A constant, challenging goal is improving profitability. Daily emergencies keep us busy – it’s easy to “wait until tomorrow” to address systemic issues that eat away at profitability. Or, as famous author Peter Drucker puts it, “Profitability is the sovereign criterion of the enterprise.” Minimizing overhead is the fastest, most predictable way to improve your bottom line, versus painful measures like raising prices or reducing head count. Let’s look at five ways that improving energy efficiency will improve profitability.
A one-time investment in energy efficiency will permanently lower operating costs
How much do you expect to spend on energy bills and building maintenance this year? If you could permanently reduce those costs, what would you do with your savings?
An efficiency upgrade can reduce energy bills by 20-70%, and studies show that efficiency projects can reduce total operating costs by 8.5-19%. These are bottom line, profit dollars going out the window every day.
The best part – the utility companies fund 30-50% of the upgrade cost through a rebate fund that we all pay into every month. (See the “Energy Efficiency Surcharge” on your electric bill.). The rebates are YOUR money.
Energy efficiency is a low-risk investment with time-tested, predictable savings
There are only three known ways to improve profitability:
- Raise prices. Often tough to do without losing customers
- Increase sales. Ex: Hire salespeople, advertise, introduce new products
- Lower your costs. The most predictable way to improve profitability
Energy efficiency measures are a safe investment because you can easily determine savings through an energy audit. Comprehensive, whole-building audits provide accurate savings projections as they are based on calculated energy measurements specific to your building. Typical paybacks are 1-4 years, and the energy savings far surpass the non-rebate cost.
Better yet, the utility companies independently verify the savings projections determined by the company who performs your energy audit. An expert from the utility will review the project proposal to validate the recommended solutions and savings both before an installation and after the work is complete. This additional inspection further reduces any risk associated with the investment and provides peace of mind to business owners looking to improve profits.
Converting from fluorescent to LED lighting typically reduces your lighting-related electric bill by 70%. If you know you are replacing a 100 Watt fluorescent fixture with a 30 Watt LED, and you know how many hours your lights are on, you multiply this times your electric rate (listed right on your bill), and voila – a simple 4 column spreadsheet tells you exactly what you will save. Predictable.
Reduce energy without replacing costly equipment
An energy efficiency upgrade doesn’t necessarily mean ripping out and replacing old equipment. Retrofitting existing technology is often a better solution as it yields similar energy savings and extends the life of older equipment. In many cases, replacing or retrofitting equipment can be avoided altogether, as small improvements make systems run more efficiently.
- Energy efficient refrigerator evaporator fans produce 2/3 less heat, meaning coolers don’t have to work as hard to stay cold. And they use 2/3 less energy.
- Switching to LED bulbs can significantly reduce light-generated heat gain by 50%, so HVAC and refrigeration systems need to work less to cool the same amount of space.
- Installing a cool or white roof coating can save up to 15% of annual air conditioning energy use, significantly reducing wear and tear on the HVAC system.
- Energy efficient solar window film can also reduce cooling costs by up to 30%, especially in buildings with lots of south, east, and west-facing windows. As a side benefit, the film eliminates glare on your computer screen, so shades are eliminated and you get back your wonderful window view.
- Instantly Improve Curb Appeal.
If you own a retail store, repair facility, or car dealership, you know the importance of curb appeal. With more and more of the competition upgrading to LED exterior lighting, a customer can instantly tell which store is new and modern – even if it was built many years ago! LEDs have a profound impact on both the interior and exterior of a building, plus they use 70% less energy and last 3-5 times longer than fluorescent bulbs. If you want to keep pace with your competition or maintain brand standards, LED lights are a low-cost and low-maintenance solution. (Your employees will love the improvements, too.)
Financing Options Keep You Cash Flow Positive on Day One
There has never been a better time for businesses to take advantage of energy efficiency upgrades. Federal and state governments, utility companies, and lenders are working hard to remove barriers to upgrading. This has led to a huge increase in available rebates, tax incentives, and financing options.
Almost all energy efficiency upgrades qualify for a utility-funded rebate, which means the utility company will cover from 40-70% of the total project cost. Business owners who wish to finance the remainder can utilize bank loans, on-bill financing from utilities, and a wide array of equipment leasing options.
The Best Part
Upgrading is simple. Many energy efficiency partners will handle the audit, design, and installation – plus all the paperwork with the utility. It’s a smart move for your pocketbook, while lowering your carbon footprint!