When you’re faced with a new economy due to the COVID-19 pandemic and a looming recession, investing your construction, renovation, or upgrade dollars in energy efficiency may not be a top priority. However, if you’re looking for long-term gains, energy stability, and lower emissions in line with ever-changing government standards, now is the time to move energy efficiency to the top of the list.
The New Energy Landscape
The COVID-19 pandemic has taught us many things, not the least of which is how devastating a public health emergency can be to both life and business. One surprising result is how much pollution there really is in the world and how air and water can run clean when people stay home en masse.
One dramatic example is that of satellite images of China taken before stay-at-home orders compared to those taken four weeks later. The initial images showed large areas of pollution throughout much of the country. One month later, those areas were nearly gone in new images.
This was just one instance of many around the world that show what happens when pollutants are taken out of the environment. The result will be increased adoption of green energy in new construction and renovations of existing commercial buildings, as well as increased use of green energy technologies in general.
What’s Going on Globally
As governments consider stimulus packages to help jump-start economies, they are being urged by energy industry organizations to include clean, green energy funding as a way to create jobs and get people back to work. The International Energy Agency is holding its annual Global Conference on Energy Efficiency (virtually) this month. It will focus specifically on how stimulus investment in energy efficiency will be crucial in a world living with COVID-19 for the foreseeable future.
If organizations such as IEA are successful, there may be more government grants, rebates, and other incentives available for companies that will add energy-efficient technologies to their properties.
What’s Going on in the U.S.
In the U.S., there will likely be a big push in growing jobs focused on energy efficiency. The 2020 U.S. Energy and Employment Report found that energy efficiency jobs saw the most growth in new jobs within the entire energy sector in 2019. Unfortunately, the pandemic led to significant furloughs and job losses within this industry.
Even with the effects that COVID-19 are having on the economy, growth in the energy efficiency sector is still projected to trend upward. That means demand for properties that save on money and emissions will also grow.
Changes in How Energy is Used
Finally, how people use energy is changing now that staying close to home is the new normal. Though many people are returning to life outside their homes, energy use patterns are changing across the board. This can result in increased load for the existing power grid.
In many areas of the U.S., the grid may not be able to withstand the demand for power. Lawrence Orsini, Founder and CEO of LO3 Energy even predicts that there will be blackouts in areas across the country this summer as the grid in some areas sees extraordinary increases in energy use.
What if your building is within such an area and your businesses or tenants have to struggle without power for an unknown period of time? The calls, complaints, loss of revenue from tenants not renewing leases, added expenses of maintenance over time, and all the other hassles can make your head ache just thinking of the possibility.
But what if your building didn’t have to draw power from the grid and you could keep the air conditioning going on a hot summer night when all the other buildings on the block are dark? Going energy efficient with a cogeneration plant is how you can make that happen.
Smart Spending is the Way
Recession can be a scary word. For those who are in the commercial building development and management industry, it means re-evaluating existing project costs, new projects planned for the coming year, and where expenses can remain static or be cut. Often, this is an exercise in balancing short-term and long-term circumstances.
But when energy efficiency choices come into focus, this is one area that is better to allocate funds to now. In a press release announcing the release of the 2020 U.S. Energy and Employment Report, former U.S. Secretary of Energy Ernest J. Moniz says “energy investment is a winning formula to respond to any recession.”
Why is that? In the case of commercial property development and management, it saves you money in the long term and can even result in streams of revenue.
Would you consider this a good investment? You add five cogeneration plants, a state-of-the-art building management system, and update HVAC components to an existing building you own. This upgrade costs $2 million, which you pay for over the next five years, and in three years, you see a total return on investment of $4 million.
How about if the ROI continued to deliver revenues every year thereafter? Even better, what if you could also get grants, tax relief, and rebates from the government for making the investment? Many of these incentives already exist and as more stimulus provisions are legislated, we’re likely to see additional opportunities to save on energy efficiency projects.
Think Long-Term
Recessions are temporary and inevitable in any economy. Like investing in the stock market, investing in energy-efficient building technology is a long-term game. It takes time to realize savings and gains, but staying the course through economic ups and downs is what results in the most return.
At MES, we specialize in building custom cogeneration, HVAC, and building management solutions that increase energy efficiency, lower operating costs, and reduce a building’s carbon footprint. When we work with a new client, we think about how their investment in our green energy solutions will benefit them and their stakeholders for years to come. We also look at costs, savings, incentives, and potential revenues for 12 to 15 years after the initial investment because we want clients to see the financial practicality of bringing energy efficiency to their buildings.
Consider what could happen if you were managing the construction of a new mixed-use building that will have both commercial and residential tenants. You allocate funds from your approved budget now to add cogeneration, HVAC, and/or building management systems to the project.
This decision means when the building is complete, it will deliver highly efficient energy, heating, and cooling that is not dependent on the grid or public utilities and is reliable even under heavy usage. This energy also results in significant cost savings that can increase year over year.
Because you have a cogeneration system powering your building, you may even be able to sell the excess energy directly to tenants or to utilities in areas where allowed by law. What results is revenue streams that can continue coming in long after the initial investment has been recouped.
What about upgrading an existing building? Adding cogeneration and efficient HVAC systems to an existing building can be a significant upgrade and capital expense. However, you still get the same efficiencies, return on investment, and possible revenue streams detailed above. You may also qualify for rebates or incentives, which will lower your costs.
COVID-19 took the world by storm in ways that few could have planned for. Now that we are looking at an economic recession and adjusting the way we live and do business, we need to also look at how we achieve long-term energy goals. Investing in energy efficiency projects today can help you and your business take on this new world, new energy economy, the next pandemic, and overall financial stability.
