In 2008, 98 people spent a combined 1,437 hours in training. In 2009, those numbers shot up to 608 people spending about 11,136 hours in training.

“I think it’s going to be like anything,” Smith said. “There’s a big push in the beginning, but as the years go by, you get the people who are really passionate about it.”

Utilities that work with energy auditors have noticed the uptick as more companies seek allegiances that could spur business. Arizona Public Service Co., which has a list of about 30 to 40 preferred residential auditors and energy-efficiency construction companies, has seen an increase in businesses requesting information about getting on that list.

“There has been a lot more interest in that, and it was touched off by the ARRA money,” said Jim Holbrook, air conditioning rebate program manager for APS.

APS has some criteria for those it’s willing to recommend. For example, they must be in good standing with the Arizona Registrar of Contractors and the Better Business Bureau, said Gavin Hastings, APS’ home performance coordinator.

APS has aligned itself with the U.S. Environmental Protection Agency’s EnergyStar requirements for energy efficiency. Those help dictate what APS-recommended auditors can do and how they must work.

“We don’t want customers getting a bad taste for these audits,” he said. “There’s a lot of difference between what’s out there and what EnergyStar requires.”

Different players

Many of those doing energy audits have been in the business for years, but it used to be called energy services. Some of the largest and most recognizable names are Honeywell International Inc. and Johnson Controls Inc., said Lloyd Ramsey, practice lead for building engineering at Stantec Inc. in Phoenix.

Stantec is an engineering company that focuses on energy-efficient design.

Given that buildings account for about one-third of all greenhouse gas emissions, there is merit to having more people in the field, Ramsey said.

“We’re seeing more competition in the marketplace, particularly from regional companies,” he said.

While some have been in the trade for years, others have shifted to efficiency programs from the building community. Todd Russo, CEO of Reeis Inc. in Mesa, co-founded the business about a year ago. His company does auditing and construction for energy-efficiency projects. He entered the field with about 10 years of experience in construction working on energy efficiency for home builders.

Russo said he built a team that includes auditors credentialed by the Building Performance Institute, a Malta, N.Y.-based group that qualifies contractors for studying the inner workings of homes, commercial and industrial spaces. He’s seen many people from the building trades make the jump to energy audits.“This is kind of a natural progression, and with the lapse in the new builds, this is kind of a natural fit,” he said.

At the same time, Russo said, contractors are rushing into the field not out of a burning desire to make buildings more energy-efficient, but because it will pay the bills. With more than 31,000 jobs in the construction industry lost from December 2008 to December 2009, many are shifting their focus simply to find work. They may not have the experience to know what will work and what won’t, he said.

“It’s a little disconcerting to see a lot of these people market products that may not be appropriate,” he said.

At Reeis, the company still is getting comfortable with its program and offerings for residential users. The company has about 20 employees and likely will hire more, particularly heating and cooling specialists and former construction superintendents who know how to oversee jobs.

While some have been in the trades for years, others are coming into the industry from completely different lines of work.

Jason Owsley launched Home Energy Auditing and Thermography in Gilbert earlier this year after being laid off as a designer at The Arizona Republic. He adapted his photographic skills into using a thermal camera that can show temperature differentials. When pointed at a home’s exterior walls, the device reveals where insulation may be lacking as air is escaping the home’s envelope.

Owsley transitioned into the business on the advice of his brother, an energy auditor in Tucson. He went through the BPI certification and now takes on a range of projects, checking for air and gas leaks. He sees it as a way to help people save money.“I’m looking at the economy, and people are just bleeding money through their houses,” he said.

Beyond the stimulus

Industry leaders say the stimulus infusion is largely responsible for fueling the influx of companies into the sector.

The funds also have helped raise awareness among homeowners and businesses on how to make their properties more energy-efficient through credits available via the stimulus.

The funds can cover the cost of audits, which can run anywhere from zero to hundreds of dollars, as well as work that’s done as a result. Utilities such as APS also are looking at rolling out their own incentive programs to meet Corporation Commission mandates.

The stimulus funds won’t last. Ramsey said people can take advantage of the stimulus money now, or possibly face penalties down the road if they fail to meet energy mandates. For example, companies that fail to cut energy use now could face federal cap-and-trade legislation in the future.

Smith said she believes demand will continue, though perhaps at a lower level, because utility incentives will take up some of the slack. The Foundation for Senior Living is working on different tracks to help auditors become more proficient and home in on selected areas.

“Our goal is to offer tweaks so that they can offer a range of services,” she said.