All C&I properties face a quandary: energy costs constitute a significant recurring expense (~10% of total operating expenses), but are they enough to justify the investment in energy efficiency systems and remediation? Will the ROI be great enough and quick enough to make up the initial capital outlay? The American Council for an Energy-Efficient Economy (ACEEE) notes, “An important goal of efficiency policies and programs is to help minimize these upfront project costs so owners are encouraged to invest in energy efficiency improvements and significant retrofits.” Well, there are programs from both government and utilities that will help ameliorate both upfront and ongoing costs, making investing in energy efficiency a winning prospect.
A property or portfolio should have a thorough energy audit before tackling Energy Efficiency Measures (EEM). The American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) identifies four levels of audit:
- Benchmarking—comparing measured building energy use with similar buildings
- Walk through—studying installed equipment, operating data, and recorded energy consumption
- Detailed/General—collecting more detailed operational and billing analysis and evaluation of proposed EEMs
- Investment grade—high-confidence projection of ROI in comparison with other investments
Applying incentives, rebates, credits, and low-cost/no-cost loans can tip the balance at that last level towards making the investment.
Identifying the appropriate financing opportunities and navigating through the application process may seem an imposing obstacle. But making the effort can pay off. The first stop should be the Database of State Incentives for Renewables & Efficiency® (DSIRE) website. DSIRE can produce a filtered search that finds financial resources and policy guidance for residential and non-residential properties by state, technology, program type, and other criteria. In one state alone (Connecticut), a search for non-residential EEMs turned up 33 programs, ranging from accelerated depreciation to tax credits and deductions to grant programs and loan guarantees. In that state (as in many), ratepayers have a fee added to their bills (the Combined Public Benefits Charge) to fund conservation, efficiency, and renewables investment; taking advantage of some of the programs found on DSIRE provides an opportunity to leverage that money.
The Federal Department of Energy also maintains a database of tax credits, rebates and savings. Users can filter results by state, eligibility (residential, commercial, industrial, government, etc.) and savings category. Information and be found there on thousands of state and federal tax credits and rebates, utility financing programs, and public-private partnerships for small or large scale renewables projects, equipment replacement efforts, and even energy efficient facility design. (Of course, Energy.gov should be the first stop for anyone interested in news and information on all kinds of energy topics.)
Investing in energy efficiency definitely helps the bottom line, especially when up-front costs are reduced. A 2010-2013 study of energy retrofits in eight Southeastern U.S. states, for instance, showed a 387% ROI. More than 10,000 energy audits and 60,000 retrofit projects yielded direct job growth of some 240 jobs and $78 million in economic output. DOE seed money of $20 million made it all possible.
As the ACEEE states, “Financial incentives are an important instrument for spurring investment in energy efficient technologies and services. The incorporation of a financial incentive can make energy efficiency investments more alluring for private and public entities, particularly by lowering inhibitive upfront costs. Financial incentives also complement other efficiency policies such as appliance standards and energy codes, overcoming market barriers for cost-effective technologies.” Anyone daunted by the costs of implementing an energy program will find plenty of resources available to help pay for one. After all, it benefits everyone to save power, reduce emissions, and increase energy productivity.
To discuss energy efficiency measures in further detail with one of our energy experts, go to www.artisenergysolutions.com and request a building evaluation.