The Cost of Energy Conservation

by Jeff Yirak, P.E., CPMP, LEED AP BD+C, O+M

We spend a lot of time emphasizing the role that energy consumers play in their electricity and natural gas consumption based on the choices they make. We design high-efficiency heating water systems with condensing boilers and complicated control systems, while specifying LED luminaires with automatic daylight harvesting and automatic off controls.

These designs have real benefit to our clients and to society as a whole, but articulating this benefit can be challenging. We live in a bountiful country, and the Pacific Northwest in particular is blessed with cheap and friendly hydroelectricity and a mild climate.  This reality sometimes makes it hard to justify a first-cost bottom-line argument for a high efficiency heating or electrical system when the utility costs are already low and thus savings doesn’t cover the increase in first cost.

The Question

How do I articulate the return on investment (ROI) to a client that needs a bottom-line argument?

On one hand, the case varies by system—the justification reveals itself more directly for some systems. I’ll use my personal residential systems and costs as examples.

Consider my water bill.  I understand how to conserve water: low-flow aerators on sinks, low-flow showerheads, shorter showers, high efficiency clothes washers and dish washers, drip irrigation (or no irrigation), washing the car at Brown Bear (where the water is recycled) instead of at home, etc.  I do those things, and it shows in my relatively low water consumption.  What’s not low is my water BILL.  I have a fixed Water Base Rate and Sewer Charge of $15.20 and $104.10, respectively.  My actual water consumption only cost me $37.80, or 24% of my total bill.  I can only control about 25% of my water cost.  The ROI on that high efficiency clothes washer or that high efficiency dishwasher is a tough sell when I’m only affecting a few dollars every month. Not to mention if the equipment’s functional performance doesn’t’ seem to be on par with their energy guzzling counterpart. How can I make a recommendation for conservation based on cost when the dollars really aren’t there to be saved?

My water bill consists of mainly fixed charges beyond my control.

Let’s look at my natural gas bill.  We had a cold winter this year.  In February, my bill was $144.79.  This bill feels more “fair,” in that the fixed fees are a small proportion of the bill, so my energy consumption more directly hits my wallet.  My house used about 150 Therms for this period.  A Therm is equal to 100,000 Btus, so my house consumed 15 million Btus.  Those 2 million and 3 million Btu/Hr boilers we specify for commercial buildings can burn that much fuel in less than one day.  Here’s a great opportunity to reduce a building’s carbon footprint and keep money in the owner’s wallet.

In terms of heating water systems, however, the fuel consumption is really only a matter of heating demand.  Anything that will reduce heating demand will save money, regardless of the technology or complexity of the heating water system design.  It’s a good idea to bulk up on building envelope insulation to reduce heat transfer (also providing a comfort benefit in hot weather) in conjunction with a high efficiency central heating plant design.  A “standard efficiency” heating water boiler operated at about 87% thermal efficiency due to their inability to handle condensation of flue gas, meaning 87% of the energy put into the boiler (in the form of natural gas) is converted to useful heat energy in the heating water.  A “high efficiency” condensing boiler operates anywhere from 87-99% thermal efficiency, so there are definitely tangible savings to be had, but only if the system is designed around this concept.  Supply and return water temperatures are lower, essentially lowering the “quality” of the heating water, requiring increased water flows, piping sizes to accommodate these larger flows, larger pumps to circulate more water, larger heat exchange coils to warm the air, etc.  Can a persistent 10% increase in boiler efficiency offset these up-front equipment costs?  If the (seasonal) savings don’t pencil out to a speedy ROI, should the system still be installed?

My natural gas bill is more under my control.

Finally, let’s look at electricity.  My house has a combination of LED and incandescent lamps, as well as an electric stove, electric clothes dryer, electric furnace fan/house fan, and we run the bathroom exhaust fans pretty consistently.  Unlike the water bill, there is no fixed fee in this bill; the cost of service is wholly dependent on my actual usage.  The flip side is that unlike heating or water, I have constant electrical demand (refrigerator), and I would sleep a lot more if I didn’t use artificial lighting during our cold, dark winters.  In spite of these “base” loads, electricity is my lowest utility bill, so efforts to reduce electrical consumption have the lowest return opportunity.  In our commercial designs, the standardization on LED lights with code-minimum lighting control really writes down electrical consumption in a building.  Use of LED in place of classical incandescent lamps alone saves 85% of the electricity, regardless of occupant behavior.  However, fluorescent luminaires already saved 75% relative to incandescent, so how do we justify the cost of using LED over fluorescent to save an additional 10%?

Unlike my water and gas bills, there is no fixed fee in my electricity bill; it is wholly dependent on my actual usage.

The Answer

So, why should you choose a high-efficiency, energy-conserving mechanical and electrical systems? The answer is because if you don’t make that choice now, your unreduced energy consumption will result in increased utility costs over time. Utility incentive programs are predicated on a majority of users reducing consumption so that the utility doesn’t have to buy energy on a spot market or build more generation infrastructure.  If we don’t keep utility consumption down, we’ll end up paying more for the energy we use. You can be part of the solution by choosing high efficiency and conservation as well as encouraging others to do the same.

We need to adopt a more community-oriented mindset to realize ongoing individual benefits. We’re all in this together. Do it to keep things cheap.  The benefits are for all of us, not just one person’s utility bills.