One of the downsides of the surging awareness and growth in energy efficiency and renewable energy, in my opinion, are all the Johnny Come Lately energy services arms of giant corporations. Companies include Lockheed Martin, United Technologies, Eaton, and Chevron. These giants have revenues of $45 Billion, $53 Billion, $12 Billion and a meager $176 Billion, respectively. Poor Chevron’s revenue dropped from $275 Billion from the year prior. Maybe they should focus on their core business and leave the energy saving to the rest of us. Among these, only measly Eaton isn’t in the Fortune 100 (Eaton comes in at 207 on the Fortune 500).
Why do these giants want to get into energy efficiency? Revenue from their energy efficiency services wouldn’t show up on the first six significant digits of their total revenue, but yet this is huge business compared to peons like Michaels Engineering and dozens of other service providers. Lockheed probably charges the government more for one tire on an F-35 joint strike fighter than we earn in a year with 40 people.
On the other hand, these behemoths have to get huge projects like those for large college campuses or military bases to be worth their while and to be cost effective to carry their crushing overhead. This leaves plenty for us little guys to fight over.
On the third hand, they provide competition for the other titans of performance contracting, including Trane, Honeywell, Siemens, and Johnson Controls, and I’m all for that.
Having provided technical support and program evaluation for dozens of utilities, I don’t think we have yet seen any requests or applications for incentives from these giants, for their customers. Why would they leave all this free money their customers could claim on the table? Could it be they don’t want anyone looking at their underbelly? Customers should demand this. But then again, customers are typically state and federal government entities. Even though these incentives are theirs to lose, it’s really ours. So who cares? What a racket.
Of course most of these huge companies, except Lockheed and Chevron I believe, use performance contracting to peddle their wares, whether customers need the stuff or not. As mentioned last week, they’ll “give away” studies and other services, and sometimes even equipment to hook (or harpoon) these customers.
Within the past couple years, one of these performance contractors had seduced a local school district by offering them “free” equipment in exchange for maintaining their buildings’ heating, cooling, and control systems over 10-20 years. What were they thinking? Remember last week; nothing is free. The whole spectacle can be most vividly portrayed in Warner Bros’ Hansel and Gretel episode on Bugs Bunny. Guess who the characters represent. As soon as reality set in and the invoices started coming for the maintenance services, the district wanted out yesterday. Another happy customer.
On a couple unrelated notes:
A group of scientists wants to create a new unit for energy savings, the “Rosenfeld”. He may have been a great guy, but I would vote no on that. All the units and named thermodynamic cycles I can think of are named after one or two-syllable names, and Rosenfeld doesn’t just roll off the tongue. Joule, Newton, Volt, Tesla, Kelvin, Rankine, Curie, Diesel, Otto, and Watt. The only major oddball I can think of is Fahrenheit. There should be a contest to replace that. He deserves it because it’s such a stupid scale.
The Rosenfeld thing would replace kilowatt-hours, three billion of them to be exact. What about Mr. Watt? This is a diss to him. What is special about three billion kWh: it’s supposed to be the annual output of a 500 MW power plant. Per my calculations, it’s closer to 4 billion kWh. And who is ever going to use this metric? “The results of our study indicate that you can save 0.00016 Rosenfelds with a two year payback.” I think they would eject us from their building and not pay us for such pathetic looking savings.
So there you have it, a “Rosenfeld” is too long, too much, incorrect, goofy, and it runs roughshod over Mr. Watt.
Then there’s this laugh out loud headline, suitable for an article in The Onion. “Warning Biofuel Targets May Hit Oil Industry”. Just think about that for a moment.
A few years ago, I took my beloved Acura to the tire store for new tires. As I was sitting on their crappy molded plastic chairs at a Formica table working away on my laptop, a cheesy 20-something sales guy approached me and asked if I would like a free alignment. “I don’t have a problem.” “But it’s free. No obligation”, he goes on. “Ah what heck, go ahead.” He returned a few minutes later as I’m hammering away on my laptop and he says my wheels should be aligned because…whatever. I put on a scrunchy-face look and decide that even if it’s off a little bit and they can make it perfect…ok, go ahead.
On my way out of town that evening I immediately noticed the “A” on my steering wheel is now leaning left about 1 or 2 degrees maybe. Now I’ve seen wheels that are out of alignment, the steering wheel may shimmy, and the tires get burned off in an expected pattern, but I have NEVER driven a car that is “crabbing” down the road. I reached over to the glove compartment, pulled out the receipt for the phone number. I called the 20 something snaky peon and blistered him so bad, I had to roll down the windows to prevent the dashboard from melting. They took something that was perfectly fine as far as I knew and screwed it up and charged me seventy bucks for the pleasure. I was a complete idiot to fall for the “free alignment” anyway. I returned and they made it right, this time getting my approval of every setting. Funny how that works. It still cost me time, which I don’t have, and plenty of angst.
The moral of the story, of course, is beware of free services. I don’t even like most free software and some free news sites because of the hassle, the advertising, lack of decent content, the garbage that may come with it and the “spam” lists they may put me on. Just give me something that works well, provides value and leave me alone. I’m perfectly content paying for it.
Which brings me to the “investment grade” energy study of large commercial or industrial facilities. Investment grade means it is accurate enough to guarantee savings if that’s what the client wants. Of course the guarantee isn’t free, but that’s a topic for another day. I count five types of study funding.
- The low-ball study. The consultant offers a low-ball study cost that will be made up on the much more expensive design phase of the energy efficiency project. Essentially, they do energy consulting to get what they really want: design and even more lucrative construction management. They may not know a low-cost, high return-on-investment (ROI) opportunity if it shot them in the kneecap, but it doesn’t matter, they just want to design equipment and system replacements. They can spot those babies for sure.
- The “free” study with the contract that says you customer have to move forward with high ROI (defined ahead of time) measures, or else pay for the study, which will be a million dollars – as in performance contracting. The company doing the study does the implementation with profit on the implementation cost. Look, a study may really cost 20% to 50% of one year’s energy savings from cost-effective measures. Implementation may cost 500% to 1,000% the first year’s energy savings. Now how easy is it to stuff the project with about 5 times the real study cost, plus other markup built into the cost of implementation? Heck the study cost doesn’t even matter. Third party verification of savings is absolutely required. This can work fine, but many end users have been burned badly, making performance contracting a pariah in some circles – more on this in another rant. Does this outfit want to provide the best value for your investment or sell you all the equipment they can to fit within your payback criteria?
- The open tell-all study. The client pays an independent consultant to do the study with everything on the table. We are typically in this scenario and have a hard time competing with the above David Copperfields for the study. We may have the same profit margin as the performance contractor, but their sale is 10x or even 50x our sale.
- The cheap and crappy audit. Somebody who’s done 1,400 studies offers to provide an investment grade study for half the price of everyone else. How do you suppose they’ve done 1,400 studies? You just have to be a good cost estimator to deliver these crumby studies. Costs come in with precise bald face numbers. Energy savings? Not so clear. Cost effective measures may be scattered all over the place AFTER they are done as well. Refer to the kneecap shooting above.
- The cheap high level audit. We do many of these too, and we go overboard, as much as possible to explain to the customer that this will NOT, is not, and was not investment grade material. It provides plus-or-minus-50%, hand-grenade results to assess potential. Some measures with a worst possible real ROI that is less than 2 years may go right to implementation, but probably more than half need further investment grade analysis, unless the customer just wants to roll the dice.
There is no free breakfast here. Our long-term clients know this because the cost of cheap can be very expensive, or intolerable, and they know it.
written by Jeffrey L. Ihnen, P.E., LEED AP
I was blindsided by the onset of daylight savings time this weekend. Wonderful. As though I don’t already have enough work to do before I can get outside to do some badly needed yard work – hack an hour off my weekend to boot.
If I remember correctly, daylight savings time used to begin at the end of April and end on the last weekend of October. I also believe that these dates were moved to the current dates of mid March and early November as part of the Energy Policy Act of 2005. This is supposed to save energy. I can generate as much energy to displace the savings using a hydropower generation station in my back yard. I have a stream about four times a year: once when the snow melts, but only when there is enough and it melts fast, and three other times when it rains hard.
Folklore has it that daylight savings time was developed so farmers could take advantage of more daylight hours and/or it saved candle wax and whale blubber. How is this supposed to save energy in modern times? It was just starting to be light enough in the morning so I wouldn’t need my flector for my morning run starting around 6:15. I didn’t need lights in the house. Tomorrow (Monday), it will be pitch black when I grumble my way out of bed. Lights are required when they weren’t last week. Savings at night is offset by more lighting use in the morning, but in our house more lights are used in the morning for numerous reasons.
Moreover, more daylight allows people to be goofing around outside later at night using even more energy for cruising around in their giant yachts, personal watercraft, golf carts, and other evil stuff people don’t need. They should be inside reading a book by daylight that is so graciously bestowed upon them.
At the office, our heating and cooling system shuts down at 7:00 PM, period – whether it’s light or dark outside. I’ve seen a lot of cockamamie control sequences in my time but I’ve never seen a heating and cooling system tied to daylight. Already last week it was light till about 6:30 in the evening. We average only 4-5 people in the office after that time of day and we only use task lighting, but then we’re energy efficiency freaks, not normal people. No savings here.
What else is there? Planes, trains, automobiles, busses, and water-going vessels? Water heaters, clothes washers and dryers, refrigerators, and toasters? Nothing there. Street lighting. Ditto.
If this is such a brilliant idea for saving energy, why move the clocks with such a difference in daylight hours at the time of springing forward versus at the time of falling back. Clocks are moved forward in the spring about one week before the equinox. In the fall, clocks are moved back about six, maybe seven weeks after the equinox. This is a huge difference in daylight hours. Once again, I blame congress, this time for not only knowing nothing about energy efficiency, but they also can’t handle this symmetry thing.
There should be more engineers in congress. Engineers are symmetry freaks. Just put some graphics in front of an engineer to see which they prefer – one sample is curvy, eclectic, and abstract – is actually interesting – and the other is all squares with a perfect balance of ink on all sides and non threatening colors, like blue, white, gray, or black. Anyway, engineers would vote to have clocks moved in spring and fall on days with exactly the same length of daylight. In fact, it may even be at a precise time like the start of spring, at 8:46 Greenwich mean time, Sunday March 21. (I don’t know when it really is, I’m just making this up – I’m ok with that)
If we can’t abolish it altogether, like Hawaii and maybe Indiana (someplace over there) my suggestion is to at least change the law to move clocks forward in the spring at 1:00 PM, Monday afternoon.
written by Jeffrey L. Ihnen, P.E., LEED AP
July 1992: Tickets for U2’s ZooTV show at RFK stadium in Washington, DC go on sale by Ticketmaster. The tickets are snapped up in a few hours, as fast as the phone lines could handle the traffic. This was before anyone knew what the internet was (no Al Gore jokes). Fortunately, a second date was announced and the roommate waited for the crack of 12:00:00 AM for a shot at the second batch, successfully.
March 1, 2010: Federally funded rebates become available for efficient appliances in Iowa and Minnesota. Phone lines jammed with 10 times expected volume and internet traffic at 100 times expected traffic took down the website of the contractor running Iowa’s program in the first hour, within minutes of opening. Ultimately, Iowa’s share of the funds was gone within 8 hours. Minnesota’s program dragged on until the next morning. It was a Wal-Mart-style black Friday digital stampede. Thank goodness for (don’t use Al Gore jokes) technology – I didn’t see any reported injuries or fatalities.
Some of these federally funded appliance incentives run two to ten times utility incentives. What were they thinking? Combined with utility incentives the total can exceed 50% of the purchase price for crying out loud. See “Policy to Curb Carbon” (government doesn’t know how to do energy efficiency) and “Incentive or Discount” (people trained to wait for handouts to buy). This is pretty much a giant transfer of wealth from people paying taxes to people taking the rebate checks, and I don’t begrudge the people taking the money.
Apparently the people who designed these state programs, which are actually handouts at these rates, don’t understand the market and/or supply versus demand. Obviously they gave away too much money and taxpayers got far less than they should have for their “investment” in terms of reduced energy consumption, emissions, and sales and in some cases manufacturing here in the states.
And to top off the environmental benefits of the appliance programs, participants are to send their old appliance to the scrap heap, with self-policing enforcement. Who’s going to do that? They will either end up with a second refrigerator or freezer in the basement or the old stuff will show up on Craig’s list.
Recall cash for clunkers last summer. The intent there was to offer a total of $1 billion incentives, up to $4,500 per vehicle and it was planned to run from late July through November. Within a week or two the billion dollars was gone and congress quickly shoveled in another $2 billion. THAT was all gone by Labor Day.
While attending the International Energy Program Evaluation Conference in Portland, OR, last fall I was engaged in a small group discussion – was cash for clunkers a free rider? A free rider is somebody who takes an incentive for something they were going to do anyway. This is considered to be a waste of incentive money. That’s arguable in this clunker case because it more than likely moved the purchase date forward for buyers, but I also think it’s the wrong question to ask. The more appropriate question is, was it cost effective?
Answering the free rider question, Edmunds estimates that of the 690,000 cars purchased through the cash for clunkers program only 125,000 were incremental. That is, only 125,000 transactions took place that otherwise would not have. The rest just displaced a sale that was going to happen soon anyway. Figuring in free ridership, the taxpayer cost per vehicle was $24,000. And then consider this: the average trade-in value of the clunkers was about $1,500, which may be worth $1,800 for sale to the next guy. All these cars were destroyed. That comes to $1.2 billion in destroyed working assets. So the feds spent $3 billion to increase profits by car dealers by perhaps $125 million and destroyed $1.2 billion in assets. Annual energy savings for these 125,000 vehicles would be roughly $120 million. And maybe the domestic automakers lost a little less money as a result of the program. Woohoo!
To be fair, the cash for clunkers program may have resulted in the purchase of more efficient vehicles than would otherwise be purchased. Hardly. The average fuel economy of cars sold through the program was 25.4 mpg. The corporate average fuel economy for cars is 27.5 mpg and with light trucks included, it is 23.5 mpg. In other words, these “efficient” cars were essentially average.
And the doozer of them all: free golf carts thanks to tax credits and sundry other incentives for electric / high mileage vehicles.
These aren’t incentives. They are gifts from frugal people to people who probably don’t need this crap. But good for them, I say. You have to play the game that’s put in front of you.
I hate electricity. I love what it allows me to do but I just don’t understand it. I sat through an in-house safety training session on arc flash, which I actually understood – there is a huge burst of energy through a “fault” that melts and actually vaporizes the copper conductor, which expands 7,000 times at Mach 2 and 1 million degrees F (made up numbers but the premise is correct). It’s one heck of an explosion. During a break I was asking our electrical engineers what the difference between a neutral and ground was, the flow of electrons, the consumption of energy. They may have just as well been explaining how to play “Teenage Wasteland” on the synthesizer for The Who (my entire musical career consists of 2 weeks of saxophone lessons in 5th grade and then I broke my arm – game over).
Typically, electrical systems are explained in terms of fluid systems. Voltage equals pressure. Current equals flow, etc. I interviewed one guy with my normal mechanical engineering quiz and he was explaining mechanical systems with electrical ones. I had to laugh. A couple questions downstream I asked my question – without using an electrical analogy, I said!
I’ve done a few electrical things in our house – changed a couple switches to the mechanical twist timer thingies and I replaced one crappy fluorescent fixture with and incandescent fixture – so I can see my clothes in the morning! It’s on for 30 seconds per day. Ok.
My electrician career ended earlier this winter. I was trying to install one of those push button timers – 5, 10, 15, 30 minutes and it turns off – to save 25 kWh/year on my garage lighting. I pull out the instructions. Attach the black wire to the black one, green, red, white, etc. Ok. I pull my switch out of the wall box – I have two blacks and a white – great, just great. I gave it a shot, replaced the thing, went downstairs to throw the breaker, came back up – nothing. Let me try again. Downstairs, upstairs, screw, twist, cram, throw the switch. It works! The timer is clicking through its settings. Before stuffing it all in the box and buttoning it up I go outside to make sure the lights are on, just in case. Hell no! I’m done! I give up. I’m wasting my precious weekend. Downstairs, upstairs…zzzzzt. I was shocked. Somehow I had gone downstairs, gotten sidetracked and didn’t open the breaker. So I almost got barbequed. Never again! I should have taken a hint from the timer switch package. It looked like it had been purchased and returned about a dozen times. At least I’m not the most electrically ignorant guy on the planet.
I didn’t try this to save money. I’m just never home during the week so it was really to save time and hassle, but this is beside the point. The point is, some commercial and industrial end users think, why do a study? Why hire somebody who knows energy efficiency? “We know what needs to be done. Why not just hire a contractor and get it done.” Why not just have Hannibal and his pal Max Cady to drop by to check on my house while I’m out of town?
First, contractors sell stuff. I find it interesting that the vendor’s answer to compressed air system problems is always a new compressor set to operate at just a little higher pressure. Nevermind the capillary tube they have for a header. Could that be a problem? A contractor’s path toward a more efficient heating plant is a new boiler – a conventional non-condensing shiny unit beside the dingy old one that can be tuned to achieve as good or even better efficiency.
Second, on the flip side, if they can’t make money on it, they wouldn’t spot an inferno of cash if it singed their eyebrows. Last week I was getting an explanation of a boiler plant I have never seen. It was from a facility manager who thinks they’re paying excessively for energy in their new 200,000 square foot facility. They want retrocommissioning (RCx). They have condensing boilers running 190F water. Ok. Turn a screw and save $6,000 per year. Not a new boiler. Not new controls.
I’m probably roughing up vendors and contractors a bit excessively. I’m sure some of them understand some things about energy efficiency beyond the sales brochure. I know one such excellent contractor, personally. We on the other hand revel in polar opposite – reducing energy bills in a big way for practically no cost. When a significant capital expense like a new control system is warranted for long-term value, we will recommend it.
Our challenge is our product, a service, is a complete unknown to a facility owner. You buy it and wait to see what happens. Wait a minute. This sounds like buying mutual funds. However, unlike the broker, investment in expert RCx has a very high probability of saving substantial money. You might as well fling darts at the mutual fund tables as opposed to spending money on a mutual fund advisor. Since they ARE the market, their odds of being right are 50% no matter what they say. Conversely, paying a decent RCx guy is like finding money on the ground. Just squat and pick it up, and move on to the next pile.
written by Jeffrey L. Ihnen, P.E., LEED AP