Financial Considerations for Energy Efficiency Upgrades

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Energy efficient practices and programs are so important to today’s business. Most organizations are aware of this. They know that their employees want to work for a green company. They know that they have a responsibility to operate as sustainably as possible. And yet, so many hesitate to implement the solutions they need in order to achieve true sustainability. Why?consider-costs

It is true that energy efficiency solutions sometimes come with a hefty price tag. But once you understand how to look at the costs and benefits from a “big picture” perspective, it’s easy to see that energy efficiency initiatives such as smart plug deployment are completely justified. In fact, they pay for themselves.When considering a smart plug deployment, consider the costs involved.

Here’s what you need to consider.

 

Consider the Costs

When considering a smart plug deployment, the first thing you need to look at are the costs involved.

First, look at the cost for the products you’ll need to complete your solution. Then think about how those products will integrate with your network infrastructure. Will they connect using your existing WiFi or is it a Zigbee-based solution using a dedicated Zigbee network?

Then, look into the cost of installation. Installation costs can vary depending on if you’re installing the solution yourself, or requesting installation from the provider. While turnkey installations by the provider are an additional cost, they’re worth it. They give you the peace of mind that the job is done right the first time.

The total installed cost of your smart plug deployment will include the cost of all products needed plus any installations costs, minus any utility incentives.

Additionally, consider the operational costs of your solution. For example, there are lower IT costs if your smart plug solution leverages your existing WiFi network vs. a separate dedicated network (e.g. Zigbee).


 

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Important Metrics

When examining the cost of deployment, take a look at these key metrics.

  • The simple payback period

How to determine what the simple payback of your energy efficiency solution would be:

This is fairly easy to calculate. It’s a quick measurement of the total installed cost of your solution divided by your estimated total annual savings, multiplied by 12.

Here’s an example. If you have $100 in installed cost with $50 in annual savings, your simple payback would be:
100 / 50 * 12 = 24 months

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Consider the Benefits

After you have an understanding of the cost it will take to get your smart plug deployment under way, it’s time to start thinking about the benefits you’ll enjoy as a result.

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Utility Incentives

Many states and electric utilities offer incentives and funding for energy efficiency projects. This funding comes in handy because it helps reduce the out of pocket cost of becoming a more sustainable workplace. You can easily see what incentives are offered in your state on DSIRE or Energy.gov.

Plus, integrating smart plugs into your business will help in reaching compliance towards energy efficiency and energy conservation goals.

Energy Savings

Then, of course, there’s the huge benefit of energy savings. Once your solution is installed, you can easily measure your energy savings. But to get an estimate prior to installation of what you could save, consider these factors:

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Energy Consumption by Device

Every device in your building consumes different amounts of energy. Therefore, your energy savings are going to depend on the devices you’ll be connecting to the smart plugs. For example, a vending machine consumes much more energy than a coffee pot – so the potential for savings is higher for the vending machine.

Operation Schedule

The great thing about smart plugs is that they’re programmable. You can set them to power off your devices at night when your building is empty, and have them power back up in time for the early birds. Your energy savings will depend on your smart plugs’ operation schedule and the number of weekly hours that the devices can be turned off. Plus, with remote access via web and mobile applications, your staff can remotely power up devices for special events at your facility.

Energy Rate

This variable is based on things such as the supplier of your building’s electricity and tariff rates.


We can also estimate your energy savings for you.
Click here to get your estimate.

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Operations Savings

Your savings don’t stop with your energy savings when you install a network of smart plugs. You can also expect to operational savings. While operational savings due to smart plug implementation are very real, they can be pretty hard to quantify. In fact, most financial decision makers exclude operations savings from the cost/benefit analysis. But the savings are out there, and it’s important to put them into consideration! Here are examples of the kinds of operational savings you could see:

Internal Labor

With smart plugs, you no longer have to spend labor on manually turning equipment on or off. Your plugs do that for you.

Enhanced Equipment Life

Due to operating on reduced hours, your equipment and machines could live longer lives. That means less money spent on repairing and replacing expensive equipment.

Consider Financing and Shared Savings Programs

Many energy efficiency projects stall for internal lack of up front capital. Leveraging financing or shared savings programs for these types of projects may reduce the CFO’s concerns, allowing your facility to achieve operational savings more effectively.

When it comes down to it, energy efficiency upgrades (such as a smart plug deployment) provide benefits that greatly exceed the cost of implementation. When considering the financial investment needed, consider the full financial picture including installation costs, energy and operational savings.

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Do you want to become a part of the $60 billion in energy cost savings in the US alone with the implementation of energy efficiency devices?

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