EPAct: Shoot first and ask questions later

The law of unintended consequences applies to the Energy Policy Act of 2005.  In a rush to save energy, facilities are buying new more efficient equipment without really knowing why.  They know it will save money, but they really don't know how much.  The Energy Service Contractors (ESCO) are promising savings as usual, and its a good business case, but is it enough?  The very nature of an ESCO contract converts a multi year payback and into an annual expense.

Is savings only possible over multiple years?  What should we do to plan for innovation.  If I install a new chiller that is 20% more efficient and it has a 8 year payback, what should I do 4 years from now when someone comes up with another chiller that saves yet another 20%?

LED lights are coming on strong as an even more practical solution over fluorescent lights.  But under EPAct everyone is replacing their current lights with an 8+ year payback schedule.  So, despite innovations in LED, LED market adoption will hit the brick wall of the Fluorescent installed base for several years to come.  It is common in technology evolution that late movers get the most benefit - wireless service in China is better than the US, because China adopted 4th generation technology as their first platform, where the united states needed to transition from Generation 1, to 2, to 3, and finally 4.

The problem is even bigger when one considers CO2.  Big energy consuming assets have an even longer payback schedule.  As noted by Texas A&M researchers, as well as others, most HVAC equipment in buildings is improperly sized (Often providing excess capacity).  EPAct does nothing to encourage owners to assess their building performance.  EPAct motivates owners to replace their existing equipment with similar sized more efficient equipment with long paybacks. 

A huge problem emerges in 2008 if CO2 limitations are enacted.  A larger portion of the national infrastructure will have been recently upgraded, to marginally more efficient mis-sized equipment, under EPAct.  As new CO2 legislation comes forward pushing more aggressive limits on energy/CO2, owners will be only partially through their EPAct payback cycle.  They will be stuck with 6-8 years of payback and pressure to drive yet more savings.  An impossible position.....

So, what do we do?  The problem is complex and there is no easy answer.  But, it is clear that no one should change the equipment in their building with out a data driven assessment of their current energy needs.  EPAct is a shoot first, ask questions later approach (replace equipment and see what happens).  Owners should follow a "Ask questions first, then shoot" approach.

Businesses run on real time information.  Wal-Mart knows where every orange is in their supply chain.  With that knowledge they can roll up information to help manage inventory, product placement, marketing, etc.  The same is true in operations.  Texas A&M and others have taught us that 20% of the building energy use is do to misconfigured buildings (controls and equipment sizing).  With real time monitoring systems that pinpoint energy usage and system status owners know where the "Oranges" are all the time.  Owners can then build a battle plan for energy savings - focused first on the highest savings + quickest payback projects first, moving down to the more capital intensive projects over time.  There is strong evidence that tuning up the control system alone can reduce energy 10-20%.

Getting real time information on building performance seems daunting.  Big controls vendors that push their turn key solutions, using their proprietary solution, create a huge barrier.  The life cycle cost of living with a single vendors proprietary solution is huge.  Beyond the fact that acquisition cost will go up over time once the vendor has your infrastructure locked in, it locks out competing technologies for years.  Conversely, if an owner chooses an open architecture approach, it is possible to get a real time information system installed and paid for on the first year of savings.  So, whats the road-map?

1. Never buy a system from a vendor that says "You need to by my controller and my applications" - Never!
2. Bacnet, Modbus, Lon are not interoperable standards (they are close) - you need a vendor with web services (XML, SOAP, etc)
3. Change your procurement standards so that vendors need to demonstrate their systems are interoperable with your existing applications.  Require that your application vendors (Maximo, Archibus, SAP, etc) demonstrate compatibility with multiple control systems.  Expect to implement an independent middle-ware solution - for an enterprise, companies like Gridlogix, for smaller buildings with a less comprehensive solution look at Gridlogix, Richard Zeta or Tridium
4. Implement a real time monitoring system and fix errors in your control system before undergoing energy related capital improvement programs - essentially get the energy signature for your building first.
5. Don't let the company (ESCO) doing your energy audit bid on the implementation work.
6. Continuously monitor building performance

So what does this all cost and save?  An open architecture system installed along with a comprehensive energy audit and linked to your maintenance system will cost somewhere around $0.50-$1.00/square foot.  This solution will reduce energy usage 10-20% and maintenance costs 20-60%, an annual savings of somewhere between $0.50-$1.20/square foot.

Real time information, meaningful energy savings, and near term payback without replacing a chiller.

Ask questions later, and maybe you won't need to learn how to shoot.