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  September 02, 2014  
     
  The Business Case for Energy Efficiency
by Dan Kelley, CFO, AAA Energy Service Co.
 
     
 
 
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You know that reducing energy costs are good for your bottom line. Do you know just how good?

According to ENERGY STAR, most organizations can achieve annual energy savings of 2-10 percent through better energy management. In fact, many ENERGY STAR partners have saved much more, including a school district that reduced its entire energy budget by 60 percent!

Investing in energy efficiency will keep paying dividends

According to a May, 2013 report by United Technologies and the Rhodium Group, investing in a 30% improvement in building energy efficiency would have an internal rate of return (IRR) of 28.6% over a 10 year period. [That’s] four times better than average corporate bond yields or average equity performance and more than double the returns even high-performing venture capital firms enjoy. That’s because the most attractive efficiency technology and design options cost the same or only slightly more than conventional alternatives, but deliver significant energy cost savings.¹

Energy costs are rising (American businesses spent $740 billion on energy in 2011, up from $380 billion in 2000²) and are not likely to drop. While new technologies and renewable energy sources are gaining in popularity, energy efficiency remains the easiest - and single most cost-effective - way to cut energy use. The most energy-efficient buildings in America use 35 percent less energy than typical buildings, all without trade-offs in performance or comfort.

Research also shows that more efficient buildings have higher occupancy rates and increased asset value compared to typical buildings. Tenants want real estate with lower utility bills, and more and more organizations are implementing leasing policies mandating environmentally friendly space. What's more, consumers and employees report a desire to affiliate with organizations they perceive to be environmentally responsible. When you add all these benefits together, it’s clear to see why investing in energy efficiency is a shrewd investment indeed. 

Job one: Optimizing the efficiency of your current equipment

Most property owners are amazed at the amount of energy savings that can be generated by simply getting better performance out of the equipment they already own. This includes making adjustments that factor in daily and seasonal use of conditioned spaces, making maintenance upgrades and other very affordable changes.

Scheduling an energy audit and thorough equipment review with a qualified professional may be the smartest decision you make all fiscal year. The technician should offer an itemized assessment of the equipment you are currently using, how to maximize the performance of each component. In addition, he or she should help you identify and prioritize equipment that may need to be upgraded or replaced in the future. A good technician will help you pinpoint the crossover points when the cost of running and maintaining older equipment will be greater than replacing it with a newer, more efficient model. 

Another low cost, big payback item for companies is control systems. Installing a sophisticated control system can save companies enormous amounts of money simply by detecting when heating, cooling and lighting are needed and powering down when they are not.

Sources: ¹ ² Unlocking American Efficiency: The economic and commercial power of investing in energy efficient buildings. Report by United Technologies and the Rhodium Group. May, 2013. 

http://naturalleader.com/wp-content/uploads/2013/10/RHG_UnlockingAmericanEfficiency_May2013-v4.pdf

 
     
     
     
 

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