Issue link: http://digital.corporatepress.com/i/323271
Facilities Manager | may/june 2014 | 41 power tools Is There a Growing Trend of CFOs Prioritizing Energy Reduction Projects? By Ed Kirk Y et another tight budget year, but a growing number of CFOs are pushing for more spending on energy reduction projects. What has caused this recent shift by the protectors of fiscal responsibility, to actually priori- tize funding for energy reduction initia- tives? After all, this is not a new con- cept—progressive facilities operations managers have been suggesting ways to reduce their overall budgets by reduc- ing utility costs for years. However, the current protracted recession has brought those opportunities to the forefront, and they are attracting more attention. The annual budget challenge has been to cut utility spending without allocat- ing any additional project capital. This forced facilities managers to focus on better ways of buying the utilities, im- proved participation in utility incentives and rebates, internal changes to normal operating set points, and other no-cost initiatives. Without project funding, these initiatives needed to have substantially less than a two-year payback to be completed with operating funds. Typically, energy reduction projects compete head to head for scarce funding with all the other types of worthy improve- ment projects. WHAT IS CAUSING THE NOTICEABLE SHIFT? Slowly, over the last half decade, and in the midst of this protracted recession, energy reduction projects have emerged as an im- portant part of the project mix. What is causing this shift? Maybe it was due to more utility incentives. More local utilities are doling out rate payer funds for customers to use to cut energy use. The strings attached to get the rebates actually add credibility to the projects. As rate-payers, maybe our institutions just don't want to leave this money on the table. At the same time, the project staff and consultants are getting better at performing the energy and financial analysis for these energy reduction initiatives, which en- sures that they qualify for these incen- tives and rebates. Maybe it has been the quickly maturing energy code, ASHRAE 90.1. This decade old code has influenced the choice of HVAC and electrical sys- tems in our new construction and large renovation projects to use less energy. It has also directed designers to use bet- ter materials to ensure higher thermal envelope performance. As designers get more creative, select better products and materials, simplify systems, use technol- ogy in better ways, predict consumption and track results, they are quickly getting much better at specifying what works. The standard line used to be that you would have to pay a premium for these energy consumption reduction projects. It hasn't been nearly as painful or costly as the nay-sayers were predicting. Maybe it has been the shift away from using only first cost budgeting for proj- ects impacting energy use, and for per- forming "value engineering" cost cutting to more financially appropriate tools. There is growing emphasis to use metrics that reflect the comparative true