Thursday, March 18, 2010

Energy Costs and the Facility Manager: Fox Guarding the Chicken Coop?

Think about how energy efficiency providers interact with large facilities. Top managers don’t have time for utility issues because “they have a business to run.” They delegate the contact to the Facilities department, because these are the people who are closest to energy issues. Here’s where it gets interesting: energy is only one of many duties that compete for the facility manager’s time and budget. Note that Facility departments are cost centers, not profit centers. As a result, facility managers are not motivated by profit. Instead, they propose and maintain the largest budget they can. Their first priority is to reliably meet the comfort or productivity needs of the facility. Efficiency comes second (facility managers lose jobs over lapses of reliability, not efficiency, per se). In practice, a procurement person may manage the price at which energy is purchased, but volume is determined by the facilities department. Given the vagaries of weather, price variance, and other drivers of energy consumption, few observers will challenge a proposed energy budget. As a result, facility managers can use the “energy” line item to pad their operating budgets. As a consequence, a lot of facility managers do not want energy efficiency. It is perceived as a threat to their budget-- and the power that a budget provides. This is a real barrier to the implementation of energy efficiency. If providers of energy solutions work through a facilities manager, they have a two-part challenge: (1) to discern the true motives of the organization's facility manager, and (2) to position energy solutions in ways that resonate with that manager’s agenda.


Saturday, March 06, 2010

Thoughts on "Mandatory" Energy Audits

I saw the aftermath of a web discussion of "mandatory" energy audits. It became an ugly shouting match over constitutional rights. Being too late to participate, I thought I'd share the following observations:

1. The average person is only vaguely aware of what an energy audit does is what it provides. We have to gently educate people so that they know, for example, that the energy audit itself does not save energy. The audit is merely a roadmap that shows where the savings are and how to get there.

2. Energy audits are not all created equal. The report of recommendations depends on the skill and knowledge of the auditor. Ten different auditors can study the same facility and end up generating ten different reports. There may be some overlap in findings, but variation may be great. My point: energy audits are not a commodity (consistent in form and value regardless of source). Also, you get what you pay for-- which leads me to my next point...

3. Today's proclivity for "free" energy audits means providers are scrambling for ways to meet this demand while minimizing their expenses. You can imagine what this leads to in terms of shortcuts, which then compromise the veracity of the results. There are plenty of energy widget vendors that offer free energy audits that recommend (surprise!) that you buy their energy widget. Never mind whether or not that widget is the most valuable energy savings opportunity for the property. Lest there be heartburn created in the policy community because of these comments about free energy audits, let it be known: "free" is better than nothing. This refers to the free audits conducted by most utilities, universities, or government agencies for the purpose of educating observers as to the merits of efficient energy use.

4. The concept of mandatory audits creates dilemmas similar to the "free" audit. With mandatory provision comes mandatory pricing. Add to this the point about variability of results. The next step is to mandate not just the provision, but also the format of the energy audit. This begs a form of regulation, the political implications of which need no explanation.

5. If an energy audit is mandatory, it implies that there is (or should be) some liability for the results. Given the inexactness of energy audit practices, the door is open to a variety of class-action lawsuits. That dripping sound you hear is the salivating legal community.

Please understand, I am sympathetic to the spirit of energy efficiency. But as with most things, the devil is in the details. I think we can expect that consumers will, over time and as energy costs escalate, begin learning more about energy audits and demand services to offset their escalating energy expenses.


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