How To Capitalize on the Value of Long-Term Energy Planning
First of a four-part Green Building Report on long-term energy planning.
More than ever before, facility managers charged with responsibility for their organization’s real estate assets are turning to energy planning to help tackle issues ranging from occupant comfort to technology integration to improving their Energy Star score. The goal should be to tackle these not as ad hoc initiatives, but as part of the orderly execution of an energy plan aligning with the organization’s other long-term planning objectives. They should recognize that establishing a baseline of equipment condition, operational practices, energy consumption, and cost helps form an “existing conditions” context for evaluating multiple scenarios of “what’s next” and serves as the foundation for a multi-year decision-making roadmap. These forward-thinking facility managers understand that planning beyond the next financial review, and even beyond the next budget year, prepares them for a variety of circumstances that might otherwise find them uninformed and unprepared.
Planning for the future may be driven by energy-related goals such as significantly improving upon a building’s benchmarked rating, whether it’s a LEED certification level, Energy Star rating, or other industry benchmark. A building owner may have signed on to participate in a local, regional, or national program designed to reduce energy use to some percentage below an energy baseline, requiring a plan for bending the energy consumption curve through deliberate, cost-effective, and practical strategies. Or an organization may be part of a national, or even global, initiative to achieve net-zero energy use in enterprise facilities. These initiatives can all benefit from multi-year energy planning.
Long-term planning is undertaken when stakeholders recognize that reaching an organization’s goals requires an effort that can take a number of years to accomplish, with discreet elements of the plan to be completed sequentially along the way. In contrast, a real estate asset’s single-year operating budget focuses on allocating revenue and operating costs only for the next year. Long-term planning incorporates a vision of stakeholders' aspirations for an asset – whether it’s the optimum workplace for the future, a more competitive asset in a market-driven environment, or a change in use that aligns with other changes occurring within the organization. Consequently, the confluence of energy planning and long-term planning takes on a more strategic direction than conventional budgeting and other tactical planning.
An important first step is recognizing that there’s value found at the intersection of long-term planning and energy planning. Value in the form of return-on-investment can be ascribed when tackling an assessment of energy-driven systems’ future performance, proposing new energy efficiency initiatives, and projecting energy cost management over a multi-year timeframe.
Managers undertaking planning beyond the horizon of an operating budget must first establish the scale of their energy investment – value factors attributed to elements of their facility operation that impact, or are impacted by, energy use in their buildings. Such value factors include, but are not limited to, the investment in the HVAC plant, annual energy consumption and its cost, the salary-related costs of in-house technical personnel, the value of service contracts, and the investment in maintenance practices and policies. Each element plays a role in planning for future cost, comfort, and sustainability. Even in an environment in which investment real estate is trading briskly, long-term planning that incorporates energy planning can be a valuable component of any future due diligence process. Aligning energy planning with long-term planning creates a context for establishing an organization’s energy investment by discreet area, and presenting a view forward of how both tangible and intangible returns can be wrung from each energy-related value factor.