Alternative Sources for Energy Project Funding

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Rosamund Rich
6 years ago
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1 Alternative Sources for Energy Project Funding

2 We will focus on true energy savings: May I use my solar powered phone cover as an example?

3 The presentation is to be product non proprietary. I will not be mentioning brands ---except for politics in Washington.

4 The approach we discuss will be focused on how you can save extensive funds on a viable energy efficiency project. We are not interested in anything quick or fast.

5 Aristotle stated,...knowledge is best passed down through a story or parable Today s presentation will never measure up to Aristotle, but I will use three project case studies to help develop the points we wish to share.

6 Opening Quiz: Pretend you are in the market for a new Ford Escape and the car salesman tells you that a hybrid would cost you $3, extra. You can save energy, reduce gas costs, but would you pay $3, to get the hybrid?

7 Now let s change the offer. If the United States Government offered to pay the $ upgrade, would you now reconsider it? I did!

8 Doing the right thing for the right reason but also accepting local, state and federal funds ear marked to help finance the energy savings projects.:

10 If you have a question please interrupt me because this will be a casual presentation based on your helping direct me to the point where we all understand the concept so that we can use it.

11 If you save energy, you are ultimately saving jobs in your firm. If you are saving local jobs, then you are investing in your children s future. Saving energy is a noble thing to do.

12 Red Gold Warehouse in Geneva, Indiana. ITW Manufacturing in Gary, Indiana. Vanguard Trailer in Monon, Indiana.

13 Three different projects all located in northern or central Indiana. A tomato processing facility, a cardboard manufacturer, and a heavy highway trailer manufacturer What do they all have in common?

14 In each case, one of the main things they have in common is that these firms all have a healthy relationship with NIPSCO as an energy supplier.

15 Each of these companies has recently invested funds to reduce the amount of energy that they consume. What is a normal level of energy consumption?

16 In Indiana, what is the average cost of energy per square foot in a distribution (warehouse) building over 100,000 square feet? What makes up the typical energy foot print of a large 100,000 square foot facility?

17 What represents the two largest sources of energy used in a building? Simply stated: electricity and natural gas. Otherwise stated: Lights and heat

18 In the state of Indiana a pre ,000 square foot building averaged $0.94/square foot for energy, and it is split evenly between lighting and heating. The lighting is fairly consistently even over all 12 months, and the heating is spread over the winter months of November, December, January, February and March.

19 1. The average 100,000 square foot building costs about $0.94 per square foot per year. 2. The annual energy consumption of a building is typically 50/50 between the lighting and the heating,

20 Our electric use is measured in Kilowatts, and most of us will pay between $0.08 and $0.09 per kilowatt hour. Our natural gas has recently dipped and is selling for about $0.56 a therm.

21 As compared to the rest of the world, our energy costs are artificially low. However, without getting into the geopolitical area, our consumption rates per capita are higher than the world average.

22 Before we jump into the core of this presentation, let's revisit our motivations. Energy is not a unlimited resource, and, as such, there are limited supplies. Technology has improved our efficiency in both heating and lighting.

23 One phrase. hours of operation

24 A 400 watt metal halide consumes 464 watts per hour which computes to $0.039 per hour. It isn t until you apply the hours of operation that the costs become clear and motivating. The same light fixture in a warehouse that operates two shifts a day for 6 days a week will cost the owner $ a year. A 4 lamp T5 will produce equal foot candles and will operate for less than $98.56 per year.

25 Let's look at that typical 100,000 square foot warehouse with one light every 400 square feet. The building would require 250 fixtures which would consume $54, annually where a T5-4 lamp fixture would consume less than $24, Is a 55% savings worth looking at?

26 Funds don t always flow the same direction as logic. We all can think of an expenditure that our companies did or didn t make that might be questionable. The federal, state and local governments have been trying to support energy projects to save jobs.

27 We will continually refer back to our base project of a company with a 100,000 square foot warehouse with 250 lights and natural gas unit heaters or a left over old boiler system for heat.

28 Cost to change lighting system.$ 56, st year energy savings , Cost to the customer after 1 st year $26, Utility rebate at $45.00/fixture -11, Cost to the customer after 1 st year $15,000.00

29 Cost to change lighting system.$56, Reduction due to utility rebate - 15, Revised project price. $ 41, st year energy savings , Cost to the customer after 1 st year $11, Payback now 1.37 years or 16.5 months.

30 Is a 16.5 month payback good enough to meet your corporate rules on paybacks? Now let's get creative.

31 The average Indiana large warehouse has been owned by its current owner for 11.2 years. The average Indiana large warehouse is 22.8 years old. If a new company buys a building, the depreciation tables start over which means that if the old lighting system is D-D-D, there is a Federal tax deduction available.

32 If the building had been owned for 11 years and the depreciation was based on 39.5 years, then 72.1% of the value of the old discarded lights can be deducted as a one time tax loss. This computes to a $40, Federal Tax deduction which is a $14, tax credit.

Cost to change lighting system.$ 56,250.00 Reduction due to utility rebate - 15,000.00 Reduction by 729 WCB-310-14,204.

33 Cost to change lighting system.$ 56, Reduction due to utility rebate - 15, Reduction by 729 WCB , Revised project price.. $ 27, st year energy savings , Cost to the customer after 1 year ($ 2,954.90) Payback now.90 years or 10.8 months.

34 EPAct (House bill ) passed in August of 2005 (Under Bush) and was extended two times.most recently it was voted for one year on 12/1/14 for the calendar year of It basically awarded the building owner another $0.60 per square foot if you met low limited reqs. This calculates t $84.00 per replaced fixture.

35 Cost to change lighting system.$ 56, Reduction due to utility rebate - 15, Reduction by 729 WCB , Use of EPACT deduction ($84.light) -21, Revised project price $ 6, st year energy savings , Cost to the customer after 1 st year($ 23,954.90) Payback now.20 years or 2.41 months or 72 days.

36 If you could do a project for $6, that would save your company a minimum of $30, for each of the next 5 years, would you get it approved? What would be the worst thing I could do at this point?

37 This is not a game. This is applying government standards to help companies become more profitable.

38 Another way to look at this is not from an expense savings or payback, but from a sales view. If you bring in these rebates and credits to your company, it goes to the bottom line. If your company can make a net profit of 15% on sales, bringing in $50, is the same as bringing in a $350, sale. It is impressive.

39 House Repair Act CHIP Grant programs Sales Tax refunds Service and calibration service grants

40 There are literally seven (7) different programs that your company should use to help finance their energy efficiency programs. Again, we believe that saving energy means that we are saving Indiana jobs.

41 Use Your Local Allies! One of the top energy entities in northern Indiana is Packaging Systems. Their efforts have garnered millions of dollars in energy savings and utility incentives.

42 In 2014, ITW in Gary, Indiana installed lighting systems through Packaging Systems of Lafayette and they saved 84% of the overall project through utility rebates and Federal Tax deductions.

43 In 2015, Red Gold built a 250,000 square foot warehouse building that is being heated by high efficiency air turnover units. With the help of NIPSCO, they received $27, towards the purchase of the heating units, which cost $54,

44 In Monon, Indiana, Vanguard Trailer utilized utility rebates to help finance new lighting systems in almost 300,000 square feet of buildings. The cost of the lighting systems was $290,

45 On a $290, lighting project Vanguard was able to qualify for the following deducts: NIPSCO utility rebate (Energizing Indiana)...$ 33, Federal Tax credits...$164, Vanguard was able to literally save $198, on this first project.

46 This is a feature job story.. In 2015, Vanguard has studied the feasibility to replace their existing steam boiler with higher efficiency direct fired heaters.

47 This job is in process at this time but the numbers are so strong that we wanted to share this as a perfect example of an existing Indian a building with a boiler. Tell me if you would consider this a WOW!!!

48 Total turnkey cost of the project...$624, NIPSCO utility rebate , Net price of the project $ 356, This is a 42% savings from the utility alone.

49 Total turnkey cost of the project $624, NIPSCO utility rebate. -267, Initial price of the project $ 356, Energy savings in 1 st year -290, Revised cost after 1 st year savings $ 66, Vanguard would pay 10% of the project cost after the first year.

50 Total turnkey cost of the project $624, NIPSCO utility rebate. -267, Initial price of the project $ 356, Energy savings in 1 st year -290, Revised cost after 1 st year savings $ 66, House Repair Act Federal credit - 54, Project cost after taxes and savings $11,855.00

51 Why would Vanguard be interested in whether EPAct is reinstated for 2015? EPAct would allow Vanguard to qualify for a total Federal Tax credit of $123,

52 Total turnkey cost of the project $624, NIPSCO utility rebate. -267, Energy savings in 1 st year -290, Possible EPACT tax credit..-123, Revised cost after 1 st year savings $(57,025.00) Payback is net of 9.6 months

53 There will be another $65, of tax refunds that will accrue at Vanguard on this project.

54 Simple ROI is the cost of the project divided by the time it takes for the savings to pay for the project. In the example we just used, the building owner would save $30, annually and the project would cost $56,

55 Project total cost/annual savings = Payback $56,250.00/30,000 = 1.87 years or 22 months We believe that a 22 month payback, all things being equal, is a great investment.

56 The single largest contributor to any and all of the energy efficiency projects has been the utility. Through the knowledge of other federal, state, and local programs, the building owner can often save between % of the energy related project.

57 These energy efficiency programs have been incentivized in an effort to help Indiana companies become more competitive in the national and international market. If you have a project that you would like to establish what rebates and credits are available, we would suggest that you contact your industrial rep from NIPSCO.

58 Thank you for your time and your interest. If there are questions I will answer them. If not, allow me to conclude by simply saying, May God bless your family with health.

59 Bill Bissmeyer, BSBA, MS, MBA, CEM Past President of Indiana Association of Energy Engineers Past President of Ft. Wayne Chapter of ASHRAE Past President Indiana Metal Builders Association

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