Facilities Management: Energy Efficiency on Center Stage

Given the fact that energy is a major operating cost in most retail facilities, it wasn’t surprising that the theme of energy efficiency echoed throughout the facilities-management workshop track at SPECS/2009. It received prominent attention in the session “HVAC—Planned Capital Replacement,” which examined the issue of planned, or proactive, replacement versus emergency replacement.

Speaker Curt Picard, national account manager, Lennox Industries, said that emergency replacement typically has a higher cost since it generally happens at peak season, when labor and material costs are highest, and opportunities to acquire multiple bids are limited.

“Time is the driver,” he said. “When a unit goes out on a hot summer day, it’s really a matter of ‘just get it replaced.’”

A proactive HVAC replacement program, according to Picard, allows a chain to plan ahead for equipment that has reached its end of life. It can be justified and supported by several key factors, including energy savings, maintenance savings, participation in an active rebate program and customer retention due to a comfortable shopping experience.

“The energy and maintenance savings can be huge,” Picard added. “Newer units are more energy efficient, which can equate to substantial savings per location.”

Also, with proactive replacement, downsizing of existing units is possible when other energy-related programs are implemented that can help reduce the load on the HVAC system.

Units more than 13 years old cost more than double to maintain versus newer units, according to industry standards, Picard said. Plus, stores with older units have more service calls.

Retailers can expect to realize $70,000 to $80,000 in annual combined energy and maintenance savings on a new unit (200 tons).

“Putting in a new HVAC unit is a long-term capital investment that can provide positive ROI,” Picard said.

Planned replacement also provides the luxury of off-season change-out, competitive bidding and minimal down time, which contributes to cost avoidance. In addition, several manufacturers offer off-season incentives.

“You also have time to look into utility rebates,” Picard explained.

Carl Nottberg, senior VP operations, USM, gave the attendees an overview on how to manage their HVAC assets and discussed the criteria they should be looking at in making the decision to replace a unit or units.

“The criteria we look at include using age reports, condition reports, service history, service-provider feedback and recommendations, reviewing remodel/future construction projects, and checking the lease for requirements and responsibility,” he said.

Both speakers agreed: Planned HVAC replacement is the way to go.

EPAct: The session, “Energy Policy Tax Opportunities,” explored ways that retailers can capture tax deductions under the Energy Policy Act of 2005 (EPAct) that help justify and support energy projects in their organizations.

“The benefits available under EPAct, which Congress has extended until Dec. 31, 2013, are available for new construction and existing buildings, and for tenant-owned lease-hold improvements,” explained Charles Goulding, president, Energy Tax Savers, Syosset, N.Y.

The legislation provides tax deductions for specific investments that improve the energy efficiency of either the entire building or one of three building systems: lighting, HVAC and building envelope.

A project, regardless of whether it is an entire building or one of the three systems, must cut energy use compared with ASHRAE 90.1-2001 to qualify for the deductions.

“You have to surpass this standard, comparing post-project calculations to ASHRAE, ” Goulding said.

The amount of the deduction depends on just how efficient the system is. So far, lighting has been the biggest beneficiary of EPAct incentives.

“This legislation [EPAct] is very favorable to the lighting industry,” said Goulding. He advised attendees not to overlook warehouse and distribution center lighting.

“Most warehouses or DCs can hit the target wattage easily,” Goulding noted.

There are two methods available for obtaining lighting tax deductions. One, called the prescriptive method, is based on watts per square foot.

“This is the most prevalent way to capture the lighting tax deduction,” Goulding said.

The second method is modeling to show a 16.67% energy cost reduction compared to ASHRAE 90.1-2001.

Similar to the whole building lighting alternative, the process of qualifying for all HVAC or building envelope deductions under EPAct requires energy modeling.

“In many jurisdictions, rebates are provided for all or substantial portions of modeling costs,” said Goulding, who noted that the IRS has approved 10 types of modeling software, including Trane Trace 700, Carrier HAP, Energy Plus, Owens Corning Commercial Energy Calculator and Green Building Studio.

In additional tax incentives, Goulding said the solar tax deduction has been extended through Dec. 31, 2016. It offers a 30% tax credit and is available for photovoltaic and solar thermal systems.