Last week, I summarized the issues explored during a panel session at the first annual SXSW Eco. The panelists, Paul Allen (Constellation Energy), Alison Taylor (Siemens Corporation), and Karl Van Orsdol (Hewlett Packard), came together to discuss how corporations and cities are managing energy within the context of a new, global economy. After tackling the question of how energy and sustainability managers can “continue to demonstrate the value of expenditures on energy efficiency” in a down economy, Allen, Taylor, and Van Orsdol went on to discuss how capital expenditures and operational expenditures can influence corporate decision-making in terms of energy efficiency investments, including the roles that technology and governance can play in the decision-making process.
Allen began by explaining that while “there is still a great deal of skepticism about investments in energy efficiency,” Constellation Energy has chosen to finance projects independently, thereby maintaining ownership of a piece of energy equipment (i.e., solar roof, commercial heating, and chilling), because “we’re more comfortable understanding that we’ll get the return in investing in that piece of equipment.” The choice also relieves potential customers who “have a harder time modeling [energy efficiency] than modeling a depreciation schedules for some large piece of equipment.”
Taylor believes that businesses are having to make tough choices between capital improvements and jobs. One way to tackle that internally is setting energy efficiency goals and incorporating those goals into the decision making process—part of the metrics “that’s a regulator system if you will, even though it’s one not being driven by an external federal force.”
According to Taylor, as building owners realize that cities have green requirements, or are requiring energy audits, performance contracting is beginning to take hold: guaranteeing energy savings as a way to gain financing for a project.
Van Orsdol emphasized that the quality of energy efficiency data is very important: “you are getting provided data in enormous variations of quality, [but] how do you translate that back into determining efficiency?”
For example, if energy costs for energy are deferred to another department (like accounting), then the incentive to cut down on energy use at the source is lost. Instead of energy use, Van Orsdol believes energy should be including the budget allocation for the department or entity that’s actually using that energy.
“Until you get the feedback loop on your performance indices on energy use,” said Van Orsdol, “you can’t be a leader in energy efficiency. Without knowing where the energy resources are going, you can’t invest effectively in efficiency.”
“It’s ironic,” said Allen, “because there are all kinds of ergs for businesses to report toxic emissions, et cetera, but there’s been no requirement to report on energy use, even though that’s what impacts our bottom line.”