Several surveys show that one of the biggest factors holding back companies from investing in energy upgrades is the absence of incentive programs from their utility or government. It is not even the amount of money that is important, but that it is there and, therefore, is a tacit approval of the program. The company gets “credit” for working under the credit program, plus the money helps the bottom line and improves the ROI.

Many states and utilities have incentive programs to improve energy efficiency, upgrade equipment, and/or switch to cleaner or renewable fuels. While it may seem counter-intuitive to offer such incentives (why would a utility discourage energy usage?), there are many good reasons for this, including ensuring that peak summer electric demand is met reliably (without brownouts) and reduced new infrastructure needs. These programs also help states meet Renewable Portfolio Standards. Most states want to lessen big public infrastructure matters, such as power lines and right-of-ways, as well.

Well, if the government or a public utility is giving out money, tax credits, etc., then it has to be careful to ensure that the money is spent appropriately to incentivize real energy reductions. They put the onus on the facility (and its consultant) to demonstrate that the proposed technology or strategy will actually achieve what is being claimed. These entities want to calculate total amount of energy saved from all projects it incentivizes.

This is good. But these requirements can be overwhelming. For some programs, it is not enough to say that a strategy will reduce electricity use by, say, 5%, based on engineering experience. One must do calculations to demonstrate it all. Assumptions are not allowed or highly discouraged. Some programs require using energy models to demonstrate reductions. These are hypothetical, of course (it is software), but somehow thought to add accuracy. The problem is that running models involving complex data entry, researching published reduction factors, and performing complex calculations cost time and money. The applicant must pay the consulting engineer for extra time to do all this. Yet, this diminishes the ultimate ROI of the incentive. I was involved in a project where incentives were based on running energy models to calculate energy usage reductions. While their strategies were excellent and likely to meet the required levels, I could not guarantee the results until I ran the model. I told the owner that he may have to pay me more for my time than he would receive in incentives. I did not know. He chose to move forward anyway, and fortunately qualified fully for incentives and came out ahead. But be careful and research the incentive program for what might you be entitled to and how much extra you must pay your consulting engineers to meet the requirements of the incentives. It may not be worth it. Do your homework.

CCES has the expertise to help you evaluate, qualify for, and apply to a wide variety of energy incentive programs to determine maximum ROI for your energy cost-saving project. Contact us today at 914-584-6720 or at karell@CCESworld.com.

There is a national debate going on about energy and how we get it. Cost, safety, reliability, and “energy independence” are all being discussed. All of this impacts the companies we work for and our home supply, as well. Grand debates are being held (“Drill, baby, drill!”) concerning energy usage and climate change, about the Keystone Pipeline and about fracking. What are the issues when it comes to energy flexibility and risk and how do they affect us?

Lately, there has been growth in demand for energy and, thus, we need to determine how we will derive it. In addition, there are global changes as a number of developing countries are experiencing growth. Well over a billion people worldwide over the next few decades will enter the middle class, increasing energy demand. This is not an abstract concept. China is opening several new large power plants every year and there are many stories of cities being electrified for the first time, people trading in their bicycles for their first cars, and people buying their first TVs, computers, etc. This demand will affect us. World demand influences the sources of our energy and the price we pay.

And at the same time, we are beginning to see the initial effects of climate change, of the increased heat in our atmosphere due to enhanced trapping of radiation by higher concentrations of CO2 from greater combustion of fossil fuels. Scientists tell us we can still avoid most of the major impacts of climate change if we can reduce GHG emissions by 70% from a 1990 baseline (which we exceed) by 2050. How can we achieve this and also meet the growing energy demands of over 1 billion people projected to be high energy users by 2050? What does this mean for us and for our economy and companies striving to maintain and grow?

We need to examine different sources of energy: natural gas, oil, coal, nuclear, renewable power. One thing that is important to accept is that all energy sources come with risk. I am old enough to remember as a child an old TV show, “Beverly Hillbillies”. Jed Clampett shoots at some wild turkey, misses, and up from the ground comes crude oil. Just like that. That was an exaggeration even then, and is quite far from the truth now. We are digging for gas and oil in unusual, faraway places and in expensive ways resulting in calamities like BP Deepwater Horizon (digging way out in the Gulf of Mexico). And fracking (natural gas from shale) has risks in terms of water usage, land use, contamination. Some want to ban it because of these risks. Good, but what would take its place? Is it better to use coal or oil (accident risks, higher CO2 emissions) instead? Nuclear emits no GHG emissions. But in what town could we build a new nuclear plant? Renewable power is clean and effective (I have solar panels on my house). But how do we store and supply power for night time or cloudy days or peak power demands? How do we get power from mostly desolate windy areas to the cities that need it?

There is no simple answer to energy. We want our energy and life styles and our company’s operations to continue smoothly, but we need to now accept and address many risks in order to attain our and the world’s energy demands.

An answer is support for technology and smart regulations. Many of the energy items mentioned are new (digging deep in the Gulf, extracting from shale or sands, renewables). Improved technology and procedures can at least reduce risk (though probably never eliminate risk) while obtaining energy. Research and development for this must be encouraged. Similarly, smart rules should force companies to address risk (particularly if it endangers human life) while encouraging the development of the energy source. For example, companies can be allowed to frack only if it has demonstrated the proper safeguards to protect watersheds, treat wastewater, and protect land that otherwise would harm us and cost our society quite a lot to remediate, too.

So, the best approach for a municipality and a company is to have a formal energy program maximizing fuel flexibility, as risk and cost will change over time. Companies should design facilities that can use multiple sources of energy. For example, besides using the local utility’s electricity, a facility should also look to install renewable of cogen to develop one’s own source of electricity. Steam or hot water systems should be able to use multiple fuel types providing surety and flexibility as availability and price become issues. The cost of energy is now recognized as a major cost center for many municipalities and companies. But without power, heat, or steam, then functionality and production can shut down altogether, having grave impacts on its very being. Energy flexibility is important to look at seriously now and to plan for and execute toward in the future.

And a big part of any such program should also be energy conservation. A great way to be more flexible is to require less energy to perform your functions, giving you more flexibility to find energy sources. To achieve this, energy audits should be conducted routinely. There has been a revolution in energy saving technologies in just the last few years that are implementable and do work. Conducting an energy audit to determine new effective strategies to reduce energy use and actually implementing them every few years will help you both reduce energy costs and become more flexible to future market changes, as well.

CCES and our experts can help your company or municipality develop a robust energy program to save you energy costs to pay for the program and to examine and improve your energy flexibility intelligently, as well. See the improvements and cost savings. Contact us at 914-584-6720 or at karell@CCESworld.com.

According to a recent report in Business Insider, Apple has more cash reserves ($159 billion) than most major nations, including the US and other industrialized nations. It’s not only Apple. Major manufacturers, like Pfizer, Coca Cola, Amgen, Johnson & Johnson, and both General and Ford Motors, each have cash reserves of at least $20 billion. Now, I’m not an investor or an expert on economics, but I suppose this means that this cash can only be making a few percent in interest at best. Isn’t there something that can earn more for companies for this cash and be more productive, too?

One answer is energy. Several recent polls have shown that while many companies and municipalities are “looking into” studying and implementing energy upgrades, most do not follow through. The reasons appeared varied, such as not finding the right internal champion, availability of funds to invest, and finding the right practitioners. But, with cash reserves of many companies overflowing and new, proven energy-saving technologies and strategies growing, energy upgrades should become a high priority.

This is not a new-fangled idea. Many companies have invested in energy upgrades and the benefits are being studied. A McKinsey study (McKinsey Insights) showed that US companies have the potential to invest $3.4 trillion in energy upgrades at an average internal rate of return of 17%; much better than cash reserves sitting in a money market!

OK, I understand your skepticism. After all, this is an average of many thousands of corporations. How may this apply to you, so you be ahead of the game? One good way to start is to begin by concentrating on lighting. There has been a revolution in new lighting types in just the last few years. Lamps that create better quality light using less than half of the electricity of standard incandescents and T12s. Simple and savings begin right away. Add in automated sensors to turn off or dim lights when not needed, and you can save even more electricity. IRRs much better than 17% can be achieved by upgrading lighting – if you do it right. Planning and knowledge of vendors are critical to maximize savings. Use outside firms who are experienced in lighting and energy. Then your company can use the savings to invest in other cost-saving energy areas.

And there are other benefits, as well. Improved lighting has been shown to improve productivity and general mood of workers. There are fewer mistakes, reduction of risk, and sick days. Upgrading and automating mechanical systems can free your labor force to focus on jobs meant to be done: additional financial benefits for your bottom line.

CCES has the expertise to help you develop a smart energy program to invest in lighting and other energy upgrades for the highest return on investment and maximize the other benefits. We know the approach and the vendors to ensure financial success and reliability. Contact us today at 914-584-6720 or at karell@CCESworld.com.