How to Sell Energy Efficiency Products

Today’s Presentation

ADDRESSES ONE OF THE BIGGEST
CHALLENGES FACING ENERGY
EFFICIENCY PROJECTS

©Kingport DBA Resource Productivity Associates, 2011 1

Who We Are?
A strategic consulting firm that provides results-focused strategic
planning and implementation to maximize resource productivity
to meet sustainability goals of our clients.

We have provided seminars and speeches to over 1,000 busy
businesspeople—from management level to CEO—on how to
increase resource productivity in their companies.

We help companies develop a comprehensive strategy to
resource productivity in their organizations to building a more
sustainable financial future, serving as their resource
productivity coach to meet their objectives.

So you want to know……

How to Sell Energy
Efficiency Projects!

Presented by: Daryl
DeJean
Emerging Technologies Associates
June 29, 2011


Copyright and Permissions
Copyright in all content on this site is owned by Emerging
Technologies Associates, Inc. and Kingport DBA Resource
Productivity Associates. No materials from this presentation
may be reproduced, stored, altered or further distributed
without our prior written permission. Requests for permission
should be sent in writing to our headquarters office at the
address below.

Kingport
DBA Resource Productivity Associates
P.O. Box 5475
Santa Barbara, CA. 93150

Today Starts the Journey!


First Let’s……..


How Do We Bridge The Gap?


Points to Ponder
• What is the “real” goal of the project?


Besides……..


It’s Really About……….

http://www.sdkcm.org

Leading To……


How are Sustainability and
Energy Efficiency Connected?

Sustainable energy
is the provision of
energy that meets
the needs of the
present, without
compromising the
ability of future
generations to meet
their needs.


Typically, the death of a
project is based upon…..


http://www.edi-nc.com/edi/news/Energyefficiency.asp


It Takes MONEY!

http://blog.broadcastengineering.com

Therefore…….

http://happyhypnosis.net


What is the Investment Worth?

http://www.rms.net


http://www.meetingarchitecture.com


Executives Look For………

http://rethinkhr.org

How do I effectively “sell” and make
credible presentations of projects to the
Finance Team and Senior Management?


ENERGY STAR®
Provides the Foundation


http://www.automatedbuildings.com


To Create….


Financial Justification of Projects

– According to US EPA, “30% of energy bills is used
to pay for energy waste” in the typical building.
– Why not use the cash flow from the avoided
energy waste to pay for new energy efficiency
projects?
– “We are paying for energy efficiency projects
whether or not we do the projects”


http://www.millennialliving.com

Utilities: Largest Controllable
Operating Expense
Growing Impact on Cash Flow

Return the CASH
FLOW to
Facilities/Engineer
ing with ENERGY
STAR!

Source: BOMA: 2008 EER


Leading The Team

http://askmarklittle.com/


Create the Culture


http://www.masternewmedia.org

Decision-Making Process
In Whole Building Design
• Define project goals:
– energy - historic preservation
– healthy and safe - cost effective
– sustainable - aesthetic
– functional/operational

• Interrelationships and interdependencies with all building
systems are understood, evaluated, appropriately applied

• Close coordination by integrated team

• Facility performance report to show continuous
improvement

Cost Effectiveness
• Every owner wants a cost-effective building. But
what does this mean?
• Is it the lowest first-cost structure that meets the
program?
• Is it the design with the lowest operating and
maintenance costs?
• Is it the building with the longest life span?
• Is it the facility in which users are
most productive?
• Is it the building that offers the greatest return on
investment?


Costs and benefits of alternative decisions?

Process is in three steps in large scale projects:

1. Utilize cost management in planning, design
development Process

2. Use Economic Analysis to evaluate design
alternatives which tool(s) depends on objective:
simple payback to life cycle cost analysis

3. Integrate non-monetary benefits such as
aesthetics, security, safety or historic preservation


Assess RISK!

Performance risk a huge
component of any decision

Address RISK OF
FAILURE UP FRONT


Credibility


Dealing with Skepticism
• MYTH: Buildings need
to use all that energy.
Energy reduction
would require big
sacrifices.
• FACT: On average,
office buildings waste
30% of the energy they
use, and simple
changes can save a lot!

Dealing with Objection
• MYTH: We don’t have the time or
money to focus on energy
efficiency right now.
FACT: Saving energy might be
the easiest way we can help our
workplace reduce operating
costs—and improve the bottom
line. Companies and
organizations that are leaders in
energy efficiency use about 30
percent less energy than their
competitors. No wonder nearly
one-third of Fortune 500
companies have made a
commitment to energy efficiency
by becoming ENERGY STAR®
partners! ENERGY STAR labeled
office buildings cost, on average,
$0.54 less per square foot to
operate than similar buildings
http://www.businessinsider.com


Who Participates in
ENERGY STAR Building & Plants?
• 6,200 buildings
earned the Star in
2008 and 9,000 in
2009, 50% jump!

• 75% of the
consumers were
aware of the ENERGY
STAR brand


2009 Staggering Growth!
• Energy performance of 120,000 buildings
with 14 billion square feet have been
measured.

• 5,000 organizations have joined the
Buildings Program as partners.
• 9,000 buildings earned the ENERGY STAR in
all 50 states.


How Do I Assess Building
Energy Performance?
• How do you know how efficiently a building is
operating?
• What is Energy Performance?
• How do you compare buildings?
– ENERGY STAR benchmarking
– Whole building assessment
– Energy management


How To Start An
Energy Management Plan?

• Compare against other buildings
• Track energy savings over time
• Monitor energy efficiency projects
• Good business practice!
Easy and simple!

ENERGY STAR® - The “Whole Building”
• Assessing a Building Energy Performance
– ENERGY STAR benchmarking
– Establishing a baseline is easy as pie!
– Staged approach is cost-effective methodology
and allows you to see the interaction between
Building Systems

Compared to National Average


What is Energy Performance?
• Energy: Gas, Electricity, Oil, • Building and Operating
Nuclear, Coal Characteristics
Converted into Common Unit Of Measurement: • Square Footage
British Thermal Units • Weather
• 1 kWh electricity = 3.412 kBtu • Occupancy
• 1Therm of Natural Gas = 100 kBtu • Plug Load
• 1 gallon fuel oil = 138.69 kBtu

Building Building
A B

Model Portfolio
Manager

kBTU/Square Footage = Energy Use Intensity

Four Pillars of a Building:
The Systems
• Lighting
• Plug Load
• HVAC
• Building Envelope
• Their interactions – why it matters
“whole building” performance leads to higher
energy efficiency or “energy performance”


Accessing ENERGY STAR


The Typical Office


The Typical Plant


Prioritizing Projects
1. Use ENERGY STAR Staged Approach
2. Estimate energy savings and financial
value of:
– Single measure project:
• Use energy calculators
– ENERGY STAR, FEMP or other third party
– Manufacturers with caution
– Large scale retrofit:
• Economic and energy modeling


Rating and Narrow Down Projects
With First Screening Process
Once an energy performance baseline rating is established, the next steps are
to set improvement goals. The ENERGY STAR guide below helps you interpret
the ratings and determine appropriate next steps.
MAINTAIN
ADJUST These top performing facilities
offer examples of best practices
Facilities in this range may reap as well as opportunities to gain
INVEST significant savings from recognition. Continue to improve
concentration on simple, low-cost and maintain superior
Facilities in this range offer the greatest measures, such as improved performance by focusing on
opportunity for financial and environmental operations and maintenance operations and maintenance.
improvement. Investing in new equipment and practices. Equipment upgrades
enhancing operational practices may have the could yield additional savings.
greatest impact on your bottom line.

1 50 75 100

ENERGY PERFORMANCE RATING

How do I Prioritize Projects?

Behavior
7-28.1%
3.5- 15.2%
O&M

Lighting
9.4 - 25%

Controls Equipment
7.3 – 22.9% 3.5 – 15.9%


The Critical Component
• Financial crisis continues
• Energy Efficiency Project Financing is available
for projects that meet
– Credit standards
– With reduced or mitigated Performance risks
– Produce strong stream of CASH FLOW DURING
THE LIFE OF THE FINANCING OR LONGER


Where is The Money, Honey?
• We have no budget!
• How do I finance 100% of the projects?

Get money from Wall Street?
WRONG! Think again!
Cash Flow Grows from Energy Efficiency Not On Trees!


Cash Flow is King! Why?
Businesses and governments cannot exist without
cash flow

Money has to grow to allow to pay for goods and services

Today’s Dollar is
Better than Tomorrow! Why?


Net Present Value Analysis
• .

All payments are added and
brought back to today’s dollars


Sources of Financing
• Internally Generated Cash Flow
– Higher rental income
– Lower utility bills and related labor
– Use the Staged Approach Strategy

• Utilities Incentives and Rebates

• Leasing: the new frontier in Energy Efficiency Financing!

• Federal / State Tax and Other Incentives

• Insurance premium discounts


Cash Financed Projects
1. Benchmark
2. Maximize Operations & Maintenance Savings
3. Identify and sequence LOW cost improvements

7 to 28 % on energy bills
helps pay for measures!


ENERGY STAR METHODOLOGY
Identify and sequence LOW cost
improvements


Operating Budget vs.
Capital Budgeting

• What if no leasing policy?

• Use your operating budget to fund projects.
– Easier to get approved. Can achieve budget
neutrality if energy savings equals or exceed
monthly debt service


25%

9.4%


Leases
• Types:
1 . Operating Leases = rent equipment
2 . Capital Leases – own for $1 buyout

• 100% of equipment costs, hardware, software and
installation

• Term: up to 10 years, normally

• Every industry - private and public finance


Leasing - Benefits
• Reduces first cost hurdles
• Common vehicle in financing projects
• Quick turnaround time
• Flexible Payment schedule: match business
cash flow


Utility Incentive Programs

• Utility Financing program
• Savings by Design
• Rebates & Incentives
• Demand Response

2010-2012 Energy Efficiency Portfolio
approved by the California Public
Utilities Commission (CPUC)


Utility Rebates vs. Incentives
Incentives
• up to 50 % of project cost including labor
• takes longer due to Measurement & Verification
• pre-inspection
• larger lighting projects

Rebates
• quick & simple
• submit invoice
• ideal for small projects


Permanent Load Shifting
“Shift & Save”- store thermal cooling capacity during
off-peak hours and/or partial-peak hours in order to
meet thermal cooling load in subsequent on-peak
hours.


San Diego Gas & Electric
On Bill Financing

• 0% interest loan
● Loan = total project cost – incentive/rebate
● Monthly payments based upon
energy costs savings.
● Payments are made on the
utility bills.


SDG&E On-Bill Financing

• Business Customers :
- Loan from $5,000 to $100,000 per meter
- Max five year term.

• Government & tax-funded agencies:
- Loan from $5,000 to $ 250,000 per meter
- Max ten year term


On Bill Financing


SDG&E – Radisson
Rancho Bernardo Case Study
Replace 153 guest
room PTAC’s and
switch to T-8’s


Energy Savings Estimates
Vending
Machine
Energy
Savings
Calculator


Transparent Assumptions

Assumptions are
crucial in your
Management
presentation


FEMP Single Measure Calculator


Continued


Continued

This cost calculator is a screening tool that estimates a product's lifetime energy cost savings at various efficiency
levels. Maintenance and installation costs do not vary significantly among the same product having different
efficiencies; so, these costs are not included in this calculator tool. See For a detailed life-cycle cost analysis,
FEMP has developed a tool called Building Life-Cycle Cost (BLCC). This downloadable tool allows the user to vary
interest rates, installation costs, maintenance costs, salvage values, and life expectancy for a product or an
entire energy project.

FEMP Life Cycle Cost Tool
for Large System


for Large System


DOE Endorsed Single
Measure Calculator


Project Financing Checklist
 Check for savings from Operations and Maintenance
procedures?

 Is the project eligible for utility?
 Rebate,
 Incentive,
 Demand Response,
 Savings by Design?

 Is utility financing available?

 Is energy efficiency financing available from the State?

Project Financing Checklist (Cont’d)
 Is project eligible for EPACT 2005 tax deductions?

 Has project sponsor applied for grants or loans?

 How much of the project can be financed with a
lease?

 How much up front cash is required after all of the
above sources are used?


http://www.iamaceo.com


Letter Attachment to
Building Upgrade Value Calculator


Letter Attachment to
Building Upgrade Value Calculator

Therefore, we recommend and request approval for these energy efficiency measures to improve
Mark Twain House & Museum ’s overall performance. We look forward to speaking with you.
Sincerely,
Daryl DeJean
Emerging Technologies Associates Inc.


Locate Calculator
on ENERGY STAR


Locate Financial Calculator on ENERGY STAR

Financial Value Calculator

Scroll down to the bottom of the page
92


Step 1 - Input Data


Step 2 - Choose Savings Level


Step 3 - Estimate Cash Flow


Step 4 - View Potential Returns

Run what if’s

Compare Today and Tomorrow Dollars!

Tomorrow’s $:

Today’s $: $111,601 ©Kingport DBA Resource Productivity Associates, 2011 98

Building for Environmental and
Economic Sustainability(BEES)
Resource Productivity Associates
is a member of ASTM committee
developing worldwide standard


A Critical Piece of The Puzzle

CASH FLOW

http://www.jmorganmarketing.com


Create Cash Flow


The Value of ENERGY STAR


Reduce Consumption
Reduce Operating Expenses
7% 6.47%

6% 5.66%

4.85%
N 5%
4.04%
O
4%
I 3.24%
3% 2.43%

2% 1.62%

0.81%
1%
0.00%
0%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Energy Consumption

THE BUSINESS CASE:
WHY THIS IS WORTH YOUR TIME
• Managing energy use is good business
– strengthens the bottom line and
– positions your company as an
environmental leader

• By improving financial performance and
embracing corporate social responsibility,
superior energy practices can give you a critical
competitive edge.


Look Out from the Microscope


Checklist
Determine the “real” goal
Tie to corporate goals and profitability

Understand the corporate financial requirements

Educate and engage management using ENERGY
STAR
Documented impact on profitability


Checklist (cont’d)
Create a strategy and TEAM

Determine savings using third party tools
ENERGY STAR
FEMP

Analyze any associated risk
Life cycle analysis and impact on profits

Checklist (cont’d)
Consider options on how to finance projects
Self using savings – operating budget
Utility programs
Lease

Use ENERGY STAR Financial Value Calculator to
generate letter

Create 5 – 7 slide presentation if required

Mission Accomplished?


Thank You!

Daryl DeJean daryldejean@gmail.com

How to Sell Energy Efficiency Products

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