Efficiency-minded investors could make huge amounts of low-cost capital available to tackle climate change.

Upgrading air conditioning systems, replacing old lighting and improving insulation may lack the visual impact of wind farms and solar panels, but energy efficiency measures do cut carbon emissions at low cost – and, increasingly, they are big business too. New consumer products are allowing individuals to invest money in such efforts, reaping the rewards of helping big commercial and industrial buildings reduce power use.

The opening of efficiency projects to retail investors, those with small amounts to invest, is in its infancy, and has happened so far mainly in the United States. But analysts say it is likely to advance quickly and cross to the UK soon. As well as giving efficiency-minded investors the chance to put their money where their principles are, such a trend could make huge amounts of low-cost capital available to tackle a major driver of climate change.

And dull can be lucrative. When Maryland-based Hannon Armstrong Sustainable Capital went public in April, raising $167m on the New York Stock Exchange, its shares became the main vehicle available to retail investors wanting to help fund efficiency projects. CEO Jeffrey Eckel acknowledges that the efforts the company finances lack the visibility of the renewable energy sector, with its photogenic wind turbines.

He recalled being interviewed by a journalist who said a story on efficiency would run soon, "unless something interesting or exciting happens"."That is the problem with energy efficiency," Eckel said. "It's not that interesting, it's not that exciting. What it does do is have a very meaningful impact on carbon emissions". If the work itself isn't eye-catching, the dollar amounts are.

Hannon Armstrong has invested $3bn in energy efficiency since 2000 and expects spending to increase with shareholders' infusion of new capital. And efficiency retrofits are generally low-risk. Hannon Armstrong hopes to pay a 7% dividend by the end of the year, generated from energy savings.

Real estate investment trusts, or REITs, a tax-favoured property investment vehicle, could become a huge source of much-needed funding for building upgrades, said Jesse Morris, an electricity expert at the Rocky Mountain Institute, a Colorado thinktank. Worldwide, REITs hold $430bn, and even a tiny fraction of that "would completely dwarf the amount of money that's currently being invested in energy efficiency projects," he said.

Home retrofits are too small-scale for investors, so most of the projects are commercial, from office buildings and shopping centres to factories and power plants. Using money from pension funds and other big players, London-based Climate Change Capital has bought four office buildings around Britain, and is carrying out energy retrofits, banking on their new efficiency providing a premium on resale.

Sustainable Development Capital LLP, also in London, has launched an energy efficiency fund with £50m from the green investment bank and £50m from other sources. The firm's projects include financing the upgrade of an insulation factory in Holywell, north Wales, to make steep cuts in its energy use. While that was not open to individual investors, CEO Jonathan Maxwell believes similar British projects will be soon. "The market will come here in the UK, I think it's a very, very exciting and attractive space," he said. "If not today, then in the very near future."

Written by Beth Gardiner, TheGuardian.com