The current economic slowdown has brought all facets of the building industry to a virtual standstill, as falling consumer spending and home values force businesses and homeowners to curtail all but the most essential construction and repairs. However, thanks to the recently passed stimulus legislation, electrical contractors may find new opportunities in energy auditing, a field expected to grow dramatically over the next two decades.
Energy auditing is based on the old business adage that what’s measured also can be managed. It involves analyzing a building’s current energy use and coming up with solutions for reducing the total amount used. Until now, these projects have gone, primarily, to energy services companies, which provide full-service energy retrofits in return for a cut of the ongoing savings such improvements can generate. However, with the passage of the American Recovery and Reinvestment Act of 2009, the stimulus package, energy auditing is set to grow exponentially, providing new business options for electrical contractors who already are experts on many of the systems and products the audits cover.
The new legislation’s budget doesn’t specifically call for energy audits. However, the bill does include $6 billion to state and local governments in energy efficiency and conservation grants, and energy audits are a first step in most efficiency-improvement plans. This funding sets the stage for long-term growth by boosting efforts to reduce the energy consumed by the enormous stock of existing buildings. Specific projects aren’t targeted in the bill. Instead, most of the funds will be funneled through individual state energy offices, and then into community development grants.
A recent report by the American Solar Energy Society underscores potential job growth in the larger, general field of energy efficiency, compared to the more broadly publicized renewable-energy industry. The study forecasts combined annual U.S. revenues could reach between $2 trillion and $4 trillion by 2030—up from today’s $1 trillion—with energy efficiency accounting for 90 percent or more of that total.
“Renewable energy is getting more attention than saving energy,” said Bernie Kotlier, director of Green Energy Solutions with the California Labor Management Cooperative Committee. “Most of our contractors are aware of the growth of renewables, but they aren’t aware of the growth in energy efficiency. It’s going to be monstrous. We have a huge building stock that’s not efficient.”
Lighting systems are considered “low-hanging fruit” to energy-efficiency advocates, and this equipment also offers an obvious entry point into the energy-auditing business for electrical contractors. Lighting is responsible for a large percentage of any building’s electricity bill, and retrofitting older systems can offer attractive payback periods to building owners interested in reducing overhead costs.
“Changing from incandescents to compact fluorescents, going from T12 lamps to T8 lamps, that’s something that can happen very quickly, with minimal study,” said Randy Barnett, author of the electrical textbook “Commercial and Industrial Wiring” and a regular blogger on the ActionEco blog, an independently edited blog sponsored by testing and measuring device manufacturer Fluke. “It’s really easy to show a building owner how much money they’ll save.”
Barnett suggests using distributors as a resource for electrical contractors seeking to quantify potential savings for their lighting customers. Using an inventory of currently installed light fixtures, as tallied by the contractor, along with knowledge of local utility rates, distributors can use manufacturer-supplied software to calculate electricity savings.
“You take that back to the building owner, and they may be amazed,” Barnett said, adding that, “it’s not unusual for lighting to be 30 percent to 40 percent of their utility expense in a commercial building.”
Helping owners take advantage of lighting savings can be just the beginning of a broader energy-auditing service offering and can be initiated by keeping an eye open for inefficient equipment or systems the next time you or your workers make a client call. The next step is to begin looking at other related operations that could benefit from upgrades.
“Certainly, [look at] any kind of space conditioning equipment that’s electric,” said Jennifer Amann, buildings program director for the Washington, D.C.-based American Council for an Energy-Efficient Economy. “And refrigeration, particularly in retail or restaurant environments [could benefit from upgrades].”
Amann recommends that you be able to give recommendations when you are working on a refrigeration system and notice inefficient refrigerator-case lighting.
In industrial or large-scale commercial settings, contractors may want to check to see if cooling equipment, such as water chillers or air-handling units, is equipped with the most efficient variable-speed motors.
“Once again, your distributor may help you with that,” Barnett said. “They may have the technological experience to go visit the project and recommend what variable-frequency drive to install.”
However, as equipment recommendations begin to get more complex, contractors may want to explore a more holistic approach to the energy-auditing process. Kotlier breaks comprehensive energy audits into three distinct phases. With proper training, many contracting firms can perform the first two in-house.
The first phase incorporates a screening or survey process, which could take the form of a careful walk-through of a facility. This initial study might take as little as an hour for a small building, or up to a day for a campus of structures.
“It may actually be more electricians than contractor staff who do these first-level activities,” Kotlier said. “They have a natural positioning to recognize those opportunities.”
The second phase is a preliminary energy assessment, which includes a thorough inspection of all systems, along with collecting complete data on all equipment nameplates. The third phase brings this information together with knowledge of possible alternative approaches into a final report with equipment recommendations and financial analysis. This task is more likely to be completed by dedicated experts.
“It’s generally done by engineers who are experts in facility energy efficiency,” Kotlier said. “It will be subbed out to consulting engineers, unless and until the contractor brings that expertise on board.”
Efficiency-incentive programs can be hard to track and even harder to understand. Learning about local options can help turn you into a resource for your clients. The following Web sites can help you learn more about energy-efficiency provisions in the American Recovery and Reinvestment Act and about energy-auditing opportunities in your area:
Energytaxincentives.org—Developed by the Tax Incentives Assistance Project, a coalition of nonprofits and government agencies, this site offers extensive information on efficiency incentives as well as links to other related sites.
Dsireusa.org—The Database of State Incentives for Renewables and Efficiency should be bookmarked by any contractor interested in keeping up with potential tax credits, rebates and other incentives.
Eei.org/ourissues/EnergyEfficiency/programs—Click on the link for “Efficiency and Demand Response Programs” for a current listing of incentives offered by local electrical utilities.
Blog.actioneco.org—An independently edited blog funded by Fluke Corp. and written by a range of experienced energy experts, covers both specific systems and larger, facilitywide energy issues.
Small-scale lighting audits and retrofits might be opportunities available to a broad range of electrical contractors whose businesses include small and mid-size businesses and schools within their customer base. But those contractors who want to explore more comprehensive service offerings might want to spend some time evaluating how they may restructure their business plans before they start calling on potential energy-audit customers.
This is just the task Sean McPeak, vice president of Martinez, Calif.-based McPeak Electric, faces. His business has focused primarily on public works projects, but he is looking for new opportunities pursuing energy-efficiency contracting as public-sector money has slowed. He has taken several auditing courses offered by Pacific Gas & Electric and also has become an accredited professional under the guidelines of the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program. Now, he is working to turn his new knowledge into new service offerings.
“The part that’s still a mystery to me is how much to charge someone,” he said, explaining one of the challenges of approaching a new line of business for which many standard benchmarks have yet to be set. “I haven’t determined how many man-hours it will take or who to send out to do the work.”
McPeak anticipates bringing his electricians into this process by training them to be aware of inefficient equipment and systems during even the most routine customer-service calls.
“Your electricians and people who have day-to-day contact can say, ‘Look, here’s a way you can save money,’” he said. “A big part of this is having your electricians be aware and proactive about this.”
One business-plan question McPeak is still working to answer is whether he should subcontract the actual analysis of the energy data he gathers or perform those calculations in-house. He is testing those waters by helping a commercial-building owner better understand tenant energy use. It is only a first step, but he is excited about the opportunities energy auditing might offer to his business, not just as a new income line, but also as a way to develop a level of customer trust that can contribute to strong and long-lasting relationships.
“It’s a very fair way to go about presenting a service to a customer. You can actually show them, ‘Hey, here’s your payoff period,’” he said. “It will do the sales for you, at least that’s the goal. I think it’s going to be a very big part of how we treat customers.”
ROSS is a freelance writer located in Brewster, Mass. He can be reached at email@example.com.