Prioritizing Energy Projects

Editor's note: In September, the author will present “Practical Energy Benchmarking for Commercial, Institutional, and Light-Industrial Facilities” during HPAC Engineering's seventh annual Engineering Green Buildings Conference and Expo. For more information, go to www.egbconference.com.

Sustainability, green energy, and LEED certification are the topics of the day for building owners and managers. With so many conservation opportunities, how does one determine which projects to pursue on a limited budget?

To this observer, there is far too much emphasis on supply-side issues, such as rate structure and regulation, supply and price variability, futures speculation, and contract negotiations. Let your company's policymakers handle those high-profile political issues. Concentrate your efforts on demand-side optimization.

Determining which projects will produce the “biggest bang for the buck” can consume scarce resource time, but is crucial to having a sound energy-conservation plan that produces effective savings the boss will appreciate.

The first order of business is to analyze one or two years' worth of energy costs and use. Because financial types may not be readily able to compare a kilowatt-hour of electricity to a therm of gas, energy data need to be converted on a “unit-cost” basis for comparison.

Which forms of energy are likely to escalate in price over the next three to five years? If you do not have access to local energy-price forecasts, go to the Website of the U.S. Energy Information Administration (www.eia.doe.gov).

Table 1 provides data for comparing energy use and cost on an equal basis. Site energy should be compiled into one energy-measurement standard. British thermal units per year is recommended.

Table 2 shows how to compare the various sources of energy on an equal basis.

Electricity is three to five times more expensive than natural gas and expected to remain so. In some regions, the price of electricity is expected to continue rising at a rate of 4 to 8 percent a year because of commercial and residential growth and the Communication Age explosion. Meanwhile, the Henry Hub natural-gas-price forecast through 2011 is a relatively stable $4 to $6.

Many facilities use more thermal energy (gas and oil) than electrical energy over the course of a year, but the annual cost is much less. For the facility in Figure 1, electrical projects surely would be more likely to yield greater overall savings and a higher annual rate of return.

Table 3 is a generic list of potential sources of electrical- and thermal-energy savings in a typical facility. The challenge is to conduct a brief assessment and identify several good opportunities.

Table 4 contains examples of cost-savings calculations for an electrical project and a thermal project. Each item identified for a facility should be analyzed in a similar manner.

Some electrical projects (e.g., replacing perfectly good lighting and smoothly running motors) may seem time-consuming and result in lower overall savings. If your power cost is 4 to 6 cents, electrical projects will not yield a good return on investment. Conversely, if your power cost is 10 to 12 cents, any type of electrical project will be extremely attractive. Moreover, thermal projects also can produce exceptional savings. You just need to perform the audits and associated analysis.

Tabulating everything in an Excel spreadsheet (using next year's energy-supply and project-implementation costs) can be an easy method of comparing economic benefits and presenting projects to management for approval. Additionally, it makes you much better prepared to have an honest discussion with equipment suppliers.

When purchasing products, use life-cycle analysis, rather than simply go with the lowest-cost option. One caution: Government stimulus programs have drawn a few nefarious characters into the green-energy movement. Some were selling automobiles and real estate just last year. Check the fine print about performance guarantee before buying.

The president of JoGar Energy Services (www.jogarenergy.com), provider of on-site technical reviews, inspection services, and training seminars, Gary W. Wamsley, PE, CEM, has 40 years of plant-operation and management experience in the tire, aerospace, and paper industries. He is a member of ASME, the American Institute of Plant Engineers, the National Society of Professional Engineers, and the Association of Energy Engineers, as well as HPAC Engineering's Editorial Advisory Board.