Insights The New Energy ROI - Part III
Increase Your Energy Return on Investment
By Jeff Suderman, Senior Strategist, IBTS and Dustin Knutson, Director, Energy Services
In this final installment in the Energy ROI series, we will focus on practical implications of how to increase your local government energy effectiveness.
The previous two Energy ROI articles equipped us with some fundamental energy knowledge. In review, we learned that the cost of energy is projected to increase because it is getting progressively costlier to produce (hyperlink ROI I). As the price of production increases, end-user energy costs will as well unless we find ways to be more efficient. Therefore, we must change energy behaviors with the two-pronged approach of conservation and innovation.
Conservation decreases energy usage and innovation will help us increase energy production output without increasing input. This approach must be sustained with three important principles (hyperlink ROI II):
- Sustainability requires resiliency: The ability to recover, persist or thrive amidst disruption means planning efforts must consider more than ‘best-case’ scenarios.
- Effectiveness requires optionality: We must utilize a diversity of energy systems to address energy challenges. This energy mix protects us from an ‘all-my-eggs -in-one-basket’ scenario.
- Progress requires intelligence: Capitalizing on technological advances requires you to develop smart people who will use technology to develop innovative solutions.
While this energy knowledge is helpful, it requires application to be effective! To explain, let’s consider a non-energy example. Imagine that you decide to lose 10 pounds by Thanksgiving. In your quest to do this, you read up on health matters such as calorie consumption, diet options and exercise regimes. This is an important first step. However, no matter how much you understand about weight loss, shedding some pounds requires you to put your knowledge into action.
Action without adequate knowledge can be equally problematic. A friend recently determined that he was going to start lifting weights in order to lose bodyweight. However, weight lifting often increases overall body weight as new muscle is created. As he trained, his body increased in mass as he converted fat into muscle and he struggled to lose weight. Therefore, action and knowledge are required to help him achieve his goals.
This is why many people utilize personal trainers to help them achieve their fitness and weight loss goals. Trainers provide knowledge about what to do and then motivate individuals to put this knowledge into action. These same principles apply to energy fitness. We must understand what we can change and how to do it as we seek to improve energy conservation and innovation.
The following steps provide practical suggestions to help achieve energy fitness for your locality.
Utilize a Personal Trainer
Achieving health and fitness improvements often requires external expertise. Trained professionals can provide knowledge, coaching, ideas and education that individuals do not have.
This same principle applies to energy improvements. Similar to the use of a fitness trainer, external organizations provide professional, unbiased advice which can help you identify energy gaps and opportunities as well as develop plans to address them. Trainers are effective at helping create a bridge between goals and the steps required to achieve them.
Training must be customized as it requires an assessment of variables which are different for every local government. The age of your buildings, the size of your inventory and the weather norms for your region are a few of the considerations we evaluate as we develop an energy training plan for your agency or municipality.
Assess Your Fitness Level
Another step in achieving a greater level of personal fitness is establishing a baseline measure of your health. Doing this helps you become aware of your specific needs and where you have room to improve.
The same is true for energy use. Typically, assessment begins with a thorough review of energy usage. This involves reviewing historic usage levels and benchmarking with comparable buildings. IBTS implemented this process with a County in Illinois. The results identified six buildings which had energy usage significantly above the average for similar buildings in their climate and geographic area. Prior to the assessment, they knew that their overall energy fitness needed to improve but this assessment helped them target their strategy and limited resources.
A significant component of weight loss is monitoring your daily caloric intake. For example, when you realize that your daily Big Mac combo contains about half of your daily calorie maximum, you can begin to consider changes in your diet.
Our starting point with many local governments is implementing a form of energy calorie counting called metering. Since every building you own has an energy meter attached to it, you have the capacity to monitor your usage levels. For some regions, the first step in this process is to make their data accessible. For others, it is compiling their energy calories into one place where it can be evaluated. Still others need help benchmarking this data against similar building types in their area. This provides an apples-to-apples comparison which, in fitness terms, compares your energy use to a standardized body mass index.
Establish a Workout Plan (& Workout!)
The previous three steps develop the groundwork needed to create a prioritized workout plan. For many, personal fitness needs are significant and somewhat overwhelming as there are so many options. Therefore, the next step is to select a workout plan which will deliver the most benefit.
Often, local governments express a desire to become more energy efficient but state, “We just don’t know where to start.” This signals the need for an energy plan. Once you have equipped yourself with external expertise, have assessed your needs and are equipped to monitor your energy usage, a prioritized energy workout plan can be established.
These plans can be extremely diverse but many of them involve Energy Savings Performance Contracting (ESPC). This term encompasses the development of an energy improvement plan as well as the financing options to enable it. The important benefit of performance contracting is that it is designed to guarantee energy weight loss! These contracts ensure that your investment delivers the agreed upon savings which creates an incredibly beneficial situation for local governments!
IBTS is able to facilitate many aspects of ESPC and here are a few examples of the most common needs we see in our work:
- Review and assess risk of energy proposals: A neutral third-party review in the proposal selection process helps ensure that contract proposals will meet your needs.
- Negotiation: National energy experts can help guide you through the negotiation process as you engage in ESPC’s.
- Energy design and review: We can guide energy retrofit design processes or review proposed plans to ensure they will meet your goals. This includes a review of verification plans, energy conservation measures, specifications as well as delivering energy management training. This creates project accountability and shared expectations for the duration of the project.
- Education: We can conduct seminars with governments to help them understand financing and contract options which are available and how to use them. Additionally, we can facilitate workshops with contractors and local government leaders to help them understand how to effectively manage ESPC processes together and gain strategic alignment.
- Third-party review of completed projects: Trained experts review installations or retrofits and increase confidence that your improvements will meet or exceed code and operate effectively
Monitor Progress & Adjust
Every workout has progress and setbacks. Keeping our eyes focused on the goal, working toward needed long-term changes, and mitigating potential setbacks are of utmost importance! This requires monitoring and the flexibility to adjust as plans change.
Effective governments flex and capitalize on unique opportunities. For example, natural disasters such as hurricanes Sandy or Katrina are not desirable but they provided considerable opportunities. Often, regions desire to improve efficiency but lack the impetus or funds to do it. A disaster often requires a rebuild and this is an excellent time to achieve energy efficiency goals. IBTS has helped local governments estimate damages after disasters. In doing so, we can bring our expertise and knowledge of cutting-edge solutions to the table. This can potentially enable your region to make incredible jumps forward in energy efficiency.
Energy is important but saving energy is not the end goal in and of itself, just as losing weight is not the end goal in being healthy. Energy can simply be a means to achieve other priorities. For you, economical and effective energy supply may mean a safer, healthier community. It may enable cost-effective growth and provide opportunity for innovation and entrepreneurial activity. Furthermore, it may help reduce utility and operational spending which will eliminate waste and allow funds to be diverted to unfunded priorities. As you pursue innovative energy conservation strategies, you will be able to augment the overall health of your region, municipality, school or other facilities under your care. The five strategies outlined above are some of common ways this can be done but there are many more. At IBTS, we are ready to help you as you pursue an improved energy return on investment.
The Institute for Building Technology and Safety (IBTS) is an energy trainer for local, city, state and federal governments. We help identify energy needs and then turn these ideas into action. As a non-profit 501 (C) organization, IBTS specializes in providing solutions in the built environment for governments who lack the necessary staff, time or expertise. We work with governments to facilitate improvements that assist your energy conservation and innovation.