Tuesday, October 26, 2010

Would You Spend $30,000 To Save $250,000?


We here at the San Joaquin Valley Clean Energy Organization - which is based in Fresno, one of the hottest regions of California and with some of the highest power bills in the state - are all about energy efficiency.

Frankly, it boggles my mind that more property owners, legislators and policy makers still don't understand that energy retrofits are a great investment. Wouldn't you, as the headline to this article says, commit $30,000 to save $250,000 in expenses later?

Is there any investor who would not think that was a good return? Certainly, Chris Martin, director of energy management at University of North Carolina at Chapel Hill, thinks so. He led one of 14 teams across the country that participated in an EPA-sponsored Biggest Loser-style contest to shed the most energy weight, according to this New York Times story.

The Chapel Hill team spent $30,000 upgrading a residence hall on campus, and wound up slashing energy expenses $250,000, much of it by adjusting the heating and cooling system to run slower during moderate weather. All combined, the school cut energy use 36% .

The university engaged residents of the hall in the process. CityBiz Magazine said a touch-screen computer was installed in the dorm's lobby so students could track energy consumption. Each floor held energy-saving competitions, and reminders were posted in elevators, bathrooms, and common areas.

That means more money in university coffers. I don't know if Chapel Hill is strapped for cash, but I know a few campuses in California that would love the extra money.

Chapel Hill has seen the light, so to speak. Upgrades to 100 buildings on campus saved nearly $4 million last year, according to the New York Times. The average savings per building was $33,000. The average per-building investment: only $7,000.

"The payback is on the order of months, not years," Martin told the newspaper.

Other teams also got good returns for their investments. A Sears store in Maryland cut energy consumption 31.7%. A JC Penney outlet in Orange, Calif., reduced energy use 28.4%. Together, the 14 teams saved $950,000 on power bills.

Businesses and others in the San Joaquin Valley could probably reap good returns too. After all, temperatures reach triple digits in the summer. Businesses and families pay the price with heart-stopping power bills.

Retrofits and modifications such as these are the low-hanging fruit of the whole greening movement. Consider the iconic Empire State Building. A $20 million energy-efficiency upgrade, which includes more than 6,000 new windows, will shave $4.4 million annually off the power bill.

That's a payback of 4.5 years. Simply amazing.

Commercial building space in the United States covers a total of 79 billion square feet, and buildings, 80 percent of which are more than a decade old, are one of the leading sources of energy consumption and carbon emissions, said a recent report on commercial building energy efficiency by Boulder, Colo.-based Pike Research.

The report, "Energy Efficiency Retrofits for Commercial and Public Buildings," estimates potential annual energy savings of more than $41.1 billion if all commercial space built as of 2010 were included in a 10-year retrofit program.
Unfortunately, shredded budgets, the freezing of Property Assessed Clean Energy programs and an economic recession make it harder for businesses, homeowners and landlords to finance the upgrades.

But those who can manage it might enjoy a nice financial return.


(Photo of Morrison Hall by online wsj.com)

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