The Business Case for Energy Efficiency

Here in Columbia, SC, Channel 57 News reported that Dominion Energy requested a rate increase from the Public Service Commission that will be just under 14% for homeowners and 17% for commercial businesses. Other towns, such as Camden, which provide energy utilities for their residents, are facing even higher rates…not to mention recent news about expected power blackouts in California and New England.

While the push to increase the use of renewables is on, the fact remains that most of our electricity production comes from using fossil fuels, and more and more plants are being shut down. The Law of Supply and Demand, as well as increasing regulations, will lead to more problems.

Reducing utility bills reduces costs, which in turn increases profit and value. In fact, saving as little as 1 watt per square foot for a 70,000 SF building can save over $27,600 per year and increase building asset value by $9.40 per SF. If the company’s market earnings rate is 2.5%, you will need an additional $1,105,784.92 in new business to equal these savings. The simple payback for an upgrade costing $55,000 (before rebates and incentives) is a short 1.99 years, and the ROI (annual return/initial investment) is 50.26%, well above any reasonable hurdle rate. These savings continue for the service life of the upgrade, well beyond the point where they paid for the cost, and resulting improvements in workplace performance, productivity, employee retention, sales, and safety provide additional cost benefits.

More energy savings quick facts:

  • Energy use represents the single largest operating expense in an office property.

  • In the United States, buildings account for:

    • 36% of total energy use / 65% of electricity consumption

    • 30% of greenhouse gas emissions

    • 30% of raw materials use

    • 30% of waste output / 136 million tons annually

    • 12% of potable water consumption

  • Businesses that lead in energy efficiency use about 30% less energy than their competitors.

  • US school districts spend $6 Billion each year on energy, secondary only to salaries. Top-performing schools use 3 times less energy than the least efficient schools.

  • Improvements in energy efficiency can improve employee productivity by as much as 10 times the energy cost savings.

  • Green buildings provide an average of 30% on energy savings, 30 to 50% water use savings, 50 to 90% waste cost savings, and up to 35% in carbon emission savings.

  • Reducing energy use by 30% lowers operating costs by $25,000 per year for every 50,000 SF of typical office space.

The best – and I’d say only – course of action is to reduce your need (use) of energy resources by implementing efficiency upgrades to cut operating costs. This is what we do, and I urge you to continue reviewing our website and links to supporting materials.