Energy services is a growth market for electrical contractors that builds on their service contracting, design/build and project management capabilities. Many ECs are hesitant to make the necessary investment to start an energy services business or expand their energy services’ offerings because they mistakenly believe that this is a limited market that is quick to mature and has finite repeat business potential. Energy services is limited only if the EC is not continuously searching for new products and services that it can offer to reduce ongoing electric energy use and recurring energy expenses. To be successful in the energy services market, the EC needs to understand its customer’s business and the role that electric energy plays in the customer’s success.
Energy service categories
The EC’s energy services can be divided into the following four energy-centric categories: conservation, efficiency, production, and reliability. These categories, and the hierarchy of energy services that they represent, can be helpful in designing energy products and services as well as marketing efforts that meet the customer’s needs. Organizing energy services around these categories helps the customer understand where the risk is the lowest and where return is the highest. The customer’s return on investment (ROI) is almost guaranteed when compared to other more risky and less certain business ventures, such as new product development and marketing.
Energy conservation involves reducing electric energy waste by making employees aware of the effect they can have on the facility’s energy use. Typical conservation efforts direct occupants to turn the lights off when they leave a space or shut down computers and other electronic devices when not in use. For the EC, energy conservation can include installing and programming of occupancy, daylight and other sensors. However, for the EC, this is just the beginning. Customers continually reconfigure their spaces and change activities, resulting in the need to modify the layout or function of these sensors. Similarly, new sensor technologies are becoming available, as is the ability to control other systems such as the air flow required through heating, ventilating and air conditioning variable-air-volume boxes under various occupancy loads.
Energy efficiency is the next step up in the energy services hierarchy, and it generally calls for the customer to invest to reap its benefits. Energy efficiency typically requires that the customer replace a system component, a portion of the system, or the entire thing to achieve the desired improved performance and ROI. However, like energy conservation, if the analysis is performed properly, the predicted benefits, including ROI, are almost guaranteed to the customer. For example, consider an energy-efficiency project that includes the replacement of existing motors in a facility with NEMA Premium efficiency motors. As part of the lifecycle analysis (LCA) performed to determine if the motor replacement should be undertaken by the customer, the annual motor use, predicted energy expense over the life of the motor, and other operation and maintenance expenses would be determined so that the ROI can be predicted with certainty.
Energy production in the form of distributed generation (DG) is a harder sell because investment is typically greater in DG systems such as photovoltaic (PV) arrays, and the ROI on energy production systems is often less certain than energy conservation or efficiency projects. For example, LCA for a PV array relies on predicted energy production that may or may not be achieved during a given year due to nature. Similarly, the economics of stationary fuel cells, microturbines and other DG systems that operate on a specific fuel source, such as natural gas, may alter due to changes in supply and demand. In addition, utility and government incentives intended to promote renewable and other alternative DG energy-production sources can change unexpectedly and affect the expected ROI of the DG system. As a result, energy services projects that include energy production are riskier than those that don’t.
At the top of the energy services hierarchy is energy reliability, which ensures that the customer’s loads have the quality power they need to function properly over their rated life. Energy reliability is often difficult to analyze because different loads will have differing criteria. For example, an induction motor can ride through a voltage transient without damage and continue to drive its load unlike a piece of sensitive electronic equipment that may drop offline and be damaged by the same voltage transient.