Many businesses looking for ways to reduce operating expenses are examining their energy usage. The typical approach is to have an audience with a lighting installer or an HVAC firm who will then conduct and “audit”. The lighting representative will walk through the facility counting fixtures and bulbs while the HVAC representative will visit the boiler room or the roof to record the make, mode and year of the heating and cooling equipment. Both will then proceed to provide a “proposal” for replacement of respective systems.
Regardless of size of facility – this approach will usually result in the replacement of lighting or HVAC – with price often the only determinant.
Evaluating long term capital expenditures relative to operating costs is historically not the integrative approach assumed by either lighting or HVAC representatives. The extent of “financial” analysis is limited to simple payback period and usually does not reflect cost of ownership, net present value, internal rate of return or true ROI.
Energy Surveys performed by experts in the field are the most effective way to evaluate energy usage and ways to cut energy costs, as well as discovering possible green tax incentives. Those who conduct energy surveys are trained to look at all of the factors that may be contributing to your energy costs – a true integrative approach – providing you with a thorough diagnosis of your energy usage situation.
Overview of Energy Audit Levels
Energy-conscious businesses have several options when it comes to energy surveys; from a walk-through identifying problem areas and usage issues to a sophisticated and detailed analysis that will enable significant capital investment decisions.
Another important factor with a vested interest survey/audit (performed by a product/manufacturer) representative is there is vested interest in the result of the audit. That survey/audit needs to result in a sale favorable to the manufacturer or product representative. A third-party – survey is truly interested ONLY in the results that will benefit the facility owner – without regard to product or manufacturer.
Phoenix-based Capital Review Group (CRG) offers a “Level I” energy survey, which is typically a facility walk-through focusing on low-cost or no-cost energy efficiency/conservation measures, operational improvements and behavioral practices.
CRG CEO, Marky Moore, explains, “Due to the inexpensive nature of many energy efficiency/conservation measures, many clients find a significant return on investment. Clients experience the ease of efficiency implementation and can enjoy both immediate and long-term savings opportunities.” This type of survey/audit can determine whether a more detailed analysis is required, and also allows clients to prioritize energy-efficiency/conservation measures.
For those businesses that require a more detailed analysis, a more in-depth survey/audit targeting specific energy efficiency measures or investment grade survey is recommended. The results of this type of survey indicate capital expenditures and should include Life Cycle Costing and full financial evaluation and analysis. Moore points out that a CRG Level II survey/audit includes energy use analysis with engineering calculations, as well as financial analysis of proposed energy efficiency/conservation measures, including a full incentive overview and summary. “CRG’s LEVEL II surveys/audits also provide a more in-depth analysis of existing behaviors, operations and maintenance (O&M) procedures and possible impact of savings/efficiency measures,” Moore says. She advises business owners to seek an energy survey/audit that provides a comprehensive survey report detailing cost saving measures with the requisite financial data to make significant capital investment decisions. Additionally, the report may also include implementation plans and milestones necessary to achieve the client’s predetermined ROI.
The first step in an effective energy survey/audit is the collection of data. The engineering team will request a minimum of two years of utility bills, building plans, and an inventory of mechanical equipment in the building. From this data, the team will analyze the total energy usage for the building and calculate the Energy Utilization Index (EUI) for the property, measured in BTU/square foot/year. This standardized data can then be compared to data from the Commercial Buildings Energy Consumption Survey (CBECS) which is includes data on U.S. commercial buildings, their energy-related building characteristics, energy consumption and expenditures. CBECS incorporates data from a national sample survey on buildings in which less than half of the floor space is used for residential, industrial or agricultural purposes. The team will also analyze the building plans and energy usage patterns.
The Site Visit
The site visit includes additional data collection, such as detailed square footage and window measurements used to determine the average R-value of the building. Insulation issues and drafts that may affect energy usage are revealed often using an infrared thermal imaging scan of the building envelope.
During the site visit, the following systems and equipment will be inspected and evaluated:
- HVAC – including ductwork
- Lighting – fixture types, locations and wattage documented, indoor light readings taken
- Water heaters
- Electric motors
- Other energy consuming equipment (refrigeration, copiers, computers, etc.)
Peak equipment loads will be evaluated, and other energy conservation opportunities noted. These might include eliminating space heaters, providing shade for western exposure, implementation of natural lighting options via skylights, adjusting usage of systems and equipment by occupants. After evaluating the current practices in the facility, changing behaviors and implementing new procedures maybe a first step in cutting energy costs.
The Survey/Audit Report
A comprehensive Energy Survey/Audit report includes complete documentation of energy usage, systems and equipment condition, and equipment usage practices that may affect energy costs. Moore gives more detail, saying, “Experienced energy modelers should re-create your building in digital form to identify opportunities to improve efficiencies and provide a solid basis for procuring incentive dollars.”
Moore cautions business owners to look for recommendations with a clear understanding of how each improvement or update will affect existing systems and conditions. She says, “Components of the Energy Survey/Audit must be considered holistically, taking into account energy usage and savings, business operations and safety.
Recommendations may include HVAC upgrades, addressing insulation and air sealing, lighting retrofits, recommendations for offsets or specific automatic control equipment/ programs for equipment, and changes in operations/usage by building occupants. It may also include the suggestion for building automation systems.”
A comprehensive Energy Surveys/Audit should provide measurable and manageable opportunities for operational savings through energy efficiency measures, a full and thorough cost/financial analysis as well as assuring the qualification for all federal and other jurisdictional incentives.
For more information please contact M.A.Moore at email@example.com or directly at 602.741.7776
CAPITAL REVIEW GROUP does not advise on any personal income tax requirements or issues. Use of any information from this document or web site referred to is for general information only and does not represent personal tax advice either express or implied. You are encouraged to seek professional tax advice for personal income tax questions and assistance.