New financing models, sharp business thinking helps companies use energy efficiency to increase profits
New financing options, public incentives, improved data analytics and holistic construction methods are creating unprecedented opportunities to improve buildings’ energy efficiency and owners’ profit margins.
That was the core message of “Leveraging Energy Efficiency to Increase Profits.” Organized by Plano-Coudon Construction, the forum brought together an array of industry experts to explore best business practices to maximize the financial benefits of energy improvements in new construction and existing buildings.
Maryland now offers building owners various energy efficiency incentives, from rebates for lighting, HVAC and building envelop upgrades to low-cost loans for energy capital projects, incentives for combined heat and power plants, in-depth data analysis and incentives to boost efficiency at industrial plants, and even a fully custom program that helps owners achieve efficiency gains in unique facilities, Mike Leslie of the Maryland Energy Administration and Jonathan Becker of BGE told attendees.
Federal tax incentives have included deductions of up to $1.80 per square foot for commercial buildings that boost their energy efficiency. In some cases, that measure has generated sufficient cash flow to cover the cost of an efficiency upgrade, said Nelson Marin of Walker Reid Strategies.
Private capital markets have developed new and attractive financing models for energy projects, including power purchase agreements and energy performance contracts.
“Implementations can be done for zero money out of pocket … and we can implement projects to be cash-flow positive from month one,” said Michael Parrish of the Plano-Coudon’s Energy Solutions Division.
Maximizing energy savings and profits from efficiency investments, however, requires expertise and long-range planning.
“You need to have an energy master plan and an energy team, and make that part of your corporate mission statement,” said Paul Raschilla of the AKF Group.
Companies, Raschilla said, need to develop a core understanding of what energy efficiency improvements would most benefit their missions, operations and profits, then work with experts from the outset of each construction or renovation project to achieve the greatest energy and fiscal benefits.
Companies may also need to readjust the way they assess project financials.
“You need to look at the lifecycle costs of a building,” Parrish said.
For example, increasing a construction budget from $25 million to $25.5 million to create a more efficient building could lower the facility’s ongoing utility costs by 30 percent and ultimately net the owner much larger profits, Parrish said. The improvements could also generate other benefits, such as improved air quality and visual acuity, heightened worker productivity, higher tenant retention rates, and increases in property asset value. Complete and proper metrics need to be assessed when deciding on an investment in energy efficiency, Parrish said.
Caterina Hatcher with the Environmental Protection Agency’s Energy Star Program noted, “You are paying for energy efficiency whether you do it or not. You have two choices: either you can pay the money to the utility [for energy use] or you can do cost-effective energy efficiency and make your buildings better.”
To drive home this point, ICFI explained that all BGE customers have been paying into the energy efficiency fund since at least 2009. It is a separate line item on your bill.
Plano-Coudon has embraced that holistic approach to construction.
“We believe in looking at the whole lifecycle cost of a building, how it is going to operate and what the owner’s goals are, and then letting that information shape design decisions and construction decisions,” said Brett Plano, co-founder and owner. “But today was a reminder for me that on every project, whether it is new construction or renovation, getting the right team together early is key.”
Plano-Coudon Construction organized the forum to help clients increase their knowledge of emerging opportunities in energy efficient construction and financing models as well as best business practices to optimize efficiency and profits.
“We believe in providing value-ads to our clients,” said Ryan Coudon, co-founder and owner. “Normally, we are waiting for them to come to us to submit a bid, but today we can reach out to them and offer them a way to improve their bottom line.”
About Plano-Coudon Construction
Based in Baltimore City, Plano-Coudon Construction brings big-company sophistication, small-company flexibility, an engineer’s mindset and unparalleled enthusiasm to a broad range of construction projects. Since opening in 1998, we have developed deep expertise in multiple construction sectors, including education, healthcare, life sciences, mission critical, industrial, commercial, residential, religious/nonprofit and sustainable construction. We live by the motto: Your vision is our mission. Determined to be a trusted construction advisor and a best-in-class contractor, we work to fully understand – and meet – each client’s goals.