Part of a series taking important new concepts and wording them so you can pass basic information to your colleagues and contacts. And why these are important.
Background
When building owners or managers hear about energy efficiency, they tend to shrug their shoulders. They know it’s important and useful. But it’s rarely a high priority. Thus, that means it won’t be addressed in the near future, if at all. “There are many other things on my plate I have to do now”, the manager says.
Who am I to argue with that? However, I will make argue that improving energy efficiency will likely provide so many benefits that some of those other headaches in managing a building may be reduced and you will have extra money (without raising rents or going deeper in the budget) to address those concerns. So, addressing energy efficiency, in the proper, professional way, will make your life easier.
Why Is Energy a Concern?
Simply put, nothing in a business gets done without energy, whether it be simple lights, operating machines, your comfort. We take for granted that lights go on when we flick a switch; the computer, the coffeemaker turn on, etc. Electricity needed does not appear magically. It is there because of a complex infrastructure starting with a plant burning a fuel (or using renewables) to create electricity which is then transported, in many cases, hundreds of miles, to get to our building. Many things can go wrong (fuel availability, the way the plant operates, transmission lines, etc.). On top of this, energy demand is growing with economic growth and people buying more “stuff” and driving bigger cars. “Smart” technology was supposed to save us, but not always. It used to be you come home from work on a hot day to a hot home, so you then put on the AC and suffer a little before cooling off. But now you can turn on your home AC from your office, thus, both your office and home ACs are working at the same time. Multiplied by many, many thousands – a big electric burden. In the summer of 2019, New York City’s utility purposely caused brownouts in certain neighborhoods to keep the whole system intact. It has been well chronicled that many parts of the US have poor energy infrastructure.
In addition to availability (where would your business be without electricity, even for minutes?) is the cost. Energy costs (electricity, gasoline, etc.) are rising faster than inflation. But it’s worse than that. While inflation has more or less been steady, energy prices tend to be quite volatile, making the expense of energy a real “bull in the china shop” for many companies, hard to keep track of and to budget.
Perhaps the biggest concern. Why does a company want to make its utility rich, especially for energy wasted? Isn’t that money more useful in your budget? The good news is that there has been a revolution in reducing energy waste and saving you cost.
The Many Financial Benefits of Energy Efficiency
So the real issue is energy management, of which reducing energy waste is important. Here are ways a smart, comprehensive energy program will benefit your business:
• It’s Not So Expensive. Conventional thinking is that incorporating smart energy features is prohibitively expensive. Generally, not true. Most energy strategies (LED lights, solar, better HVAC) have dropped in price because there is more interest and competition. Also, many utilities and governments want to save on infrastructure, so they offer tax or other incentive programs to pay part of the upfront cost of a smart upgrade directly to you.
• ROIs and Paybacks Are Great. Most important is the payback. How much will the energy strategy save you in energy usage and, thus, costs? When will you get that initial outlay back and how much extra money (“gravy”) will you have during the life of the technology? ROI is a great measure. If a strategy is planned right, you can get an ROI of 20, 30, 40 or more % per year. I always say, what bank pays 20 or more % annual interest? What Wall St. investment pays this with no risk? The answer, of course, is nobody. But this is achievable in energy. Even if you don’t have the money upfront, these ROIs make it clear you can borrow the upfront and come out ahead, especially now with historically low interest rates.
o Skeptical? Here is a real-life example. A commercial building explored upgrading their lights to more modern, energy efficient ones. They spent $79,000 in a recent year just on electricity for lighting. We recommended lamps that produced more light and used one-quarter of the wattage of the existing ones, saving about $60,000 per year on electric costs. The price tag: $150,000 (which included not only the bulbs, but all new fixtures and code installment), of which the local utility would pay them $50,000 upon installation. A net of $100,000 spent, saving $60,000 per year means a 1.6 year payback of the $100,000. The lights were warrantied for 7 years (will likely last much longer). Based on this and the annual cost savings, that’s $300,000 in “gravy” over the last 5 years from the $100,000 cost. What investment matches this return risk-free (the lights work and really use less electricity)?
• Reduced O&M. Most energy upgrades result in reduced O&M costs. LED lights do not “burn out”; efficient HVAC equipment are effective longer, etc. For example, most LED lights are warrantied for 7-10 years, unlike fluorescent tubes which typically last about 2 years. This means your maintenance staff has more time for high-priority projects, plus reduced accident risk (ladder falls). Longer-lasting bulbs also means fewer needed in reserve, freeing up your budget.
• Reliability. A more energy efficient building means a more reliably functioning one, again, reducing your O&M needs and staff. One also gets satisfied renters, as reliability means better productivity and their businesses are doing better.
• Higher Rents, Better Tenants. By reducing energy waste and being more reliable, you can maintain the tenants you have and/or attract more tenants who understand the importance of reliability and cost savings. And a building’s resale value is higher because potential buyers know that energy costs will be lower.
• Environmental Progress. While this article has focused on financial benefits, let’s not forget that energy efficiency results in indisputable environmental benefits, too, particularly in this age of a greater portion of the public being very worried about Climate Change. Energy efficiency means less energy needed, directly resulting in lower greenhouse gas emissions (one’s “carbon footprint”). More and more governments and the public think this is important and you can undeniably be a “hero” to many with efficiency.
CCES has the experts to help you assess your buildings and help you get started with a useful, beneficial energy program. We can organize it for you seamlessly to save you aggravation. We can also manage the projects you select to provide the maximum financial benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.