The Building Advisor

A recent study conducted by The Economic Intelligence Unit found that out of the 538 corporate executives surveyed, 73% will make energy efficiency a high or moderate focus over the next 2 years.  They are doing this to reduce their cost base as they weather the economic crisis.  Interestingly enough, almost two thirds have already undertaken some amount of energy efficiency measures in the previous two years.

This is good news for energy service providers, because you can positively impact the bottom line for every building you assess.  How, you ask?  Well there are a great many low and no cost energy savings measures that can be found in nearly all buildings.

Here are the three best low/no cost energy savings opportunities that on average yield 5-20% savings depending on the building:

1. Verify set points meet ASHRAE’s Comfort Criteria, and set them to the edge of the ranges for heating and cooling.
2. Verify the building schedules are being met and look for opportunities to shave off time through optimal start/stop and getting the cleaning crew to shut the lights off when they are done.
3. Reduce the outside air ventilation rate to match the occupancy of the building. There is no good reason to have to condition the outside air if it is not needed.

According to a story by CoStar, labels that detail the energy efficiency (or lack thereof) for commercial buildings are going to be in use by June.

That is welcome news for those who have made a concerted effort to improve the energy efficiency of their buildings.   It’s not such welcome news for those on the other side of that fence.  And unfortunately, there are far more on that side.

As if there weren’t already enough reasons to improve efficiency – most importantly, to lower operating costs, now there is an additional reason:  transparency.  Just like when people buy cars and can look at the mileage rating right on the window sticker, potential buyers and lessees of buildings will now be able to do something similar.

A similar labeling system has been in place in Europe since 2002.

Will you be ready for energy labels?  Will your clients?

The Environmental Protection Agency (EPA) has been under order from the Supreme Court since 2007 to determine if carbon dioxide and other green house gases pose a threat to public health and welfare. Lisa P Jackson, the new EPA Administrator has asked staff scientists to conduct a final review of relevant climate change research and prepare the needed documentation for an endangerment finding.

An endangerment finding will set off a chain reaction of events at the EPA which will take approximately two years to complete but will put regulation of green-house gas emissions under the rules of the clean air act, and would put a regulation on sources that emit 250 tons or greater. The EPA, according to Jackson is looking to put a prescriptive strategy and plan together that clearly spells out who will be required to reduce emissions and at what schedule. It will be a roadmap that the Obama administration is looking for to help spur Congress to enact complete legislation on climate change. One possible result – a cap and trade program – could enable our energy services industry to grow and create jobs while reducing the operating costs and carbon footprint of the built environment.

The Supreme Court’s near unanimous decision almost two years obliged Ms. Jackson to act. “It places EPA square in the center of the discussion on climate and energy,” Ms. Jackson said. “People are waiting.”

Mechanical service contractors are uniquely positioned to address one of the greatest needs that the owners and managers of existing commercial buildings have – to reduce energy costs. Service contractors already offer the types of services and products that can reduce a building’s energy demand. They understand how buildings operate. And they have regular access to the buildings to assess them.

So, what’s missing?  The conversations about energy.

Sure, there are other issues and needs that need to be addressed. But, just about any conversation between a mechanical service contractor a decision maker in a building should include the topic of energy consumption and cost savings. “What are you doing now?” “Do you feel like you use more energy than you need to?” “Do you know what your biggest sources of energy consumption are?” These are some good starting questions.

The key is to have the conversation with the right person. This needs to be a financially-minded building decision maker. This could be the owner, facility manager, or CFO. As long as they think in dollars and cents, they are a good candidate for the energy discussion.

HVAC mechanical service contractors are walking through buildings not serving their customers’ real needs and leaving money on the table, every single day.  Sure its tough out there – few new construction projects, tougher to justify retrofits, preventive maintenance (PM) contracts getting cut.

This is our premise:  Now is the time to solve real problems for your customer, take share, and grow (yes, you heard me right), GROW your business.  It’s not about science experiments and voodoo engineering, its just about shining a light on what you already know:

• Your customers’ buildings are not operating efficiently
• It’s costing them a lot of money, and
• You can help them fix their problems

We can help you equate your PM service with reducing building operating costs, get you more service work, justify retrofits, and take share.  How?  As a provider of web-based software for providing energy services, we have visibility into the results of hundreds of buildings recently analyzed by our customers.  Here is what we typically see:

• Most buildings are in the 50,000 to 150,000 square foot range
• They spend between $1.50 and $3.50 per square foot on energy
• Every building our customers have assessed can save at least 10% through simple low and no-cost fixes, such as fixing schedules and temperature control issues, reducing excess outside air, and fixing economizers

Our conclusion – EVERY building is an opportunity.  Even buildings that perform well today.  We’ve seen cases where our customers have found $25,000 in annual savings in ENERGY STAR-certified buildings.  Wouldn’t delivering that message justify your service agreement?

What your sales team needs is some backbone to take on the bean counters.  If they don’t find it somehow, you’re leaving a ton of money on the table and leaving your customer to find someone else to fix it for them.  And believe me, they will.  BOMA is all over this, telling their members there is significant savings to be had by reducing energy waste through no and low-cost fixes.  It’s a target-rich environment.  You need to get off your butt, go measure the buildings, and find the savings.

Or maybe this is too challenging for you and you want to leave it to the competition.  Or maybe your financial guys are taking over your company and want to lay off half your staff and send up a white flag.  No more capital spending, reduce expenses, retreat, retreat, retreat!  If you are in the automotive business or a banker, or sold shoes at Macy’s, yeah you might want to consider finding a blanky, a warm room, and start sucking your thumb – but you’re not.

Forget that.  Get in the game.  You have the ability to position yourself in one of the hottest markets around right now – energy.  There’s a reason why the only industries that VCs are investing in are clean tech, green tech, and energy-related.  It’s the future.

So, quit analyzing it.  Just get moving.  We’re 6 weeks into a year that’s destined for a 35% drop, if you let it happen.  Jeff Souza from EMCOR Facilities Services hit the nail right on the head when he said, “If you do the same thing in 2009 as you did in 2008 and think you can expect the same result, you’re crazy. You have to do something different.”

We think the thing you have to do is show your customer how you can reduce their operating costs, and deliver on that promise.  It’s not hard, it’s just different.

The stimulus package making its way to the President’s desk in the next few days has some very good strategies to help kick start the economy and help energy services grow.  In a recent press briefing, President Obama had these words to pass along to those detractors of energy efficiency.

“When people suggest that, “What a waste of money to make federal buildings more energy-efficient.” Why would that be a waste of money?

We’re creating jobs immediately by retrofitting these buildings or weatherizing 2 million Americans’ homes, as was called for in the package, so that right there creates economic stimulus.

And we are saving taxpayers when it comes to federal buildings potentially $2 billion. In the case of homeowners, they will see more money in their pockets. And we’re reducing our dependence on foreign oil in the Middle East. Why wouldn’t we want to make that kind of investment?”

Exactly!  Anything we do to reduce energy consumption has a corresponding reduction in monthly costs and greenhouse gas emissions.  Why wouldn’t we do it?!

There is an article in the ACHR News today which features a couple of mechanical service contractors who are truly providing value (as in cost savings) to their customers.   These days especially, more building service providers need to be doing precisely that – focus on what you do that saves building owners money and then communicate it using numbers to the high level decision maker.

The contractors in this case, Grodsky Service and Dillett Mechanical Serivce, are promoting their preventive maintence services and their retrofit work as measures which will reduce energy consumption.  They also wisely point out that there are other financial benefits, most notably, the increase in productivity that comes from having a comfortable working environment.

Read the article at the ACHR News site

Here are three ways to keep your business thriving:

1) Find New Opportunities

a) by keeping your best customers happy & feeling valued.

b) by expanding into similar market segments or locations.

c) by targeting opportunities through specific case studies highlighting your ability in that market.

2) Be Loud & Clear with Messaging

a) by getting Attention, gaining Interest, establishing Desire, and asking for Action.

b) by hitting them with the communication (direct mail piece, media spot, etc.) then follow up via email & repeat, repeat, repeat.

3) Add Value for Customers

a) by helping them solve problems and using case studies to illustrate value to customers.

b) by using creative pricing that is not just a deep discount.

These three steps are basic building blocks of any business and can help you sustain and grow even in tough economic times.

There is a very positive article in this week’s ACHR News on how older buildings can meet federal mandates for energy reductions.  Often thought of as being unattainable for older buildings, the federal goal of reducing energy consumption by 30 percent by 2015 can be implemented in a cost effective way for older buildings, according to a research study for the Department of Energy.

Also interesting to note is that even though all building systems were studied, over 75 percent of energy savings came from modifications to HVAC equipment.

This is strong evidence for what we believe (and hoped) to be true.   With the makeup of the existing building stock in the U.S., it is extremely important: Over 70% of buildings were constructed prior to 1980 and over 50% before 1970.

Read the article here.