How to Sell Energy Efficiency Products
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How to Sell Energy Efficiency Products

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This seminar focuses on using a nationally recognized third-party tool and resources to "validate" energy efficiency projects and successfully get projects funded. The focus will be the......

This seminar focuses on using a nationally recognized third-party tool and resources to "validate" energy efficiency projects and successfully get projects funded. The focus will be the demonstration of how to use this unbiased tool to illustrate to clients the financial impact and benefits of your energy efficiency projects.

Topics include -

executive level financial considerations

the role of benchmarking in getting project funding
incentives as enabler
high impact, proven financial lingo to get funding
effectively presenting projects for funding


Learning Objectives

1. Tools and resources to support energy efficient project funding

2. Benchmarking and project funding

3. Impact of incentives on overall project funding

4. The lingo of finance executives

5. High impact presentation of projects

6. The value of energy efficiency projects to the organization

More in: Technology , Business
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  • 1. Today’s Presentation ADDRESSES ONE OF THE BIGGEST CHALLENGES FACING ENERGY EFFICIENCY PROJECTS ©Kingport DBA Resource Productivity Associates, 2011 1
  • 2. Who We Are?A strategic consulting firm that provides results-focused strategicplanning and implementation to maximize resource productivityto meet sustainability goals of our clients.We have provided seminars and speeches to over 1,000 busybusinesspeople—from management level to CEO—on how toincrease resource productivity in their companies.We help companies develop a comprehensive strategy toresource productivity in their organizations to building a moresustainable financial future, serving as their resourceproductivity coach to meet their objectives. ©Kingport DBA Resource Productivity Associates, 2011 2
  • 3. So you want to know…… How to Sell Energy Efficiency Projects! Presented by: Daryl DeJean Emerging Technologies Associates June 29, 2011©Kingport DBA Resource Productivity Associates, 2011 3
  • 4. Copyright and PermissionsCopyright in all content on this site is owned by EmergingTechnologies Associates, Inc. and Kingport DBA ResourceProductivity Associates. No materials from this presentationmay be reproduced, stored, altered or further distributedwithout our prior written permission. Requests for permissionshould be sent in writing to our headquarters office at theaddress below. Kingport DBA Resource Productivity Associates P.O. Box 5475 Santa Barbara, CA. 93150 ©Kingport DBA Resource Productivity Associates, 2011 4
  • 5. Today Starts the Journey! ©Kingport DBA Resource Productivity Associates, 2011 5
  • 6. ©Kingport DBA Resource Productivity Associates, 2011 6
  • 7. ©Kingport DBA Resource Productivity Associates, 2011 7
  • 8. First Let’s……..©Kingport DBA Resource Productivity Associates, 2011 8
  • 9. How Do We Bridge The Gap? ©Kingport DBA Resource Productivity Associates, 2011 9
  • 10. Points to Ponder• What is the “real” goal of the project? ©Kingport DBA Resource Productivity Associates, 2011 10
  • 11. Besides……..©Kingport DBA Resource Productivity Associates, 2011 11
  • 12. It’s Really About………. http://www.sdkcm.org ©Kingport DBA Resource Productivity Associates, 2011 12
  • 13. Leading To……©Kingport DBA Resource Productivity Associates, 2011 13
  • 14. How are Sustainability andEnergy Efficiency Connected? Sustainable energy is the provision of energy that meets the needs of the present, without compromising the ability of future generations to meet their needs. ©Kingport DBA Resource Productivity Associates, 2011 14
  • 15. Typically, the death of aproject is based upon….. ©Kingport DBA Resource Productivity Associates, 2011 15
  • 16. http://www.edi-nc.com/edi/news/Energyefficiency.asp ©Kingport DBA Resource Productivity Associates, 2011 16
  • 17. It Takes MONEY!http://blog.broadcastengineering.com©Kingport DBA Resource Productivity Associates, 2011 17
  • 18. Therefore……. http://happyhypnosis.net©Kingport DBA Resource Productivity Associates, 2011 18
  • 19. What is the Investment Worth? http://www.rms.net ©Kingport DBA Resource Productivity Associates, 2011 19
  • 20. http://www.meetingarchitecture.com©Kingport DBA Resource Productivity Associates, 2011 20
  • 21. Executives Look For……… http://rethinkhr.org ©Kingport DBA Resource Productivity Associates, 2011 21
  • 22. ©Kingport DBA Resource Productivity Associates, 2011 22
  • 23. How do I effectively “sell” and makecredible presentations of projects to theFinance Team and Senior Management? ©Kingport DBA Resource Productivity Associates, 2011 23
  • 24. ENERGY STAR®Provides the Foundation ©Kingport DBA Resource Productivity Associates, 2011 24
  • 25. http://www.automatedbuildings.com©Kingport DBA Resource Productivity Associates, 2011 25
  • 26. To Create….©Kingport DBA Resource Productivity Associates, 2011 26
  • 27. ©Kingport DBA Resource Productivity Associates, 2011 27
  • 28. Financial Justification of Projects– According to US EPA, “30% of energy bills is used to pay for energy waste” in the typical building.– Why not use the cash flow from the avoided energy waste to pay for new energy efficiency projects?– “We are paying for energy efficiency projects whether or not we do the projects” ©Kingport DBA Resource Productivity Associates, 2011 28
  • 29. http://www.millennialliving.com©Kingport DBA Resource Productivity Associates, 2011 29
  • 30. Utilities: Largest Controllable Operating Expense Growing Impact on Cash Flow Return the CASH FLOW to Facilities/Engineer ing with ENERGY STAR! Source: BOMA: 2008 EER ©Kingport DBA Resource Productivity Associates, 2011 30
  • 31. Leading The Team http://askmarklittle.com/ ©Kingport DBA Resource Productivity Associates, 2011 31
  • 32. Create the Culture ©Kingport DBA Resource Productivity Associates, 2011 32
  • 33. http://www.masternewmedia.org©Kingport DBA Resource Productivity Associates, 2011 33
  • 34. Decision-Making Process In Whole Building Design• Define project goals: – energy - historic preservation – healthy and safe - cost effective – sustainable - aesthetic – functional/operational• Interrelationships and interdependencies with all building systems are understood, evaluated, appropriately applied• Close coordination by integrated team• Facility performance report to show continuous improvement ©Kingport DBA Resource Productivity Associates, 2011 34
  • 35. Cost Effectiveness• Every owner wants a cost-effective building. But what does this mean?• Is it the lowest first-cost structure that meets the program?• Is it the design with the lowest operating and maintenance costs?• Is it the building with the longest life span?• Is it the facility in which users are most productive?• Is it the building that offers the greatest return on investment? ©Kingport DBA Resource Productivity Associates, 2011 35
  • 36. Costs and benefits of alternative decisions?Process is in three steps in large scale projects: 1. Utilize cost management in planning, design development Process 2. Use Economic Analysis to evaluate design alternatives which tool(s) depends on objective: simple payback to life cycle cost analysis 3. Integrate non-monetary benefits such as aesthetics, security, safety or historic preservation ©Kingport DBA Resource Productivity Associates, 2011 36
  • 37. Assess RISK! Performance risk a huge component of any decision Address RISK OF FAILURE UP FRONT©Kingport DBA Resource Productivity Associates, 2011 37
  • 38. Credibility©Kingport DBA Resource Productivity Associates, 2011 38
  • 39. Dealing with Skepticism• MYTH: Buildings need to use all that energy. Energy reduction would require big sacrifices.• FACT: On average, office buildings waste 30% of the energy they use, and simple changes can save a lot! ©Kingport DBA Resource Productivity Associates, 2011 39
  • 40. Dealing with Objection• MYTH: We don’t have the time or money to focus on energy efficiency right now. FACT: Saving energy might be the easiest way we can help our workplace reduce operating costs—and improve the bottom line. Companies and organizations that are leaders in energy efficiency use about 30 percent less energy than their competitors. No wonder nearly one-third of Fortune 500 companies have made a commitment to energy efficiency by becoming ENERGY STAR® partners! ENERGY STAR labeled office buildings cost, on average, $0.54 less per square foot to operate than similar buildings http://www.businessinsider.com ©Kingport DBA Resource Productivity Associates, 2011 40
  • 41. Who Participates in ENERGY STAR Building & Plants?• 6,200 buildings earned the Star in 2008 and 9,000 in 2009, 50% jump!• 75% of the consumers were aware of the ENERGY STAR brand ©Kingport DBA Resource Productivity Associates, 2011 41
  • 42. 2009 Staggering Growth!• Energy performance of 120,000 buildings with 14 billion square feet have been measured.• 5,000 organizations have joined the Buildings Program as partners.• 9,000 buildings earned the ENERGY STAR in all 50 states. ©Kingport DBA Resource Productivity Associates, 2011 42
  • 43. How Do I Assess Building Energy Performance?• How do you know how efficiently a building is operating?• What is Energy Performance?• How do you compare buildings? – ENERGY STAR benchmarking – Whole building assessment – Energy management ©Kingport DBA Resource Productivity Associates, 2011 43
  • 44. How To Start An Energy Management Plan?• Compare against other buildings• Track energy savings over time• Monitor energy efficiency projects• Good business practice!Easy and simple! ©Kingport DBA Resource Productivity Associates, 2011 44
  • 45. ENERGY STAR® - The “Whole Building”• Assessing a Building Energy Performance – ENERGY STAR benchmarking – Establishing a baseline is easy as pie! – Staged approach is cost-effective methodology and allows you to see the interaction between Building Systems Compared to National Average ©Kingport DBA Resource Productivity Associates, 2011 45
  • 46. What is Energy Performance?• Energy: Gas, Electricity, Oil, • Building and Operating Nuclear, Coal CharacteristicsConverted into Common Unit Of Measurement: • Square Footage British Thermal Units • Weather• 1 kWh electricity = 3.412 kBtu • Occupancy• 1Therm of Natural Gas = 100 kBtu • Plug Load• 1 gallon fuel oil = 138.69 kBtu Building Building A B Model Portfolio Manager kBTU/Square Footage = Energy Use Intensity ©Kingport DBA Resource Productivity Associates, 2011 46
  • 47. Four Pillars of a Building: The Systems• Lighting• Plug Load• HVAC• Building Envelope• Their interactions – why it matters “whole building” performance leads to higher energy efficiency or “energy performance” ©Kingport DBA Resource Productivity Associates, 2011 47
  • 48. Accessing ENERGY STAR ©Kingport DBA Resource Productivity Associates, 2011 48
  • 49. The Typical Office©Kingport DBA Resource Productivity Associates, 2011 49
  • 50. The Typical Plant©Kingport DBA Resource Productivity Associates, 2011 50
  • 51. Prioritizing Projects1. Use ENERGY STAR Staged Approach2. Estimate energy savings and financial value of: – Single measure project: • Use energy calculators – ENERGY STAR, FEMP or other third party – Manufacturers with caution – Large scale retrofit: • Economic and energy modeling ©Kingport DBA Resource Productivity Associates, 2011 51
  • 52. Rating and Narrow Down Projects With First Screening ProcessOnce an energy performance baseline rating is established, the next steps areto set improvement goals. The ENERGY STAR guide below helps you interpretthe ratings and determine appropriate next steps. MAINTAIN ADJUST These top performing facilities offer examples of best practices Facilities in this range may reap as well as opportunities to gain INVEST significant savings from recognition. Continue to improve concentration on simple, low-cost and maintain superior Facilities in this range offer the greatest measures, such as improved performance by focusing on opportunity for financial and environmental operations and maintenance operations and maintenance. improvement. Investing in new equipment and practices. Equipment upgrades enhancing operational practices may have the could yield additional savings. greatest impact on your bottom line. 1 50 75 100 ENERGY PERFORMANCE RATING ©Kingport DBA Resource Productivity Associates, 2011 52
  • 53. ©Kingport DBA Resource Productivity Associates, 2011 53
  • 54. How do I Prioritize Projects? Behavior 7-28.1% 3.5- 15.2% O&M Lighting 9.4 - 25%Controls Equipment7.3 – 22.9% 3.5 – 15.9% ©Kingport DBA Resource Productivity Associates, 2011 54
  • 55. The Critical Component• Financial crisis continues• Energy Efficiency Project Financing is available for projects that meet – Credit standards – With reduced or mitigated Performance risks – Produce strong stream of CASH FLOW DURING THE LIFE OF THE FINANCING OR LONGER ©Kingport DBA Resource Productivity Associates, 2011 55
  • 56. Where is The Money, Honey?• We have no budget!• How do I finance 100% of the projects? Get money from Wall Street? WRONG! Think again!Cash Flow Grows from Energy Efficiency Not On Trees! ©Kingport DBA Resource Productivity Associates, 2011 56
  • 57. Cash Flow is King! Why? Businesses and governments cannot exist without cash flowMoney has to grow to allow to pay for goods and services ©Kingport DBA Resource Productivity Associates, 2011 57
  • 58. Today’s Dollar isBetter than Tomorrow! Why? ©Kingport DBA Resource Productivity Associates, 2011 58
  • 59. Net Present Value Analysis• . All payments are added and brought back to today’s dollars ©Kingport DBA Resource Productivity Associates, 2011 59
  • 60. Sources of Financing• Internally Generated Cash Flow – Higher rental income – Lower utility bills and related labor – Use the Staged Approach Strategy• Utilities Incentives and Rebates• Leasing: the new frontier in Energy Efficiency Financing!• Federal / State Tax and Other Incentives• Insurance premium discounts ©Kingport DBA Resource Productivity Associates, 2011 60
  • 61. Cash Financed Projects1. Benchmark2. Maximize Operations & Maintenance Savings3. Identify and sequence LOW cost improvements 7 to 28 % on energy bills helps pay for measures! ©Kingport DBA Resource Productivity Associates, 2011 61
  • 62. ENERGY STAR METHODOLOGYIdentify and sequence LOW cost improvements ©Kingport DBA Resource Productivity Associates, 2011 62
  • 63. Operating Budget vs. Capital Budgeting• What if no leasing policy?• Use your operating budget to fund projects. – Easier to get approved. Can achieve budget neutrality if energy savings equals or exceed monthly debt service ©Kingport DBA Resource Productivity Associates, 2011 63
  • 64. 25%9.4% ©Kingport DBA Resource Productivity Associates, 2011 64
  • 65. Leases• Types: 1 . Operating Leases = rent equipment 2 . Capital Leases – own for $1 buyout• 100% of equipment costs, hardware, software and installation• Term: up to 10 years, normally• Every industry - private and public finance ©Kingport DBA Resource Productivity Associates, 2011 65
  • 66. Leasing - Benefits• Reduces first cost hurdles• Common vehicle in financing projects• Quick turnaround time• Flexible Payment schedule: match business cash flow ©Kingport DBA Resource Productivity Associates, 2011 66
  • 67. Utility Incentive Programs• Utility Financing program• Savings by Design• Rebates & Incentives• Demand Response2010-2012 Energy Efficiency Portfolio approved by the California Public Utilities Commission (CPUC) ©Kingport DBA Resource Productivity Associates, 2011 67
  • 68. Utility Rebates vs. IncentivesIncentives • up to 50 % of project cost including labor • takes longer due to Measurement & Verification • pre-inspection • larger lighting projectsRebates • quick & simple • submit invoice • ideal for small projects ©Kingport DBA Resource Productivity Associates, 2011 68
  • 69. Permanent Load Shifting“Shift & Save”- store thermal cooling capacity during off-peak hours and/or partial-peak hours in order to meet thermal cooling load in subsequent on-peak hours. ©Kingport DBA Resource Productivity Associates, 2011 69
  • 70. San Diego Gas & Electric On Bill Financing• 0% interest loan● Loan = total project cost – incentive/rebate● Monthly payments based upon energy costs savings.● Payments are made on the utility bills. ©Kingport DBA Resource Productivity Associates, 2011 70
  • 71. SDG&E On-Bill Financing• Business Customers : - Loan from $5,000 to $100,000 per meter - Max five year term.• Government & tax-funded agencies: - Loan from $5,000 to $ 250,000 per meter - Max ten year term ©Kingport DBA Resource Productivity Associates, 2011 71
  • 72. On Bill Financing©Kingport DBA Resource Productivity Associates, 2011 72
  • 73. SDG&E – RadissonRancho Bernardo Case Study Replace 153 guest room PTAC’s and switch to T-8’s ©Kingport DBA Resource Productivity Associates, 2011 73
  • 74. Energy Savings EstimatesVending Machine Energy Savings Calculator ©Kingport DBA Resource Productivity Associates, 2011 74
  • 75. Energy Savings Estimates ©Kingport DBA Resource Productivity Associates, 2011 75
  • 76. Energy Savings EstimatesTransparent Assumptions Assumptions are crucial in your Management presentation ©Kingport DBA Resource Productivity Associates, 2011 76
  • 77. FEMP Single Measure Calculator ©Kingport DBA Resource Productivity Associates, 2011 77
  • 78. Energy Savings Estimates ©Kingport DBA Resource Productivity Associates, 2011 78
  • 79. Energy Savings Estimates Continued ©Kingport DBA Resource Productivity Associates, 2011 79
  • 80. Energy Savings Estimates ContinuedThis cost calculator is a screening tool that estimates a products lifetime energy cost savings at various efficiency levels. Maintenance and installation costs do not vary significantly among the same product having different efficiencies; so, these costs are not included in this calculator tool. See For a detailed life-cycle cost analysis, FEMP has developed a tool called Building Life-Cycle Cost (BLCC). This downloadable tool allows the user to vary interest rates, installation costs, maintenance costs, salvage values, and life expectancy for a product or an entire energy project. ©Kingport DBA Resource Productivity Associates, 2011 80
  • 81. FEMP Life Cycle Cost Tool for Large System ©Kingport DBA Resource Productivity Associates, 2011 81
  • 82. FEMP Life Cycle Cost Tool for Large System ©Kingport DBA Resource Productivity Associates, 2011 82
  • 83. FEMP Life Cycle Cost Tool for Large System ©Kingport DBA Resource Productivity Associates, 2011 83
  • 84. FEMP Life Cycle Cost Tool for Large System ©Kingport DBA Resource Productivity Associates, 2011 84
  • 85. DOE Endorsed SingleMeasure Calculator©Kingport DBA Resource Productivity Associates, 2011 85
  • 86. Project Financing Checklist Check for savings from Operations and Maintenance procedures? Is the project eligible for utility?  Rebate,  Incentive,  Demand Response,  Savings by Design? Is utility financing available? Is energy efficiency financing available from the State? ©Kingport DBA Resource Productivity Associates, 2011 86
  • 87. Project Financing Checklist (Cont’d) Is project eligible for EPACT 2005 tax deductions? Has project sponsor applied for grants or loans? How much of the project can be financed with a lease? How much up front cash is required after all of the above sources are used? ©Kingport DBA Resource Productivity Associates, 2011 87
  • 88. http://www.iamaceo.com©Kingport DBA Resource Productivity Associates, 2011 88
  • 89. Letter Attachment toBuilding Upgrade Value Calculator ©Kingport DBA Resource Productivity Associates, 2011 89
  • 90. Letter Attachment toBuilding Upgrade Value CalculatorTherefore, we recommend and request approval for these energy efficiency measures to improveMark Twain House & Museum ’s overall performance. We look forward to speaking with you.Sincerely,Daryl DeJeanEmerging Technologies Associates Inc. ©Kingport DBA Resource Productivity Associates, 2011 90
  • 91. Locate Calculator on ENERGY STAR©Kingport DBA Resource Productivity Associates, 2011 91
  • 92. Locate Financial Calculator on ENERGY STAR Financial Value Calculator Scroll down to the bottom of the page 92 ©Kingport DBA Resource Productivity Associates, 2011 92
  • 93. ©Kingport DBA Resource Productivity Associates, 2011 93
  • 94. Step 1 - Input Data ©Kingport DBA Resource Productivity Associates, 2011 94
  • 95. Step 2 - Choose Savings Level ©Kingport DBA Resource Productivity Associates, 2011 95
  • 96. Step 3 - Estimate Cash Flow ©Kingport DBA Resource Productivity Associates, 2011 96
  • 97. Step 4 - View Potential Returns Run what if’s ©Kingport DBA Resource Productivity Associates, 2011 97
  • 98. Compare Today and Tomorrow Dollars! Tomorrow’s $:Today’s $: $111,601 ©Kingport DBA Resource Productivity Associates, 2011 98
  • 99. Building for Environmental andEconomic Sustainability(BEES) Resource Productivity Associates is a member of ASTM committee developing worldwide standard ©Kingport DBA Resource Productivity Associates, 2011 99
  • 100. A Critical Piece of The Puzzle CASH FLOW http://www.jmorganmarketing.com ©Kingport DBA Resource Productivity Associates, 2011 100
  • 101. Create Cash Flow ©Kingport DBA Resource Productivity Associates, 2011 101
  • 102. The Value of ENERGY STAR ©Kingport DBA Resource Productivity Associates, 2011 102
  • 103. Reduce Consumption Reduce Operating Expenses 7% 6.47% 6% 5.66% 4.85%N 5% 4.04%O 4%I 3.24% 3% 2.43% 2% 1.62% 0.81% 1% 0.00% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% Energy Consumption ©Kingport DBA Resource Productivity Associates, 2011 103
  • 104. THE BUSINESS CASE: WHY THIS IS WORTH YOUR TIME• Managing energy use is good business – strengthens the bottom line and – positions your company as an environmental leader• By improving financial performance and embracing corporate social responsibility, superior energy practices can give you a critical competitive edge. ©Kingport DBA Resource Productivity Associates, 2011 104
  • 105. ©Kingport DBA Resource Productivity Associates, 2011 105
  • 106. Look Out from the Microscope ©Kingport DBA Resource Productivity Associates, 2011 106
  • 107. ChecklistDetermine the “real” goal Tie to corporate goals and profitabilityUnderstand the corporate financial requirementsEducate and engage management using ENERGY STAR Documented impact on profitability ©Kingport DBA Resource Productivity Associates, 2011 107
  • 108. Checklist (cont’d)Create a strategy and TEAMDetermine savings using third party tools ENERGY STAR FEMPAnalyze any associated risk Life cycle analysis and impact on profits ©Kingport DBA Resource Productivity Associates, 2011 108
  • 109. Checklist (cont’d)Consider options on how to finance projects Self using savings – operating budget Utility programs LeaseUse ENERGY STAR Financial Value Calculator to generate letterCreate 5 – 7 slide presentation if required ©Kingport DBA Resource Productivity Associates, 2011 109
  • 110. Mission Accomplished? ©Kingport DBA Resource Productivity Associates, 2011 110
  • 111. Thank You!Daryl DeJean daryldejean@gmail.com ©Kingport DBA Resource Productivity Associates, 2011 111