Uncovering Savings Through Sustainable Strategies

Categories : Procurement Goals
  • Tags : Save Money | Assess Opportunity | Develop Business Requirements | Conduct RFP Strategy
Published on : Oct 04 2017

As originally published in Properties Magazine

By: IBISWorld Analyst, Ian Buchanan

Utility costs are a major expense for building owners, who are increasingly seeking ways to improve energy efficiency to reduce energy costs. While utility prices have fallen over the three years to 2017, IBISWorld anticipates that this trend will pivot toward growth in the next three years.

To help hedge against coming increases in utility prices, IBISWorld has identified some strategies that businesses and property managers can leverage to both reduce their environmental footprint and save money, including implementing energy intelligence software, installing energy efficient doors and windows and seeking advice from a consultant to reduce utility expenses in the long run.

Energy Intelligence Software

According to the Department of Energy (DoE), the average commercial building wastes about 30% of the energy it consumes, with excess lighting being responsible for the largest source of unnecessary consumption, followed by overheating and overcooling rooms.

One solution to reduce energy waste is implementing energy intelligence software (EIS). EIS is designed to monitor a building’s lighting, HVAC and electrical infrastructure systems to optimize energy usage. EIS typically works in tandem with installed sensors and meters that provide real-time readings of electrical use, and adjusts settings automatically to optimize energy consumption. Simple systems use motion sensors to turn lights off when a room is unoccupied. More advanced systems can use sensors to detect ambient light from windows and dim the lighting in different parts of a building in response. Implementing EIS can help build owners achieve energy savings ranging from 8% to 15%.

Over the three years to 2017, greener buildings have become more popular, in turn driving demand for this software. As demand has increased, suppliers have been able to raise their prices. These trends will likely continue. In fact, over the next three years, IBISWorld anticipates EIS prices will rise further at an estimated annualized rate of 1.1%, reaching $3,656 per year in 2020. Buyers are encouraged make EIS purchases now to avoid higher list prices down the road.

Green Services Pricing Table

Installing Windows and Doors

Commercial buildings with several windows or windows with poor heat reflection create the potential for inefficient HVAC usage. In fact, the DoE estimates that roughly one-third of cooling costs are attributable to heat transferred through windows. Windows that do not reflect heat from the outside force HVAC systems to use more energy to reach the preset optimal temperature. By installing more energy-efficient windows, buyers can reduce their cooling costs.

Similarly, heating loss can occur in the winter due to low-quality, poorly installed doors that let in cold air. By installing doors designed to insulate and prevent drafts, contractors and building managers can reduce heating costs.

Over the three years to 2017, the cost of window and door installation services has been increasing at an estimated annualized rate of 2.2% to reach $459 per installation. Due to growth in demand, the price of window and door installation services is expected to increase further at an annualized rate of 1.0% over the three years to 2020.  Consequently, buyers should look into securing a contractor now to avoid higher prices in the near future.

Energy and Utility Consulting Services

Building managers looking to make their facilities more eco-friendly and reduce energy costs can also purchase energy and utility consulting services. Consultants work with building owners to assess areas in their facilities that are wasting energy and identify possible solutions. After an initial assessment, the consultant can help develop a plan to achieve the buyer’s cost savings goals. Service prices vary widely, but average prices in 2017 are estimated to be $194 per hour. Growth in demand for energy and utility consulting services has been pressuring prices for the service upward at an estimated annualized rate of 0.9% over the three years to 2017. This upward trend is forecast to continue, with service prices rising at an annualized rate of 1.2% over the three years to 2020. Consequently, building managers should begin issuing RFPs now to avoid steeper costs in the future.

Going Green Saves More Than Money

Despite the recent decline in the price of utilities, an expected rebound creates an incentive for building managers and contractors to increase their buildings’ operational efficiency. Purchasing energy intelligence software, installing specialty windows and doors, and hiring energy and utility consultants are all possible options to save money by increasing energy efficiency. Having a green building also helps the environment by conserving natural resources. Demand for utilities lowers when the amount of energy wasted is reduced. In turn, fuels commonly used to produce energy, such as coal, natural gas and crude oil, are consumed less and depleted at a more sustainable rate.