Investing in assets when future is uncertain

Posted November 14th 2010

Building managers in both the public and private sectors face the challenge of not knowing which assets will remain in their portfolio in the future.  With this uncertainty, it becomes challenging to make the investments needed to save energy.  HVAC controls are often considered one of the low hanging fruits in energy efficiency measures—however, traditional DDC retrofits have payback periods of 7-10 years.  Without knowing the long-term fate of a facility, this ‘low hanging fruit’ may be a leap of faith too far.  Ironically, by not increasing the efficiency of that facility, chances that it will be on the cutting block may actually increase.

With a payback period of around 18 months, most of our clients find it to be a no brainer to invest in our Wireless Pneumatic Thermostat (WPT) to save energy and money.  However, in the current economic environment, there are some that find even 18 months to be beyond their horizon.  Fortunately, in some regions in the country, there are utility programs that can help reduce the payback period to well under 12 months, which actually helps the current budget cycle.  For instance, in California the utilities will pay up to $300 per kW of auto-demand response capacity and $0.09 per kWh.  By participating in these programs, the upfront cost of the WPT can be reduced almost in half.  These incentive payments turn a ‘no brainer’ investment into a compelling opportunity even for the most risk averse organization.

David K. Roberts