It’s approaching the end of the year, which means self-evaluation of your company. What went well; what did not. What can be changed or should be incorporated to ensure growth moving forward? Historically, companies focus on sales and profits. Look at the headlines in major business journals: “XYZ Reports Auto Sales Jumped by X% In 1 Year”, etc. Expenses are pretty important, but the one that most companies seem to focus on is labor, as in how can it be lowered (lay off workers, increase automation, etc.). While companies cumulatively spend billions on energy annually, that expense is considered a fixed expense with little need for managing. This is a mistake. Companies can reduce energy costs and at the same time reduce risk and improve resilience.

Energy should be more important to a corporation given the fixed supply of it and issues involving regulations due to environmental, climate change, and business trends. Companies can now make choices about its energy sources and usage that it could not have made before with impacts on profit, costs, and flexibility. This is exemplified by the shift in the U.S. from traditional industrial manufacturing to more IT, cloud-based services by corporations, where energy costs can be a potential deal breaker.

Sources

Companies now have many more options of where energy comes from than before. A major new force is renewables. Solar, wind, hydro have been around for a while, but major technological advances now make building an operating a solar PV farm comparable to purchasing electricity from the local utility or running your own cogen. With the growing number of states who want to achieve a higher percentage of power derived from renewables and utilities wanting to get more facilities to become independent because of infrastructure concerns, incentives exist to sweeten the pot even more if one wants to invest in renewable power.

Another approach is to look at site-specific approaches and restrictions. You have a specific facility in a certain country or region. What are the sources of energy that are most easily accessible and plentiful in that region? Companies should make sure that equipment is capable of using that fuel or be ready to invest in new plants to secure that energy source. And they should take the long view. Which fuels may be impacted by future climate change rules or by future shortages for political or technical reasons?

Usage

Obviously, reducing usage of a fuel critical for your operations will reduce costs. But doing so will also improve your operational flexibility. If there is a looming shortage of a critical fuel, and you use less of it than your competitors, that flexibility puts you in a more commanding position, needing less. Being able to use more than one type of fuel for critical operations is beneficial, too, and gives your firm tremendous flexibility to ride price upheavals.

An overlooked issue in minimizing energy usage and improve flexibility is treatment of heavy equipment. Boilers, AC equipment, electric generators all need to be maintained and replaced at the appropriate times. It is a positive investment to perform retro-commissioning to maintain that the equipment is operating as you wish it; for you, the owner, to get your money’s worth. Also overlooked is proper training. Sometimes the first to be let go are maintenance workers; they appear not to contribute to the “bottom line”. But good maintenance people and managers (overseeing good procedures) can lengthen the effective life of equipment and keep down usage and costs very effectively.

How-To

A key to getting energy to be taken seriously as a top-of-the-line corporate interest is to have the top person, the CEO, involved. He/she should understand the importance of managing energy in a robust way and what the benefits are to the company’s moving forward. There may be doubters in the C-suite, including people who may not want Energy to “elbow its way” into decision making. But if the CEO understands the ultimate value of considering, tracking, and managing energy sources and usage, then those doubters can be silenced. So invest time in educating the entire C-suite, but particularly the CEO and update him/her on developments.

Make sure that energy is tracked as well as other business items, such as sales, workforce, profits, etc., and is included in business reports. Make sure that gains and benefits are explained and recognized.

CCES can help your company develop a robust energy program to serve your company. Its infrastructure, as well as technical evaluations of strategies to raise its value in the company and to demonstrate financial benefits. Contact us today at karell@CCESworld.com or at 914-584-6720.

I can’t tell you the number of times I have approached building owners or managers with great opportunities to upgrade energy systems (lights, HVAC, etc.) saving money right away and paying back the investment in a short time, and the first question I’m asked is “Are there any rebates?”. When I tell a client there are none for that or it is paltry, the building owner/manager actually ignores the many other benefits and is reluctant to do the project. If the payback of an upgrade is under 3 years and the ROI of investment is double digit percent growth per year anyway, why should a rebate “make or break” a project? I guess some people really enjoy “free money”, of part of the cost being paid by a government or utility. While a client and the engineer should look for all available applicable rebates, it is unreasonable to actually squelch a project due to its absence.

So that you understand why rebates may or may not be available in your area, here is some background. It is certainly contrary to business sense for a utility to pay a building to install and utilize technology that will cause it to use less energy (natural gas or electricity). Utilities offer rebates for either of two reasons. One is they are forced to by the state’s government or watchdog agency. These elected officials or people beholden to them know that being able to say that they saved a certain amount of a resource or utilized it more efficiently is what people want and a good thing for a politician to boast. A second reason is that the more energy a region uses, the greater the infrastructure costs are for the utility. In even modest utility districts, utilities are forced to spend billions of dollars in capital costs to upgrade, expand, or replace existing infrastructure (utility lines, gas lines, etc.). And, of course, to ensure they are up-to-date and safe. If infrastructure fails, and a power blackout results or a gas line explodes, the negative headlines, the anger of residents and businesses, and being hauled into legislative hearings over the failure, is something to avoid at nearly all costs. Therefore, the less energy used, the less that infrastructure needs to be upgraded and at a lower cost.

Therefore, it is important to do research on rebates. The availability and amount for different programs vary between utilities. In general, most rebates are universal for a utility. A rebate for LED lights resulting in decreased electric usage is valid throughout a utility’s district. However, some utilities designate some rebates as greater in different areas within the district. For example, in New York City, Con Edison’s Demand Response Program encouraging building owners to use their own generators and be off the grid during peak demand periods, has greater rebate payments for buildings located in a certain area which has seen the greatest growth in electrical demand (gentrification) and weakest infrastructure. And lower incentives everywhere else, including zones where infrastructure is fine. So look carefully at the conditions of a rebate.

Part of your research should also be on timing. Utilities and the commissions that oversee them often decide annually on rebates. They decide if they are effective or not, look at market conditions, and then adjust for the next year. A rebate at a certain level this year may go down (or up) next year or be eliminated altogether. For example, some utilities are reducing or eliminating LED lighting rebates. The price of LEDs has droped recently, plus it is more accepted. Many feel an incentive is no longer needed; savings and payback are sufficient without it. Your engineer (including this one!) should keep up with the latest trends and talk to those managing rebates.

I should add that I have seen the opposite reaction (occasionally) of building owners and managers feeling almost guilty about receiving a rebate for an upgrade. Nobody should feel this way. Most rebates come from charges that are in your monthly utility bill. You pay into a fund used for rebates. Therefore, when you do an upgrade, you are simply taking back the money that you have put in!

In summary, research or have your engineer research and go forward with any energy rebates that an upgrade qualifies for. However, don’t be hung-up on it. If a rebate (or tax deduction or other financial benefit) does not exist or is only worth a small percentage of the upfront cost, let it not stop you from doing the project. The vast majority of energy upgrade projects are very financially beneficial for building owners for a long-period of time even without utility or government rebates.

CCES has the experts and experience to help you get the maximum financial benefits from an energy upgrade, including being up to date on potential rebates and to get you through the application process. Contact us today at 914-584-6720 or at karell@CCESworld.com.

The Trump Administration is beginning to have its imprint on energy policy. Yet, many potential moves may not be very effective given market forces, which certainly drives business. The University of Texas’s Energy Institute has issued an interactive map showing the cheapest energy sources and greatest availability throughout the US. http://calculators.energy.utexas.edu/lcoe_map/#/county/tech and http://www.vox.com/energy-and-environment/2016/12/12/13914942/interactive-map-cheapest-power-plant

The Future of Coal is Not Favorable

Despite the President’s promise to bring back jobs to coal miners, the map’s information is pretty obvious that natural gas and renewables are likely to provide much of the U.S.’s new electric capacity in the foreseeable future. In addition, the map shows why the cost of building and operating new coal-fired plants is so high and non-competitive. This concurs with recent papers issued by the US Energy Information Administration.

Part of the problem for coal is geography. Prices to build wind farms have plummeted lately, and the Plains states, which have been high historic users of coal for power, are ideal location for wind plants (they have plenty of it). And in the South and Northeast, natural gas prices have dropped greatly, in part because of fracking and shale gas. Besides raw materials being cheaper, natural gas plants are more efficient than coal-fired plants. A modern gas-fired plant can convert 60% of the theoretical energy to electricity; for a modern coal plant, it is about 35%. Even if environmental regulations affecting coal are repealed, wind subsidies are eliminated, and gas prices spike, the cost of a new coal-fired power plant still cannot compete with wind or natural gas, and investors and builders will go with gas-fired and renewable power plants.

The Future of Nuclear Power is Murky

Despite its many detractors, nuclear power is growing in Europe and other parts of the world and, without a doubt, results in much lower greenhouse gas emissions than any fossil fuel-based plant. However, it is still expensive to build a new nuclear plant in the U.S., an estimated $8,000/kW, almost double that of other forms of electricity. There is research on advanced reactors with smaller, modular designs that in the future may be safer and less expensive than current mammoth reactors. The Trump Administration has signaled its approval of nuclear power, but has not suggested what it would be willing to do to help alleviate the cost differential.

Renewable Power

All signs indicate that the cost of renewables (solar, wind, geothermal) will continue to drop in the coming years. Renewable power has grown greatly worldwide, spurring a learning curve and a drop in costs due to greater efficiency and experience. Even if utilities and state governments reduce or end incentive programs for renewables, these will still rank in many parts of the country as the most cost effective power plants around. This will be especially true if and when large-scale battery power can be modernized both technically and financially to address the issue of inconsistent generation of power from renewables.

CCES can help you assess your future energy options to give you maximum operating flexibility and maximize your financial benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Renewable energy has dramatically advanced in the US in recent years, progressing against the established energy base because of technological advances, the easy accessibility of raw materials, and government mandates and financial incentives. Not only are solar panels affordable and profitable for many home owners, but conditions are right to build solar farms for large-scale electricity generation. And there are many news stories about wind farms and plans to build massive off-shore wind farms. Many states have ambitious, yet achievable goals for a certain percentage of power coming from renewables. But the “elephant in the room” is that most renewable energy sources are intermittent and, therefore, limiting in terms of reliable integrating into a utility grid, such as at night or cloudy days or when the wind is not blowing. When conditions are “right”, these sources can produce a large amount of power, but when not, they produce little or none. It is hard to manage an electrical grid for a city or community this way.

The answer is to be able to store large quantities of excess power production above the demand of the moment, to be utilized during periods when power cannot be produced. Heavy research into larger and better utility-sized batteries or storage systems is proceeding. Whatever the form of such storage will become economical and prevalent, there will likely be land use, permitting and environmental issues to contend with.

Energy storage technologies do exist. Pumping water to higher ground at night to be used to generate electricity during peak demand is used. The main research these days is on lithium ion-based battery systems, which many believe offer the prerequisites for a viable utility-based system, such as reliability, fast response times, ease to implement, and large scale for residential and commercial applications.

In anticipation of the growth of utility-scale battery storage projects, several states have passed rules with goals for certain gigawatt storage capabilities state- or community-wide (CA, OR, WA, MA). However, to achieve this, it is likely that significant land must be available to install and operate such systems and infrastructure and operations be present, as well, to transmit the stored power into the grid for rapid transmittance during peak demand. This may result in critical issues that must be addressed, such as land use, noise, truck traffic, storage and transportation of potentially hazardous materials, permitting, and environmental. It is likely that such energy storage projects would be placed where power is needed in or near urban areas where space is tighter and more people reside or work. States and localities with old infrastructure or in greatest need of reliable power during peak periods would be warned to anticipate and address such issues sooner rather than later, before systems are potentially chosen and designed.

CCES has the experts to help your company become both more energy efficient and to implement renewable power to maximize financial benefits and promote flexibility with a minimum of disruption for your employees. Join the wave of a more efficient and cleaner energy future and maximize the benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.