The four pillars of an electrical contractor’s energy service business are energy conservation, efficiency, production and reliability. I discussed energy conservation in last month’s column. To recap, this pillar addresses reducing energy use by modifying building occupant behavior and by installing controls, such as occupancy sensors. This column focuses on energy efficiency, which is the second step.
Simply stated, this pillar involves reducing energy use in a building by replacing existing building systems and equipment with more efficient ones that provide the same or better service to the owner and occupants with less energy input. Energy efficiency is the ratio of the useful work that a system or piece of equipment delivers to the amount of energy that needs to be supplied to get that useful work. The difference between energy input and work output is the amount of losses the system incurs as a result of converting input energy into useful work. These losses are typically in the form of heat that can also increase the building’s cooling load and decrease its overall efficiency. For example, an incandescent lamp has an efficiency of about 10 percent. In other words, only 10 percent of the electric energy supplied is converted to visible light or useful work; the remaining 90 percent is dissipated as waste heat.
The energy-efficiency market for the electrical contractor is in existing commercial, industrial and institutional buildings. In particular, the electrical contractor should focus on smaller commercial, manufacturing and institutional buildings that do not have in-house energy management expertise.
The owners and operators of these facilities often don’t understand the operational and economic benefits that can be realized by upgrading and integrating existing building systems, such as lighting and heating, ventilating and air conditioning (HVAC). Potential energy-efficiency customers include locally owned and operated retail stores, restaurants, banks, office buildings, private schools, medical offices and clinics, retirement and assisted living facilities, shopping centers, hotels and motels, apartment buildings and condominiums, small manufacturing plants, storage and warehouse facilities, parking lots and garages, and many others. In fact, many potential customers that fit this profile are probably already the electrical contractor’s regular service customers because they do not have in-house or contract maintenance personnel on-site that have power, communications and control systems expertise.
Marketing energy-efficiency retrofits
Energy-efficiency retrofits typically require the replacement of existing systems and equipment prior to the end of their useful life. It can be a difficult sell to customers who have systems and equipment that are currently working properly. It is not enough for the electrical contractor to talk about the advantages and increased efficiency of the retrofit. Instead, the EC must be able to make a business case for the proposed energy-efficiency retrofit in terms of dollars and cents.
For customers, an energy-efficiency retrofit project is an investment that will compete with planned core business expansions, such as the development and introduction of new products and services, improved product and service delivery, marketing and business development, and others. Making a business case for an energy-retrofit project means the electrical contractor must demonstrate that an investment in energy efficiency will have a lower risk and greater return on investment (ROI) than competing core business projects. Ideally, the business case should be made on a life-cycle cost basis that compares the initial investment in energy efficiency, reduced by government and utility rebates and incentives, with the current value of the tax, operation and maintenance savings that will be realized over the life of the upgrade.
Looking beyond ROI
ROI is only one benefit the customer can derive by undertaking an energy-efficiency retrofit project. Most energy retrofit projects not only improve the efficiency of the customer’s systems and reduce ongoing tax, operating and maintenance expenses, but also have a positive affect on the customer’s business in a variety of other ways.
For example, replacing an outdated lighting system that might not have been designed for the current work activity can improve employee productivity and morale by making it easier for them to perform their work. Similarly, a retail space with updated lighting designed to highlight the merchandise may make the space more pleasant and inviting to customers, increasing both the time spent in the store and sales. In addition, replacement of older systems and equipment with more energy-efficient systems and equipment can demonstrate the customer’s environmental awareness and concern to both employees and customers and enhance the company’s image in the community.
This article is the result of a research project, “Energy Roadmap: Electrical Contractor’s Guide for Expanding Into the Emerging Energy Market,” sponsored by ELECTRI International, Inc. (EI). Thanks to EI for its support.
GLAVINICH is director of Architectural Engineering & Construction Programs and an associate professor in the Department of Civil, Environmental and Architectural Engineering at the University of Kansas. He can be reached at 785.864.3435 and firstname.lastname@example.org.