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Energy Savings Project: How organisations Save Big $$$ on Energy Bills

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Large market electricity prices and gas prices have soared in recent years due to volatility in supply and reliability concerns in the national energy market. Large energy users including manufacturers, hospitals, office buildings, schools etc, are bracing for massive bill shock when contracts are up for renewal later this year. A doubling of energy costs is expected after energy retailers announced sharp increases to energy prices – effective July 1, 2017. Consequently, more and more organisations are looking at ways to save money and reduce their energy bills.  The most effective way to reduce energy bills is to invest in an energy savings project. 

This post explains what these projects are and how organisations can benefit from an energy savings project, particularly performance based projects with guaranteed energy savings.

 


 

What is an Energy Savings Project?

An energy savings project is a series of activities that involves identifying opportunities to actively reduce energy usage in a building or facility, and carrying out a detailed project plan to install and commission energy conservation measures and energy saving equipment that yield measured improvements in energy efficiency and energy savings in both economic and/or environmental terms.

Projects like these are commonly referred to as energy efficiency retrofit upgrades, energy conservation projects, energy efficiency upgrade projects, building efficiency upgrades,  or green building upgrades. They involve upgrading, refurbishing or optimising plant and equipment for maximum energy efficiency.

An energy savings project is typically a business case justified investment that includes a detailed account of capital expenditure and KPI’s such as savings generated, payback periods and return on investment. There are many benefits to an energy savings project, but one of the main reasons for commercial organisations is they are able to save a lot of money on energy bills.

Not all energy savings projects are created equal, however; see common reasons why energy savings projects fail.

Energy savings projects can vary in scope and size. Some are small and focus on specific areas within an organisation or facility that may take several weeks to complete. While others are large and complex projects that may take several months or in some cases, years to complete.

There are various types of energy conservation measures (ECMs) but the most common upgrades involve: LED Lighting, heating-ventilation and air conditioning systems, boilers, chillers, Solar PV and so on.

Larger projects that involve significant capital upgrades tend to generate more energy savings. But to make this investment viable a well designed project would typically also include lower cost ECMs with high rates of energy savings, thereby reducing the payback period of the total project with other more expensive ECMs.

Some organisations have sufficient resources and in-house expertise to design and implement comprehensive energy savings projects. For most organisations however, implementing energy savings projects can be a distraction as it would present a significant opportunity cost to reallocate resources to an energy savings project.

Energy savings projects are usually designed and carried out by a specialist service provider known as an Energy Services Company, or ESCO for short.

For best results a, it’s recommended that you find a trusted energy savings firm that has a long and stable history in the industry, a strong track record in energy performance contracting and similar performance-based energy savings projects, and have a number of positive reviews  from respectable organisations across different sectors. Most importantly, an ESCO should demonstrably have the expertise and experience to deliver a guaranteed energy savings project on behalf of your organisation. Read this article to learn more about how an ESCO can help your business achieve significant energy savings.

 

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The Benefits of an Energy Savings Project

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There are many reasons why organisations undertake these projects but the two main reasons include, (1) to reduce energy bills (2) and reduce the environmental impact of their operations or facilities.

Energy saving projects that include a variety of Energy Conservation Measures (ECMs) could achieve anywhere up to 50% in energy savings. Imagine the impact to your organisation’s bottom line if your energy costs are slashed by up to half? This is a very compelling reason for organisations to undertake an energy savings project.

But that is not the only reason why an organisation would invest in an energy savings project. Organisations may also develop sustainability targets in a bid to demonstrate their corporate social responsibility and genuinely promote environmental sustainability. This may be done purely for PR purposes, which may have a positive influence on share price or a brand’s goodwill, however that doesn’t negate the fact there are genuine environmental benefits from an energy savings project.

Government departments would typically follow a prescribed sustainability policy established by State government authorities and Australian State governments favour the Energy Performance Contracting process, which is essentially a large scale performance-based energy savings project. Several Energy Services Companies (ESCOs) bid to win the Energy Performance Contracting (EPC) job; a single ESCO is then awarded the contract and becomes contractually obliged to deliver on project outcomes. A similar performance based energy savings project model was developed by Ecosave for non-government organisations and the commercial sector that incorporates similar performance guarantees.

In any case, an energy savings project helps organisations with their sustainability objectives, by reducing overall energy consumption via a range of ECMs and high efficiency equipment. Plant or equipment that’s more energy efficient, uses less energy, and by extension means a reduced demand for energy; in Australia, energy is sourced mainly from non-renewable and often carbon emitting sources (e.g. coal or gas fired power plants), therefore lower lower energy usage leads to reduced demand for energy generation thereby reducing greenhouse gas emissions.

In summary, the main benefits of energy savings projects may include:

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Energy Conservation Measures (ECMs) in an energy savings project

Energy savings project (s) or energy efficiency retrofit upgrade projects involves a combination of energy conservation measures (ECMs), which may include installing new energy saving technology or refurbishing and optimising existing equipment. ECMs typically considered in an energy savings project include:

 

There are a multitude of energy conserving devices and technologies that can form part of an energy savings project; the main objectives being to maximise savings, reduce energy costs and promote sustainability. Well designed energy saving projects has a blend of energy conservation measures that leverage energy savings generated from lower cost ECMs to offset the higher cost of ECMs with lower savings.

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What to consider when thinking about undertaking Energy Savings Projects

The first thing to do is develop an understanding of your organisation’s key drivers and identify specific objectives in relation to energy savings.

What are the business’ true objectives?

Is it to reduce energy costs in response to soaring energy prices ?

Is it to improve cash flow?

Is it to reduce business risk?

Is it to improve profitability?

Is it to promote the organisation’s corporate social responsibility, being green and sustainable, or meet a sustainability requirement and achieve a specific target within a specified time frame?

All of the above?

The next step is to identify financial parameters that would define the nature and scope of the energy savings project. Typically, the CFO, CEO and Board would need to deliberate and decide on the following:

 

The final step is to contact a trusted energy services company  (or energy savings firm) that specialises in designing and implementing energy savings projects. One that has a long and stable history, deep experience across multiple industries and a proven track record of success with reputable clients.

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Are all Energy Savings Projects created equal?

No two projects are the same and depend greatly on the extent of capital upgrades or scope of works and the specific facility or site in question.

Some energy savings projects are undertaken internally by in-house sustainability managers or facility managers. However, this often results in a long drawn out process and typically comprise smaller ad hoc projects, more often than not due to a lack of resources such as qualified personnel, expertise and focused time.

Larger energy saving projects are typically outsourced to a specialist energy efficiency and energy services company (energy efficiency ESCO ) that are experts at designing and implementing energy saving solutions.

To ensure results are maximised and financial risks brought to a minimum, you should consider outsourcing to a performance-based ESCO that has the developed resources and expertise to deliver a guaranteed energy savings solution – on time and on budget.

However, no two energy efficiency ESCOs are the same.

Several well known ESCOs and energy savings firmsare not product independent, meaning they either own, manufacturer or exclusively on-sell products and equipment to their customers. This fact leads to heavily biased energy advice and recommendations given they have vested interests in pushing their particular product line without giving much thought to the best ECM solution. What’s more, is that non-independent ESCOs often use ineferior quality ECM devices or equipment that are neither fit for purpose nor fail to meet ISO standards and the Australian standards equivalent. This is particularly prevalent in LED lighting projects where there are specific LUX levels required for various environments.

On the other hand, Independent ESCOs – or product independent ESCOs – does not sell any products, rather they sell their professional services. Therefore, an independent ESCO has no vested interest in recommending a particular ECM product for no other reason than it is the best solution; it meets acceptable standards and achieves the desired efficiency outcomes. To learn more click on what criteria to look for when choosing an ESCO.

Ecosave is fiercely independent and since 2002 has become the trusted energy savings and energy advisory partner to hundreds of clients…More

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What to look for in an Energy Services Company (ESCO) for your energy savings project

Energy Advisory Firms: Experience Matters…

Finding an ESCO with all the attributes and competencies listed above will ensure you get the best results or ‘biggest bang for buck’. But the importance of consulting with an energy advisory firm that has the engineering expertise and project design / implementation experience can not be overstated. Energy advisory firms that lack such experience are likely to provide ECM recommendations that are not costed,  untested, impractical and with no certainty of actually delivering results if implemented.

Some energy advisory firms specialise in energy audits and sustainability consulting services, while other consultancy firms dabble in energy efficiency in addition to many other markets or industries. Either type of energy advisory service is potentially a high risk venture with no guaranteed outcomes.

A good energy advisory firm however, is one that ticks all the boxes (as described above) and most importantly, has the engineering competency, expertise and real world experience in delivering energy savings projects with guaranteed results.

 

 

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What makes Ecosave’s Guaranteed Energy Savings Project™ different?

Ecosave has developed a unique performance based service model that guarantees savings and caps the project cost with a single fee for the entire project.

Ecosave’s Guaranteed Energy Savings Projects™, or GESPs™ are inherently different because its a performance based project delivery model, which means savings are guaranteed and Ecosave carries the technical and financial risk if the energy efficiency retrofit upgrade doesn’t initially achieve the state objectives. In the unlikely event that savings are not achieved, additional upgrades or efficiency optimisation will be carried out at no extra charge. Should that not be possible, then the difference between projected savings and actual savings will be refunded to the client. This means that the financial risk typically associated with a price-driven tenders is significantly reduced, making the investment in energy efficiency retrofit upgrades even more attractive.

Ecosave GESPs™ are initiated by a comprehensive energy audit outlining baseline energy consumption and overall assessment of building performance. Specific energy conservation measures (ECMs) are recommended and a fixed price proposal is presented for Ecosave’s end-to-end service to deliver the entire project.

The results are guaranteed and the project fee is capped. This ensures clients get maximum energy savings while reducing financial risk.

Learn more about Ecosave’s unique performance based energy efficiency solutions. … More

To find out more and discuss how Ecosave can help your organisation save money and resources, call 1300 55 77 64 or send us an online request for a FREE 30 minute phone consultation with an Ecosave Solutions Architect.  

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Case studies of Ecosave’s Energy Savings Project (s)

 

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At Ecosave, our motto is to help clients to save money and save resources.

Ecosave is an end-to-end provider of energy and water efficiency services.

We provide a comprehensive suite of professional services to deliver energy and water savings for large energy users.

Ecosave has more than 15 years of experience with Tier 1 organisations across Government, Education, Health & Aged Care, Manufacturing, Commercial Real Estate and Commercial Enterprise sectors.

What makes Ecosave unique? Our longevity in the energy services industry, our experience with big government and commercial projects and our performance-based holistic approach to achieving energy and water savings. Every energy savings project that we design is a capped price investment with embedded savings guarantees and implementation warranties. This minimises risk and provides certainty of achieving sustainability targets and objectives.

As a full suite energy services company (ESCO) and end-to-end efficiency provider, Ecosave has developed three service divisions that are integrated in every energy savings project, but also serves as stand alone engagement points for clients: Ecosave Advisory, Ecosave Efficiency and Ecosave Watch.

We advise, develop and implement energy and water saving solutions; we also measure and verify savings, monitor and manage energy performance in your built environments and partner with you to ensure continuous improvement and maintenance.

 

Our motto: help our clients save money, save resources

 


 

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