Tag Archives: energy efficiency

Overcoming The Fear of Energy Investments

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According to the USDOE, over 4.2 million commercial buildings waste an average 30% of their energy, causing a cumulative estimated excess cost of $60.7 billion in 2007. Given an 8% capitalization rate, the cumulative loss of real estate value is $750 billion.

A simple example applied to an individual building (from Energy Star): A 200,000 sf office building pays $2/sf in energy. Energy reductions resulting in a 10% decrease in energy costs translates into $40,000 in additional net operating income annually. Energy Star believes that common energy recovery opportunities range from 20%-40%.

Given this opportunity to turn wasted energy into newfound income and asset value, why aren’t all property owners and managers investing in energy efficiency upgrades? A Deloitte survey, reSources 2012, found that 90% of companies surveyed had energy management goals; and over two-thirds identified reducing energy costs as their main rationale. Yet, the survey also found that few companies had actually developed and implemented significant energy efficiency improvements. Many property owners and managers have one or more of the following impressions about energy upgrades:

• Improving energy efficiency is a complex, mysterious and unreliable process.

• Investing in energy efficiency is almost always expensive.

• Pursuing energy efficiency is risky business (due to overpromise and under delivery).

Each assumption has been shown to be incorrect based on real life examples. So, how can these fears be overcome? Be organized and address the following:

1. Perform a site-specific energy assessment led by an experienced professional. Make sure that data (energy usage data, bills, information about operations and equipment) is thorough and properly collected. Data quality is of prime importance. I once prepared an energy survey for the managers of facilities to submit to obtain such data. For groups of similar facilities, I expected a bell-shaped curve; instead I got some facilities that were listed as extremely efficient and others very inefficient. I was suspicious that errors or misunderstandings occurred during data entry. When I spoke to the client manager of the need to invest time to verify the data collected from the outliers, he started yelling at me that we must accept all data as submitted. He did not understand data collection. They invested money into energy reducing strategies at facilities that did not need it! The bottom line is that good, quality information reduces the fear that some may have.

2. Focus on your highest energy activities; identify multiple solutions. To reduce the fear of risk in energy upgrade strategies, it is critical to focus on big energy consumers and determine costs, reductions, and paybacks of multiple potential solutions. Obtain multiple bids and identify the best combination of solutions based on financial analysis.

3. Put all matters in writing. It is important to be transparent in the evaluation and calculations. Prepare professional memos or reports along the way, and don’t hide any data or reasoning for decisions.

Proposing this approach will reduce the fear that many C-level executives have about performing energy assessments and investing in energy waste reduction strategies.

CCES has the technical experts to help you prepare energy evaluations and audits to maximize your energy and cost reductions and gain the greatest business benefits in a reliable, programmatic, transparent way. Contact us today at 914-584-6720 or at karell@CCESworld.com.

New Rules Focused On Energy Efficiency in 2014

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2014 will likely continue the momentum of energy efficiency goals being brought about by regulation, with more government legislatures looking to impose such rules. Federal legislation seems possible (of course, with Congress as it is, who knows?) and further presidential dictates are expected. Municipalities and states, given the early success of existing mandatory programs, are expected to actively produce legislation in 2014 that will impact many different types of companies and facilities.

In Congress, the proposed Energy Savings and Industrial Competitiveness Act (ESIC) was chock full of common-sense provisions. It was endorsed by them all: Republicans, Democrats, business, labor and environmental groups. Yet, only a small portion of it, mainly portions directing federal agencies to collect data or reduce barriers to deploy energy efficiency technologies, are in effect. These various groups have asked both Houses to address the rest of the provisions, which will reward businesses for implementing energy efficiency technologies and provide more American jobs.

Among other things, ESIC would create a Supply Star program in the USDOE to boost the efficiency of industrial supply chains, increase industrial research, allow on-site technical assessments to identify opportunities for maximizing energy efficiency, and establish rebate programs for facilities procuring upgraded energy efficient equipment.

The IRS’s Energy Policy Act rule (EPAct) expired on Dec. 31, 2013, meaning buildings reducing their energy usage can no longer qualify for a federal tax deduction. Last year, a bi-partisan group wanted to extend and strengthen EPAct to provide greater potential tax savings. However, Congress being Congress, it did not pass. There is hope that the extension will pass in the first months of this year and be retroactive to Jan. 1, 2014.

The USDOE is expected to publish rules on battery chargers and external power supplies, potentially setting efficiency standards equal to those of California. Amended DOE standards for residential room air conditioners will become mandatory on June 1, 2014 and for refrigerators, refrigerator-freezers, and freezers on Sept. 14, 2014. The USDOE has published a notice of proposed rulemaking for standards for various commercial and industrial electric motors with a Feb. 4, 2014 deadline for comments.

DOE is expected to consider drafting efficiency rules for other products in 2014, such as commercial packaged boilers; commercial refrigeration equipment; walk-in coolers and freezers; automatic commercial icemakers; ellipsoidal reflectors, bulged reflectors, and small diameter incandescent reflector lamps; new and renovated federal buildings; solar hot water heaters; and manufactured housing. The USDOE is expected to decide some time in 2014 whether to regulate the energy efficiency of computers and servers.

This brings up the question of what bases will the USDOE use to set minimum energy efficiency standards on any type of equipment. How will the agency balance availability of technology with cost and specific local concerns? Will the agency use the “social cost of carbon” (SCC) in its standards rulemakings? SCC is expected to result in stricter minimum efficiency standards in future rules than not using SCC, and this may trigger a political battle. The Office of Management and Budget will likely get involved in SCC.

The Energy Star program, a voluntary program operated jointly by the USDOE and USEPA, is expected to undergo changes this year. The USEPA has issued new Energy Star criteria for different types of computers, effective on June 2, 2014, and is reviewing several potential amended Energy Star specifications for televisions; clothes washers; central and room air conditioners and air-source heat pumps; and boilers.

A number of states and municipalities are expected in 2014 to act aggressively on energy efficiency rules to save consumers costs, reduce infrastructure upgrade needs, and reduce GHG emissions. For example, California is expected to promulgate robust energy efficiency rules in 2014 for consumer electronics (computers, displays, game consoles, network equipment, and set-top boxes); lighting (fluorescent dimming ballasts, LEDs, and multifaceted reflector lamps); faucets, toilets, urinals, and water meters; commercial clothes dryers; and other appliances. California authorities are also expected to establish administrative processes to enforce these and existing equipment energy efficiency standards, including procedures for assessing penalties for violations.

Cities, such as New York City, Seattle, and San Francisco, have in recent years established mandatory benchmarking and/or energy auditing standards. In New York City, all buildings larger than 50,000 sf must benchmark energy bills (electric, gas, and oil), and perform ASHRAE Level II and retro-commissioning studies once every ten years. The results of the energy audit, which normally contain potentially expensive strategies to reduce energy use, are not required to be implemented. However, the results of retro-commissioning, usually no or low-cost operational upgrades of existing equipment, are required to be implemented. Seattle requires benchmarking, while San Francisco requires benchmarking plus energy audits every five years. A number of other municipalities, such as Washington, DC, Philadelphia, Chicago, and Boston, and states are reviewing the early results of these rules to determine the amount of energy reduced, the reduction in GHG emissions they have achieved, the cost savings and other secondary benefits (reduced traffic, reduced infrastructure needs, building and business growth, etc.), and how such rules may be implemented in their areas.

CCES has the experts to help you keep track of energy efficiency legislation – federal, state, and municipal – to help you stay ahead of the game, and to maximize your financial benefits from these rules or incentives. For example, for the New York City rules, CCES has the certified energy professionals the law requires to perform the various elements, and the experience to perform these technical assessments to ensure compliance and long-term cost savings. Contact us today at 914-584-6720 or at karell@CCESworld.com.