A Dynamic Duo
Budgetary constraints spur a growing demand for EMS.
Tyson Schilz has seen the difference in the last five years. There was a time when building owners and municipalities rarely cared about how much energy their facilities consumed. Today, that’s changed. Tight budgets have forced school districts, municipalities, and private businesses to take a closer look at every dollar that they spend. This includes the money that they spend on powering their buildings each year.
This is good news for Schilz, owner of Glow Electric Company, in Los Angeles, CA. In addition to providing electrical, audio-visual, and voice and data installation and service, Glow Electric works with its customers to help them reduce their energy bills. The company uses meters, energy-efficient ballasts and lamps, and motion-sensor surveys to reduce the amount of energy that their commercial clients consume. The company offers energy management systems, better known as EMS, to its customers, too. These systems rely on meters and computer software to automate the energy conservation process, taking the decisions to shut off certain lights at certain times of the day, or lower the heat and raise the air-conditioning at the right times out of the hands of humans, allowing computer programs to make energy management choices.
The company also performs energy audits to determine what steps their clients, including such big names as Boeing, Lockheed Martin, Northrop Grumman, and W. E. O’Neil Construction, can take to lower their energy bills without having to make upfront investments in computer software or new equipment.
|Photo: Intel Corporation
These days, this end of the business is growing quickly, Schilz says.
“Interest in energy management was almost non-existent about five years ago,” says Schilz. “People today, though, are changing. They want to baseline their energy consumption so that they can start retrofitting their buildings. It’s still a sell to convince building owners to invest in energy management systems or energy audits. I wouldn’t say that energy management is selling itself, but it’s certainly an easier sell than it was five years ago.”
Schilz isn’t the only servicer seeing this. The providers of EMS and energy audits say that both municipal and business clients are placing more attention on the size of their monthly energy bills.
EMS might be even more important for those building owners whose facilities boast onsite power systems. As the providers of energy management systems say, this technology can help ensure that building owners are getting as much out of their onsite power generation as possible, something that can further reduce the amount of power these building owners are purchasing from the public grid.
The combination of EMS and energy audits is a powerful tool for building owners who want to reduce the amount of power that they need from their onsite energy source, creating a stronger and smarter onsite power supply.
“A building might have its own CHP [combined heat and power] or cogeneration system, whatever it is. If the building owners can reduce the amount of onsite power that their buildings need, they can reduce by a greater degree the size of their energy bills,” says Albert Thumann, executive director of the Atlanta, GA-based Association of Energy Engineers. “Energy management systems and reducing the amount of onsite power a building needs do go hand in hand. Energy management is all about reducing wasted energy and reducing demand. The onsite power system is only producing the power it needs to meet that demand.”
Rising Energy Costs
Fred Goldner, principal of East Meadow, NY-based Energy Management & Research Associates, has been performing energy audits for most of the last 20 years. Today, though, he’s seeing a greater demand among businesses and municipalities. He points to the rising costs of energy as the main reason.
What is surprising, though, is that Goldner has found that many of his clients still don’t understand the commonsense ways in which they can dramatically reduce their buildings’ energy consumption. Once a corporation flew Goldner from his home base in New York, to Georgia. There, Goldner discovered that the corporation had the unfortunate habit of leaving the lights on 24 hours a day in its headquarters building.
“They flew me all the way from New York to Georgia just so I could tell them to turn off the lights at night,” he says.
Of course, Goldner found several other less-obvious steps that the company could take to reduce its monthly energy consumption. But that “turn off the lights” example isn’t as rare as it might seem. Many facility managers today still need to have even the most obvious of energy-reduction strategies pointed out to them, he says.
“Unfortunately, I would have to say that most managers are not aware,” says Goldner. “Before we showed up? No, they were not aware. A lot of it does come down to the individual operator. There are operators out there who are more conscientious about energy usage than are others. There are others who are not at all focused on energy issues and smart operations.”
Santa Ynez, CA-based Davidge Controls is benefiting from the growing interest that building owners are placing on lowering their energy costs. The company makes a line of watt-hour meters under the EZMeter brand name. Building owners and facility managers can either directly wire these meters to their computers or use power lines themselves to transmit their consumption data. By consulting the meters, building owners can determine when they are consuming a high amount of electricity. They can then take steps necessary to reduce this consumption.
Ryan Fetgatter, general manager of Davidge Controls, says that the meters can be part of an overall energy efficiency program that can help building owners monitor and lower their facilities’ energy consumption.
“If you take a look at energy costs and where they are going, you have to conclude that they are going nowhere but up,” says Fetgatter. “By controlling your energy consumption and managing it, you are better armed and prepared to decrease what your energy costs are going to be.”
Price, though, isn’t the only consideration that businesses owners and building managers are making when deciding to invest in EMS or order an energy audit. Jean-Yves Blanc, senior vice president of strategy with Schneider Electric, says that energy management systems bring a host of benefits to building operators. One of the most important: It can help buildings reduce their carbon footprint.
That might not seem like a top reason for most businesses or even for most municipalities. Blanc, though, says that by being good to the environment, businesses can also be good to their bottom lines. He points to the tenant who only wants to locate in a building that employs “green” strategies so that it has a minimal impact on its surrounding environment. He also points to businesses that are able to nab or retain top employees, in part because of their commitment to the environment.
“Clients expect an energy management system to reduce their operating costs. That’s the main goal, always,” says Blanc. “But there is more that we can do. By investing in energy management systems, building owners can make a positive impact on their carbon footprint. We are seeing this become a more important reason in more and more organizations. We are even seeing the employees asking their organizations to do this. It has an effect on citizenship, and that can have an impact on how successful a business is.”
The positive benefits of reducing their impact on the environment notwithstanding, it’s hard to argue that most building owners turn to EMS for one main reason: They want to shave the amount of money they are paying to power their facilities.
And if these building owners operate their own onsite power systems, they turn to energy management to make sure that their microturbines or CHP systems are also consuming as little power as possible. It makes little sense, after all, for building owners to invest in an onsite power system only to then not consider ways to reduce the power demand placed on it.
Fetgatter sums it up this way: “Some companies and corporations out there can drop $200,000 on energy costs a month. That’s a lot of lost money right there.”
EMS and energy audits can help owners eliminate some of these lost dollars. An energy management system, for instance, can tell building owners how many kilowatt-hours a machine is using at any given time. If machines are consuming an unreasonably high amount of energy, owners can make the decision to replace inefficient equipment with better-performing, newer models.
These management systems can also pinpoint those times of day when specific pieces of equipment are consuming the most energy. Building owners can then take steps to reduce this amount of energy. They might dim ceiling lights, lower the heat in certain portions of their buildings, turn some equipment on later in the day, or even shut off a machine completely.
Energy management systems can also save companies and municipalities money when it comes to lucrative government rebates and tax breaks. Many states are providing financial incentives to encourage building owners to decrease their energy consumption. For example, building owners have a better chance to qualify for these state financial breaks when they invest in EMS.
“When you add everything together, it becomes fiscally irresponsible for building owners to not be managing their energy use,” says Fetgatter.
Selling the Systems
Despite all this evidence, and despite the budget pressures that so many school districts, municipalities, and businesses face, not all building owners are yet willing to invest in EMS. And this even includes those owners who have had the energy awareness to install onsite power systems in their buildings.
“Do businesses understand how important energy management is? That’s a very good question,” says Fetgatter.
The hardest sells tend to be the medium to smaller businesses throughout the country. Larger businesses and municipalities tend to understand the important role that energy audits and EMS can play in reducing their energy bills. These buildings are usually staffed with chief financial officers and chief executive officers who are well aware that energy management is a vital part of increasing their businesses revenues or helping their school districts or municipalities meet their budget goals.
Smaller-sized businesses, though, don’t always see energy management systems as a necessity. And many of those that do realize the benefits of such systems aren’t willing to spend the upfront money it takes to install new software and equipment in their buildings.
“Take a look at the large corporations, the ones spending $100,000 to $200,000 in energy costs a months,” says Fetgatter. “Yes, those corporations and the engineers working for those corporations, the chief financial officers and chief executive officers, are well aware that energy management is a vital part of increasing revenues. They are aware that reducing energy usage is a part of being a responsible member of the community.
“Unfortunately,” he continues, “a lot of the smaller to mid-sized companies still don’t look at it the same way. They don’t look at it as something that is absolutely necessary.”
Johnson Controls Energy and Sustainability Product Technical Support Manager, Scott Gordon, says that selling EMS to businesses, or even convincing them to sign up for an energy audit, requires real selling ability. At Johnson Controls, officials promote not only the cost savings and quick payback that comes with energy management, but the better control that such systems give building owners over how they consume their energy.
And for owners with onsite power systems, the sell goes this way: With an energy management system in place, the onsite power system will have to do less work. This equals fewer repairs and a longer lifespan for those onsite systems.
“There are always more issues than just cost,” says Gordon. “Some old equipment might be more prone to failures, which could result in power failures for the entire building. By upgrading to a new energy management system, building owners can identify pieces of equipment that might be near the end of their lifespan. They can then take action to either repair or replace this equipment before a power failure occurs.”
Johnson Controls officials will often discover during an energy audit that even those facilities that already have EMS in place aren’t using them to their fullest potential. Gordon points to several buildings, all of which had achieved LEED Silver certification, that during the holiday season did not have a holiday schedule in place for their energy systems. This meant that seven or eight times a year these buildings were running at full power, even if they were empty or nearly empty. This can add up to significant dollar losses for those corporations or municipalities that have a real estate portfolio consisting of several buildings, he says.
“A lot of times what we do is go into existing buildings, sit down with the people who manage and operate them, and try to find out what areas can be placed in an unoccupied mode and at what times,” says Gordon. “This alone can yield significant savings. Any energy management system can do this, if it’s being used properly. Building owners don’t necessarily have to install a new one. They just have to use what is already there.”
Even simple steps can result in solid savings, Gordon says. Lights might have to be one, but can they be dimmed? The air-conditioning might need to run, but can it run at a lower temperature?
Persuading the Hesitant
Gordon has seen much the same issue as Fetgatter when it comes to convincing smaller municipalities and building owners to invest in EMS. The hurdle is always money. And this is even more the case today, when the gloomy national economy has forced businesses and municipalities to slash spending budgets.
“The availability of capital remains the primary hurdle preventing more buildings from having these systems,” says Gordon. “This is especially so for commercial facilities; they are always looking at the bottom line.”
When it’s time to sell EMS, Johnson Controls focuses on this same issue, money. To clarify, Johnson Controls officials spell out for clients just how quickly they’ll generate enough energy savings to cover their initial investment in an energy management system.
“We have to speak in terms that they understand,” says Gordon. “Our clients want to know their rate of return. They want to know what the cash flow will look like over the lifetime of that piece of equipment. The commercial clients are all looking for a quick payback. For municipal or government buildings, it’s a bit different. They can go with a payback term of 10 years. With commercial buildings, though, they are looking for a payback of two to three years when approving low-cost measures and six years, maybe seven, when replacing equipment in the building.”
Janie Jefferies-Freer, president of eSight Energy Inc., a leading energy management software company based in Schaumburg, IL, sees clients demanding an even quicker return on their investments—most of her company’s customers require a payback of less than 12 months today. Jefferies-Freer has found that potential clients become more interested in EMS once they realize just how functional these systems are.
And this is an even bigger issue for buildings with onsite power systems.
“Building owners are looking to understand what they are spending on utilities and how onsite power generation is impacting their bottom line,” says Jefferies-Freer. “It is important to utilize an energy management software system to gather all aspects of energy usage information in one place. It is critical to learn exactly how that power is being used and distributed if you want to run a building as efficiently as possible.”
She adds that building owners become more interested in these systems, too, when they realize how easy they are to operate and install.
“Our systems are quick to pay back their initial investment,” she explains. “They are easy to put into place. And, they are functionally rich. When clients see all this, it’s a no-brainer to invest in it.
“From our perspective, the only thing keeping more people from investing in these systems is a lack of understanding,” she continues. “Sometimes the people in charge of the energy management of facilities can be overwhelmed.”
Despite some resistance, the professionals working in the energy management industry say that they expect demand for their software, equipment, and services to increase during the coming years. Blanc, from Schneider Electric, says that many of his company’s clients can realize annual energy savings of 30% if they invest in EMS.
“The potential for savings is quite large,” he says. “We are speaking of big money here.”
As with all business decisions today, the state of the national economy has played a role in how eager municipalities and businesses are to invest in energy management. Blanc has seen the economy both help and hurt the growth of the energy management business. After all, businesses and governments have fewer dollars to spend today. But they also want to slash their operating expenses as dramatically as possible. This creates a complicated sales pitch for EMS, which require an upfront investment that businesses may not be willing to make, but also offers a fairly short payback of that upfront investment.
“We are living in a period where there is a need for cash among many businesses; cash savings are critical right now,” says Blanc. “This does not favor the overall development of our industry. It does not encourage businesses to invest in energy management.”
But, on the other hand. . . .
“At the same time, businesses and governments are under more pressure to reduce their expenses,” adds Blanc. “If we can show clients that they can quickly recover the cost of the investment, and then start profiting after that, we can get them very interested.”
Author's Bio: Dan Rafter is a technical writer and frequent contributor.
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