Each year, inefficient energy systems in America’s commercial buildings:
- Reduce the capitalized asset value of commercial real estate by more than $750 billion.
- Remove more than $60 billion from business cash flows and potential profits.
With so much money missing in action, it is a conundrum that very few property owners are doing anything to recover it.
An energy audit should be the first step toward solving this problem. But, very few building owners, or business tenants, have even the slightest interest in doing one. The problem seems to be that most energy audits are missing property owner’s ROI targets.
Energy Audits Miss the Target
Today’s energy audits are missing owner’s financial targets (often by a wide margin) because they fail to give owners and their tenants the information they need in order to make energy efficiency investment decisions.
Today’s energy audits are being delivered through a confusing assortment of often mystical approaches, some of which include:
- Free Energy Audits
Free audits, delivered by product sales representatives, are a thinly disguised sales call.
- “Virtual” Energy Audits
Virtual energy auditors (sometimes referred to as “zero touch”) claim that they can make energy efficiency investment recommendations without ever setting foot on the premises. Typically, these audits compares a building’s utility bills, type of use, location, and some additional information to corresponding data for a portfolio of properties deemed similar.
The resulting data indicates whether the building under study is efficient, or less than efficient, compared to its peer group.
The limitation of virtual or zero touch audits is that they do not account for how a building actually uses energy. The virtual auditor cannot know whether a potential efficiency improvement is viable or appropriate in any given building, or what any prospective installation will cost. Virtual and zero touch energy audits cannot provide the financial information required for making sound investment decisions.
- Engineering Studies
Energy studies, conducted by professional engineers, identify building-specific energy efficiency options and they can provide general guidance with respect to improvement costs and benefits. However, they provide less than investment grade answers until owners collaborate with local contractors to identify detailed costs and potential energy cost savings.
When it comes to making an energy efficiency investment, the last thing building owners or business tenants want is a sales pitch or virtual/zero touch information. What they do want is a careful investigation of the way their building consumes (and wastes) energy. And, in most cases, they expect their property or facility manager to collaborate with contractors to give them very specific, well researched, financially grounded recommendations.
Property and facility managers are finding it relatively easy to deliver on these owners requirements by using cloud-based energy assessment software that enables the following process:
1. Establish Energy Cost Recovery Goals
When an owner and facility manager set energy cost recovery goals, projects are more likely to be successful.
2. Perform a Commercial Energy Assessment
A hands-on commercial energy assessment identifies where and how a building consumes (and wastes) energy. It provides information that is essential for assessing any energy efficiency investment “because you cannot manage what you do not measure.”
3. Identify a Wide Range of Alternative Solutions
To obtain the best ROI, a facility manager needs to consider full range of potential solutions.
4. Analyze the Costs and Benefits of Alternative Solutions
Obtaining the best ROI from an energy efficiency investment requires analyzing the costs and financial benefits of alternative solutions.
5. Present a Professional Report or Recommendation
Real estate owners are impressed by thoughtful, thorough, professional investment recommendations.
Dr. Bob Roth is CEO of BGZ, Inc., developers of EnergyActio software. EnergyActio is listed in the US Department of Energy Software Guide. EnergyActio is solving the energy audit conundrum by giving owners and tenants what they want . . . a hands-on investigation . . . a thorough evaluation of efficiency options . . . and a financial investment recommendation based on real project costs and energy cost-savings estimates (from local contractors who are willing to have their feet held to the fire). For more information, and to take a free test drive, visit www.EnergyActio.com, or contact Info@EnergyActio.com.