2022 has been a tough year for those paying utility bills. And, this year we’ve heard several building owners, managers, and tenants express frustrations around blown utility budgets by midyear, primarily driven by natural gas increases.
Natural Gas & Electricity Prices Are Going Up
As you’ve likely experienced, natural gas has had a perfect storm of factors driving up commercial end-user pricing, from international relations to policies to supply/demand to “weather events”. The U.S. Energy Information Administration (EIA) cites that Residential and commercial natural gas prices reach multiyear highs in 2022. That’s building on 2021, when EIA notes “Energy prices rose more than other commodities.” And, it’s not over yet. In this article, EIA expects high prices for natural gas this winter as global consumption remains high and inventories low, EIA notes “the U.S. natural gas spot price at the Henry Hub will continue to climb this winter, reaching a monthly average of $9.10 per million British thermal units in January 2023. That price will be the highest inflation-adjusted monthly average price since 2008.”
U.S. monthly end-use commercial natural gas prices (Jan 2017-Jul2022) dollars per thousand cubic feet. (Mcf). Source: U.S. Energy Information Administration, Natural Gas Monthly, September 2022.
We’ve seen electrical rates on the rise as well. For instance, one client typically paying a $.11/kW blended rate experienced up to $.16/kW within the year. And, utilities are pushing to raise pricing even further. EIA data shows the average electricity price to commercial users up 11% from $11.96 (2021) to $13.3 (2022) for the month of September.
So, How Do You Fight Increasing Energy Costs?
Without delving into macro issues causing these increases, let’s look at what you can do today to take control and reduce your utility expenses behind the meter. Your building can do more to help, through a combination of energy conservation and generation. An energy assessment is a good place to start to help identify the biggest opportunities and solutions you can implement.
Conservation Through Energy Efficiency
Assessing your building’s energy consumption, demand charges, power factor, and utility rates (and rate plan) is a good place to start, identifying and prioritizing energy efficiency and other measures that will have the greatest return on investment.
Over 50% of all commercial buildings that exist in the United States today were built before 2000, as highlighted in a report by The American Council for an Energy-Efficient Economy (ACEEE) “Moving the Needle on Comprehensive Commercial Retrofits”. The average age of U.S. commercial buildings is 53 years old; that’s pre-Internet, Pre-LED, Pre-Wireless Network, pre-IoT, pre-Machine Learning…you get the picture. These older buildings often operate with dated systems and technologies affecting energy consumption. Some are still using pneumatic compressed-air controls for HVAC. Some are running systems 24/7. Fortunately, several programs have emerged encouraging “comprehensive” commercial retrofits for these buildings to make them more energy efficient.
The ACEEE research analyzed results from more than 12,000 commercial building retrofits completed through federal, utility, and energy service company programs. The findings demonstrate that comprehensive, integrated, building systems-based retrofits achieve higher energy savings than do single end-use or measure-based approaches like upgrading lighting.
Integrated retrofits include upgrades to heating, cooling, lighting, and other systems. They found that this approach delivers energy savings 2.5 to 7 times greater than single-measure approaches. LED Lighting is typically to go-to retrofit for impact, though other building considerations should be considered in the mix.
An October article in Smart BuildingTechnology magazine, 4 building efficiency strategies to counter soaring energy prices, provides some interesting opportunities to save energy created by new technologies around occupancy tracking and HVAC efficiency baselining. Smart building technologies can help collect data from HVAC systems over time to track performance. These platforms are able to identify system anomalies, such as faults, leaks, degraded performance, misconfiguration, etc. that could lead to higher electricity and/or gas bills and affect, in addition to comfort issues.
Renewable Generation
While conservation through energy efficiency is typically the best starting point to reduce utility consumption and costs, you also have the power to take energy generation into your own hands and become more independent, namely with renewable generation. And with energy-efficiency-driven reduced energy load, you’ll have less load to generate.
Solar is looking better than ever, with the ability to offset some or all (Net Zero!).of your electrical load onsite and receive multiple incentives in the process. And, you can get paid by the utility for the energy you generate. We’re seeing paybacks in 2-5 years on many systems (that would have taken 2-3 times that in years past) with ongoing generation 25-30 years out. The incentives are many, especially factoring in accelerated depreciation and newly-bolstered tax credits. As noted in our recent post, “Building Owner Benefits of the Inflation Reduction Act“, the Investment Tax Credit (ITC) is back up to 30%, higher with adders like domestic sourcing (+10); and, nonprofits can now get the ITC directly.
Geothermal is another option to consider for renewable generation for your HVAC systems. And, depending on your building’s geographic location, aquifer-based geothermal may be a worthwhile consideration. We’re helping clients assess geothermal potential and payback.
Incentives Abound
In an earlier post “Subsidize Your Investment in Building Efficiencies” we highlighted key opportunities to reduce costs through energy-efficiency retrofits, and we noted some of the many programs available through governments and utilities. Identifying and maximizing these incentives can be a challenge, so we help to track and leverage programs to help justify projects …and lower ROI payback timeframes.
Benefits Beyond Energy Savings
While your utility bill may be a key driver this year, many other benefits can result from these upgrades. In addition to reducing energy costs, a building owner also realizes a reduction in operations and maintenance costs, and gains premiums for leasing and asset sales with a more attractive, marketable, and sustainable property.
Let’s Minify Energy!
How can you start saving money on your energy bills? Minify Energy is all about minimizing energy consumption and costs…and making it easy. It’s in our name: Minify Energy = Minimize + Simplify. We help with whole-building assessments and turnkey “deep green” retrofits that span several systems. Start with an assessment, to determine where your opportunities exist and a turnkey retrofit plan, highlighting associated incentives compiled to let you know how much you will save.