Tuesday, August 26, 2014

The Smart Money is on Energy Efficiency

By Russell Cann 

If you can invest money now on something that will pay for itself in three years, then provide you with free money every year after that, would you do it?
Well, this "something" really exists, and it's called energy efficiency. Right now, we need the state government to embrace it. Unfortunately, the South Carolina legislature has taken the opposite step, pushing legislation this year that attacks energy efficiency in the state. The result being that the economic benefits of energy efficiency in the state will not be realized. There's no apparent reason for this -- especially if you're someone who thinks government should be run like a business.
At Elauwit, we build and manage private telecommunications and data networks around the country, and we have firsthand understanding of how well energy efficiency can work. When we renovated our network operations center in Columbia, we spent over a quarter million dollars on energy efficiency -- everything from improved windows and high-efficiency lighting to occupancy-managed HVAC.
Yes, that's a big investment, but the payoff has easily been worth it. Our energy bills should have been over $14,000/month -- but with our energy efficiency investments, we cut them to $2,000/month. Our big investment will pay for itself in just two years. Everything after that is free money -- money we can use to make more investments, hire more people, and improve our bottom line. This is money we wouldn't have had otherwise. And since we work in over 40 states, there are a lot of places we can use this.
In addition, energy efficiency is something we work on with our clients around the country. Just by managing HVAC and hot water usage, we have cut client energy usage by as much as 30 percent, thus paying for the investment in less than twenty four months.
This wasn't always the case. Even just six years ago, the technology was so expensive that the return on investment wasn't there from a business perspective. But technology has advanced rapidly since then.
Think how much technology exists in your phone today that was not there in 2008. Apply that same technology shift to energy management and you understand the cost reductions that have occurred in this arena. Infrared sensors now can turn off lights when people leave a room and controls can change hot water usage in periods of lower demand. Investing in energy efficiency technology can pay for itself in a few short years, if not months.
Yes, there's an environmental benefit -- and a lot of companies will point to that in their marketing materials -- but the economic benefit can't be understated.
For government, it makes even more sense to follow the Leadership in Energy & Environmental Design (LEED) standards that offer the best building strategies and practices. Borrowing costs are usually lower for government than business, and government usually replaces its infrastructure less frequently. This means the overall return on investment can be greater even if the cost is higher.
There are jobs to be created as well. A total of 139 South Carolina businesses are members of the US Green Building Council (USGBC), whose LEED program is among the best energy efficiency programs nationwide; fifteen of those are among the state's top 50 employers. Statewide, there are more than 190 LEED-certified projects with more than 16 million square feet of space. That's a lot of work for the 1,600 South Carolinians who are LEED-credentialed to design, install and manage energy efficient systems.
This trend isn't limited to South Carolina; according to McGraw-Hill Construction's 2013 Dodge Construction Green Outlook report, green construction will represent 55 percent of all commercial and institutional construction by 2016. Nationwide, 88 of the Fortune 100 companies already use LEED. That construction is green for the environment -- and green for the money it saves.
We often hear people say that government should be run like a business. It should -- especially when it comes to new construction and renovation of public buildings. By following LEED today and adopting new standards as they are developed, the operational costs of these buildings for decades will be dramatically lower due to incorporating energy efficiency into the design. The additional upfront costs will be recouped many times over by saving money for future generations of taxpayers.
That's what running government like a business means: making smart business decisions about energy efficiency today that will yield a financial return in the future.
Cann is chairman of the board of Elauwit, LLC, a content and technology company based in Columbia, South Carolina.