Energy efficiency solutions typically refer to the set of building or facility improvements designed to decrease energy use. These can range from LED lighting retrofits to installing new, state-of-the-art boilers or heaters. All facility improvements come with a cost. But efficiency solutions are unique in that they provide companies an opportunity to invest in their own internal systems and reap both financial and sustainable benefits after installation.
Are energy efficiency solutions a good investment?
Energy efficiency solutions are one of the best infrastructure investments for commercial and industrial business because they end up paying for themselves over time by offsetting utility costs. Catana Capital explains: “Good investment ideas have a high probability of success… With a good investment there should be very little chance of losing the total amount invested.” Based on this criteria, energy efficiency solutions should be considered by every company serious about good investments.
The total amount invested in a professionally designed efficiency project should be presented to finance teams with a clear ROI and transparent payback period. Project costs will therefore be paid back in full once the efficiency solutions pay for themselves and continue generating savings due to on-going lowered energy consumption.
The following are seven good reasons many companies across commercial and industrial sectors will want to consider efficiency solutions as part of their internal investment strategy:
1. Decrease annual cost of energy
One of the first and immediate reasons to invest in energy efficiency solutions: a decreased annual energy bill. Less efficient equipment or products require more energy to run, thereby inflating many companies’ utility bills. The moment a fluorescent lighting fixture is changed to LED, for example, is the point in time at which that fixture stops costing so much to operate.
2. Improve existing building infrastructure
Most energy efficiency solutions are designed to target old or failing building systems. Investing in solutions like these means increasing the performance and value of a facility’s infrastructure. In addition, new products or equipment result in decreased maintenance demands and costs.
3. Avoid a high cost of waiting
The “cost of waiting” is described as the time during which a company is considering energy efficiency solutions but has not yet implemented them. This is a monthly cost that compounds every month a company waits to start reaping the benefits of decreased utility bills. Committing to the investment sooner decreases this monthly cost.
For one example, we work with a client who manages several hundred auto collision repair shops across the United States. We’re working together to upgrade the shop lighting to LED. This efficiency solutions saves 30-60% of this client’s lighting costs, or about 18% of their total energy bill. Each store averages approximately $1,000 in savings per month. That’s their cost of waiting: for every month some of those shops are not upgraded to the LED lighting efficiency solution, this client faces a growing cost of waiting to invest.
4. Take advantage of utility incentives
Any investment requires spending dollars. One of the unique elements of investing in energy efficiency is the component of utility incentive programs. These programs are managed by local utilities and designed to incentivize companies with funding opportunities to move forward with efficiency projects.
Depending on the region and local utility program, we’ve seen utilities cover 60-70%+ of a project’s cost. This only improves a project’s ROI and rapidly decreases a project payback period, sweetening that initial investment even more.
5. Efficiency solutions can deliver a rapid ROI
As referenced, efficiency solutions designed to obtain some utility funding and decrease operational costs and generate a quick return on investment. It’s important to understand that this does not mean replacing the odd fixture with an LED one, but approaching efficiency solutions with a comprehensive mindset, focusing on integrated systems with advanced controls, and probably working with an Energy Service Company (ESCO) or similar type of partner.
6. Bolster employee morale
Energy efficiency solutions are a good investment because of the greater business impact besides just cost savings. Investing in a building’s infrastructure can results in improved aesthetics, higher visibility, better safety and a more comfortable working environment. Companies struggling with employee morale or retention rates can benefit from demonstrating a commitment to their own facilities and the working environment for employees. Higher retention rates can contribute to making efficiency solutions a positive investment for businesses.
7. Lower environmental impact
Improving your own corporate social responsibility is an investment of a different kind. Energy efficiency solutions lessen a company’s environmental impact. Decreasing your carbon footprint means investing dollars committed to more sustainable practices and a greener approach to doing business.