Energy Audits Cut Costs and Reduce Emissions

Commercial Buildings Could Save 30% on Average

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John Avina is president of Abraxas Energy Consulting in San Luis Obispo, Calif.

Scott Surgeoner is manager of communications for FirstEnergy's Pennsylvania and Ohio operations.

Kent Hatt is senior consultant for energy efficiency at FirstEnergy.

Posted: Wednesday, April 8, 2015 4:30 pm

Tax season might not be the best time to talk about audits, but this kind of audit could save institutions a lot of money and help them reach their emission reduction goals, too.

Experts say not enough building owners are taking advantage of energy audits.

Energy audits date back to the 1973 energy crisis, but they have dramatically increased with the growing interest in sustainability, climate change and energy conservation. Yet, according to one East Coast electric utility, nearly 90 percent of their customers have not asked for an audit.

In addition to saving money, there are some powerful reasons for an audit. According to the Environmental Defense Fund:

• 65 percent of greenhouse gas emissions come from energy generation

• $108 billion is spent each year on energy bills for commercial buildings

• 30 percent of the energy used by commercial buildings could be cut through investments in energy efficiency. (The book, "Rules of Thumb," reports that lighting uses 30 percent of the power for a building and is considered "low hanging fruit" for conserving energy, i.e. change outs to LED and CFL.)

Sustainability is another reason.

“To be sustainable is to use less energy,” said John Avina, president of Abraxas Energy Consulting in San Luis Obispo, Calif., which he founded in 2001. The company divides its offerings into the energy analysis and energy accounting spheres.

With analysis, Abraxas provides energy audits (electricity, propane, natural gas, fuel oil, water and maybe diesel), retro-commissioning, and measurement and verification services for the federal government, energy savings companies (ESCOs), utilities and commercial customers. The company also does audits for LEED certification and provides Environmental and Social Impact Assessments (EISA) audits for the Federal Government.

The Abraxas accounting products include utility bill tracking software and databases, and energy management project support for federal, commercial and ESCO clients.

“We hate waste of any kind!”

“We hate waste of any kind,” Avina said. “Our resources are finite, and wasting them is shortsighted, expensive and ultimately detrimental to all of us on the planet. Through our energy assessments, training, software tools and daily interactions with the outside world, we provide guidance to others so that they can reduce energy and water waste at their facilities. This is our calling, and it makes achieving a sustainable environment a cornerstone of all we do.”

“An audit will point you in the right direction,” he added. “An audit is in essence a plan, a road map, written specifically for your building. It identifies energy savings opportunities, explains how one can save energy, and gives an estimate of savings and the cost to implement them.

“With a good audit, you can make intelligent choices that will reduce your energy spend, and make your company more sustainable,” Avina stressed.

Other advantages are reducing operating expenses, increasing profits, determining the best energy efficiency measures for your building and increasing the value of a building.

What is an energy audit?

According to Avina, a non-residential or commercial energy audit is the process of having a professional or certified auditor‎ assess your building for energy savings possibilities and provide you with an “energy audit report,” a carefully thought-out plan that – if followed – cuts energy usage.

Considering that every building is different, and each offers unique opportunities to reduce consumption, Avina emphasized that “this is why every different building requires its own energy audit.”

The American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) developed four levels of analysis applied to most audits:

Level 0 – Benchmarking: A preliminary Whole Building Energy Use (WBEU) analysis based on the analysis of the historic utility use and costs and the comparison of the performances of the buildings to those of similar buildings. Benchmarking determines if further analysis is required.

Level I – Walk-through audit: More preliminary analysis to assess building energy efficiency to identify not only simple and low-cost improvements, but also a list of energy conservation measures to orient the future detailed audit. Level I is based on visual verifications, study of installed equipment and operating data and detailed analysis of recorded energy consumption collected during the benchmarking phase.

Level II – Detailed/General energy audit: Based on the pre-audit, this level includes an energy use survey to provide a comprehensive analysis of the studied installation, a more detailed analysis of the facility, a breakdown of the energy use and a first quantitative evaluation of the measures selected to correct the defects or improve the existing installation. Finally, analysis can involve advanced on-site measurements and sophisticated computer-based tools to evaluate precisely the selected energy retrofits.

Level III – Investment-Grade audit: Detailed analysis of capital-intensive modifications focusing on potential costly options requiring rigorous engineering study.

Costs and benefits

While audits can be very beneficial, not all buildings should go through the process.

“It depends on the size of the building or, more so, on the amount the (owner) is paying for utilities,” Avina said. “If cutting, say 25 percent of the total energy spend is an attractive option, then yes, a company should.”

The next question is whether to pay for it or get a free utility audit, and that also depends on the building's size, Avina said. Paying a qualified person, like a Certified Energy Manager‎, is worth the thousands of dollars they charge for the detailed 50-page report that might save hundreds of thousands of dollars in the long run.

Audit results and paybacks vary. Abraxas has audited more than 40 million sq. ft. of space in the last four years in more than 400 buildings, resulting in at least $20 million in energy savings. Clients usually see between 15 and 40 percent in savings with a simple payback of four years. A 10,000 sq. ft. building that uses about $20,000 worth of energy per year may save only $5,000, which might not justify a costly audit.

“On a hospital, we found that they were being overcharged by their utility by $1.4 million annually. They are resolving this now,” Avina said. “We also audited a very large federal office in Washington in which we were able to find over 50 percent in utility cost savings, just under $5 million annually with a simple payback of under two years.

“I know this sounds impossible, but a large part of this was that the client was paying a very high rate for district steam and installing their own boiler system would cut their heating cost by about 65 percent.”

Additional cost factors

There are additional cost factors. If a building has not aggressively pursued energy conservation during the last 10 years, a 20 percent savings might be possible. If the building owner has, an audit might reveal possible savings of 10 percent. Follow-up audits might not be necessary, since savings from the initial audit can be tracked by billing software.

Another excellent example of the value of audits is the success of EnerNOC Inc., which reported it generated more than $1 billion in customer savings during nearly 15 years. Headquartered in Boston and with offices across the globe, EnerNOC is a leading provider of cloud-based energy intelligence software (EIS) and services to thousands of enterprise customers and utilities globally.

Its EIS solutions improve energy productivity by optimizing how customers buy, how much they use and when they use energy. EIS for enterprise includes budgeting and procurement, utility bill management, facility optimization, visibility and reporting, project tracking, demand management and demand response.

EIS solutions for utilities help maximize customer engagement and the value of demand-side resources, including demand response and energy efficiency.

Subsidiaries and affiliates of FirstEnergy Corp., a diversified energy company headquartered in Akron, Ohio, are involved in the generation (14,000+ MW of capacity), transmission and distribution of electricity, as well as energy management and other energy-related services. Its seven operating companies in Pennsylvania, Ohio and New Jersey serve 4.5 million customers.

Committed to conservation

Scott Surgeoner, FirstEnergy manager of communications for Pennsylvania and Ohio, said the utility is very committed to helping its industrial, commercial and residential customers manage and save electricity, spending about $100 million annually for energy conservation programs.

Some of those programs are mandated by the Public Utility Commission (PUC), including Act 129 that requires Met-Ed and its sister companies — PenElec, Penn Power and West Penn Power — to reduce consumption by as much as 3 percent and peak demand by as much as 4.5 percent in three phases in three-year blocks through 2020.

“It costs a lot of money to try to get people to cut electricity, and legislating energy savings is a tough sell. Education is simple and effective. And we are continually working on energy conservation programs and encouraging especially our commercial and residential customers to audit,” Surgeoner said.

“However, while audits may reveal a lot of options, cost remains an issue. It may be easy for a homeowner to change out light bulbs versus spending $1,000 for a new refrigerator that will only mean saving $50 a year on electricity. A manufacturer might not be able to afford a five-year payback on more energy efficient machine tools,” he said.

Kent Hatt, FirstEnergy senior consultant for energy efficiency, said the utility does all it can to encourage participation in its audit programs for residential and commercial users.

“Not only do we offer them free, but we absorb most of the cost of paid audits. For example, if a homeowner wants a detailed audit costing $500, they only have to pay $100, which is quickly paid back. We contract our residential audits to Honeywell and commercial and residential to CLEAResult.”

FirstEnergy also focuses on urging small businesses to audit, Hatt said.

“We run into understandable resistance with them. A small pizza shop owner running his oven from 7 a.m. to 10 p.m. to earn a decent living doesn’t see an audit as a priority,” he said. “That’s true for a lot of our home businesses, too. But, there is a lot of potential energy savings being overlooked.”

FirstEnergy employees see many examples of savings, but the customers have to choose to go after them, Surgeoner said.

“One small town in our service area has a number of very small, highly sensitive companies with 15 to 20 employees and operating on thin margins in a highly competitive global economy,” he said. “Audits are not in their budgets. The economy also plays a huge role. It’s not the same as it was prior to 2007-2008.”

Financial incentives offered

FirstEnergy offers businesses financial incentives, like one that encourages customers to have an ASHRAE Level II and gives up to 0.05 cents per kilowatt-hour if they implement qualifying audit-recommended improvements such as lighting, HVAC, refrigeration and custom measures.

“Another offer is the Building Systems Energy Efficiency Rebate for electricity savings demonstrated to improve the energy performance of whole-building systems, including new construction projects, renovations, and shell improvements,” Hatt said.

The bottom line for many larger businesses and institutions is that they are looking for a maximum two-year payback for energy improvements, he said, thinking “How can I spend $100,000 for a new conveyor and recoup that on my electric bill in 18 months? And, U.S. companies aren’t benefiting from government energy subsidies like those available in other countries.”

Finally, Avina said there is another key financial point regarding audits.

“Anyone can just install solar photovoltaics on their building, but it may not be the most cost-effective option. Generally, energy efficiency is the least expensive way to reduce your energy spend. Once you are using less energy, then you can size a smaller solar system, saving yourself quite a lot of money on the photovoltaics.”

There’s also the most obvious advice, which Avina uses often.

“The best energy conservation measure is to just turn things off when they are not needed!”

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