“What are the energy savings?” This is the most often asked but least understood question from building owners associated with high efficiency equipment installation. What’s worse, it often means different things to different people. For example, a building owner may only be interested in the estimated utility cost savings and the impact on cash flow. On the other hand, a utility energy efficiency program manager evaluating potential incentives or rebates may only be interested in the equipment’s energy consumption savings.
So, to answer the question properly, more information is needed:
Providing a simple answer to “what are the energy savings” without qualifying the basis for the estimate is meaningless. At a minimum, “energy savings” should always be qualified as either an “energy consumption savings” or “energy cost savings.”
In our experience at SRS conducting technical due diligence for thousands of energy efficiency projects seeking third party financing approval, best practice to estimate “energy savings” associated with the replacement of existing inefficient equipment with new high efficiency equipment includes the following key steps:
While there are several building energy modeling and performance simulation software tools, e.g., eQuest, EnergyPlus, TRACE, HAP, etc., available to assist with determining building energy consumption by end-use, they can typically require a considerable amount of existing building data inputs and the skills of experienced energy modeling professionals. This results in significant upfront “at risk” skilled labor cost. For this reason, it is rare that energy efficiency project developers and contractors will rely on building modeling at the preliminary project scoping and proposal stage prior to a financial commitment from the building owner.
At the project origination and proposal stage where the developer or contractor cannot justify allocating the at-risk labor cost associated with building energy modeling, the best practice next steps typically include:
While contractors typically have little problem in preparing a turnkey installation cost proposal, they often have difficulty in estimating “energy cost savings” and the cash flow impact that can flow from today’s high efficiency equipment. The challenge they face is twofold:
Fortunately, a new generation of software, data and predictive analytic solutions are emerging specifically designed to empower energy efficiency contractors and project developers to better meet these market challenges.
To learn more about how energy efficiency professionals are successfully meeting these challenges with SRS’s latest innovation: The Energy Performance Improvement Calculator (EPICTM), visit SRSworx.com.
Anthony J. Buonicore is Director of Engineering at Sustainable Real Estate Solutions. Mr. Buonicore is a licensed professional engineer with almost 50 years' experience in the commercial real estate energy and environmental industry. He may be contacted through our Contact page.