I’ve written and spoke a lot about business mechanics and mindset; and wanted to change gears and talk about my core skill of energy engineering. When I talk about energy engineering, I really mean energy-efficiency engineering. You may ask, “What is a business coach doing talking about engineering?” Before, I was a business coach, I started, grew, and sold an engineering firm. It just so happens that engineering is my core skill. The reason that this content is relevant today, is that I now coach business owners in the Energy Services Company (ESCo) industry. Energy engineering happens to be one of the main challenges ESCo’s have in being successful.
Imagine if you can, that you’re a sales executive. You’ve worked hard for a year to develop a relationship with a big facility conglomerate. You finally get a chance to audit one of their key buildings to show them how much energy you can save them. You send your energy engineer to their building, and they come back with some bad news. It turns out that the best they can do is a lighting retrofit and a few other small-time projects that will reduce their utility bill by 5% and cost so much that it will take 20-years to pay for itself. After all that work, you now must walk away from a relationship and a deal that you thought could have made you thousands of dollars in commissions.
The sad fact is that many energy engineers don’t see the true opportunity that exists when they perform a building audit. This is completely because their focus is on the wrong things.
During my time as an energy engineer and an energy efficiency entrepreneur, I tended to find opportunity when others came up empty. I’d like to highlight how I did it; and hopefully help you make the most of your opportunities in the ESCo industry.
Know the Energy Index
Do a utility bill audit first. A utility bill audit is simply a table of monthly utility bills whereby you then divide the annual utility consumption by the square footage. The result is an energy index. You will know the cost per square foot; electricity usage per square foot; gas consumption per square foot; summer electric demand; winter electric demand; and all sorts of cool data. Most ESCo’s will salivate with high energy index numbers thinking there’s a lot of saving opportunities, thus a large project size. I look at these energy index results a little differently. If the number is high, then I look for what is causing the high number when I visit the building. If the number is low, I look for indoor air quality problems or other reasons for the low energy usage.
It’s not About Energy
It’s not about the energy. Yes, I know, you’re an energy engineer. It’s in your title… you’re supposed to reduce energy consumption in buildings. The reality is that most building owners, while they want to save energy, they think they are already as energy efficient as they can be. On top of that, their utility bill is usually 10th on their list of concerns. This means that there are nine higher priorities the building owner is concerned about besides energy. It’s your job to uncover all of these higher priorities; and help the building owner address these along with any utility bill reduction concerns.
Start with a Blank Canvas
Third, you must “start with a blank canvas”. This means that you cannot walk into a building with a pre-conceived idea of what solutions will work for this client. Engineers take mental short-cuts. All of us humans do it, but engineers are the worst (or best depending on your perspective) at it. A short-cut happens when you make assumptions to reduce the amount of time it takes to do a certain task. In the energy business in the 1990’s and early 2000’s, lighting tended to be the common short-cut. Energy engineers assumed that lighting would be one of the quickest paybacks, so they’d immediately start gazing at the ceiling to discover the immediate opportunity. If they saw efficient lights, they’d be tempted to walk out the door claiming there was no opportunity. While I also looked at lighting as an energy engineer, I understood that this was the “tip” of the opportunity iceberg.
In fact, the true opportunity was in the mechanical systems, control systems and less obvious spaces in a building. In the industry, we called lighting-focused companies as “cream skimmers”. They would address superficial concerns without looking for the deeper challenges and innovative building solutions.
Ask Open-Ended Questions
Ask good, open-ended questions. Part of not taking short-cuts is being genuinely curious. It still amazes me how many engineers and scientists have made up their minds. They’re not at all curious about uncovering the unknown. You will find out more with conversations with building occupants, maintenance technicians and owners; then you will ever find out looking at lights, boilers, rooftop units and control systems. An open-ended question is a question that cannot be answered with a yes or no. This means that the respondent needs to spend time telling you a story… which is gold in the energy engineering profession. Whenever I’d join others in a typical building walk through as part of a Request for Proposal (RFP) process, I’d be near our guide talking away, while others were taking pictures and writing down nameplate information on equipment. My questions were never scripted, and always born out of curiosity. This conversation helps you learn more about the project opportunity than any motor nameplate ever could.
Be aware of your location. I’ve audited buildings all over the United States. Energy cost and energy intensity is different from location to location. Weather is much different in Minnesota than Florida. Electricity is much more expensive in California than it is in Montana. Electricity Demand is the highest cost of an electricity bill in urban areas and is non-existent in many rural areas. Ironically, water costs the least in the arid southwest and the most in the heavily populated east. Each location will dictate different strategies to reduce utility costs and is something that you must understand before you start considering energy conservation measures.
Show Me the Money!
Understand the financial picture. Most energy projects are not supported by only energy savings. Throughout my time in the ESCo industry, approximately 30% of a project would be supported by energy savings. This means that 70% of the cost of the project will need to be funded from some other source. Many of the successful ESCo’s understand rebate programs, grant programs, public finance avenues, capital budgets, tax credits, and other operational cost categories like the back of their hand.
For instance, many building owners budget to replace mechanical equipment at some point. If you understand their budget cycle, you can help them make the best use of their capital funds.
Deferred Maintenance is REAL
Prior to joining the ranks of the Energy Service Company (ESCo) world, I worked to maintain buildings for an Air Force Base. When you maintain buildings, you realize that things get old and eventually break. When I was trained in sales for Honeywell, they showed me a pie chart with all the costs of maintaining a building. The largest slice of this pie was called Deferred Maintenance. As a building maintenance professional, this made perfect sense to me. If you can replace old equipment with new equipment, you automatically extend the life of the equipment in the building.
For some reason, this concept was difficult for my colleagues to understand. I spent some time touring Honeywell branches educating them on how deferred maintenance works and how they could use those funds to fund their energy retrofit projects. If you don’t understand deferred maintenance, learn about it, and use it when creating financial justification for your projects. If you don’t, you will be forever playing “small ball” in the energy retrofit world.
The final topic that is important to most building owners is the impact that their energy efficiency project will have on the environment. All energy projects will help or harm the environment is some way. As fate would have it, the environment is one of those politically polarizing topics. It’s important to understand your customer’s environmental goals without making dangerous assumptions. It may be that the maintenance technician that is showing you the building thinks the “green new deal” is a scam; while the building owner has specific goals, they want to achieve in carbon reduction. Be respectful of both views regardless of your personal view. Most of all, be curious. If zero carbon emissions by a specific date is a critical need of your client, help them create a plan to get to this goal and you’ll be their hero. If they believe that carbon emissions isn’t an important goal, don’t try to change their mind. Build your project accordingly.
I hope that you’ve picked up a few pointers on how to build meaningful projects for your building owner customers. This approach should create a foundation for creating a valuable project for your customers and profit for your company.
Incidentally, my approach to business coaching is much like my project development approach as an energy engineer. I listen intently… understand my client’s situation… then propose a custom solution. If you’d like to learn more about how I coach my business owner clients, please visit my website at www.mmbizcoach.com.