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An Easy Guide to Efficiency ROI

By Michael DeCaluwe

When I’m working with a client who’s new to energy efficiency, the first question they ask is:

What’s the ROI of this project?

To help clients decide which project to pursue first, we’ve created an easy guide that outlines the payback period for each type of energy efficiency project. Projects can be placed in the following groups based on their anticipated ROI:

1-2 Years

3-5 Years

6+ Years

Read on to discover which projects fall into each category.

1-2 Years

Compressed Air

Repairing leaks in your air system is the quickest way to increase the efficiency of your air compressor. Since air compressors typically have a 10-15% efficiency rating, locating and fixing leaks in your air lines typically has a payback of less than one year.  Some states and utilities have programs that will completely cover the costs of testing to locate leaks.

Steam Traps

For those with a steam-based system, many utilities have excellent rebate programs that will either pay for a steam trap study on your site or will even pay outright for the replacement of steam traps.  If capital is required on these projects, a typical payback will be under 1 year.

Water

For larger users of water (and depending on the size of pipe for your water feed), water-flow devices installed on the customer side of the water meter have a typical payback period of 1-2 years.  These projects have an excellent long-term payback potential as the cost of water continues to rise for most water utilities.

Variable Frequency Drives (VFDs)

Some motors are constantly running at full speed, which can lead to unnecessary energy costs. VFDs vary the power input and frequency of the motor, which results in energy savings. Depending on the size, horsepower, and hours of usage, installing VFDs on your pumps and motors will have a payback of 2 years or under for most projects.

3-5 Years

Lighting

One of the most popular efficiency upgrades is lighting. Typical payback for an LED lighting project is 2-4 years. The payback on your lighting project depends on:

  • the efficiency of your current lighting,
  • the number of hours that your facility has its lights on,
  • whether you do a bulb-only retrofit or a full ballast replacement, and
  • utility rebates.

Burners

Check the amount of excess air in your boiler system. If your system contains more than 15% excess air, you could benefit from installing a low excess air burner. Upgrading the burners or the controls on a boiler can have an expected payback period of about 3 years, depending on the age and efficiency of your current burner or controls.

Building Automation Systems (BAS)

Installing a building automation system (BAS) helps you use your building’s equipment fore efficiently. If you do not currently have a BAS system, you can anticipate a payback period of 3-4 years.  If you have an older BAS system or it only controls some of your equipment, payback is closer to 5 years.

6+ Years

Roof Top Units (RTUs)

Roof top units (RTUs) have an average life span of 20-25 years.  Utilities will often pay for engineering studies on your current unit to determine its efficiency.  If you decide to replace an older, functioning unit, you can expect rebates to cover 10-15% of the project costs.  If you wait until your unit fails, rebates are not available.  The efficiency of the newer units typically yields a 9-year payback period, including rebates.

Boiler Replacement

Boilers typically have a life expectancy of 25 years before they need to be replaced. Some utilities offer 10-15% rebates for replacing your old boiler. However, there are no utility incentives if your boiler is not functional. Not sure if your facility needs a new one? Check to see if your boiler is exhibiting any of these 7 signs. With utility rebates, you’ll likely experience a 10-year payback for replacing your boiler.

Increase your efficiency to decrease your energy costs.

Completing an energy efficiency project is a great way to reduce your overall energy spend. Although fast paybacks are a focus for many facility managers, don’t let a multi-year payback keep you from doing necessary upgrades. And paying for a project doesn’t have to be a large up-front cost – utilities and suppliers have rebates and on-bill financing options to help you cover the cost over time.

Ready to talk strategy? Call me to discuss your efficiency needs and to develop your project blueprint.

 

About the Author

Michael has served as the VP of Commercial & Industrial Sales at Nania Energy AdvisorsStrategic Energy Advisors Michael DeCaluwe since 2007. He believes that listening to and understanding clients’ energy needs is vital to becoming a thought leader in the industry and forming a mutually beneficial business relationship. In his spare time, Michael enjoys being a dad, staying active and playing basketball.

Michael can be reached via email at mdecaluwe@naniaenergy.com or via phone at      630-225-4552.

Energy Audits and the Road to Energy Efficiency

By Calvin Cornish

Uncovering Energy Efficiency Opportunities

Energy efficiency is a hot topic in energy discussions, especially with the current incentives and rebates offered by electric and natural gas utilities. Because energy is a top 3 spend for many facilities and about 30% of energy in commercial buildings goes to waste, it’s not surprising that facility and property managers want to take on an efficiency project to reduce their costs. However, with everyone talking about efficiency and the amount of information available, it can be difficult to know where to start if you’re considering implementing an efficiency project.

The first step in tackling an energy efficiency project is to perform an energy audit. An energy audit identifies how energy is being used in a facility and identifies cost reduction opportunities. Here, we spell out what’s included in each audit level, as well as the utility incentives and rebates available to help cover the cost of the audit.

Energy Audit Levels

All audit levels require a Preliminary Energy Use Analysis. During this analysis, a site visit is necessary to assess the building’s equipment and gather utility bill data. It also includes benchmarking to see how the building’s usage compares to those similar to it in the region.

There are three different levels of audits, each more detailed and involved than the next. The appropriate audit level for your building depends on your building’s needs.

Level 1: Walk-Through Analysis

The most basic audit level available to customers is the Walk-Through Analysis. During this 2-hour process, the auditor identifies major areas of energy efficiency improvements and outlines low- to no-cost measures that you can take immediately. They’ll also highlight potential improvements to capital equipment as well as quick cost and payback period estimates.

A Level 1 audit can show savings in both electricity and natural gas and is typically free for customers. This level of analysis is best for facility and property managers who want to know which efficiency projects are available for their property and want to identify which energy efficiency project should be their first priority.

Level 2: Energy Survey & Analysis

This level of audit includes the information from the Walk-Through Analysis but provides a more detailed examination of energy efficiency improvements. Because of this, a Level 2 audit can take 2-3 days to complete. Due to the amount of time and level of detail required, you should expect to pay between $5,000 and $15,000 depending on the size of the facility and whether you have the audit done for all systems. To reduce costs, larger buildings may consider doing this level of audit for just one system, such as HVAC or domestic water. At the conclusion of the Energy Survey, you will receive an energy usage breakdown as well as savings and cost analyses of all the recommended efficiency measures. The audit also uncovers capital-intensive projects that require a Level 3 audit.

Level 2 audits provide enough detail to implement an energy efficiency project. Customers who are financially prepared to execute their top-priority efficiency project and are looking for a detailed cost breakdown of the project would benefit most from this analysis.

Level 3: Analysis of Capital Intensive Projects

A technical analysis audit is the most detailed audit of the three. It expands on and includes the information gathered in a Level 2 audit. It requires more detailed field data and engineering analyses and uses actual utility data as a baseline for estimating operating costs of a new project. It also examines the situations that impact a building’s load profile and monitors system operating characteristics.

A Level 3 audit can take weeks to complete due to the amount of data required and is best for customers looking to do a large-scale, capital intensive project.

Incentives & Rebates

One of the aspects of an energy efficiency project that causes managers to hesitate is the cost of the project. Detailed energy audits can cost between $0.12 and $0.50 per square foot, depending on the size of your building. Factor in equipment and labor costs, and the entire audit can come with a rather hefty price tag. However, electric and natural gas utilities in Illinois are currently offering incentives and rebates that can help you fund your energy efficiency project.

ComEd’s incentives can help you pay for audit costs as well as other electricity efficiency projects.

  • Its retro-commissioning programs offers performance-based incentives up to $10,000 to uncover some of your basic needs. These incentives can increase to over $25,000 if you are willing to commit to implementing some of the solutions.
  • ComEd’s “Made in IL” incentive bonus gives customers a 10% incentive bonus for installing products that were manufactured or assembled in Illinois.
  • It also offers incentives for upgrading light fixtures and water cooled chillers, as well as for the installation of sensors and variable speed drives.

Nicor Gas and Peoples Gas offer rebates on steam traps, pipes, valve and fitting insulation, boiler reset controls, and demand-controlled ventilation. These rebates can range between $25 and $7,500. Customer rebates are available.

Start developing your energy efficiency strategy.

Energy efficiency projects are an excellent way to reduce your long-term electric, natural gas, and water costs. Regardless of your efficiency experience, sitting down with your Energy Advisor is the best way to start planning your energy efficiency strategy. We’ll help you decide on the right type of analysis for your facility’s needs, make the most of available utility-backed funding opportunities, and appropriately budget for future improvements as part of an overall plan to control usage and costs.


About The Author

Strategic Energy Advisors Calvin Cornish

Calvin has served as a Senior Energy Strategy Advisor at Nania Energy Advisors since 2010. He specializes in preparing property management boards to make informed decisions on energy efficiency through proper industry education. His clients include apartment complexes, condominium associations and senior living facilities. In his free time, Calvin enjoys music and coaching youth sports.

Calvin can be reached via email at ccornish@naniaenergy.com or phone at 630-225-4554.

Your Energy Efficiency Project: 100% Funded with On-Bill Financing

By Mike Eckenroth

February 12, 2018 – What comes to mind when I say “energy efficiency”?

There was a time where energy efficiency seemed out of reach for many organizations. Upgrades were too expensive. Technology was too new or too complicated to implement. Results and success stories seemed too good to be true.

But in recent years, that has all changed. Energy efficiency is now attainable and profitable for manufacturers, retailers and property managers like you.

You can modernize your facilities to be more energy efficient. What’s more, you can do it in a way that will not interfere with regular business operations and (perhaps most importantly) will not break the bank.

Energy efficiency initiatives don’t have to seem pie-in-the-sky. With on-bill financing options through your energy supplier, you can spread out the capital risk of an upgrade over time so the project essentially pays for itself. Your energy supplier fronts the capital for your efficiency project, putting less strain on your organization’s finances. The costs of the project are then paid back gradually per a signed energy supply agreement.

On-bill financing options allow you to start your efficiency upgrade projects immediately. The cost savings you receive through reduced energy consumption ultimately offsets the cost of the efficiency project itself. The result is an upgraded facility that’s less costly to manage and leaves a smaller carbon footprint.

On-Bill Financing for Energy Efficiency: How It Works

Your energy supplier fronts the cost for your project. You pay that cost back over the course of your energy supply agreement.

During your initial on-bill financing agreement, a fixed fee is added to your energy invoice. Combined with the reduction in usage provided by the efficiency project, you receive a “net zero” impact to monthly energy costs.

After your on-bill financing agreement has ended, your reduction in usage may lead to an overall long-term reduction in costs. You now have new equipment, happier stakeholders and lower forward energy costs.

Common Energy Efficiency Upgrade Projects

Lighting Improvements

LED lighting and interior/exterior retrofits are some of the most popular efficiency projects we help clients manage.

For one of our clients, Southern Insulation, our team facilitated an LED lighting retrofit of their office and warehouse. This provided better lighting in areas where the brightness of the bulbs and the constant outages was becoming an issue for productivity. From the initial audit through the upgrade, we managed 100% of the project through a chosen supply partner.

During the payback period, Southern Insulation’s costs were still less than what they were paying prior to the project.

Electric Motors & Drives

Another popular kind of project involves reducing consumption on running motors and drives. Our team has advised on high-efficiency motor replacements, as well as the utilization of variable frequency drives.

These types of upgrades are especially popular with manufacturing clients who are looking to improve their overall load profile and meet environmental goals.

Learn More: Ask your Energy Advisor About On-Bill Financing

Water & Sewer Conservation

Water and sewer conservation upgrades also contribute to reducing an organization’s impact on the environment. Property management and senior living communities have come to our team for managing projects like low-flow faucet and showerhead installations.

In 2014, for instance, our team facilitated the “Smart Valve” installation at Newport Condominium in Chicago. We introduced the concept, negotiated the proposal, and reported back on ROI over the 3-year period to follow.

For these properties and others we’ve assisted, the cost savings has been a welcoming sight. They’ve created several positive outcomes – from upgraded amenities (pools, washer/dryer, etc.) to overall higher tenant satisfaction scores.

Building Automation Systems (BAS)/Energy Management Control Systems

Building Automation Systems (BAS) optimize building temperature, humidity, pressure and energy use. Once in place, BAS or control systems give facilities the ability to cut back on their load at will with the flip of a switch.

By reducing usage, these clients reduce the stress they put on the grid and subsequently help systems run more efficiently.

HVAC & BAS projects are often coupled with demand response programs, where organizations like schools have an opportunity to generate additional revenue just by participating. BAS & control systems give these facilities a leg up in their efforts to curtail usage.

Even as energy costs decrease, demand costs can increase. Efficiency projects are a great way to mitigate or offset those costs. By modernizing facilities with on-bill financed efficiency upgrades, your company can make your energy strategy positive and profitable.

Have questions about one of these or some other energy efficiency upgrade options? Give me a call at 443-833-8224 and we can discuss bringing your project to fruition with on-bill financing.


About The Author

Mike is an energy professional based out of Baltimore, Maryland with a strong engineering and purchasing background. His specialties include energy efficiency and strategic commodity procurement. Growing up in the shadow of Three Mile Island nuclear power plant, Mike has an intimate stake in a grid with safe, reliable, and cost-effective energy generation – which he leverages into an energy strategy that provides security for his clients.

Michael can be reached via email at meckenroth@naniaenergy.com or via phone at 443-833-8224.