With everything small businesses have to worry about today (revenues, employees, taxes, healthcare, etc.) why should they be concerned about energy consumption?
Shawn: High energy costs take a heavy toll on consumers as well as on businesses of all types and sizes. That is most certainly the case with small businesses that so often operate on very thin margins. For example, a rise in the price at the gas pump often is said to be similar to a broad-based tax increase in terms of its negative effect on the economy. Whether directly or indirectly, there’s no way to fully get around the effects of high energy costs. For most businesses, including small firms, two big energy questions loom. First, what do you pay at the gas pump? Second, what do you pay for electricity? Electricity costs often rank among a firm’s biggest expenses. This cost can affect whether or not a business can hire more employees, has to lay off employees, or can even keep the doors open.
How significant are electricity costs for small businesses?
Shawn: Commercial buildings account for 19% of the energy consumed in the United States. Office buildings make up the largest sector of building type within the commercial sector, comprising 17% of all commercial buildings in the U.S, as well as 17% of the energy. Office equipment is one of the fastest-growing electricity users in commercial buildings in the United States. It directly consumes 7% of total commercial electric energy, which translates to $1.8 billion in electricity costs to businesses. Furthermore, energy consumption due to office equipment and related energy systems is expected to continue to rise (according to American Council for an Energy-Efficiency Economy). Almost 100% of the equipment used in a business is powered by electricity.
I thought “Smart Meters” were just for residences?
Ron: That is a common misconception. It is understandable with all of the recent press about the Smart Meter roll outs around the country. The first “Smart” digital meters were introduced in the 1990s and have been widely used in commercial installations for many years.
How can a business shift its electrical usage from peak times?
Ron: It depends on the business really. Manufacturing businesses often have the option to move production to off-peak shifts or curtail use of the most power hungry equipment during peaks. There are some peak shifting activities that can apply to all businesses. For example, turning off optional lighting and adjusting thermostats during peak hours. I have even seen businesses implement “summer hours of operations” which allow them to start the work day earlier and shut down all or part of the operation before peak hours start.
How can energy monitoring help? (Advantages of FIDO)
Ron: Installing an energy monitoring system can be a big help in reducing electric bills.
Firstly, by measuring and analyzing energy consumption on all of the loads in the facility, energy hogs can be identified and sometimes removed or reduced. This is especially true when it comes to equipment maintenance. Many businesses are wasting precious dollars because their equipment is not in good working order. In some cases, the only way to detect these energy wasters is by measuring their energy consumption as the equipment might otherwise appear to function properly.
Secondly, an energy monitoring system which understands the electric rate structures can allow the business to analyze usage against the rates charged and develop a load shifting plan to be implemented during peak price events.
Lastly is the on-going benefit of having the monitoring system installed after money saving measures have been taken. Unlike one time energy audits, an energy monitoring system can provide continuous monitoring of changes in electricity consumption as well as electrical rates. As changes occur, it is important to constantly adjust and adapt to the changing business environment as well as changes in electricity rates.
What are the typical costs and savings?
Ron: Again, it depends on the business and the electrical rate structures in place. For most businesses, reducing unnecessary energy consumption and shifting loads away from peak hours can easily create total savings of 20% or more.
However, many businesses are billed not just for how much energy they consume, but also on short-term peak loads. These charges are sometimes called demand charges and they can be significant. In many cases, a single 15 minute high peak demand can incur significant tariffs that will stay on the bill as long as a year. I have seen commercial electric bills where 30% of the total bill is based on these kind of historical events and charges that aren’t related to how much energy the facility consumed during the month. In these cases, managing peak load events can add additional and significant savings.
In multiple tenant buildings, how can businesses and landlords benefit?
Shawn: There is evidence that the simple act of having building owners gather energy data for the whole building, including tenants’ data, is leading to benefits. In many cases those bills get rolled into operating expenses of the building and are never scrutinized by owners directly. In some cases, owners actually make money on re-selling energy to tenants, so they have no incentive to reduce tenant consumption. Giving the tenant the ability to help control their energy consumption and helping lower there operating expenses allows the business to be more profitable with less tenant turnover and vacancies.
An additional benefit to having data on benchmarking and tracking performance, together with the trend toward requiring energy performance disclosure and ratings in real estate transactions, will increase the building owners’ abilities to understand and improve the current building stock. Determining performance following a retrofit or renovation is also important to demonstrate retrofit results and identify any shortcomings. As with energy efficiency, a market benchmark to compare changes such as tenant attraction, retention, lease rates and occupant satisfaction that relate more directly to the real estate industry would be valuable in reviewing project outcomes.
How can a small business evaluate whether or not an energy saving project is warranted?
Shawn: All energy performance information on buildings is based on measured data. By monitoring their actual energy use, discovery of measured energy performance data is easily obtained. Data that can enable and empower small business owners to identify opportunities to reduce their energy use and to track the results of such changes can help determine if an energy saving project is needed and what kind will give the best results. As owners see the results of their everyday choices, they are better informed about the cost consequences of their energy use behavior. If this knowledge is combined with practical information on how to reduce energy use, this can help them to make changes in their behavior to save energy and, in turn, money.
Ron Pitt is the founder and CEO of EcoDog, a startup developing innovative home energy management systems and winner of CommNexus GadgetFest Gadget of the Year for 2009. He has spent the last 10 years in the green energy industry serving first as Chief Technical Officer and later as General Manager of Trace Engineering, at that time the world’s leading supplier of electronics to the solar electric market. Subsequent to the acquisition of Trace Engineering by Xantrex, he served as corporate Vice-President and General Manager of Xantrex’s Distributed Residential & Commercial Markets Division. At Trace, Ron gained insight to looming issues resulting from rising energy prices, pending smart meter deployments, the utilities' need for energy demand reduction, calls for reduced carbon footprints and the advantages of increased energy efficiency in the face of these trends.
Prior to joining Trace, Ron spent eight years in the Uninterruptible Power Supply (UPS) industry with Exide Electronics, Deltec Electronics, Network Security Systems and Elgar Corporation (a succession of corporate changes resulting from spin-offs, mergers or acquisitions), where he served as Director of Software Development, Director of Strategic Business Development, Vice President of Software Development and finally Vice President of Engineering for Exide Electronics Small Systems Division.
Ron has over 20 years experience in the Software and Electronics Manufacturing industries including an extensive background in product development, marketing and sales. He has been awarded three U.S. Patents — including one for EcoDog — and has four additional patents pending.
Shawn Allen - Founder, Resource Conservation Technologies - http://www.r-c-tech.com/
Shawn Allen has been in the building industry since 1995 with an emphasis on building smart, energy efficient homes. He has well-rounded education & experience in efficient building envelopes, energy optimization for buildings, occupant behavior solutions for reducing energy use, current HVAC technologies (including ground source heating systems), and alternative energy. In 2007 he graduated from the Sustainable Builder Advisor course offered through the USGBC and is also a Certified Aging in Place Specialist (CAPS). While continuing his education on sustainable building and methods to improve the built environment, he started EcoVentures NW, a consulting firm to help people apply these methods. Recently a new division of the company called Resource Conservation Technologies was developed specifically to bring available technologies together to optimize the energy, water, gas and renewable energy use for buildings and help occupants conserve through knowledge of how their behaviors impact their resource use.