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  • Jeff Schuster

Green Energy Dilemmas for Building Owners: ESCo’s Are the Answer

Updated: Dec 18, 2022


If you own a facility or oversee maintaining a commercial facility, you have three general priorities:


Facility Function: Ultimately, your facility performs a valuable service to your organization. It may house office workers who are tasked with being efficient in their work. It may house teachers and students who need a productive learning environment. It may house high-speed data servers used by millions of users on the internet who require 24/7 up time. Facility functionality is the highest priority of any facility owner.


Operational Cost: If your facility is part of a public sector organization, you must keep operational costs as low as possible to fit budget expectations of your organization. If your facility is part of a private sector company, facility costs rob the company of profits required to grow. Energy is becoming a larger cost for both public and private sector facility owners. Energy projects cannot be completed without due consideration for the implementation and operation costs resulting from those projects.


Environmental Goals: I know I’ll get blowback on this… but environmental goals take a back seat to both previous priorities. With the advent of environmental promises made by corporate executives, how your facility impacts the environment is a priority. It may not be as high as the other two; but it is a corporate priority. Environmental goals often include reducing your carbon footprint, reaching carbon neutrality, or obtaining zero-energy status.


While environmental goals are the third priority of building owners, it can be the most complex. The three basic strategies to reduce energy consumption are: energy conservation, renewable energy, and energy efficiency. While all three of these efforts reduce energy consumption, they act in different ways.


Energy Conservation: Energy conservation is the reduction of energy use. Energy conservation may include reducing your heating temperature in the winter or increasing the cooling set point in the summer. It also includes eliminating wasteful energy using activities. For instance, locating a data center in a northern climate to take advantage of cooler outdoor temperatures can be classified as energy conservation.


Energy Efficiency: Energy efficiency is the act of replacing less efficient energy using equipment with more energy efficient equipment that performs the same task. A great example of energy efficiency is replacing old fluorescent lights with LED lights. They both provide lighting; however, LED uses much less energy to do the same thing.


Renewable Energy: Renewable energy is generating energy with renewable energy sources. In most cases, renewable energy refers to wind, water (hydro), and sun (solar). It has also included woody biomass, biofuels, and ethanol. Most advocates of renewable energy infer that we can continue to use as much energy as we did before, but because the energy is being generated with renewable energy sources, we will be reducing carbon emissions. This is largely true for wind, hydro, and solar. The other benefit of renewable energy is that we will not deplete these energy resources as we will deplete coal, oil, and natural gas.


The Energy Dilemma

I’ve tried to layout the energy picture from the demand side (building owner), the vendor side (green energy solutions), and the supply side (energy sources) picture. These descriptions are general; but you can see the complexity forming.


The vendors who offer solutions are biased. Product vendors claim that their product will fix your energy challenges. Service providers claim that their service is the solution to your problems. Utilities will claim that using more of their utility and less of their competitor’s utility is what you really need. Environmentalists will pressure you on reducing carbon emissions at any cost. Construction contractors will advocate that you trash your current facility and build a new one.


The result of this constant pressure to reduce energy consumption and cost from clearly biased sources forces many building owners into stalemate. You believe that energy efficiency, carbon neutrality, and climate change are a fad; and you focus on your two top priorities of Facility Function and Operational Cost. Afterall, these are the two items you were hired for in the first place…. And if you get these two things wrong, you’ll lose your job.


The Energy Solution

There is one type of vendor who can be different than the rest. This vendor is an Energy Services Company or ESCo. An ESCo is comprised of business development executives, energy efficiency engineers, and construction managers.


The reason that an ESCo is a better solution than any product or service vendor is that they start with a clean slate. Each ESCo customer has different needs and therefore requires different solutions. The three priorities of Facility Function, Operational Cost, and Environmental Goals are given equal priorities in the development of a solution by an ESCo. An ESCo will weigh the pros and cons of energy conservation, energy efficiency, renewable energy, operational cost, facility function and corporate environmental goals at the same time. The key to the value of an ESCo for any facility owner is in their process.


The ESCo Process

The key difference in an ESCo solution is that they will not approach your situation with a canned solution. They will form their solution based on input they receive from you; and what data they collect in their process. The start of their process is the feasibility study. Some ESCo’s call this a preliminary audit or technical energy audit (TEA). This audit is a fact-finding effort where the ESCo will evaluate your current energy consumption, operational considerations, and existing operating costs.



After the ESCo has fully digested this information, they will create “your story”. The story goes something like this…


Point A: Here’s where you are today. Based on comparisons with like facilities in like locations, here’s where your facility lines up with operational reliability and efficiency.


Point B: Here’s where you can be tomorrow with a comprehensive package of solutions. Some of these solutions address operational costs, others address facility function and still others address energy and environmental benefits.


Money: Here’s how you can fund all of the solutions we recommend within your current budgets.


Guarantee: We will measure and guarantee the results we’ve promised.


Your story is an objective picture of how you can improve all three of your facility priorities as efficiently as possible. The ESCo’s proposal isn’t just flowery words offered by a salesperson eager to earn a sales commission. The ESCo measures and guarantees their results.


All ESCo’s are not EQUAL

The ESCo process has been so popular that many companies have jumped on the ESCo bandwagon to pull through the products and services they couldn’t sell the old way. While these companies offer benefits, they are not objective. This objectivity is the key to the ESCo advantage that I described in the previous section.


Companies that are not objective include controls companies trying to sell their control systems as the one solution to all your needs. Other biased ESCo’s include utility companies who are focused on saving their competitor’s utility, but not their own. Any other product-based company will not be objective when they assemble solutions to help your building.


There are several ESCo’s who will recommend products and services they do not make. These are the companies who will help you objectively identify the best products and services to both reduce energy consumption and improve your facility.

 

I hope that you’ve learned how to reduce energy consumption, improve the environment, and improve your facility. If you need further guidance, I’d be glad to refer you to the best ESCo for your facility. If you run an ESCo and need help growing your business, I’d be glad to talk with you about how I help my ESCo clients achieve profitable growth.

 

About me. I have been actively engaged in the energy efficiency, renewable energy, and energy conservation industry all my professional career from 1987 until now. I was a licensed Professional Engineering in six states and a Certified Energy Manager (CEM). I worked as a sales executive, energy engineer, sales manager, and entrepreneur. I started, grew, and sold an Energy Service Company (ESCo) called Ennovate Corporation (1997 to 2013). I now coach business owners, engineers, and business development executives in the energy efficiency industry.

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