ROI+: Advantages of Smart Building Technology

Now that we've covered the basics of obvious energy savings, let's dig into the advantages of smart building technology that are less likely to grace your company's ROI projections. These benefits can add both direct and indirect returns for control systems, which are important factors for making the business case to the C-suite.

 

UTILITY AND TAX INCENTIVES

Utility incentives can play a huge part in most companies’ upgrade ROI and payback projections. Depending on your utility program, these incentives could equal anywhere between 20 and 60 percent of project costs. Most utility companies across the country typically offer:

 

• Rebates for installing energy-efficient HVAC and lighting equipment that typically start ramping up only as companies invest beyond the bare minimum efficiency requirements.

 

• Rate discounts for peak-demand energy conservation that can be maximized only through smarter lighting and HVAC controls.

 

Uncle Sam may also contribute enough perks to make a significant bump in ROI and payback.

Here are some of the big ones:

 

• Environmental Policy Act of 2005 (EPAct): EPAct Section 179D offers sizable deduction incentives for lighting and HVAC investments that reduce energy use. Though EPAct expired in the beginning of 2014, lawmakers are at work to retroactively extend it from Jan. 1, 2014, through the end of 2015.

 

• HVAC Tax Incentives: New tax incentives for HVAC replacements can place design, equipment and installation of related costs under eligibility for deductions.

 

• Cost segregation: New buildings and major renovations can use a lucrative tax incentive called cost segregation, which allows some eligible building project costs to be depreciated quickly for tax purposes.

 

EMPLOYEE COMFORT & PRODUCTIVITY

During the past decade, the types of documents and machines that employees work on have drastically changed. Typical employees are no longer paper jockeys, instead conducting work on backlit screens. Meanwhile, offices are dominated by more open space and lower cubicle walls. This lends itself to growing populations of workers who would turn down their own lights if it didn’t mean pulling the plug on co-workers who require a brighter environment.

 

Unfortunately, most office buildings today don’t come equipped for any level of lighting customization.

 

“Typical old school lighting was a three-lamp fixture. The wall switch affected the entire workspace,” says Bisbee of Sacramento Municipal Utility District. “You might compromise, but nobody wins.”

 

Per-fixture and zone-based controls change that situation entirely, putting greater control into the hands of employees—and improving their comfort and productivity in the process.

 

According to Bisbee, in the case studies he has witnessed at Sacramento Municipal Utility District, workers generally turn down lighting levels. Overall lighting costs are saved, but even the workers who need more lighting are accommodated.

 

“One of the great benefits for having this level of control is that people who work in cubicle environments have much greater satisfaction when they can control the light over their heads.”

- Dave Bisbee, program manager of Sacramento Municipal Utility District’s
customer advanced technologies group.

 

The more comfortable employees are, the more efficient they’ll be on a day-to-day basis. This goes not only for lighting conditions, but temperature settings as well. Studies have shown that when temperatures are too cold, employees make more mistakes.

 

This efficiency quotient can be one of the most forgotten and impactful ROI+ elements of all. If you think about it, employee wages by square foot within a building are several orders of magnitude higher than energy costs, so slashing energy savings in half may save a company $1 per square foot per year. But improving productivity by just 5 percent could save 10 times as much or more.

 

REDUCE BUSINESS RISK

Studies have shown that temperature and lighting have a stronger influence on customers staying within and returning to retail stores than any other atmospheric factor, such as décor, parking or accessibility. When stores are too hot, customers leave, resulting in an immediate loss of revenue.

 

Similarly, retail and food service chains depend on outdoor signage and lighting to denote when stores are open or closed. When signs and lights unexpectedly go out, an otherwise open restaurant may look closed to potential customers. That’s yet another revenue killer.

 

Retailers and other businesses concerned about consumer attraction and retention in stores should consider the top-line revenue assurance offered by centralized control of lighting and temperature controls and monitors. These controls not only offer automated adjustments for optimal lighting and temperature settings, but also alerts when systems go down so they can be fixed with as little revenue disruption as possible.

 

This can mean a huge upside for chains that manage many retail facilities at once.

 

OPERATIONAL EFFICIENCIES

On-call maintenance infrastructure can be incredibly expensive. While central controls for lighting and HVAC can’t eliminate these costs, they can greatly reduce them.

 

For example, in one story related by the former vice president of facilities for a major retail clothing chain, this company contracted with a network of local contractors across the country to be on call for immediate maintenance should store thermostats ever stop functioning. The cost of a truck roll alone was $200 per hour, and they frequently were made for thermostat configuration changes that could have been fixed remotely had they been tapped into a wireless network.

 

Maintenance Savings of Centralized Control

Organizations can do preventative maintenance with fewer workers when they have fully consolidated visibility into how all of their systems operates day to day. For example:

 

• The facility manager knows a piece of equipment has a maintenance schedule that requires service after it has been cycled 6,000 times.

 

• Before central tracking, there was no way to know how many times individual equipment was cycled. Maintenance is reactive in this case — emergency maintenance is dispatched with the equipment breaks.

 

• Monitoring makes it possible to know when that equipment hits 5,000 cycles so cheaper preventative maintenance can be scheduled before failure.

 

The savings can add up considerably in these cases.

 

PUTTING THE ROI PICTURE TOGETHER

Clearly, the ROI picture for an energy control framework is more than energy savings alone. As organizations begin to add estimates for considerations such as utility and tax incentives, employee productivity, operational efficiency and customer satisfaction, the ROI and payback picture looks drastically different than when calculating kilowatt hours alone.

 

These added considerations are potential game-changers that are well worth the effort by facilities, energy and sustainability managers and executive leadership to add to the investment analysis.

 

Interested in putting the ROI picture together
for your business? 

 

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