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?
- The Benefits of an Energy Savings Project
- The types of Energy Conservation Measures…
- What to think about when undertaking an Energy Savings Project?
- Are all ESPs created equal?
- What to look for in an energy efficiency ESCO?
- What makes the Guaranteed Energy Savings Project different?
- 15 Case study examples of successful energy savings projects
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 or green building upgrades. They involve upgrading, refurbishing or optimising 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.
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.
Larger projects that involve significant capital upgrades tend to generate more energy savings.
Energy savings projects are usually designed and carried out by a specialist service provider, but some organisations that have sufficient resources and in-house expertise are capable to design and implement comprehensive energy savings projects. For most organisations however, implementing energy savings projects can be a distraction as its not a core activity aligned to their mission or vision statements. It is recommended that you find a trusted energy savings firm that has the resources and expertise to deliver an energy savings project for your organisation.
The Benefits of an Energy Savings Project
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 contract; 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 an energy savings project may include:
- Save money on energy bills
- Lower maintenance costs, as newer equipment has longer life spans.
- Improved occupancy comfort – with enhanced ambience and LUX levels as well as fine tuning of heating, ventilation and air conditioning systems. When employees are more comfortable and feel better about the environment they work in, they are typically more productive which means better business outcomes.
- Save resources
- Reduce carbon footprint
- Enhanced Corporate Social Responsibility profile – sends a strong sustainability in action message
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 energy savings projects include:
- LED Lighting
- HVAC system upgrade or HVAC optimisation (Heating, Ventilation, Air-Conditioning)
- Voltage Power Optimisation, voltage regulation; Voltage Reduction Units (VR Units)
- Energy Savings Modules
- Motion controls
- Appliance controls
- Building Management Controls
- Hot water plant upgrades
- Cold water plant upgrades
- Onsite and distributed energy generation including Solar PV
- Water amenities, pumping and treatment
There are a multitude of energy conserving devices and technology that can form part of an energy savings project; the main objectives being to maximise savings, reduce energy costs and promote sustainability.
What to consider when thinking about undertaking an Energy Savings Project
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:
- Budget – how much capital is set aside to invest in an energy savings project?
- Project funding – how will the project be funded? Will the project be funded from working capital, equity finance (capital raising though issuing shares, or owner / shareholder investment), leasing arrangement or debt financing through bank or credit union?
One important aspect to consider is the balance sheet treatment of fully funded energy savings projects i.e. do you want the amount to be shown on the balance sheet as a liability? If not, would you prefer an energy services agreement that is not a lease, is completely off-balance-sheet and all equipment fully funded through service fees payable from the operational expense budget over a long term contract (For more on this topic, see ‘A financial solution to power efficiency’ and Ecosave Services Agreement.)
- Payback period – the acceptable time frame that you would be comfortable with for the energy savings cover the cost of the capital upgrade. The payback period for energy savings projects can vary greatly between 2 – 8 + years, depending on the scope of works involved. Longer payback periods involve more comprehensive ECMs that generate significantly higher energy savings, whereas shorter payback periods limit the type of ECMs that can be used thereby limiting the quantum of energy savings.
- Return on Investment – is there a required ROI for the energy savings project?
The final step is to contact a trusted energy services company that specialises in energy saving projects. One that has a long and stable history, deep experience across multiple industries and a proven track record of success with reputable clients.
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.
Most energy saving projects are 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 risk brought to a minimum, you should consider outsourcing to an energy efficiency ESCO that has the developed resources and expertise to deliver an energy savings project on time and on budget.
However, no two energy efficiency ESCOs are the same.
Several well known ESCOs are not product independent, meaning they either own, manufacturer or exclusively on-sell products to their customers. This may bring up issues of 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 use ineferior quality ECM devices or equipment that are not fit for purpose or fail to meet ISO standards or 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.
Ecosave is fiercely independent and since 2002 has become the trusted energy savings partner to hundreds of clients…More
What to look for in an Energy Services Company (ESCO) for your energy savings project
- Responsive service
- Specialisation in energy efficiency and energy savings projects.
- Proven track record of success
- Quality client references or case studies
- Guaranteed savings
- Capped price proposals
- Integrated solutions
- End to end service
- Multi-technology ECMs
- Product Independent
- Holistic approach
- Complete energy management solution
- Embedded analytics and remote monitoring or control
- Flexible financing solution such as off-balance-sheet service agreements
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.
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.
Case studies of Ecosave’s Energy Savings Project (s)
- Amcor: energy savings in the bag
- Primo Smallgoods: hungry for energy savings
- Telstra: Calls for Bottom-line Energy and Water Savings
- National Australia Bank (NAB): reaps dividends with Ecosave energy saving initiatives
- Stockland: builds energy and water savings throughout Australia
- Bupa Aged Care: efficiency savings without disruption to its operations
- Bupa – Energy Procurement & Utility Management
- CSIRO: LED Lighting upgrade for Clayton campus
- State Water: makes energy savings throughout NSW
- Department of Education & Communities NSW: Saves $1.4 million in Taxpayer money on energy savings projects.
- Queensland Health: saving more than just lives…
- University of Canberra: Awarded with high energy savings achievements
- Charles Sturt University: economic value in environmental changes
- City of Sydney: Australia’s biggest city saves big on energy and water at 47 retail, commercial and council buildings
- Wagga Wagga Council: gains sustainability advantage
- North Sydney Council: Federal funding and Ecosave enables deep energy savings in iconic buildings
- Waverely Council: riding the wave of energy and water savings
Ecosave is an independent energy services company founded in 2002.
We specialise in the following energy services:
- Performance based Energy Efficiency services
- Complete Energy Management
- Trusted and independent Energy Advisory
- Independent Measurement & Verification
- Energy Audits, or detailed energy efficiency opportunity assesments
- Energy management and sustainability action plans