The US Energy Information Administration (EIA) publishes nationwide and regional energy use data (http://www.eia.gov/forecasts/aeo/data.cfm). While changes from year to year are not great, a longer view reveals a lot. From 2007 to 2013, total US energy use dropped 5%, while the GDP rose 6%. The US is becoming more energy efficient.

Our mix of energy sources has changed over this time, too. The percentage of energy from coal dropped from 23% to 19%; oil from 39% to 33%. Meanwhile, the percentage of total energy from natural gas rose from 23% to 27% and from renewables (including hydroelectric) from 6% to just under 10% during that span. These trends will get greater in the future as prices of natural gas and renewables continue to drop relative to other fuels. For example, unit prices on solar panels fell by 80% from 2008 to 2013.

While some of this has been caused by big power companies shutting down units or whole power plants using coal or oil and replacing the demand with natural gas and renewables, another factor is the growth in distributed or decentralized energy (DE). More communities, corporate parks, and industrial facilities are beginning to build their own power plants to become independent of big centralized systems and to better manage power.

Combined heat and power (CHP) is a great example, raising thermal efficiency to as high as 80% or greater and generating electricity from the same fuel combusted. Communities are building microgrids, small power plants serving their needs. Finally, more buildings are using renewable power and/or fuel cells. These forms of DE will be beneficial as they result in much fewer transmission lines and reducing the loss of electricity. More and more states recognize the value of DE in terms of saving existing infrastructure, which otherwise would cost the utility or state many tens or hundreds of millions of dollars to maintain or expand for demand. Therefore, many states and utilities offer incentives for companies or groups to build their own DE plant.

How do these trends affect your company? Do you have facilities that may be fit for a fuel change or installation of DE? In general, switching to natural gas or installing renewables is relatively inexpensive with fairly quick paybacks because the fuel source is cheap (natural gas) these days or free (sun, wind, etc.). DE requires a much larger investment upfront, but it may be spread among a number of users of the technology. CHP, microgrids, etc. often are functional for 20 or 25 years or more. So while the payback of the initial investment may be relatively long, you have an opportunity to save quite a bit of money in total. Perhaps more important is the reduction in risk of costs from losing power in a storm (a tree taking down a faraway line that serves your facility).

What should you do? Perform an energy evaluation of your facilities. What energy source does each facility use for electricity and heat/hot water? Is it feasible to switch one’s boilers to natural gas (is there a natural gas line nearby)? To switch to CHP (room to install it, investment capital)? To install and operate renewables, such as solar, wind, geothermal (proper conditions)? What might the costs be to switch or install CHP, renewables, etc.? What are the potential savings based on current and projected energy prices? What added benefits may you gain from such an energy uplift (reduced risk, lower emission rates and permitting requirements, better productivity or fewer distractions of your workers, such as fewer oil truck visits)? A thorough energy evaluation can lead you in the right path and save you much money.

CCES has the experts to perform a meaningful, cost-saving energy evaluation for your facilities. We can pinpoint benefits of different options, including incentives which your facility may qualify for. We can manage the implementation of any energy upgrades (efficiency, fuel change, etc.) you choose and ensure you get the maximum benefits possible. Contact us today at 914-584-6720 or karell@CCESworld.com.

Recent reports (http://www.ism.ws/ismreport/mfgrob.cfm, http://www.strategy-business.com/article/00297?gko=0d2ac&cid=TL20141016&utm_campaign=TL20141016) indicate the return to the US of manufacturing after several decades of operations going overseas. “Re-shoring” is being fueled by several factors, including the high availability and dropping costs of diverse US energy sources (i.e., natural gas and renewables), our infrastructure (more reliable than in Asia), improvements in automation and availability of robotics (one estimate states that the American worker is now seven times more productive than the equivalent one in Asia, negating the wage differential), greater ability to respond to changing customer needs and to supply chain disruptions, greater availability of capital, and the ability to perform robust R&D. This trend is also helped by the growth in incentives being offered by a number of states to relocate or expand.

This is wonderful news for the US economy. Manufacturing is the opportunity to take raw material of relatively little value and turn it into something of much greater use and value, allowing a markup and greater profit, in many cases, than in the service economy. Some have estimated that new US manufacturing startups and expansions can grow manufacturing sector jobs by 4 million in the next few years alone.

Having hundreds of new manufacturing plants and processes in the US has many implications, one of which is the environment. Compared to other countries, the US has relatively strict environmental rules. Most such rules are enforced at the state level, but contain minimum standards based on the Federal Clean Air Act and Clean Water Act.

I will focus on Air since that is usually the most time-consuming. If you are building a new plant from scratch or performing a major expansion of an existing one, the first matter to consider (the bottleneck) is a rule called PSD, a pre-construction permit. One is forbidden legally to even begin construction until a PSD Permit is issued. PSD is a lengthy process, often taking many months to over a year for full approval by both the State agency and the USEPA (with public comment). So if your company plans to build or expand, it is important to address this fully and early. Simply put, PSD states that if you propose a major increase in emissions of certain compounds, proper control technology must be installed and modeling performed to estimate how much ground-level concentration will increase to determine whether standards may be exceeded.

The CAA also requires facilities that exceed a threshold of “potential to emit” to apply for and maintain a “Title V” air permit. These permits are legal documents and open to the public, so care is needed to make sure it is prepared properly and, once issued, compliance maintained. The hallmark of a Title V permit application is a listing of all Federal and State air regulations that are applicable to the operations you plan to perform at the new site (or modified existing facility). While the Title V application requires a list of regulations that are applicable to the operations and why, it is just as important to prepare – at least internally – a document explaining why certain rules are not applicable and need not be listed in the application.

Finally, most states have air pollution rules pertaining to specific types of operations, such as boilers and furnaces, coating and painting, pharmaceuticals, iron and steel, and others. Do a thorough review of the laws in your state and determine whether any are applicable (and if not, why) and how best to comply. Also, federal NESHAP rules for toxic compounds are process-specific, as well, and should be reviewed.

Yes, your company may join others in moving manufacturing operations “home” soon and that’s good news for everybody. And yes, that means work for you as the environmental professional to comply with applicable rules. But good preparation and planning can make the situation proceed smoothly and the costs relatively low to the eventual long-term savings and safety improvements.

CCES has the experts to help you estimate emissions from new plants or processes, to research and advise (technically, not legally) on State and Federal air and other environmental regulations that may be applicable to such new operations, and can manage the implementation of strategies and obtain the proper permits to allow you to comply with environmental rules and begin operations quicker and seamlessly. Please contact us today at 914-584-6720 or at karell@CCESworld.com.

We’re coming to the end of the year – the time that companies consider future change. Financial performance data is in; you know where you stand. You begin to think about improvements. If your firm does not already have an energy or sustainability program or has a middling one, there may be no better change to make in the new year than to get a quality one off the ground or grow the one you have. There will be doubters in management as energy/sustainability is a foreign concept to many (this will change; sustainability is becoming a staple in business schools – I lecture on the topic at one!). Here are some arguments sustainability doubters may make, and good responses.

Companies that spend effort on being sustainable are losers. Not true. Some doubters think that doing anything different from core product or services is wasted effort. Would those people not have a Legal, Accounting, or HR staff, too? In fact, companies with robust sustainability programs have come out to be winners. Published papers have shown a correlation in Fortune 500 firms: those that address sustainability issues, such as reducing energy and water usage, had higher valuations than those that did not. Is this a coincidence or have these become better performing companies? Finally, it is true that some projects to reduce water, energy and waste production have long paybacks. However, many have additional, hard-to-measure benefits to consider, such as reducing O&M costs, freeing up workers to perform other needed projects and raising worker productivity. While hard to quantify, these benefits are real and should be recognized.

We must wait for government rules about sustainability or else we will need to repeat the effort once they come. While sustainability is not required by any government (except, in California), many agencies are incentivizing sustainability through tax credits, grants, and indirect rules. While these may appear changeable, it is not a good idea to wait and hope that policies and incentives will become uniform. Take advantage of what is right for you. Similarly for procedures, it may be awhile before government sets precise policies on how to become more sustainable, such as an energy audit. However, existing standards (ASHRAE) will likely be part of any future requirements.

Sustainability has no effect on our business. In the US, this may be true in sales. Only a small block of consumers consider sustainability reputation in making purchase decisions. However, more investors take this seriously. A growing number of lenders and shareholder groups have investment or loan policies which favor those with positive energy or sustainability records. Such groups certainly affect company performance.

There are no or there are too many metrics to measure sustainability. Yes, sustainability achievements are difficult to quantify because they often affect parameters that are hard to measure (productivity, company culture). But do note that sustainability metrics exist, such as the Global Reporting Initiative, to measure sustainability. It is important to research the right metrics for your company. But it has been done successfully.

Sustainability is just low-hanging fruit and is of little true importance. This is simply not true. Sustainability is all about conserving resources before they become scarce and expensive. It is a risk hedging program. For example, if your company produces a product dependent on water, and your manufacturing plant is in an area that has either a contaminated water supply or one it must share with residents, farmers, etc., then you know that its price rise and even availability may become an issue. This can become an existential problem for your business. Ways of minimizing water needs would, therefore, have major positive risk outcomes for your business. Also, it is now acknowledged that climate change has and will have major effects on our way of life which, of course, affects business. May the greater frequency of extreme storms, hot weather, and droughts affect your cost of or even the ability to do business, such as access to energy, water, etc.? Might climate change bring on a global depression or at least affect consumer tastes? A sustainability program puts you ahead of the curve in terms of evaluating and addressing such risks.

There is no accepted standard for sustainability. This is true. There is no single standard that says this product is sustainable, and this one is not. This is why it is important that your sustainability program have a strong communication element. Goals, strategies, and practices need to be established and publicized in-house and to the public, easily seen on one’s website or other communications. The public can see the full case you have made about what you are doing to achieve your goals (reduce energy use, greenhouse gas emissions, water use, waste generation, etc.) within the parameters you control. You can quantify such achievements and undeniably say that you are working toward a sustainable future for the world and for yourself.

CCES has the experts and experience to help you develop a robust sustainability program to achieve maximum benefits (and to answer all doubters). We can help you with the technical, policy, and economic phases and develop and achieve goals seamlessly. Contact us today at 914-584-6720 or at karell@CCESworld.com.

This is the first in a series of articles on smart and effective energy upgrades that will not only pay for itself and save significantly on energy costs (if done right), but will also result in other economic and productivity benefits. These articles will discuss technical issues, but will emphasize benefits, economic and others. There has been – literally – a revolution in energy technology in the past few years. If you have not had an energy audit done in the last 4 years, there’s a lot to gain by doing a comprehensive one.

For most, a great “low hanging fruit” for energy savings is lighting. Facility managers are increasingly turning to LED lighting technology to reduce energy costs. You probably already know that LED lights use well under half of the electricity of incandescents and T-12 fluorescents for the same amount of lumens. LEDs now can be adjusted and dimmed and come in a variety of colors (CCT ratings) to optimize their effectiveness. New LED fixtures can now fit right in place of the fixture being replaced. And cost savings are not “down the road”, but start immediately upon replacement.

Besides the immediate electricity cost savings, LEDs have other major advantages resulting not only in more money, but also in greater productivity. LED lights do not burn (unlike the other types mentioned) and last much longer. Typical office LEDs are warranteed for as much as 50,000 hours of operation. Given 12 hour/day, 5 day/week operation, that’s a little over 10 years until they have to be replaced; a lot longer than standard types. That frees up your office maintenance crew to do other things and reduces their number of trips up the ladder (reducing risk and inconvenience to staff).
In addition, the light from LEDs (if the right ones are procured) is whiter without the tints that other lights may have and has less glare. LEDs do not flicker, unlike fluorescents, reducing eyestrain. LEDs improve workers’ productivity. Here’s proof. A worker working through the morning will need to take at least a short break just because of eyestrain from the glare / flicker of fluorescents. The actions of an added break – walking down the hall to get water or coffee, returning, sipping the water/coffee, resting – before resuming work must take at least 5 minutes, and more likely 10, which is 2% of a typical workday. Avoiding such a break in the afternoon, and now you have a 4% improvement in productivity right there. And if the person taking a break stops to talk to a colleague, … Workers with lower eyestrain need to take fewer breaks and are thus, by definition, more productive and effective, all because of improved lighting – a significant and real added economic benefit to installing LEDs.

Of course, there is a cost involved. While LED prices are dropping, for a large office, warehouse, or multifamily residence, the upfront cost may be six figures. However, in many places, incentives exist to pay you back some of these costs and low interest loans are available so you can install LEDs without having to pay anything upfront. You can pay back these loans from the cost savings as they are earned. Waiting for LED prices to drop further is not a good idea. Incentives do go away and the energy cost savings (70% or greater) that you will achieve will likely be greater than the probable future reduction in LED prices. If you wait even one year, that’s one more year of high electricity costs to pay. So now is the time. If you think you can only afford to convert only part of your facility to LEDs right now, then consider which areas currently have the oldest and highest energy usage lighting and have the greatest number of workers who will benefit from reduced glare and no flickering.

A word on economics. Most companies want to know the payback of the upfront cost of LED procurement and installation. It will vary based on the number and the types of lights being replaced and can range from under one year to over 4. Some companies have policies on payback (they will not approve a project if the payback is more than X years). But remember, payback is only one way of measuring economic benefits. Let’s say there is a proposal to replace lights with LEDs at an upfront cost (after incentives) of $120,000, and the payback is on the high end of the range, say 3 years, beyond company policy. In 3 years the company will have gotten its $120,000 back. But the company has at least 7 (and likely more) years to reap extra money. If anything, the energy savings later on will be greater than $40,000 per year for two reasons. One, the future unit cost of electricity (cents/kWh) will likely increase, by 3-4% per year typically. So, in 7 more years, you will have avoided at least $280,000 (and more likely between $350,000 and $400,000) in costs. Even assuming the lower figure, by implementing this project (and spending the $120,000) your company will have saved $280,000 minus $120,000 or $160,000 over a 10 year period. The rate of return would conservatively be 13.3%/year. Tell me, does your company earn a rate anything near this for its cash? The second reason is that your existing lights will need to be replaced anyway – likely several times during the 10-year period. You will need to pay that capital cost, which could easily exceed the $120,000 for the LEDs – and you won’t get the cost savings.

Finally, buy smart. There are a growing number of manufacturers of LEDs. Some produce better quality lights than others. Do not buy on price alone. An energy professional can help you assess just what your lighting needs are, exactly what lights need to be replaced, the best LEDs to do so, manage the installation, and help you get the proper incentives and financing (if needed) you are entitled to. Maximizing these and the other benefits and ensuring reliability is worth the cost of an experienced expert.

CCES has the experts to help you plan out a lighting upgrade to maximize not only your energy cost savings, but also the productivity improvements and maintenance reductions. We can help you design the right lighting to maximize productivity with the least interference. We can plan and buy smart for you, resulting in the greatest benefits to make you look good. Contact us at karell@CCESworld.com or at 914-584-6720.