Renewing Old Buildings

Market research and consulting firm Navigant Research has found consumer motivations and government influence drive the demand for innovative new products to save energy through energy-efficiency upgrades in older buildings.

“Overall, the energy-efficiency retrofit market is a multibillion dollar market with consistent growth potential over the next 10 years,” said Rick Rodriguez, director of energy services for Siemens Industry Inc., Buffalo Grove, Ill.

The main market drivers for energy-efficiency retrofits are cost savings from reduced operating expenses, new federal and state regulations, and environmental consciousness, said Melissa Golden, market segment manager, contractors, Schneider Electric, Palatine, Ill.

Utility rebates for highly efficient technology with proven return data—such as lighting retrofits, premium efficiency motors, and variable frequency drives—are a major driver in the efficiency retrofit market due to the accelerated payback they provide, said Carl Lundstrom, federal solutions manager, Electrical Services and Systems, Energy Solutions Group of Eaton Corp., Cleveland. Utilities have also started to charge fees on highly inefficient customers in an effort to reduce demand concerns. Energy-efficiency retrofits can help customers avoid these fees.

“Utilities also have incentive programs to reduce energy use, such as providing money for customers to perform building commissioning analyses and to implement the resulting solutions,” Rodriguez said.

Return on investment (ROI) and the reduction of operating costs are the largest drivers in the federal market as well because they enable public funds to be distributed for other uses. However, the primary drivers in the public market are federal energy-efficiency mandates, said Jim Dankowski, Eaton’s manager, marketing and business development, Government Sales and Solutions.

Not to be outdone, states and local authorities have their own energy-efficiency mandates. Look at San Francisco, for example, where owners of buildings of more than 10,000 square feet must submit annual consumption benchmarks and perform energy audits every five years, Rodriguez said.

Technology also is a market enabler. 

“New technology delivers better efficiencies than ever before, frees up efficiencies in new ways, and can even lower the entry or initial cost of becoming more energy-efficient,” Golden said.

Light-emitting diodes are one technology that has demonstrated dramatic efficiency results.

“In addition, the evolution of large mechanical systems continues to improve in applications including boilers and chillers, which allows owners to see the value in implementing entirely new systems,” Lundstrom said.

Market challenges

The slow economy and slow allocation of the necessary funding for energy-efficiency retrofit projects is challenging the market.

“Funds are limited, and energy-­efficiency projects must compete against what might be more important to the customer, such as process improvement,” Rodriguez said.

The public market has addressed funding issues, Dankowski said, with energy savings performance contracts and utility energy savings contracts, which permit federal facilities to make progress through projects funded by means of guaranteed energy and water savings, with no federal management fees, appropriated funds or project facilitators required.

Just understanding what can be done presents its own challenge. According to Golden, many end-users find researching, evaluating and preparing a plan for energy efficiency daunting.

The contractor steps in

The newest role for the electrical contractor is as an energy consultant to the end-user, Golden said.

“Electrical contractors can evolve and become a key player in the energy-efficiency retrofit market by knowing the needs of their customers and helping them to understand what they can save in energy,” she said. 

Through knowledge assessments and recommendations, ECs can cultivate business opportunities that yield revenue for them and personalized and comprehensive results for the end-user.

“The contractor must understand, however, that energy-efficiency projects require a different business model to understand, evaluate, cultivate and commission. Only through a comprehensive and dedicated approach will contractors optimize their opportunities,” she said.

There also are opportunities for contractors with a focus or specialization on specific technologies. A great example of this, Lundstrom said, is an EC that specializes in lighting controls or UPS retrofitting.

“Lighting controls can do so much more than occupancy sensors, such as dimming, daylight harvesting, scheduled lighting, and tuning lighting to specific tasks,” Rodriguez said.

ECs that stay current on evolving technologies can calculate both the energy consumption and cost savings. This knowledge enables customers to realize long-term savings and ECs to meet their financial needs.

About the Author

Darlene Bremer

Freelance Writer
Darlene Bremer, a freelance writer based in Solomons, Md., contributed frequently to ELECTRICAL CONTRACTOR until the end of 2015.

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