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The Best of Times | Energy Management

In all our years, NOW is the “best of times” for energy efficiency projects. In this very short article, we will address some energy trends, and then: some very hard, tangible reasons why…

  • Many countries are expanding their policies regarding: electrification, decarbonization, resiliency and other desired outcomes to deal with climate change.  Non-governmental associations like ASHRAE and others are embracing these terms too.  
  • Within many companies, organizations, schools, governments, etc., goals have been set and activities are underway to be aligned with the clean energy transformation, as well as other sustainability trends.  Emissions/sustainability reporting standards are driving higher expectations on everyone. For example, if a major multinational company is required to report emissions, then reporting may be required by its upstream and downstream suppliers too, which may have a 10-fold effect.
  • Decarbonization via Electrification will require a more robust grid, as BBC recently did a short video piece on.
    • CEMs are probably the best-positioned people to solve these temporal/energy issues.
  • Market forces in real estate and corporate sustainability reporting are increasing the appetite for “green” investments. CEOs as well as corporate real estate owners want to look good by being “greener” than their competition.  In fact- renters are willing to pay a premium for certified “green spaces”… so landlords have a financial stake (or loss) depending on their actions.
  • ESGs, net zero commitments and regulatory compliance are popular terms today.  Corporate hedge fund managers are showing a preference for green options, and these preferences drive change from the top down.  More corporate funds may be available for your energy project (because it helps satisfy a regulatory need or corporate goal towards “sustainability” or “decarbonization”, etc.).
  • In the US. We have tax incentives that encourage renewable energy projects such that the return on investments can be greater than 15% per year (for 25 years in a row), which beats most other investments available (especially when you consider the very low risk of energy projects).  Note the 15% per year is only counting the energy savings, and also would get larger if grid prices continue to increase. Did you know that US Tax Credits can range from 30% to over 50%?  Non-profits and government buildings can also take advantage of the tax credits. 
  • Beyond renewables, many energy efficiency projects are eligible for 179d tax deduction benefits, which can turn a 25% ROI project into a 35% ROI or more.  179d benefits can be for your building, your client or your personal gain if you know how.  Non-profits/government buildings can receive benefits from 179d too.

CEMs have an opportunity to understand these motivations and align strategic projects that improve value creation for their company and clients. 

Due to favorable economics, evidence already shows that an energy transition is underway.  Did you know California’s efforts in renewable energy (and efficiency) has turned the “duck curve” into a “canyon”? As the image below from EPRI shows, there is so much solar energy being produced that the California Independent System Operator’s load goes to zero during parts of the day.

This graph is from EPRI (Electric Power Research Institute), data published by CAISO (California Independent System Operator)

As everyone is witnessing this Summer… it is hotter and the sense of urgency for a more sustainable planet is increasing. 

At the same time, artificial intelligence is getting a lot of attention, and changing some parts of our industry.  The good news is that AI may help you improve your project!  One easy benefit is that AI can help you write reports and consider new (AI) perspectives.  If you haven’t played around with ChatGPT, that might be something you want to look into because it’s far more powerful than Siri or Alexa. AI and automation is also showing up in areas like performance contracting, building modeling and even using blockchain. These are terms that CEMs need to know to be “up-to-date”.

The time is NOW… Certified Energy Managers have more tools/leverage to get projects approved (and we have less excuses to fail).  You have every reason to master the new skills and get more projects approved/implemented!

This article was written by: Eric A. Woodroof, Ph.D., CEM & Randy Hoff, Ph.D., PE, CEM

The CEM Annual Update is happening October 17-18, 2023. This popular two-day non-certification program is designed to update current global Certified Energy Managers (CEM) on the most current energy-related trends, strategies, best practices, technologies, and regulations. Learn more about attending in the US and International.