By Thomas Jackson, Vice President Corporate Strategy at Climatec.
Nationwide, select cities are adopting energy efficient practices to their great benefit. Energy expenditures and associated pollution fall with strong support from community citizen groups. So why aren’t more cities overhauling their infrastructure and investing in conservation?
There are four main reasons: energy efficiency often requires a longer-term perspective on investment, significant opportunities for savings are fragmented and require expertise, many efficiency upgrades are not sexy or visible, and savings/ROI can be hard to measure over time. The good news is that with a bit more information at our fingertips and the right approach, each of these hurdles can be easily overcome.
Reason #1: Energy Efficiency Typically Requires a Longer-Term Perspective on Investment.
There is an antiquated expectation within most organizations that any investment should achieve a simple payback in one to four years. The payback estimations often used for budgeting tend to be too simplistic and one dimensional, especially when buildings are undergoing major energy retrofits.
In a simple example, imagine that the light bulb in your desk lamp burns out. You can either replace it with an incandescent bulb for $1 ($0.25 a year over four years) or you could use an LED bulb for $10 ($2.50 a year over four years). Within a four-year time frame it doesn’t seem like much of a contest in terms of which investment makes the most sense from a first cost perspective. But the incandescent bulb will need to be replaced an estimated 42 times before the LED bulb fails.
What’s more, once you factor in the energy savings of the LED over the course of its lifespan, the investment in LED will save your organization an estimated $282 – per bulb. Even if you leave your lamp on 24 hours a day, it would take nearly six years to realize that savings – much longer than the usual one to four years used to assess investments in infrastructure.
Reason #2: Opportunities are Fragmented and Require Expertise
Changing light bulbs may seem simple, but the truth is, even basic conservation projects in cities are often ignored, because other projects take priority. We need to begin thinking about these opportunities in a more holistic way. Instead of just “grabbing the low hanging fruit” of short energy paybacks, while leaving other worthwhile projects languish, cities need to take a more comprehensive approach to investing in conservation projects. By combining short payback projects (lighting retrofits, projects with major utility rebates, variable frequency drives for fans/pumps, etc.) with longer payback projects (mechanical retrofits, automation/controls, building envelope, etc.) major positive contributions to the city General Fund can be achieved, often with positive impacts on employee comfort and productivity.
Since California passed Proposition 39 in 2012, it has embarked on a mission to drive energy conservation in public education buildings. There are more than 10,000 schools in the state, the average age of which is 30 years. These institutions spend more each year on energy than they do on school supplies (including books). The EPA estimates that energy retrofitting will allow the K-12 schools in CA to save $250 million+ year that can be redirected to teachers and textbooks. Energy that now goes “up the smokestack” and adds to carbon footprint can be reinvested in education. Similar opportunities exist in city facilities.
For too long our focus has been on budget cuts and belt tightening, not on investment. We need to start framing these opportunities as the large puzzle pieces they are, instead of viewing them as piecemeal one-off, feel-good efforts. This is much more than a chance to say you did something good for the environment – this is an opportunity for real and significant cost savings, with multiple knock-on benefits for your city.
Reasons #3: Low Mindshare That’s Not Always Obvious or Sexy.
The American Council for an Energy-Efficient Economy (ACEEE) released a City Energy Efficiency Scorecard in September of 2013. The report ranks 34 of the most populous US cities on their policies to advance energy efficiency. The highest-ranking cities were Boston, Portland, New York, and San Francisco.
As a part of the study, ACEEE offered suggestions as to how to make energy efficiency part of the everyday discussion in our cities. Local governments can go a long way toward encouraging efficiency measures by
- Starting at home to increase efficiency in their own facilities
- Creating goals for efficiency standards scorecards and making them public
- Building a webpage where progress is tracked and where the public can see challenges and successes over the longer term vs a starting baseline
Transparency in these efforts is the key to increased mindshare and community support. As well, cities need to look at energy efficiency as an on-going project, not something that’s finished once city hall has some solar PV’s installed on the roof. Energy consuming equipment wears out and new technologies are more affordable every day. The mindset needs to be one of continual improvement.
Reason #4: Efficiency Savings are Difficult to Measure
Because energy efficiency is a relatively new criterion by which cities are benchmarking and measuring their work, each municipality, and in many cases each type of building, has their own way of reporting their findings. This makes it difficult to track citywide results with any consistency. But this is slowly changing.
In May 2013, the City of Boston passed the Building Energy Reporting and Disclosure Ordinance. Once implemented, commercial buildings over 3,500 square feet and residential buildings with more than 35 units will be required to report their whole-building energy and water use, as well as greenhouse gas emissions through EPA’s Energy Star Portfolio Manager. Results are made public as part of the city’s goal to reduce greenhouse gasses by 25% by 2020, for an estimated cost savings of $2 billion (notice the longer time line).
Finally, consider that while most efficient commercial buildings spend $1.50 – $2.00/sq. ft. on energy, these same spaces support $200.00 – $250.00 or more on human capital per sq. ft. Even a slight positive impact on employee productivity will easily pay for most conservation projects, but employee comfort or productivity gains are rarely even considered in payback calculations.
Vision for the Future
Developments in energy efficient infrastructure have made the technology accessible to cities both large and small. Climatec Building Technology Group is proud to be at the forefront of these changes, helping cities assess the opportunities and devise comprehensive plans to take advantage of significant conservation opportunities. We look forward to a day when investments are viewed in broader terms with more return factors considered, when increased energy efficiency is recognized as a critical contributor to a balanced city budget, and when everyone is talking about their scores on the “City of the Future Energy Efficiency Scorecard.”