If you’re like most businesses or building owners, saving money is a priority for 2016. Costs are going up in many areas of doing business, especially in human resources (salaries), benefits (health care), technology (computer and system upgrades), and deferred maintenance issues that now have to be addressed.
One area has great potential to reduce costs. Energy. 65% of the buildings in North America today are more than 20 years old. Chances are most of them have not been re-commissioned, retro-commissioned, had an energy audit or any kind of energy efficiency upgrade.
More and more, municipalities, cities, counties and states are enacting regulation that requires building energy use disclosure and benchmarking against peers. In this new era of building energy information being in the public domain, it pays to look good! Energy efficient buildings accomplish the following:
- Lower operating costs
- Higher net operating income
- More valuable
- More attractive to tenants – and to buyers
Meanwhile, energy inefficient buildings have these consequences:
- Less competitive in the marketplace
- In danger of obsolescence
“That’s great” you say. “But how do we pay for it?” We hear this question all the time. Fortunately, there are more options on the market than ever before. Here are just a few that we have seen work well:
- Government (Federal, State, County, Municipality) Check the Database of State Incentives for Renewable Energy (www.dsire.org) to see what government programs for upgrading for energy efficiency may be available in your location. Note: Every state but WV has at least a dozen options so it’s worth a look.
- PACE (Property Assessed Clean Energy) – special assessment on property, specifically to fund deep energy retrofits or new energy-efficient construction. Not available in all states yet. PACE financing doesn’t show up on a company’s balance sheet, and the assessment stays with the building regardless of owner. See www.pacenow.org or ncgconsulting.us.com. Click here to find out if your building qualifies for PACE financing.
- Energy Service Agreement (ESA): Energy efficiency outsourced to 3rd party where the 3rd party owns and maintains the equipment. Building owner pays for upgrades through savings in energy costs, usually through a performance contractor or ESCO.
- Power Purchase Agreement (PPA): PPA provider owns and maintains renewable energy generation equipment. Building owner purchases that energy from provider at an agreed rate. PPA can also mean provider owns and maintains new energy efficient equipment. Both options reduce the amount of energy required from, and payments to, local utility.
Other options include utility rebates, operating lease, or commercial loans from banks, credit unions or investors. And loans today are still very hard to come by.
It’s true that the gas we put in our cars costs half what it did a few years ago in most areas of the U.S. But the economic - and environmental - costs of continuing to run inefficient buildings is one we can’t afford. How will you pay for upgrades this year?
For more detailed information, attend an exclusive Lorman Education live webinar with Jim Newman, "Management of Existing Buildings: Best Practices in Sustainability and Development of Capital Plans," February 11, 1-2:30 p.m. EST. Use this link for a substantial discount.