By Sandy Gutner, P.E., President, ROI Energy Services

EEPA, or Energy Efficiency Paralysis by Analysis, needlessly affects millions throughout the US, and the world. Some call it Energy Efficiency Performance Anxiety. EEPA is nothing to be ashamed of. It’s just a number. And it can be easily fixed.

You know energy efficiency is a universally accepted “win-win”. You know it will boost your bottom line make your organization more competitive. You even know it will improve your sustainability profile. If this describes you, you’re probably suffering from EEPA.

What are the Causes of EEPA?

OK, I’ll admit it. I made up the term EEPA, but the reality is most businesses are missing opportunities to improve their bottom line. How do you know if you have it?

• You feel confused and overwhelmed with information
• You don’t know whom you should trust.
• You’ve gotten many new insights about your energy use, now you think there is so much more to explore, and maybe you’d better do some more research.
• You feel like you need even more information before making a decision but in your heart you know that more information might make your EEPA worse.

If any of these indicators or similar excuses is stopping you from cutting electricity costs, you probably have EEPA.

How did you get to this point? You’ve been thinking about energy conservation, but…..
• “You’ve done an energy audit, and one of your contractors/suppliers/advisers/vendors (circle one) has other suggestions”;
• “Your engineering or technical staff wants to study it further”;
• “You’ve heard renewables are looking more attractive”;
• “Someone in your golf foursome, poker game, advisory committee (circle one), mentions that technology is advancing so quickly that it would be better to wait a couple of years”.

Most likely, you do not even realize you have EEPA.

How Is EEPA Affecting You?

Simply stated, if you have EEPA you’re giving the cash that could be used to streamline your operation and giving it to your electric utility. Unlike other capital investments, the cost for energy efficiency solutions are already covered by the savings gained. When these costs are financed the savings exceed the finance costs yielding a positive cash flow. You can see an example of this right here. On the flip side, delaying energy efficiency is actually costing you money. The Cash Flow Opportunity Calculator, developed by Energy Star can help you determine the actual and opportunity costs of waiting.

How Can You Treat EEPA?

The solution to EEPA is not more information, just better information from a trustworthy source, that addresses your specific and unique needs, and that provides clear actionable steps. The most important information for most management and executives is:
• “What is the payback”,
• “Will it affect my operations or workspace environment?”
• “What will I have to do?”
• “How do I know I will really see the savings?”

That is why ROI Energy Services takes the approach of managing the details and delivering a package that meets a guaranteed payback and ROI. We study your system, design a solution that is customized to your needs, meets your required ROI and payback period, and whose savings is guaranteed. Our approach delivers a specific, actionable recommendation with a firm not-to-exceed cost, and guaranteed ROI. We will worry about whether LEDs are cost effective, and where, or whether other methods are better. We will determine how to make your existing equipment more energy efficient without costly replacement.

Important Side Effects

Implementing energy efficiency may result in higher profitability, better equipment reliability, longer lasting equipment, improved sustainability, productivity improvement, and many other benefits. Please consult with ROI Energy Services to discuss how to achieve these results.

Sandy Gutner, P.E., is the President of ROI Energy Services, Weston, FL
Website: www.ROIEnergyServices.com
Phone: 1-888-855-5471
E-mail: sgutner@ROIEnergyServices.com

ROI Energy Services is an engineering firm that offers energy saving solutions with a unique financial proposition for our commercial and industrial clients. Our financially viable turnkey solutions help reduce one of the most challenging operating expenses – energy consumption– and are paid for by the savings from reduced electricity costs.

Guaranteed Energy Savings Offers Unique Financial Proposition

ROI Energy offers a unique financial proposition to commercial and industrial energy consumers by creating energy savings solutions tailored specifically to meet their financial requirements. With a useful life many times greater than the payback period our clients reap long-lasting financial rewards. If the energy savings is less than our guarantee, we pay 100 percent of the shortfall –guaranteed

Renewable Energy, Water, Wastewater and More – 25 Years Engineering Consulting

The ROI Energy team has more than 25 years of experience providing engineering consulting services to public and private sector clients. We have represented owners’ interests in a wide variety of large-scale infrastructure projects including renewable energy, water, wastewater, and many others. The insight gained from this perspective has led us to our primary focus, which is adding value in everything we do.

The American Council for an Energy-Efficient Economy (ACEEE) issued a report last year detailing the special value and benefits of becoming more energy efficient (for access, see: http://aceee.org/research-report/u1402). The report determined that improved energy efficiency costs on average 2.8 cents for every kilowatt-hour saved, while the average American spends 10 cents per kilowatt-hour used (of course, we in the Northeast pay much more), making energy efficiency a great value. Therefore, efficiency is the true cheapest form of energy and pursuing energy efficiency is, if done properly, a positive financial success for any business or families in their homes.

This and other papers drive home this point this way:

The unseen cost value of energy efficiency. Many energy efficiency projects are judged by the payback on the initial investment. Many companies have a threshold (i.e., 3 years or 4 years) above which they will not make the investment in the project. No matter what! Within limits of what money is available to be invested, this is a short-sited argument. The real value of energy efficiency is in the length of time the savings continues, as well as, the continued and growing value of the savings.

Here is a conservative example where I overestimate costs and underestimate benefits: a simple group of lights in one particular room is replaced with LEDs, say 20 60-watt fluorescent lights with 18-watt LED equivalent lights. Assuming the lights are on 12 hours/day, 5 days/week, then the electricity savings would be over 2,600 kWh/year. At $0.20/kWh, this alone would save $520/year. Assuming an installed cost of $80 per LED, the upfront cost would be $1,600, for a simple payback of just over 3 years. Not a bad payback. (Again, overestimating costs, underestimating savings) 2 “by the ways”: 1st, this does not include incentives from your state or utility for lighting upgrades, reducing the payback. 2nd, many buildings pay for electricity based on peak demand as well as usage. Reducing demand here by nearly 1 kW would further save costs.

What is often not included in such evaluations of energy efficiency upgrades is that the new lights will likely last for over 10 years. Many LED lights are waranteed for 50,000 hours of usage, which would be 16 years of usage at this rate. So after the investment is paid back, you will continue to save and come out ahead for the next 7 years, maybe 13 years or more. These lights would save >$3,600 in the lifetime on short end of range.

Remember, the savings calculations are just for one area of only 20 lights. Imagine how many lights your building actually uses and, therefore, the potential cost savings! And now add on improvements in your insulation, HVAC systems, etc., and the savings multiply. There is a special value to this. Depending on the size and complexity of a building, energy cost savings can be hundreds of thousands of dollars per year. That’s money in the company’s “pocket”. How else does a company make money? By increasing revenue; by selling more widgets. But if the average widget yields 10% profit, that’s an awfully lot of widgets that have to be sold to make up for energy efficiency savings. And, after a year, you have to go right out and sell even more widgets. Once you make the energy efficiency upgrades, the savings stick around with no additional work for a long time!

But even this underestimates the savings in two ways. Unit electricity prices change and only go up. Assuming the $0.20/kWh rate rises even 2% per year, cumulative savings will grow by about another 10%. Also, the fluorescent bulbs that would have replaced existing bulbs had LEDs not been used have a much shorter lifespan. They would need to be replaced much more often than LEDs, requiring additional capital costs and raising the cost savings of using LEDs.

Hard-to-measure added benefits. Energy efficiency projects also have many significant benefits that are good for a business or residence that are not directly energy-related and hard to quanitify, yet are significant. New, more efficient equipment generally needs less maintenance, freeing up your maintenance workers to perform other needed tasks. A more efficient HVAC system with smart controls (thermostats) will result in a more comfortable work staff, raising worker productivity and resulting in tenants who will complain less. Studies show that well-designed efficient lighting causes less eyestrain, not only also raising productivity, but also reducing sick days and even the number of “coffee breaks” a worker needs. How much this benefits a building owner or a business is hard to quantify and depends on the individual needs of the business; but nobody can deny that these benefits of energy upgrades are real and significant.

Not all energy efficiency projects are created equal. Different types of energy efficiency projects are more cost beneficial than others. According to the McKinsey report: “Pathways to a Low Carbon Economy”, replacing lights with LEDs and installing more efficient appliances and electronics are the two most cost-effective ways to be more energy efficient. According to the report, other strategies are less cost-effective (upgrade motors, retrofit insulation, upgrade HVAC) and some are theoretically not cost-effective at all (renewable energy in absence of incentives, plug-in hybrid fleets), yet have many positive non-energy benefits.

How do you get the go-ahead to pursue an energy efficiency project that is beneficial, but may have a longer payback or reduced return on investment? There are two approaches. In the first one, an entity may concentrate on “low hanging fruit”, such as lighting and appliance and electronics upgrades, have management be aware of the quick reduction in the electricity bills and quick payback. With this money “in the bank” and the confidence that this instills, then begin to address slower payback strategies, using the money saved as upfront cost, a springboard to implementing these strategies.

The other approach is to perform a comprehensive energy efficiency upgrade of your facility and address several strategies at once. Calculate the expected payback and return on investment of the blended project. Average the “good” numbers from a lighting or electronics project together with the worse-appearing numbers for insulation and HVAC upgrades to provide an overall payback and return on investment that management will accept and allow you to do all of the projects and reap all the benefits.

CCES can help you organize, implement, and verify the success of a robust energy efficiency program to maximize both your financial and non-financial benefits, reduce your upfront costs, and to ensure that all elements of your organization is “on-board” and shares in the benefits. Our technical and policy experts can maximize your benefits and ensure that the projects proceed smoothly with minimal disruptions. Contact us today at 914-584-6720 or karell@CCESworld.com.

LEDs are all the rage now. LED vendors are beginning to advertise to a wide audience; they are being accepted. There have been great advances in LED lighting technology in recent years. Illumination no longer varies. LEDs can be dimmed or adjusted in other ways. LEDs can be made to resemble the fluorescents they replace and fit into their ballasts with little additional effort, yet reduce electrical wattage significantly.

While LED bulbs are highly energy efficient with a payback often of 3 years or less, it is important to plan out any LED replacement project to get the best financial and operational benefits. Here are some things to consider.

Do an illumination survey. Before you replace your lights, take this opportunity to determine whether changes in lighting are necessary. Are there areas that are relatively dark – in comparison to the need? Are there areas overlit? Have an illumination survey performed to determine levels. And don’t forget exterior space, too. Before you replace, determine where additional or different ballasts and lamps may be necessary for proper illumination and where you can remove some or have fewer lamps in a fixture.

When and where to install LEDs. You might think with such great energy cost savings and incentive programs in some states, it is best to just replace every existing bulb with LEDs. But that is not necessarily financially prudent, as LEDs do have a high upfront cost. Therefore, it may be best to prioritize your replacement program. If you cannot replace all of your lighting at once, then replace, as a first priority, your least efficient types of lighting or the lights used the most hours.

Save even more with lighting controls. Even LEDs use electricity needlessly if they are left on for extended periods with nobody around. Therefore, consider lighting controls, such as occupancy sensors and daylighting, sensors that dim artificial light as sunlight enters a room. LEDs can be installed that are compatible with these control types. Consider which areas of your building get used. In offices, occupancy sensors ensure that lights are not left on all night when nobody is around. In warehouses and storage and utility rooms that often go many hours, if not days, without activity, sensors can save, too. Which places in your facility get sunlight (sky lights or south-facing windows)?

Light locations. Do you currently have lights in inconvenient places that take a huge effort to replace? If so, prioritize LED bulbs in these locations to save you labor, storage space, and equipment rental expenses. I had a client that rents a cherry picker once every third year to replace burned out bulbs from a very high ceiling. As luck would have it, the day after the job was done one time, a light went out! With LEDs generally lasting well over 10,000 hours, the frequency and cost of replacing lights from an inconvenient spot drops markedly. Remember that reduced light replacement activity gives your maintenance crews more flexibility to perform other needed tasks. And fewer trips by your personnel up the cherry picker or ladders mean lower risk of an accident for you.

CCES has the experts to perform an evaluation of your lighting needs – to perform an illumination study and assess the right priorities for a lighting upgrade to give you the maximum financial benefits. We can manage and implement a complete turnkey lighting upgrade for you. Besides our technical expertise, we can help you apply for and get applicable incentives for such an upgrade. Contact us today at 914-584-6720 or at karell@CCESworld.com.

In recent weeks, major articles in the New York Times (http://opinionator.blogs.nytimes.com/2015/02/06/investing-in-energy-efficiency-pays-off/) and the Wall St. Journal (http://deloitte.wsj.com/riskandcompliance/2015/01/22/energy-management-becoming-a-core-business-competency-survey/?KEYWORDS=energy+efficiency) have stated what you have been reading here for several years: that energy efficiency pays off big time, better than most other investments, and that major companies now recognize energy management as an essential part of any business functioning and growing. Any business that ignores energy is at risk for major problems.

David Goldstein, the Energy Director of the National Resources Defense Council, recently wrote an interesting blog article (see NRDC’s Switchboard), stating that the lack of energy efficiency legislation for a number of decades contributed to the recession that hit the US starting in 2008 and that recent energy efficiency policies had a major influence in us getting out of the recession. For example, the Department of Energy recently issued stronger appliance efficiency standards than any previous administration. These standards have been conservatively estimated to save consumers over $425 billion over the next 30 years. That savings in the hands of consumers and businesses allow them to spend that money in other ways or save it, benefitting other businesses, banks, and investment houses.

Similarly, the USEPA issued updated fuel economy standard for automobiles and for trucks for the first time in decades, saving consumers and businesses an estimated $2.7 trillion, and generated almost an additional million new jobs for parts manufacturers and the businesses that the savings support.
States and localities are realizing this, too, and have implemented a wide array of rebates, tax credits, and low-interest loan programs. These programs help local businesses stay competitive and put more money in the hands of families and businesses to spend and benefit other businesses. In addition, being more energy efficient and reducing peak demand enables utilities to put off or reduce the amount of new or updated infrastructure it needs to install, saving billions of dollars which, of course, would be collected from consumers in higher energy (electricity and gas) rates.

Energy efficiency also influences markets. As we are all aware, crude oil prices have dropped (as of this writing) by over 50% compared to a year ago. Of course, many reasons contributed to this (greater natural gas and oil exploration). But one definite factor is energy efficiency, such as the greater purchasing of fuel efficient cars (not only in the US due to the recession, but in China and Europe) and that the average number of miles driven annually by Americans has dropped in recent years due to millennials staying home more and land use law changes reducing urban sprawl.

And finally, we come to everyday businesses and municipalities. In these tough monetary times, there is great economic benefit in improving energy efficiency, reducing energy used and, therefore, costs that go to someone else, while not impacting service at all. Here are three examples.

The recent NY Times article spotlights several universities that have set up “green funds” to pay for energy efficiency upgrades. The direct cost savings goes back into the green fund to implement other energy efficiency projects. The University of New Hampshire is an example. They started such a green fund with $600,000 of university money, and within 5 years saved $1.3 million, which went back into the fund and invested in other energy efficiency projects. They believe that in another 5 years, the university will have saved over $3 million dollars all coming from the original one-time $600,000 investment. Once all major projects have been completed, the university can reap the full benefits of the cost savings to their budget.

I recently did an analysis for a municipality for one energy efficiency project only, replacing street lights with LED lamps. This municipality had a cocophony of different types of lights and lamps. Many of them shone a yellowish tint and times were tough for it, being in a state that limits property tax increases. My analysis showed that switching all of their street lights to LEDs would likely save them $250,000 per year, which they were quite happy about. It would be a 3.5 year payback, but more important, the cost savings would likely increase every year as the utility’s rates would likely increase. Therefore, the rate of return of investing nearly one million dollars in LED street lights would be 14% per year for 7 years. What bank pays that rate of return? What Wall St. investment is as good with no risk (lower wattage means lower wattage)? With such a rate of return, it would be quite easy to borrow the money or float a bond. In addition, I pointed out that these LED street lights would likely be warranteed for 10 years before any need to be replaced; their current lights need to be replaced every 1-2 years. In fact, the town has two workers who nearly full time replace street lights that burn out. They were thrilled to free up those workers for other tasks. In addition, this means fewer trips up the cherry picker and reduced risk of an accident and tying up traffic.

And finally, how does energy efficiency help business? I worked for a small warehouse / light industrial facility who was not only being hurt by high energy costs, but the workers were not comfortable in the office and warehouse. The building was over 60 years old, and still had its original windows and some of its HVAC equipment. The owner, to his credit, did not just put “band-aids” to fix the problems, but instead went first-class, with 21st century energy upgrades. He saw this as an investment. He upgraded the windows, installed improved insulation on the exterior walls and roof, upgraded the lights, installed solar PV and hot water, and installed a new boiler with thermostats to control heat distribution. The building has reduced its energy bills by over 50% due to these changes. We also helped them obtain applicable incentives from the utility and state and a federal tax deduction for the upgrades. But two other things resulted from the energy upgrade. First, a section of their warehouse that was hardly used was now, given the upgrades, attractive for alternative use. The company fixed up the area and now rents it out to a supplier, not only resulting in additional (rental) income, but better assuring that supplies will arrive quicker! Finally, workers were much more comfortable in all seasons and noticeably more motivated and efficient.

CCES has the experts to help you design the right energy upgrades to maximize the myriad of financial benefits possible. We can manage the implementation of the upgrades you choose and ensure it confers the benefits projected. We can help you get the maximum incentives, low-interest loans, and deductions that the project qualifies for. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Energy efficiency is being recognized in many quarters as more than just a “feel good”, environmentally-beneficial business activity, but as a positive financial investment goal itself. After all, what is an investment; any kind of an investment? It is spending money so that you get that money back and a lot more. Investing in energy efficiency is an effective way of making money invested in saved costs and other financial benefits.

How do we define a good investment? Making the most money within a risk – reward paradigm. If you are risk averse, you invest money in T-bills are similar instruments. You make a great yield, but it is understood that the US government is behind the investment, and at worst, you are unlikely to lose the money you invested. Or if you wish to entertain risk, there are many investments that could pay a high yield, but there is a risk that business conditions will change, you don’t make that yield, and, in fact, you could lose all or some of the principal; a high risk.

Smartly investing money in energy efficiency projects is the best of all worlds. The risk is low. The technologies are known; if implemented correctly, they will work in lowering your energy use. And if a particular technology fails, the vendor should replace or repair it. They are simple; a lower wattage light bulb uses less electricity than a higher one. Period. And if designed right, provide you with the same (or better) light.

And the savings are potentially great. LED lights in many cases produce the same light using less than half the electricity of many current conventional lamps. In addition, these new technologies often last longer than those replaced, saving the user much in O&M risks, costs and improving worker flexibility (reassign workers to other tasks and fewer trips up the ladder to replace lights). I recently performed an evaluation of a large light replacement project. The client’s investment would conservatively (overestimating costs and underestimating savings) have a rate of return of 14%/year for at least 7 years. And the likely rate would be higher, with no risk (the lights work). What investment on Wall St. results in such a return?! Really! Tell me one. Many other strategies – if planned well for your particular building – will result in similar yields and benefits.

Some say: “This is great, but where do I get the upfront capital to buy the technologies I need to be more energy efficient?” Given the high rate of return and low risk, many financial institutions would be happy to lend money at low interest knowing their risk of default is low. Several government agencies have set up low-interest loan programs geared to cost savings, enabling companies to have only positive cash flow in these projects. Principal / interest are paid back only when energy cost savings are achieved.

The organization The American Council for an Energy Efficient Economy (www.aceee.org) has compiled many financial studies and case studies on energy efficiency upgrades. See the following graph comparing the risk-reward of a typical energy upgrade with that for other monetary investments. If the graph does not appear, then note that typical energy efficiency projects have a risk index of about 5% (comparable to US T bills), yet a typical rate of return of over 20% (comparable to small company stocks).

See how energy efficiency projects – again, if designed and implemented professionally – has a low risk index, yet high annual rate of return.

CCES can perform an energy evaluation and manage the implementation of energy efficiency projects you select for your buildings and operations to maximize your financial benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Here is another simple, effective energy upgrade that will not only save you significant energy costs (if done right), but will also result in other benefits. As discussed last month, one of your biggest users of energy is cooling. Moving heat from a relatively cool place, such as an office or a data center, to a hotter place (the outside) goes against the norms of physics, and, therefore, requires energy. A study from Lawrence Berkeley National Laboratory (https://publications.lbl.gov/islandora/object/ir%3A158674) found that upgrading fans and adding fan speed controls significantly reduces a facility’s electrical energy usage and reduces average and peak electric demand. In this day and age of many utilities around the country encouraging users to reduce their peak electricity demand, any way to do this will result in major cost savings. Many utilities now require large users to pay for peak demand, as well as usage, making reducing demand on weekdays during the 2 to 6 pm period a major cost savings.

The study focused on the cooling of a data center, which often needs cooling performed 24/7. What ways can energy efficiency be improved? The facility used for this initiative was a 135,000 square foot data center in El Segundo, Calif. The project focused on replacing constant speed scroll fans with electronically commutated motor (ECM) variable speed fans of a more efficient design and deploying an energy management system to control fan speeds and air handler output.

Deployment of the control’s software system resulted in a 66% drop in cooling energy usage, freeing stranded capacity while simultaneously expanding reserve cooling capacity. Varying the fan speed based on actual space needs in time and utilizing software to control it fairly accurately is a large energy saver compared to old style fans set at the same speed at all times.

In addition, the software saved the facility 2.9 million kWh annually and provided a pictorial view of the heat profile in the room, identifying and addressing “warm spots”. Not only is this a significant energy saver (identifying “warm spots” and addressing them), but it leads to better worker comfort and productivity.

Potentially overcooling a data center or other location to reduce cooling during the peak period in the summertime by adjusting fan speed (but still utilizing cooling if needed) can save a facility much costs.

CCES has the experts to help you evaluate new technologies and approaches to maximize savings not only in energy usage, but in peak demand shaving, as well, to maximize your financial gains. Contact us today at 914-584-6720 or karell@CCESworld.com.

Here is another smart, effective energy upgrade that will not only save you significant energy costs (if done right), but will also result in other benefits. One of the biggest users of energy is your heating, ventilation and air conditioning (HVAC) systems. A lot of building managers buy boilers, rooftop units, etc., install them, and then leave them alone or just have an outside contractor look at them occasionally. Perhaps people think they work automatically. But HVAC operation should be taken seriously – to minimize energy costs and to reliably provide proper temperature control for your workers to be efficient or your customers to be comfortable and buy.

The first item to consider is the design and efficiency of the system. Since HVAC systems often last a decade or more, when buying a new or replacement system, it is important to consider the right size (for the area treated) and its rated efficiency. Saving a few bucks now to buy a relatively inefficient system will cost your company a lot in the future. Efficiency is indicated by the energy efficiency rating (EER) or SEER. Many units now are available with an EER of 14 or higher. If you are currently using one with an EER under 9, it may be cost-effective to replace it now with a more efficient one, even if it has not reached its end of life. The difference in electricity costs may justify it.

Just as important is to ensure you operate your HVAC units optimally. All HVAC units contain filters to filter dust and other items from the outside air that is drawn in. While one may simply follow manufacturer’s recommendations on how often to replace the filters, it is important to not blindly follow the recommendation, but instead, physically go onto the roof and look at your units in action, and check the filters themselves. Every situation is different. I worked with a facility which followed the manufacturer’s direction of replacing filters once every 6 months. However, the filters from the biggest units (drawing in more outside air) were filthy with caked-on dust well before 6 months. Was the manufacturer wrong? Not necessarily. The building was located across from a facility that stores different rocks, sand, and other materials. It is probable that dust from this facility brought in by the wind caused the filters to cake up sooner than normal. A dirty, caked filter has two effects on an HVAC unit. It causes the fan to work harder to bring in more air to meet system requirements. One study showed that a dirty filter results in an increase in a unit’s electricity usage by about 9%. Plus, dust that penetrates the filter can damage the interior parts of the unit (condenser coils, etc.), reducing its life and efficiency. More filters and the labor to change them are fairly cheap and worth it to avoid these issues.

One more thing to consider periodically is whether the conditioned air is reaching the zone it is supposed to service. Sometimes internal duct work is partially obstructed, shunting warm or cool air out certain vents and not others. Building management should occasionally monitor whether changes of this nature occur periodically. Again, you want to get the most out of the equipment you paid a lot for. If conditioned air is not distributed properly, a simple inspection of the ductwork could find and allow correction of the problem.

CCES has the experts to help you assess your boilers, air conditioning, and related systems, and advise you on planning new systems and how to better maintain your current ones. We can help you get the best use of your system, to get your money’s worth, and make your workers and customers comfortable. Contact us at karell@CCESworld.com or at 914-584-6720.