Energy Efficiency | February 17, 2021
What Are You Waiting For? [Cost of Waiting Pt 2]
If you’ve ever thought of taking on an efficiency project, such as installing LED lighting or moving forward with mechanical efficiency upgrades, do it now! Waiting is killing your bottom line when it comes to energy. For every day you wait to implement energy efficiency, dollars are invested in the utility’s pocket, instead of your own. In fact, your utility would even agree. So much so that most utility companies offer incentives for organizations to install energy efficient products and equipment. When it comes to efficiency upgrades, even your utility wants you to do it now!
Whether your motivation is ultimately financial, environmental or operational, efficiency projects must be prioritized as soon as possible to minimize your waiting time between initial interest period and project completion. Some of the companies I’ve worked with look at this like a capital expense, but it should really be operational cost. Every month you wait to improve the efficiency of your systems, you’re paying monthly for that inefficiency – instead of investing, you’re spending.
Part 1: Understanding the Cost of Waiting
The Cost of Waiting is that time period during which a company considers efficiency but has yet to implement solutions. Here’s one way to think about this concept:
- Why turn the faucet off after brushing your teeth?
- Why get your sink fixed when it’s dripping?
- Why turn off lights in the house?
Which leads us to ask the question: if doing it at home, why not do it at work too?
Here’s how it works:
The cost of waiting is the sum of energy savings over the time frame between calculation and project completion. The chart visualizes the cost of waiting over time. If a facility could save $4,000 per month by improving the efficiency of the systems, the total “cost of waiting” 12 months to implement a project accumulates to $48,000.
Real project example
One of our clients operates hundreds of auto repair shops across the US in which we are helping to upgrade their lighting to LED technology. For this client, we save between 30-60% of their electrical usage from lighting, depending upon each location’s current lighting, which equates about 18% of their total energy bill. Each store averages approximately $1,000 in savings per month. Across their many US sites, this monthly savings adds up and can end up equaling several hundred thousand dollars.
Most large commercial/industrial companies can be saving 30-70% on lighting costs which is typically 10-20% of their overall energy bill. It’s simple math to estimate your own cost of waiting.
Learn more about this calculation in our first blog about Calculating your Cost of Waiting »
Part 2: Commons reasons for delaying efficiency projects
It always surprises us to see how inefficient some companies are. It makes us wonder, “why have they not done this yet?” However, we do understand there are many reasons companies have for not moving forward on an energy efficiency project right now.
Here are the four most common reasons I hear for delaying projects:
“We don’t have the budget for efficiency projects”
Efficiency projects are not necessarily a regular line item in the budget, so we can understand this reason. Energy efficiency solutions are different from other types of infrastructure upgrades. Because these solutions upgrade equipment AND decrease energy use, they are ultimately an investment into your own building systems.
Every month you wait to implement efficiency solutions, your facilities overuse energy and you overpay for power. Obtaining the budget for an energy project can feel overwhelming. But compare overall project cost to monthly cost of waiting. Within 3-4 years – sometimes 1-2 years – those monthly savings add up and pay back the project cost. The bottom line is this: the longer you wait, the higher the cost.
So, while the funding may feel out of reach, it’s worth the investment now to immediately start reaping the benefits of the savings – rather than waiting 3, 6, 12 more months. Another way to make this investment appealing to finance teams is to build a cash flow positive project.
“We don’t have the time for a project of this scope”
This reason is also completely understandable: the maintenance team can barely keep up with the burnt-out fixtures, let alone replacing several thousand across facilities at once. In addition, maintenance or facilities teams don’t necessarily cover energy efficiency as a core competency.
This is why many companies choose work with a turnkey Energy Services Company. Professional energy engineering firms who specialize in turnkey solutions will manage every aspect of the project. Once again, this approach can kick start cost savings that would otherwise continue to drag on your energy bills.
You may not have the time to get started right away, but a trusted solutions partner does.
“We have to wait for the next budget cycle”
Finance teams sometimes come back to a project request with this response: wait for next year’s budget. While this is simply the case sometimes, it’s important for companies to understand the danger in delaying. The cost of waiting continues to have an impact: waiting for next year’s budget may seem like the right move, but every month a building is operating inefficient systems, you continue to overpay for energy.
If you tackle an efficiency upgrade now, how much more quickly can you start financially benefitting from optimized systems?
“We’re just going to do it ourselves”
Many clients are committed to energy efficiency and they intend on installing solutions. Many also have the skillset to move forward on efficiency projects. But it takes time to develop solutions, and large projects can require a huge amount of coordination to complete in a timely fashion. There’s a cost when you’re trying to do it yourself, which can grow over time the longer it takes to finalize a complete efficiency upgrade.
Solutions today, savings tomorrow
The cost of energy solutions can become a roadblock for some companies looking to improve the efficiency of their buildings. The benefits of these solutions are a no-brainer: lowered power costs, lowered maintenance, improved infrastructure, increased financial savings, etc. What are you waiting for?
There are dozens of benefits to energy efficiency and with a cost of waiting looming, now is the time to act.
I’ve worked with clients all over the Midwest for years and I’ve found the cost of waiting for these solutions speaks volumes. What could you do with an extra, $5-10K+ every month? Even if the initial spend is a challenge to solve for, the benefits of more efficient buildings rapidly prove themselves worthwhile.
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