The Truth About the ROI of Energy Efficiency for Small Business Owners
Running a small business means watching every dollar. Rent, payroll, inventory and marketing — it all adds up fast. But there’s one line item that’s often overlooked: energy costs. Utility bills can eat into margins, and unlike other expenses, they don’t go away on their own. The good news? Energy efficiency upgrades offer one of the most reliable returns on investment (ROI) available to small business owners.
Why the ROI of energy efficiency matters for small businesses.
Energy is often a top-three expense for small businesses, behind only labor and rent. That means efficiency isn’t just a sustainable choice — it’s a smart financial strategy. Beyond savings, efficiency upgrades enhance comfort, improve the customer experience and even boost employee productivity.
The case for efficiency.
The ROI of energy efficiency is measurable. According to ENERGY STAR, small businesses can cut utility costs by up to 30% with upgrades that quickly pay for themselves.
- Lower monthly bills: Upgrading equipment to more efficient models reduces energy bills. Just swapping outdated lighting for LEDs alone can reduce electricity use by up to 75%.
- Incentives and other energy solutions: Make your equipment upgrades more affordable with incentives from your local power company and TVA EnergyRight®, which can help reduce project costs and the payback period.
- Long-term value: Once installed, upgrades like HVAC and Refrigeration continue saving money year after year.
Sources: energy.gov, energystar.gov, EnergyRight.com
Small investment = big benefits.
The value of efficiency goes beyond numbers on a utility bill. A well-lit, inviting space makes a difference for everyone who walks through your doors.
Stronger customer experience: Bright, well-lit spaces encourage shoppers to stay longer — and spend more.
Better working conditions: Improved HVAC and lighting create a comfortable environment for businesses and other organizations, like schools.
Improved employee satisfaction: Studies show comfortable workplaces and better lighting boost productivity and reduce turnover.
Sources: epa.gov; hrfuture.net; pecnw.com
Real-world ROI: Ironhorn Enterprises
Energy efficiency isn’t just about trimming bills—it can help seal business deals, too. Take Ironhorn Enterprises, a commercial real estate firm specializing in industrial and warehouse properties.
When a new tenant was interested in leasing an Oak Ridge, Tennessee, warehouse, the outdated 1,000-watt metal halide lighting threatened to derail the deal. Powering the space would have been too costly for the tenant to justify.
The solution: Ironhorn partnered with the Oak Ridge Electric Department and TVA EnergyRight® to upgrade the facility with 110 energy-efficient 300-watt LED high-bay fixtures.
The results:
- 317,638 kWh annual energy savings
- $30,914 in annual energy cost savings
- $28,205 incentive from TVA EnergyRight
- Simple payback: <5 months
Beyond the impressive numbers, the upgrade helped Ironhorn secure the tenant, modernize its property and enhance long-term value.
Beyond cost savings: building resilience and brand value.
Today’s customers expect businesses to operate sustainably. Using the ROI of energy efficiency metric is a way to show that you care about your community while strengthening your bottom line. It also makes your business more resilient—less vulnerable to rising energy prices or unexpected system breakdowns. Positioning your business as efficient and sustainable can become a competitive edge that attracts both customers and talent.
How to get started.
Getting started doesn’t have to be complicated.
- Save up to $375 in annual energy costs with a free Smart Energy Starter Kit from TVA Energy Right and your local power company.
- Explore TVA’s incentives and other programs to get upgrades with short payback periods.
- Work with a TVA Energy Expert to identify the best opportunities for your space.
For small business owners, energy efficiency is more than a buzzword — it’s a proven investment. Lower bills, improved comfort, happier employees, and a stronger brand all add up to measurable ROI and long-term success.
Take the first step today. Explore TVA incentives, request your Smart Energy Starter Kit and start saving.
Frequently Asked Questions
Q: What is the ROI of energy efficiency for small businesses?
The ROI varies by project, but many small businesses see payback in just a few years — or even months. For example, lighting retrofits with LED fixtures can cut electricity costs by up to 75% and often pay for themselves in under two years.
Q: What are the best energy efficiency upgrades for fast payback?
High-impact, low-cost projects, like LED lighting updates, HVAC upgrades and smart thermostats, often deliver the quickest payback. These upgrades lower monthly utility bills and improve comfort for employees and customers.
Q: Can energy efficiency improve employee productivity and customer experience?
Yes. Better lighting, consistent indoor temperatures and improved air quality create a more welcoming space. Employees tend to be more comfortable and productive, while customers enjoy spending more time in your business.
Q: How can small businesses in the region get started with energy efficiency?
TVA EnergyRight offers a complimentary Smart Energy Starter Kit to help small and mid-size businesses take the first steps to cut energy costs. If you are ready to replace equipment like LED lighting, HVAC or Refrigeration, our incentives make the investment more affordable, and a TVA Energy Expert can guide you through options that deliver the most impact for your business.
