10 Questions To Ask BEFORE An

Energy Efficiency Upgrade

EAG
THE
Energy Alliance Group
OF MICHIGAN
Written by Scott Ringlein, EAG Founder & CEO &
Kerry Kilpatrick, Director of Business Development
© The Energy Alliance Group, Inc ­— All rights reserved — October 2014

www.energyalliancegroup.org
 10 Questions To Ask BEFORE An Energy Efficiency Upgrade
You know your equipment or building is in need of an energy efficiency upgrade.
Before taking the first step there are 10 questions to which you should get the
answers to. Knowing which questions to ask and finding the appropriate answers
will make your energy renovation project go smoothly. This process also will help
minimize stress and eliminate buyer’s remorse. The ultimate goal is to help you get
the most energy savings at a cost that reflects the greatest value.

1) What is the first step I should take as I consider 3) How can I become energy efficient without put-
improving my company’s energy efficiency? ting a big dent in my cash flow?
Answer – Find an energy efficiency professional who offers Answer – There are many programs that make efficiency
you information FIRST! projects affordable and some don’t require any cash outlay.
A primary barrier to successful energy efficiency up- When considering energy efficiency upgrades a common
grades is a lack of information on the client’s part. Technol- problem results when the upgrades show up as a large ex-
ogy is changing fast. When reviewing the proposal detailing pense on a company’s Profit and Loss statement, or debt on
the unique technologies that will be incorporated into their their balance sheet.
project, most clients remark, “I didn’t even know that stuff A large expense can negatively affect a company’s cash
existed!” flow. If the expense doesn’t show a short-term return on in-
An energy-efficiency professional should be easy to find vestment, it also becomes harder to justify to shareholders
with some simple searching on the web. Look for reports, and stakeholders.
case studies, testimonials and blog articles that will show- Fortunately some energy efficiency financing programs
case experts who are on the leading edge of energy effi- mandate positive cash flow guarantees. To be more precise
ciency. Some utility companies maintain a list of “approved” the total project cost must be paid for out of the energy sav-
contractors. They will tend to specialize in the products that ings. When the proper finance options, rebates, tax incen-
are used in energy efficiency upgrades but typically won’t tives and local programs are incorporated into efficiency
have the depth of knowledge for a comprehensive energy projects it often turns out that not doing the project can
renovation. cost more than initiating the project.
One project that was quoted reduced the present energy
2) Am I looking for a salesperson or a consultant? cost by 13% even after factoring in the cost of the project! It
Answer – It depends on the size of your project but, in was going to cost the owner less money to initiate the proj-
most cases, choosing an energy efficiency consultant or ex- ect than he would spend if he kept using his old, energy-
pert will give you the most comprehensive solutions. hungry technology.
Salespeople tend to be product oriented and will look at When he saw those numbers he knew he had to make the
efficiency projects in terms of incorporating their own prod- improvements rather than continue to waste money and
uct instead of looking at your big energy picture. Almost all energy with the status quo.
energy products offer a choice between good, better and
best.
If you have a conference room that is rarely used, install-
ing the most expensive and energy-efficient lighting will
make it almost impossible to ever see a return on the invest-
ment. The “good” version would have worked just as well
“It’s very rewarding for us
with lower expense! to go into companies and
Energy-efficiency projects are all unique. There is no find ways for the owners to
“one-size-fits-all” solution. Each project must be customized save energy and money with
to the unique demands of the facility, work accomplished the added benefits of new
there and/or equipment under consideration. equipment, a better work
Consultants will typically have a broad knowledge of environment and happier
multiple options, various technologies and specific experts employees.’”
needed to make your project a success. They will propose
Scott Ringlein, CEO & Founder
the optimal solution to your particular application; sales
of The Energy Alliance Group of
people will propose the solution that best fits their product Michigan.
offering.
4) Should I invest in energy efficiency even 6) Are there other reasons to pursue energy
though I plan on selling my business soon? efficiency besides saving money and energy?
Answer – When energy savings are significant, and the Answer – There are countless reasons to pursue energy ef-
right financing options are utilized, the value of commer- ficiency.
cial property often goes up (making the sale of the building Knowing the reason you’re considering an energy renova-
easier and more profitable) and the financing can be set up tion is one of the top concerns of energy efficiency profes-
to pass seamlessly along to the new owner. sionals. Some of the most common reasons are energy and
Property Assessed Clean Energy (PACE) is an example of a cost savings. Sometimes existing equipment is antiquated
financing option that eliminates the concern about selling and can no longer be supported. Other reasons may include
a business following an energy efficient investment. Often social responsibility, the desire to be perceived as “green,”
the sale of a building necessitates satisfying an underlying employee or customer comfort, visual appeal, and an in-
loan before the sale can be finalized. creasingly popular reason is the desire for unique public
PACE uses the taxing authority of the local county to se- relations opportunities.
cure an energy efficiency loan to the property. This provides One company installed cutaway portals in the walls and
security for the lender and allows the financing to move floors to showcase the energy efficient technology that was
with the sale of the property hidden within. Another company installed plaques that told
instead of needing to be satis- a story of the re-purposed products used during the con-
fied by the owner prior to sale. struction of its new facility. A rooftop garden was the high-
In Michigan, many PACE districts light of a business that its clients were encouraged to walk
are being created through a pri- through while learning about how much rainwater and
vate-public partnership called heat the garden absorbed.
Lean and green Michigan. If a company wants to be perceived as “green,” then hav-
This type of financing opens ing visual reminders (solar panels, green gardens, etc) may
up many energy upgrade opportunities and can make the be more important in the achievement of that goal than
property more appealing due to the energy efficiency. putting in a new energy-efficient heating system, nestled in
the bowels of the building.
5) How can I determine if an energy professional The nice thing about energy projects is they are good for
is credible? the environment as they cut cost and improve cash flows.
Getting some great PR can be an added bonus.
Answer – The easiest way is to look at the company web-
site!
7) How do I know if my business or building is a
There are too many cases where people in unrelated fields candidate for an energy-efficient renovation?
get excited about energy efficiency and call themselves Answer – If you use lots of energy, have long operating
energy experts as they attempt to sell the latest gadget or hours and your facility is old or was constructed with old
technology. technology, your business is most likely a candidate.
Compare that to an energy expert who has spent years
Businesses that have high energy demands, operate for
acquiring vast knowledge and expertise. Qualified energy
long hours and have been in business for many years with
professionals typically have a wealth of information avail-
the same equipment are the most likely candidates for en-
able about their experience and credentials right on the
ergy efficiency upgrades. Those factors create the greatest
company website.
probability of energy reductions. New technologies have
A website (or lack of one) is a powerful indicator of the been invented that should be used in all industries but are
caliber and credibility of energy professionals. A true energy usually absent in older facilities.
professional will maintain a website that typically provides a
The typical chimney is a perfect example. In the past,
variety of case studies, the relevant local rebates and incen-
chimneys simply carried away the unwanted exhaust from
tive programs, a listing of qualified specialty partners that
an operation. But that exhaust contained a lot of heat and
can be called in to provide expertise on unique situations
moisture that was simply being wasted. New heat recovery
(solar, geothermal, wind, etc), as well as news articles and
technology can capture a large percentage of that heat and
recognition from the community they serve.
moisture and repurpose it to other uses within a building.
Credibility should ooze from all aspects of an experts Water can be used for lawn irrigation and retrieved heat can
website! cut down on other heating fuel usage.
Lighting is another example. Many of the lights used in
older buildings are being phased out of production due to
their inefficiency. Advances in lighting technology can offer
significant energy savings. Adding occupancy-sensor light-
ing controls and computerized lighting control systems can
help reduce commercial lighting costs by even more.
8) What’s the best way to actually start an energy 9) Are my savings guaranteed?
or green renovation project? Answer – In a number of situations, yes.
Answer – A graduated approach typically works best There are too many stories of energy saving promises
when considering a green renovation. The most common that miss the mark but after installation there is often no re-
approach typically involves three steps. course. In some cases, the buyer couldn’t contact the manu-
Step 1 – Conduct a phone conversation or informal meet- facturer of the product or the salesperson who sold them
ing between you and the potential energy consultant. There on the savings. They were out of business!
is typically no charge for this and it allows you to determine Cost savings from the latest energy efficiency technolo-
if there’s a good fit and a desire to move into the next step. gies can be significant, consistent and predictable. If out-
Step 2 – Usually involves a walk-through of the facility comes are predictable then guarantees may be possible.
with the energy consultant and the principals of the compa- This requires a “baseline” to be established prior to the ener-
ny or the building owner. This step should always be done gy retrofit, with any subsequent operational changes taken
with company leadership, owners and the CFO. An energy into consideration to determine the effect on guaranteed
upgrade or retrofit is very much a financial transaction, and energy savings. For example, a second shift can’t be added
decision makers should be involved from the beginning for without a significant impact on energy consumption.
the most optimal outcome. Don’t relegate this vital compo- As a consumer protection feature many of the new ener-
nent to ancillary personnel. gy financing and rebate programs mandate a savings guar-
Step 3 - The third step is often a comprehensive energy antee. Guaranteed savings are a key feature of the Property
audit. This will involve the energy consultant looking at Assessed Clean Energy (PACE) program.
several years of prior energy bills, determining the present In order to make a guarantee the cost and saving projec-
energy rates, quantifying where energy is presently being tions must be calculated out for multiple years (20 is not
used, collecting data, videos and pictures of what technol- unusual). Those projections will look at the life expectancy
ogy is presently on site and understanding what outcome is of the technology, replacement costs, projected increases in
desired with the upgrade. utility expenses, costs of maintenance, etc.
Do you want or need more light, less light, cooler, better
environment, cleaner air, warmer, quiet, etc.. Once this step 10) What are some of the indirect benefits I
is completed a formal proposal and plan of action will be should take into account when deciding to initiate
created. an energy efficiency project?
The three steps can vary for a number of reasons but the Answer – There are many more than you would expect.
information that needs to be compiled is typically the same.
The stories that detail the indirect benefits of energy ef-
The complexity of gathering the information will differ for
ficiency upgrades are almost always simply amazing. A brief
each project.
list would include increased health, better productivity, less
stress, improved concentration, faster growth, less noise,
etc.
Often old technology is noisy, smelly, hums, flickers, runs
too much, is too dim, breaks down or is just plain annoying.
“The fact that PACE enables a Here are some comments that illustrate the benefits: “The
building owner to undertake an new equipment hardly ever runs”, “The plants grow so much
energy efficiency project that is better with the new lights”, “I don’t feel like I’m working in
cash flow positive will resurrect a fog anymore”, “We are able to complete so many more
many that have been shelved
cycles per shift now”.
due to capital and ROI concerns,
as well as open the door to many Countless studies show the direct relationship between
new ones.” work environment and productivity. When the air is clean,
the lighting good, the noise diminished, and the environ-
Curt Monhart, Vice President of ment more comfortable and safe, people perform better.
Sales and Marketing, The Energy When you add energy and cost savings on top of all that
Alliance Group of Michigan
– it’s truly a winning combination.

The Energy Alliance Group (EAG) of Michigan is an energy solutions company

providing energy saving products, technologies and services.
© The Energy Alliance Group, Inc —
­ www.energyalliancegroup.org — All rights reserved