Pop quiz: Your firm has just acquired a commercial office building and you’ve been assigned to cut its energy costs by 20 percent. What’s the first thing you do?
Getting a grip on energy cost — let alone cutting it — can be a daunting task. Meeting a specific goal can be an even bigger hurdle. With rising energy prices, and some organizations making green commitments that involve energy use, it’s important to take a systematic approach to achieve real results. The usual scattershot approach, reducing HVAC services and telling people to shut off lights, for example, may be counterproductive, costing more in lost rent or productivity than is saved.
Assembling the right data should be the first task regardless how basic or ambitious the goal. Facility executives should follow a step-by-step process that gathers information for use both in-house and by energy professionals, and then analyze it. The plan should support an overall fact-based approach to finding savings.
Prepare to be surprised: Experience shows that merely gathering energy-related information often reveals possible savings, long before the first screw is turned or lamp changed. In all cases, it pays to assemble and keep current energy-related information. Facilities that maintain good building records, organized plan rooms and computerized energy data are often among those with the lowest energy costs.
Collecting monthly usage and billing data is just the beginning. To find opportunities, many other forms of information should also be gathered. In that process, additional facts will be uncovered that inform and assist cost-cutting efforts. The more of this data that is available in one location — instead of being scattered among diverse sources — the more likely savings will be achieved quickly.
Setting an arbitrary numerical goal (such as a 20 percent cut) without first having benchmarked the building against similar facilities may lead to early disappointment because it may not be economically or technically feasible. While seeking a competitive edge through aggressive energy-efficiency measures may be desirable, a more realistic near-term approach may be to reduce use to that of comparable buildings, while positioning the facility for future savings with energy-conscious specifications that govern renovations or upgrades.
Step one, then, is to review past energy use and cost, relative to the conditioned square footage of the building. Such benchmarking services are offered by many engineering and consulting firms, but, for standard building types such as schools and offices, using the online ENERGY STAR Portfolio Manager process may achieve acceptable results using in-house personnel. Focused on energy use rather than cost, Portfolio Manager guides the user through the types of energy and building information to be entered into its spreadsheets.
For useful benchmarking, at least two years of monthly energy billing — both dollar costs and unit use — should be collected. While not used by the Portfolio Manager, be sure to log peak monthly electric demand. It may come in handy later. Conditioned square footage, operating hours, number of occupants and other data are also required.
If not immediately available, such data may be obtained with queries to the local utility or other energy suppliers based on past invoices or delivery records. Square footage may be derived from building floorplans, leases, tax assessments or other sources. Occupancy may be taken from building security data, estimated based on head counts in typical spaces and extrapolated to the rest of the building, or drawn from queries to tenants on their populations. Operating hours should be available from the security department, facility operations personnel and tenants.
When all the information has been entered, the ENERGY STAR Portfolio Manager issues a percentile grade indicating the relative efficiency of a building. A grade of 50 means that 50 percent of all comparable buildings subject to similar weather and operating conditions use more energy, while 50 percent use less. A higher grade would indicate better-than-average energy utilization, while a lower grade may indicate that many opportunities exist for energy savings.
While the ENERGY STAR score is a good start, it provides only a global picture. It does not provide information on where to find savings, such as with more efficient lighting, or how to quantify opportunities. Even a low ENERGY STAR score is no assurance that cost-effective options exist. To try to respond quickly to management queries about expected savings, some facility executives may throw out random numbers instead of waiting for more careful analysis.
Be careful: Conjecture and educated guesses are not information. Because building systems differ widely, and the way they are operated may vary even more, be cautious when using numbers that aren’t based on measurements, especially from contractors eager to sell their products or services. Unless coming from a neutral third party, such projections may be little more than biased speculation. To find real savings, a higher level of analysis is needed.
Assuming an ENERGY STAR score of 50 or less, it is likely that some cost-effective options exist. Finding them involves step two: a professional examination of how the building uses energy, typically called an energy audit or feasibility study. It pays to research any prior energy cost-cutting efforts. In one case, a facility was reviewing a new energy audit when one of its engineers found that a similar study had been performed almost a decade earlier. While the energy pricing then was much lower, nearly all the same recommended measures appeared, but none had been further developed. In the meantime, another $100,000 had been spent on the second audit.
When performing such a study, an experienced energy engineer will need access to:
The energy auditor will also develop useful information that, while summarized in the audit, should be logged separately for use by others down the road. This includes:
During this process, a variety of low- and no-cost options may be uncovered, often related to equipment failures or operating deficiencies — following outdated controls schemes or schedules, for example — that have not yet compromised comfort but may be raising utility bills. In some cases, the audit finds billing errors that lead to instant savings, for example, by recouping sales taxes charged to a tax-exempt organization.
To assist this effort, an auditor may also request additional information, including:
Better audits also look at energy procurement options, such as alternative utility tariffs, eligibility for economic development rates or special deals, and competitive purchasing, if the local utilities have been deregulated. To do all that the auditor may request access to:
A report is then issued that details the type and condition of energy-related systems and describes what options may exist for improving efficiency and cutting operating cost. Budget pricing and annual savings are calculated, leading to a prioritized list, usually based on payback period or rate-of-return.
In step three, facility executives should look for information needed to finance and schedule the recommended changes. Key to this effort is the organization’s acceptable rate of return, or other means to set a go/no-go point. While many firms will freely spend money on interior furnishings that cannot demonstrate a specific payback, they typically set rather tight rules on mechanical/electrical upgrades that could pay for themselves over time.
Establishing that limit as a defined rate-of-return or simple payback period will segregate options that may save a lot but pay back slowly from those that save only moderately but pay off quickly. Such a defined limit helps bound expectations while providing a basis for loosening the limit if a higher level of savings is desired.
If internal funding is not available, determine if a performance contract either exists or was previously used at the facility. Under such a contract, an energy service company (ESCo) funds and installs energy upgrades and is paid back out of a portion of verified cost savings. If that option was never tried, find out if it would be acceptable.
Even if internal funding through the operations or capital budgets is available, it pays to know what energy-related grants or rebates may be available. Many states and utilities offer programs that will cover part of the costs of audits and upgrades. To find them, see www.dsireusa.org, a local utility account rep or the state energy office. Many state energy office Web sites also offer guidance on finding and qualifying energy services to perform the required tasks.
Collecting, tracking and analyzing energy use data becomes less of a chore when software designed for such tasks is used. Both PC-based and online options exist that allow the user to enter details from energy bills, meters and other sources. Most have built-in routines that compare past use during comparable periods and provide alarms if normalized use or demand — adjusting for weather and other variations, for example — exceeds a user-set limit. Such automatic operations may reveal billing, metering or contractual errors, allowing prompt correction before a problem gets out of control. To review such options, search online for “energy accounting software.”
Various utility cost management services also exist to handle this task. When overseeing many widely scattered sites, such services may prove to be more cost-effective than in-house personnel, especially if they include aggregated bill payment. Energy data may still be quickly accessed via secure Web sites offered by those services.
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Lindsay Audin is president of EnergyWiz, an energy consulting firm based in Croton, N.Y. He is a contributing editor for Building Operating Management.
