Energy 101

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Courtesy of Mid-Atlantic Associates, Inc.

Energy 101 - Managing Your Energy Costs in a Rising Utility Rate Climate

Funding Your Energy Savings Projects

This is the third in a series of informational articles to commercial and industrial facility owners and occupants intended to present methods to reduce energy usage and improve efficiencies of existing energy loads within buildings and manufacturing processes. We at Mid-Atlantic are dedicated to assisting our clients to address impending utility rate cap terminations that are projected to significantly increase their future operating costs and allow them to stay competitive in their respective markets.

Identifying Energy Savings Projects

Upon conducting an energy audit of your facility, a list of potential energy conservation and efficiency measures may be identified. Depending on payback periods or other financial measures used by the facility owner, funding these projects may pose the next hurdle. In some cases, the financial metrics may show it’s wise to fund the project internally using the owners own financing. In others, projects may require funding through loans or a combination of loans, grants and internal funding.

The first step would be to verify assumptions that show promising energy savings projects. An internal review team could include technical personnel, operations, utility representatives and internal financial analysts. Early involvement by all affected parties, particularly decision makers, results in greater acceptance of the selected projects and streamlining of project installation. Consultants that conduct the energy audit make numerous assumptions that affect the technical and cost effectiveness of the recommended projects. It’s important to verify all assumptions prior to implementation.

As part of the cost savings, an owner may want to consider various governmental and utility funding available for these types of projects.

Funding Sources

Depending on the facility location, utility service, and size and type of Energy Savings Project, various funding sources are available in Pennsylvania and New Jersey.

In addition to several grant and low interest loan programs in Pennsylvania, the Alternative Energy Investment Act was signed into law on July 9, 2008. Aside from providing funding for clean energy projects and energy conservation, Pennsylvania utilities are required to reduce energy demand and peak loads during the next five years. Experts predict that this mandatory reduction will spur utilities to offer energy savings grant opportunities to users within the next several years. To prepare for this expected funding source, facility owners should start identifying energy savings projects now in order to take advantage of these potential opportunities.

A listing of various funding resources for each state can be found on Facility owners should request that their energy auditor include funding resources available to them in the scope of their energy audit.

Future Articles

The next article in this series will discuss how to select a consultant to help you define your Energy Savings Projects.

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