When business owners search for ways to reduce costs, facility and utility expenses are often overlooked as areas for potential savings. Though energy efficiency has become a more common topic of conversation for owners in recent years, implementing energy efficiency programs usually takes a backseat to improving the efficiency of their business processes.
I like to show companies they can have positive cash flow by investing in energy opportunities. Owners that are hesitant about the initial investment of an energy efficiency project may be relieved to learn that the number of organizations willing to finance projects at good interest rates has increased considerably in the last ten years. The combination of energy project financing, incentives and rebates can actually create positive cash flow for an organization. Yes, that means an owner can actually put cash in their accounts the first year as well as subsequent years. In many cases, there are opportunities for the project to be cash flow positive for the duration of the financed period and the investor, who is the owner, never puts a dime of operating or capital cash into the project.
Utility prices have grown volatile ever since the early 2000’s when many states began deregulating utilities. The onset of renewable electricity generation systems like wind and solar, along with a shift from coal use to natural gas use, has benefited our environment and reduced the production of greenhouse gases (GHGs) but in turn has contributed to the unstable environment of utility pricing. Electricity prices continue to trend upward year on year. With the rise of hydraulic fracturing natural gas prices have dropped for the past eight years down to a 20-year low, though sources speculating on the future of natural gas prices remains inconsistent. With this instability in mind, now is a great time for businesses to get serious about energy saving programs.
While energy improvements like installing more efficient lightbulbs are fairly obvious, there are many ways to make changes that aren’t as readily apparent. I look at energy in facilities as a three-tiered pyramid, with the largest segment representing conservation. The best way to save energy is not to use it. Owners should work on changing their organization cultures to become more conscious of what they leave on when not in use, and get their teams on board with the program. The pyramid’s middle represents efficiency. Improvements in this category can be anything from replacing boilers, chillers, and other large equipment with more efficient models to identifying inefficiencies due to the design and age a facility itself. This requires capital up front, but can lead to long-term savings. The top of the pyramid is renewable energy, for businesses that wish to generate their own energy and reduce their carbon footprint by investing in wind and solar power and energy storage.
For owners looking to implement an energy efficiency program, the best place to start is by setting goals and building a strategic energy plan. Shive-Hattery has a six-step plan, which begins with benchmarking the energy usage of a business and comparing it with the usage of peer businesses, or its own facilities, as a baseline to judge what is the magnitude of opportunities for improvements. Having a strong strategic energy plan can help owners understand where they are today, what decisions they need to make, and how to meet their goals going forward. In reality, it’s the best roadmap for generating a more predictable outcome in the future and reducing your exposure to risk.
Download: Six-Step Strategic Energy Plan Infographic
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||As the Energy Services Market Leader at Shive-Hattery, I help my clients learn about the value of sustainable energy performance and the resulting environmental and economic benefits. I am interested in integrated, sustainable, high performance building design and influencing building performance through the use of strategic energy analysis.
I grew up on a farm learning to raise food crops and livestock while caring for the environment. These values helped to shape my education becoming an agricultural engineer and mechanical engineer. My diverse background and experience has given me a broad base of knowledge to draw from in support of my clients goals. My clients are looking for practical, economic and environmental solutions in their building designs along with solutions that provide a return on their investment. These goals are not mutually exclusive. Making this into a reality for my clients is extremely rewarding because I see them be successful and I enjoy being a part of their success.
Bob Furgeson, PE, CEM, GBE, CBCP, CEA
Energy Services Market Leader
800.798.8104 | email@example.com