In today’s challenging operating environment, a well designed energy conservation plan can help companies achieve and maintain operational efficiencies that help sustain the business through tough times and help it emerge ready to compete in the future.
Today’s Operating Reality
Businesses around the world continue to confront an environment of unprecedented challenges in energy and operations. Economists agree we are in the midst of a global recessionary market. Businesses are being squeezed more than ever as operating costs continue to rise, energy costs continue to fluctuate, and management teams continue to exert intense pressure to reduce cost in every area of their operations. Access to cash and credit continue to be restricted. And business leaders everywhere continue to have a limited appetite for capital investments that don’t have clear tangible benefits and financial returns.
Whether your business is public or private, large or small, any operating efficiencies that can contribute to the bottom line or further organizational goals are desired in this environment. Efforts that can deliver the greatest impact and largest savings for the organization should be given the highest priority.
Energy use in buildings is significant and growing. Because energy use can account for up to 40% of the total operating expenses of a building, energy conservation measures for buildings offer a good place to start when seeking ways to reduce operating cost and make a significant impact on the bottom line quickly. The building sector is the single greatest user of energy, consuming more than 100 quadrillion BTUs yearly; and energy consumed by heating, ventilation and air-conditioning as a percentage of the total building sector is up to 50% in residential and commercial and up to 20% in industrial buildings. It’s no wonder that buildings are the single greatest contributor to global warming.
Green house gases (GHGs) are created by carbon dioxide, which is a result of burning fossil fuels for electricity generation. GHGs trap heat in the earth’s atmosphere, which increases the temperature-causing climate change. The resulting consequences include more severe weather, sea-level changes, an imbalanced ecosystem, poor air quality and diminished quality of life.
Buildings consume one-third of energy worldwide. And given our ever increasing demand for energy, consumption will only continue to grow as much as 60% by 2030. Population growth, construction in urban areas, and the progress of developing nations will contribute to that growth. In the U.S. alone, 15 million new buildings will be built by 2015; and developing nations are building at an increasing rate.
Fortunately, interest in “building green” is keen, and the opportunity to make a positive impact on global warming through energy conservation measures is great. Retrofitting a building with proven energy efficiency measures can generate cost savings in the range of 20% to 50%.
Developing and implementing an Energy Conservation Plan delivers a number of benefits:
- Reduced utility and operating costs
- Reduced carbon footprint and green house gases
- Increased market value for buildings
- Increased productivity of occupants (as evidenced in multiple studies) through improved student performance, improved patient outcomes in hospitals with good indoor air quality, reduced absenteeism and improved safety and productivity in the workplace.
Using a Successful Blueprint for Your Energy Conservation Plan
Financial objectives help determine what type of Energy Conservation Plan makes the most sense for your building and situation.
- Short-term, quick-return energy conservation plans are focused on driving immediate cost savings. These plans are typically reactionary and market-driven and generally will not fix major building problems. By comparison with longer-term plans, these conservation measures require the lowest capital investment, but they may not be able to generate the best results. From a timing perspective, these conservation measures are focused on delivering payback in three years or less.
- Near-term, intermediate energy conservation plans are focused on driving high-impact cost savings and are typically reactionary to the market, but with longer-term results desired. These conservation measures will typically fix some of your building’s problems and generally align with strategic goals of the organization. Near-term, intermediate energy conservation plans require some capital investment, and are generally able to generate good results that can be measured and maintained. They pay back their investment in three to eight years.
- Long-term energy conservation plans focus on driving total cost of ownership (life cycle cost savings). These plans take a visionary approach focused on driving longer-term results. They are designed to fix your building’s problems proactively and align with strategic goals and the organization’s mission. Long-term energy conservation plans require a higher capital investment and they are able to generate excellent results that can be measured and maintained. Long-term conservation measures pay back on their investment in nine or more years.
No matter which type of energy conservation plan you choose, the knowledge and understanding you gain from benchmarking your energy costs compared to other similar buildings will help you make the right decisions for your building. In addition, knowing what strategies will most effectively save energy and which measures will deliver the best results is critical knowledge to help building/facility owners/managers make informed decisions.
You will need a sound process for sorting out and optimizing your investments in order to achieve the greatest return on investment. Finally, you want to be sure to put a plan together that includes a control plan that ensures and measures success.
Energy conservation plans require a systematic, disciplined method to identify, plan and execute conservation measures focused on meeting your specific energy goals, but the returns are well worth the investment in time and resources. Planning an energy efficiency project begins with a sound understanding of why the project was initiated, what the goals and objectives are, and what your organization’s appetite for risk is at this time and into the future.
What type of plan and goals make the most sense for your organization? Every building, project and customer is different, and that makes each project unique. When building the business case for investment in increasing the energy efficiency of your building, understanding the factors that are driving the change is important.
The driving factors for a private business might include staying competitive by attracting tenants, customers or talent; reducing maintenance and operating costs; optimizing capital budget; improving the indoor environment to boost productivity; and adding to asset value. Factors for a public concern might include the desire to improve infrastructure, reduce maintenance and operating costs, optimize capital budget, and improve indoor environment, as well as to be socially responsible.
Conducting an in-depth audit not only benchmarks your own facilities’ performance, it also identifies potential infrastructure improvements and related savings, as well as optimum solutions. An audit uses historical utility data to establish the base line conditions from which proposed energy conservation measures can be evaluated to project potential savings.
A typical approach to an energy audit might involve collecting three years of utility expenses to create a snapshot of annual utility use that reflects seasonal changes and annual variance. A thorough audit would also include conducting an operations and maintenance analysis, and reviewing at least 12 months of repair and replacement work orders for the building systems.
The audit should also include:
- An in-depth analysis of current operations and maintenance practices
- Feedback on building conditions from occupants, employees, tenants and others
- An on-site survey of existing buildings to identify additional energy and operational efficiency challenges and potential solutions.
A comprehensive audit will create a complete picture of energy use and current capability at the site. Once the data from the audit is gathered, use of industry-recognized energy modeling software to evaluate the benefits of potential improvements is an excellent approach. The software is a proven tool that can be used to identify the best potential systems and solutions to meet the organization’s needs.
The U.S. Department of Energy maintains a directory of Building Energy Software Tools on its website (http://apps1.eere.energy.gov/buildings/tools_directory/). Energy modeling also uses benchmark information from similar buildings in the same environment, industry and peer group, so the process will produce a picture of energy conservation and savings potential that is well grounded in real experience.
Because modeling allows users to enter the utility rate structure information into the simulation during the energy conservation measure selection process, the team can evaluate energy consumption costs and see how they interact together as a whole to create energy, operations and maintenance savings.
When financially modeling an energy project, a multitude of costs need to be considered. The most obvious and visible costs are price and time. But when taking the total-cost-of-ownership approach, multiple hidden costs come to the forefront and must be considered if you want to save energy-operating dollars throughout the life of the asset and have greater financial transparency.
These hidden costs include equipment shutdown costs, security costs, start-up delays, maintenance costs, energy costs, legal costs, performance problems, fire protection costs, engineering charges and performance costs. All of these must be considered if you are to calculate the true cost of your building’s operations in its current state, as well as the true savings of your energy conservation plan once it’s realized.
To help focus your efforts, be sure to only focus on the costs that you can control. The energy audit and modeling process will provide the basis and direction for the project and give you the information needed to make sound decisions to meet the goals and objectives you have established. Using an experienced energy services company is an option to help you look for ways to save energy, decide what measures deliver the best results, and assist you with the development of your energy conservation blueprint.
This same information and knowledge will also help you sort out and optimize your investments for greatest return on investment for the project. No matter what energy conservation plan you put in place, you will want to be able to measure the efficacy of the various energy conservation measures installed and ensure that the overall project performs as promised. So, part of your plan must include control mechanisms that ensure and measure success.
When establishing your energy goals, prioritize efforts based on the energy conservation plan and energy goals. Consider how many resources you have to assign to the project. Will you use outside help to achieve your goals? What level of funding is available? When must the project be completed?
Create realistic goals. It’s a good idea to target high consumption and cost areas first. Don’t take on too much if you have limited resources. Consider completing projects in phases. Know your organization’s limitations (funding, commitment, skills, etc.) Understand that most high impact conservation measures may not have a short payback.
Buildings that are designed and outfitted to be “high performance” and can calibrate their functioning to occupancy and environmental fluctuations tie to the mission, values and results of a business by bringing value to the people the building serves (environment, comfort, safety), to customers and the community (competence and environmental responsibility), and to the bottom line in the form of cost savings, avoidance and return on investment.
Developing and Implementing Your Plan Using Proven Energy Conservation Strategies
There are a wide variety of strategies that will deliver results. Again, the best way to consider them may be within the type of energy conservation plan that is chosen:
- Short-Term Plan (0- to 3-year payback). Strategies that deliver optimum results: retrofitting lighting; updating existing building automation systems; retrofit/re-commissioning equipment; making behavioral changes in occupants such as turning out lights or programming systems; and exploring utility procurement options.
- Near-Term Plan (3- to 8-year payback). Strategies that deliver optimum results: installing new building automation systems; improving heating, ventilation and air-conditioning systems; implementing water conservation; using fans and motors (variable frequency devices, high efficiency change-outs; and applying load-shifting technologies such as ice storage.
- Long-Term Plan (more than eight years). Strategies that deliver optimum results: replacing high efficiency equipment such as major systems, chillers, and boilers; building envelope improvements; applying renewable technologies; applying on-site/distributive power generation; and implementing comprehensive maintenance and repair strategies.
Developing and putting your plan in place will require a project team with the right skill set to get the job done and be responsible to deliver the results expected. The entire team needs to stay focused on the objectives. Don’t waste time and resources on areas outside of the plan. In addition, it’s very important to communicate goals within your organization to ensure support for the plan.
Maintaining and Measuring Your Success
Once you have put an energy conservation plan together for your building, have funded it and have installed the recommended energy conservation measures, how do you ensure that your building delivers the results and continues to deliver ongoing performance?
You need to create and implement a Measurement and Verification plan. You can develop a plan yourself, hire an engineering professional, or engage an energy services company. Measurement and verification doesn’t have to cost a lot, and many measurement and verification approaches are available.
Standard measurement and verification protocols exist through the International Performance Measurement and Verification Protocol published by the U.S. Department of Energy.
It’s important to measure and verify the efficacy of your energy conservation plan and measures because you can’t tell how well you are doing if you don’t measure results. But it’s also important to determine what level of verification of performance your organization needs and not spend resources gathering data that will never see the light of day.
In addition to performance contracts and measurement and verification, owners can ensure ongoing performance of energy projects through a proactive maintenance strategy that ensures desired outcomes throughout the life of the equipment. An agreement that is cost-beneficial and provides value-driven service will help you avoid capital, energy and repair costs. For example, a proactive maintenance strategy may gain 10 times the return on investment, or reduce maintenance costs by 25% to 30%, or eliminate breakdowns by 70% to 75%. Ensuring such levels of performance can be well worth the investment.FEJ
Case Histories: Energy Efficiency Strategies Prove Wise and Profitable Investment for Hospital, College
Passavant Area Hospital (Jacksonville, IL)
After completing a formal investment-grade audit of its facilities, which included a study of its environment of care, this Jacksonville, IL hospital decided to upgrade its building systems to address aging infrastructure and high energy and operating costs.
The Hospital improvements, which are estimated to save the not-for profit community hospital more than
$313,000 annually, include:
- Installing more energy-efficient lighting and electrical systems;
- Optimizing the central chilled water and steam boiler systems for improved operation, efficiency and
water conservation; - Upgrading the heating, ventilation and air conditioning (HVAC) systems and controls;
- Increasing the energy efficiency, effectiveness and throughput of laundry operations.
The improvements, which will be completed in February 2010, will positively impact the environment of care for patients and staff while decreasing power consumption by 19%, according to the formal audit. The cost savings will pay for the project in 6.5 years. The project is entirely funded through a performance contract, which is a model that allows building owners to use future energy and operational savings to finance infrastructure improvement projects. It is an option for funding energy-saving improvements in buildings that provides measurable business results.
As part of its improvement process, the study demonstrated that the improvements will conserve water and energy, save money and improve comfort for patients and staff while decreasing energy consumption.
The study identified three physical environment opportunities for improvement, including temperature control, noise level and aging plant systems and equipment. The study also demonstrated that these energy upgrades will improve the environment of care through better patient satisfaction, patient outcomes, staff satisfaction and performance, physician satisfaction and retention, and financial performance.
Oklahoma City Community College.
Education leaders at OCCC recently completed infrastructure upgrades that have significantly decreased energy use and improved the school’s learning environment, while making the school more environmentally responsible.
In 1995, the school undertook an extensive expansion to upgrade aging infrastructure and to increase total square footage by 30%. The school also needed to address rapidly growing enrollment, which today is nearly 22,000 students. Between Sept. 2003 and Sept. 2008 alone, the new high efficiency infrastructure systems chosen by the administrators have decreased the school’s energy use per square foot by nearly 35%.
“We’ve been very pleased with the energy savings on the infrastructure improvements,” said Dr.
Paul Sechrist, president, OCCC. “Additionally, as one of the nation’s largest community colleges, we believe it’s important that, in addition to teaching young people about environmental responsibility in our classrooms, we demonstrate it with our actions.”
While upgrades were completed throughout the campus, infrastructure improvements to the school’s chilled water plant, which serves the entire campus, are among the most significant. The plant’s efficiency and effectiveness were maximized by upgrading the pumping system and by adding a new chilled water system to provide constant volume. The upgrades also expanded capacity to enable the plant to meet the needs of the expanded campus. In the school’s library, improvements to an existing thermal ice storage system shifted ice production to low-cost evening hours, saving energy and money.
In three buildings – the Health Professions Center for nursing students, the SEM Science, Engineering and Math) Center, and the Visual and Performing Arts Center improvements included new air handlers and valves and controls for increased energy and operational efficiency.
The OCCC facilities management team has accomplished these energy savings projects through a series of five-year plans that they update and prioritize each year. Each year as new projects are identified, they are added to the plan, along with estimated costs, and prospective funding mechanisms. To date, most all of the OCCC energy saving projects have been funded internally by the “realized” utilities cost reductions. The success of these projects has much to do with this focused vision, as well as a close relationship with Trane Commercial Systems, the OCCC team of design engineers, and a number of committed mechanical and electrical contractors.
