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Choosing Energy Efficiency Projects

Sep 11

Written by:
9/11/2012 10:28 AM  RssIcon

If you are a facility manager facing a tightening budget and an expectation of reducing expenses, how do you choose energy efficiency projects?

If you are willing to pass a portion of your future savings on to a consulting company for several years, you can hire an energy service company (ESCO) to analyze your facility and make improvements. This is a slick solution for some facility managers because the up-front cost is low and results are often guaranteed. If the solutions do not produce the energy savings expected, many ESCOs will pay for their own mistakes with lost revenue.

But what if you want to keep your future energy savings? How can you analyze your own facility to choose the best energy-saving projects?

Though written for energy auditors rather than for facility managers, the recent article How to Do a Basic Energy Audit by Eric Woodroof provides some concrete first steps. I have summarized and simplified them below:

  1. Collect one to three years of historical energy bills (electric, gas, water, sewer, etc.).
  2. Understand utility rate schedules (demand and kWh costs per unit).
  3. List primary energy consuming equipment and locations.
  4. Determine operation hours of each area (offices, classrooms, auditoriums, etc.).
  5. Understand the hurdle rate—the expected payback period for efficiency projects.

Once you have gathered the data described above for your facility, you will have gained an understanding of your utility rate schedules and expected payback period. Now you are ready to begin considering specific energy efficiency projects.

You can use a free tool like the Custom Building Optimization Analysis (C-BOA) tool to evaluate some types of projects. C-BOA was developed for ESCOs and energy auditors, but with the supporting tutorials and users’ group, there is no reason why savvy facility managers cannot use this tool to do their own analysis.

Unfortunately, C-BOA only covers nine of the most common types of energy efficiency improvements. Though there are other tools out there, they all have limitations. For some of the newest and most innovative energy-efficiency projects, you will need to use project-specific estimating methods.

For example, if you are considering implementing Events2HVAC event automation software to integrate room schedules with your lighting, HVAC, and security systems, C-BOA won’t help you estimate your potential savings. You will have to do your own analysis. We have provided some guidelines for this effort in this document: Potential Savings with Events2HVAC Event Automation Software. Other vendors may also provide guidance in estimating savings.

Once you have estimated project costs and potential savings for several projects, you need to compare them. One common mistake in comparing projects is looking only at the payback period— how long it takes a project to save enough money to pay for itself. Yes, the payback period can be an important issue to consider, but you also must consider the savings over the entire useful life of the project. How long will it continue to save you money—and how much will it save each year? This article, Can Simple Payback Justify Building Energy Improvements?, provides guidance and examples for analyzing more than just the payback period.

Finally, it is important to look at ALL savings for each project, rather than just the energy savings. Some projects might extend the useful life of equipment or reduce equipment maintenance expense. Other projects might reduce labor expense. And a few projects might actually reduce energy use, labor expense, and equipment maintenance costs all at the same time. So be careful to consider potential savings beyond your utility bill.


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