Abracadabra; 10%!

6 07 2010

“Thrown under the bus.”  Now there is a term that has to be going out of style pretty soon.  The phrase is used practically daily by everyone, especially in the news-talk business.  Where did that come from?  Why is it so popular and useable?  Has it ever happened?  It seems it would be very difficult to do.  You would have to take the guy down like roping a calf and somehow stuff them under the cargo hold while the bus is going down the road I guess??  Your timing, strength and technique would have to be impeccable.  It may deserve to be elevated to an Olympic sport. Seems like it would be like trying to stuff a cat into an ice cream bucket.

Some precursors to “thrown under the bus”:  Thrown down the stairs (that’s already been coined but I think it was much underrated); Taken to the woodshed (already coined, gaining traction in politics); Burned at the stake!  Wow, now there’s an old one that probably died at the hands of political correctness; Tarred and feathered; Fed to the lions; Thrown to the wolves.

Some suggested new ones:  Thrown from the train?  Rammed through the wood chipper?  Shoved into the hammer mill?  Sentenced to Oprah?  Boiled in milk?  Shredded with the Sunday paper?  Canned with tuna?  Bagged with the grass clippings?  Thrown in the lake of fire?  Fed to the Stay Puft Marshmallow Man?  Pitted and stuffed with pimento?

“Low hanging fruit” is another favorite of mine – not.  What does low hanging fruit mean?  Well, everybody has their definition of what they think it is but they are not all the same.  Low hanging fruit to me includes all energy efficiency measures that fit in a four year lumped package.  Low hanging fruit to a firm that does performance contracting may represent a package of measures that has a combined five to seven year payback.

In some, circles low hanging fruit means all the energy savings you (consultant) can generate with your magic wand, while rubbing a rabbits foot and humming the cheesy Steve Miller hit, ♫♪Abracadabra ♪♫. Like politicians who think alternative energy is a low cost, abundant source of energy that we just aren’t trying hard enough to develop, these customers seem to think they can cut their energy bills by 10-15% by spending virtually nothing on consultants, hardware, software, programming or contractors.

You can save a lot of energy, and if/when real time pricing becomes available, a lot of money in your home with behavioral changes.  Turn the thermostat up in hot weather; wash clothes on the weekends or after 9 at night, lock your electric water heater and maybe your dehumidifier out during peak hours, and even turn the lights off when you leave the room!

Which of these sorts of measures are going to be available to commercial and industrial facility managers? – shut the lights out when you leave and maybe they can eek the temperature up a couple degrees in hot weather before people start to howl.  How much will this save? Somewhere between 0.01% and 1.00%.  There it is, your abracadabra free audit.

We are working with customers that have savings goals of 10-15% for huge manufacturing facilities and they plan to start with the “turn out the lights” solution.  This is a potential huge waste of calendar time while they watch their bills roll in over subsequent months.  They won’t see savings because it’s down in the grass and well within the “noise” of typical energy consumption gyrations from month to month and year to year.

Getting to the goal can be done with cost effective measures but cost effective and free are two different things.  Ten to 15% savings isn’t going to happen without spending money on expertise, time, and in many cases some equipment or controls.  There is no magic/free solution and the sooner this is accepted, the sooner customers can get on with achieving their energy goals.

Tidbits

Tidbits provides comment and follow up on recent news and posts to this blog.

I said at least twice that the disaster in the gulf would be underestimated.  Two thousand barrels a day turned into 5,000 and now I think the most recent estimate is 50,000 barrels a day.  Touché.

I also said the robotic government bureaucracy would act like idiots.  Recently, the EPA was threatening to keep the A Whale gigantic skimmer with a capacity of 500,000 barrels of treatment per day from performing because its discharge of cleaned seawater may not meet the EPAs standards.  I hope the EPA isn’t around if I should get in an accident and my arteries are spewing blood all over the road.  They may not allow a good Samaritan doctor from plugging the leak.  The area and the doctor’s instruments may not meet hygiene standards.  What morons.

Thirteen countries offered up ships to help contain the “spilled” oil.  Thanks, but no thanks guys.  We don’t need your help.  The 80 year old (or so) Jones Act in a sop to the unions, prohibits foreign vessels from docking in US ports in consecutive stops.  It’s refreshing to know unions take precedent over beaches, birds, turtles, and fishing and tourism industries.  The only thing worse than bureaucracy is a crony one.

written by Jeffrey L. Ihnen, P.E., LEED AP





Horse and Buggy EE Programs

8 06 2010

In many states, energy efficiency programs are meeting annual savings goals and their incentive cash is depleted in a fraction of the year.  States where energy efficiency programs are a new offering are especially quick to meet goals.  These states include Ohio, Michigan and Illinois.  These states rely heavily on lighting, which accounts for somewhere in the range of 90% of the total savings.  Even mature states like Wisconsin and California still get well over half their savings from lighting and other prescriptive measures (rebates).  Wisconsin surpassed goals and ran out of incentives last program year.

There are many ways to solve the “excess savings problem” from reducing or eliminating incentives on some things or eliminating program offerings.  In Wisconsin, they are sort of cutting incentives across the board and getting rid of comprehensive energy retrofit in existing commercial and industrial (C&I) facilities, where everyone knows the greatest potential exists.  Comprehensive energy retrofit in WI is dead because they killed feasibility studies.

Wisconsin must know something Minnesota, Iowa, Illinois, Michigan, New York, California, Johnson Controls, Honeywell, Siemens, and dozens of energy service companies (ESCOs) around the country are oblivious to.  These states’ programs rely substantially on comprehensive energy retrofit and it’s actually the holy grail of energy efficiency.  But not in Wisconsin.

Wisconsin instead relies on the discount model.  See Incentive or Discount, January 12, 2010.  The powers that are believe this is the most cost effective (only) way to deliver savings and that feasibility studies once paid for by the program just rot on the customer’s shelf.  But there are numerous ways to avoid this.  You just have to develop an integrated program that holds customers accountable for implementing measures.

When Wisconsin (Focus on Energy, Focus for short) took over the energy efficiency programs from the investor-owned utilities about 10 years ago, one of the goals was market transformation.  Market transformation simply means making energy efficient products and services the normal way of doing business such that ratepayer-funded programs are no longer needed, or their need is greatly reduced.  Market transformation has long since been cast aside.

Instead, Focus has been transformed into something that seems to be directly at odds with its market transformation charter.  Service providers in the market, ones with expertise and no bias (don’t sell stuff) are locked out by an apparatus that cannot work for them.  Eliminating feasibility studies was the equivalent of adding a mote full of alligators around the fiefdom with razor wire atop the castle wall to keep the serfs out.

The idea that feasibility studies are a waste of money is just plainly incorrect.  Nearly all of our feasibility studies are acted on.  Last year we kicked off a retrocommissioning program with three pilot studies – no commitment from the owners whatsoever.  We just wanted to demonstrate potential.  Two of three have already been implemented.  One has almost a year’s savings accumulated with 25-30% electric and gas savings, on their bills.  The third project is close to implementation, which will probably be completed by year’s end.

In another study, we projected 30% savings for a high school. Actual results were 40% savings, indicated by energy bills.  One college campus: 20% gas and electric savings projected, 20% savings realized.  Another campus 15% and 22% electric and gas savings projected, respectively.  Actual savings from bills: 25% and 20%.  A medical clinic with about 25% savings projected:  actual savings in the first 3 months of post-implementation operation total a full half year of projected savings.  Every one of these projects needed measure identification, cost and savings estimates, and return on investment analysis.  We started with a blank slate.

We have a study underway for a huge food processor and are projecting 3.5 million kWh savings, from only a portion of their air handling systems (68 units).  We are looking forward to moving on to the ammonia refrigeration and compressed air systems. This customer has been very progressive with energy projects over the past 7-8 years and is willing to get everything that meets their financial criteria.  In fact, when we delivered the proposal they agreed to move forward with the study on the air handlers but said, “but I don’t think you’ll find anything”.

The bottom line is, a comprehensive program that includes front-end screening, study, Implementation design, implementation, functional performance testing of measures, and customer training will be acted on by customers.  Of the 10 or so projects, including dozens of campus buildings, where we have used this process, savings have been 20% or more in every case, up to 40%, and actual savings from pre and post implementation bill comparisons have always come in above study projections.  Projects include everything from retrocommissioning to major equipment/system retrofits to new controls systems.

Ironically, we completed a “no risk” study with Focus last year including controls, refrigeration and HVAC.  The customer went forward with all recommended measures.  Again, all we started with was a customer that wanted to cost-effectively save energy, a blank sheet of paper.  No “pre-packaged” projects.  I.e., no free rider.

From a program perspective, this is very cost effective because savings are huge and concentrated and studies do not get stranded.  The problem with some (as in, not all) program administrators whether they be third parties or utilities is they are steadfastly wedded to the status quo with a divorce rate Vatican City would cheer.  The typical disjointed process with reams of paperwork and delays at the outset, no assistance between study and implementation, no hook or commitment from customers to do anything with the study, and no functional testing at the conclusion of implementation is doomed to fail.

The solutions to the “waste of money” issue are simple and they work very well, but some administrators and in some cases regulators need to open their minds and ditch their horse and buggy program paradigms.

And by the way, the attribution rate, which is the savings that occur as a result of an integrated program including feasibility studies, is near 100%.  See the food processor guy’s quote above.  He didn’t think we would find anything.  Tell me.  Would these 3.5 million kWh savings have occurred in the absence of a thorough investigation?  How does a customer who buys an efficient boiler have any idea what the incremental cost and energy savings of his new equipment are?  Does that constitute decision making based on energy efficiency?  Perhaps some programs could improve their attribution rates on C&I programs if they would actually lead customers to implement energy efficiency measures rather than chasing contractors, like lawyers chasing ambulances, to capture savings that are going to happen in the marketplace anyway.

written by Jeffrey L. Ihnen, P.E., LEED AP





Fortune 100 Energy Efficiency

30 03 2010

One of the downsides of the surging awareness and growth in energy efficiency and renewable energy, in my opinion, are all the Johnny Come Lately energy services arms of giant corporations.  Companies include Lockheed Martin, United Technologies, Eaton, and Chevron.  These giants have revenues of $45 Billion, $53 Billion, $12 Billion and a meager $176 Billion, respectively.  Poor Chevron’s revenue dropped from $275 Billion from the year prior.  Maybe they should focus on their core business and leave the energy saving to the rest of us.  Among these, only measly Eaton isn’t in the Fortune 100 (Eaton comes in at 207 on the Fortune 500).

Why do these giants want to get into energy efficiency?  Revenue from their energy efficiency services wouldn’t show up on the first six significant digits of their total revenue, but yet this is huge business compared to peons like Michaels Engineering and dozens of other service providers.  Lockheed probably charges the government more for one tire on an F-35 joint strike fighter than we earn in a year with 40 people.

On the other hand, these behemoths have to get huge projects like those for large college campuses or military bases to be worth their while and to be cost effective to carry their crushing overhead.  This leaves plenty for us little guys to fight over.

On the third hand, they provide competition for the other titans of performance contracting, including Trane, Honeywell, Siemens, and Johnson Controls, and I’m all for that.

Having provided technical support and program evaluation for dozens of utilities, I don’t think we have yet seen any requests or applications for incentives from these giants, for their customers.  Why would they leave all this free money their customers could claim on the table?  Could it be they don’t want anyone looking at their underbelly?  Customers should demand this.  But then again, customers are typically state and federal government entities.  Even though these incentives are theirs to lose, it’s really ours.  So who cares?  What a racket.

Of course most of these huge companies, except Lockheed and Chevron I believe, use performance contracting to peddle their wares, whether customers need the stuff or not.  As mentioned last week, they’ll “give away” studies and other services, and sometimes even equipment to hook (or harpoon) these customers.

Within the past couple years, one of these performance contractors had seduced a local school district by offering them “free” equipment in exchange for maintaining their buildings’ heating, cooling, and control systems over 10-20 years.  What were they thinking?  Remember last week; nothing is free.  The whole spectacle can be most vividly portrayed in Warner Bros’ Hansel and Gretel episode on Bugs Bunny.   Guess who the characters represent.  As soon as reality set in and the invoices started coming for the maintenance services, the district wanted out yesterday.  Another happy customer.

On a couple unrelated notes:

A group of scientists wants to create a new unit for energy savings, the “Rosenfeld”.  He may have been a great guy, but I would vote no on that.  All the units and named thermodynamic cycles I can think of are named after one or two-syllable names, and Rosenfeld doesn’t just roll off the tongue.  Joule, Newton, Volt, Tesla, Kelvin, Rankine, Curie, Diesel, Otto, and Watt.  The only major oddball I can think of is Fahrenheit.  There should be a contest to replace that.  He deserves it because it’s such a stupid scale.

The Rosenfeld thing would replace kilowatt-hours, three billion of them to be exact.  What about Mr. Watt?  This is a diss to him.  What is special about three billion kWh: it’s supposed to be the annual output of a 500 MW power plant.  Per my calculations, it’s closer to 4 billion kWh.  And who is ever going to use this metric?  “The results of our study indicate that you can save 0.00016 Rosenfelds with a two year payback.”  I think they would eject us from their building and not pay us for such pathetic looking savings.

So there you have it, a “Rosenfeld” is too long, too much, incorrect, goofy, and it runs roughshod over Mr. Watt.

Then there’s this laugh out loud headline, suitable for an article in The Onion.   “Warning Biofuel Targets May Hit Oil Industry”.  Just think about that for a moment.





No Free Lunch

23 03 2010

A few years ago, I took my beloved Acura to the tire store for new tires.  As I was sitting on their crappy molded plastic chairs at a Formica table working away on my laptop, a cheesy 20-something sales guy approached me and asked if I would like a free alignment.  “I don’t have a problem.”  “But it’s free.  No obligation”, he goes on.  “Ah what heck, go ahead.”  He returned a few minutes later as I’m hammering away on my laptop and he says my wheels should be aligned because…whatever.  I put on a scrunchy-face look and decide that even if it’s off a little bit and they can make it perfect…ok, go ahead.

On my way out of town that evening I immediately noticed the “A” on my steering wheel is now leaning left about 1 or 2 degrees maybe.  Now I’ve seen wheels that are out of alignment, the steering wheel may shimmy, and the tires get burned off in an expected pattern, but I have NEVER driven a car that is “crabbing” down the road.  I reached over to the glove compartment, pulled out the receipt for the phone number.  I called the 20 something snaky peon and blistered him so bad, I had to roll down the windows to prevent the dashboard from melting.  They took something that was perfectly fine as far as I knew and screwed it up and charged me seventy bucks for the pleasure.  I was a complete idiot to fall for the “free alignment” anyway.  I returned and they made it right, this time getting my approval of every setting.  Funny how that works.  It still cost me time, which I don’t have, and plenty of angst.

The moral of the story, of course, is beware of free services.  I don’t even like most free software and some free news sites because of the hassle, the advertising, lack of decent content, the garbage that may come with it and the “spam” lists they may put me on.  Just give me something that works well, provides value and leave me alone.  I’m perfectly content paying for it.

Which brings me to the “investment grade” energy study of large commercial or industrial facilities.  Investment grade means it is accurate enough to guarantee savings if that’s what the client wants.  Of course the guarantee isn’t free, but that’s a topic for another day.  I count five types of study funding.

  • The low-ball study.  The consultant offers a low-ball study cost that will be made up on the much more expensive design phase of the energy efficiency project.  Essentially, they do energy consulting to get what they really want: design and even more lucrative construction management.  They may not know a low-cost, high return-on-investment (ROI) opportunity if it shot them in the kneecap, but it doesn’t matter, they just want to design equipment and system replacements.  They can spot those babies for sure.
  • The “free” study with the contract that says you customer have to move forward with high ROI (defined ahead of time) measures, or else pay for the study, which will be a million dollars – as in performance contracting.  The company doing the study does the implementation with profit on the implementation cost.  Look, a study may really cost 20% to 50% of one year’s energy savings from cost-effective measures.  Implementation may cost 500% to 1,000% the first year’s energy savings.  Now how easy is it to stuff the project with about 5 times the real study cost, plus other markup built into the cost of implementation?  Heck the study cost doesn’t even matter.  Third party verification of savings is absolutely required.  This can work fine, but many end users have been burned badly, making performance contracting a pariah in some circles – more on this in another rant.  Does this outfit want to provide the best value for your investment or sell you all the equipment they can to fit within your payback criteria?
  • The open tell-all study.  The client pays an independent consultant to do the study with everything on the table.  We are typically in this scenario and have a hard time competing with the above David Copperfields for the study.  We may have the same profit margin as the performance contractor, but their sale is 10x or even 50x our sale.
  • The cheap and crappy audit.  Somebody who’s done 1,400 studies offers to provide an investment grade study for half the price of everyone else.  How do you suppose they’ve done 1,400 studies?  You just have to be a good cost estimator to deliver these crumby studies.  Costs come in with precise bald face numbers.  Energy savings?  Not so clear.  Cost effective measures may be scattered all over the place AFTER they are done as well.  Refer to the kneecap shooting above.
  • The cheap high level audit.  We do many of these too, and we go overboard, as much as possible to explain to the customer that this will NOT, is not, and was not investment grade material.  It provides plus-or-minus-50%, hand-grenade results to assess potential.  Some measures with a worst possible real ROI that is less than 2 years may go right to implementation, but probably more than half need further investment grade analysis, unless the customer just wants to roll the dice.

There is no free breakfast here.  Our long-term clients know this because the cost of cheap can be very expensive, or intolerable, and they know it.

written by Jeffrey L. Ihnen, P.E., LEED AP