Energy efficiency is a win for both sustainability and the bottom line, but according to director of Queensland based Negawatt Energy Solutions, which also deals in energy procurement, there is a hierarchy of choices driving market behaviour, and if the energy comes in cheaper the appetite for efficiency can slide dramatically.
Negawatt’s current client base for energy-efficiency projects includes data centres, a number of large insurance companies, and small to medium enterprises, particularly those with multiple sites where economies of scale can be achieved with projects.
“We tend to aim for projects with a 12-18 month payback,” company director Mick Robinson said.
Following procurement of a better energy contract, and analysis of the client’s demand profile, the pecking order of initiatives customers generally choose to implement starts with optimising the HVAC system with the Building and Asset Tuner, which has a three month payback if the site already has a Building Management System installed, and a six month payback where there is no on-site BMS.
Where supplementary controllers and sensors are installed, payback is between six to nine months.
Mr Robinson said this type of project has been popular with clubs, pubs and hotels in the SME sector, as HVAC forms a significant proportion of the energy load for this type of business.
Power factor correction is another quick payback. He said “it’s something of a dark art”, and pays for itself within six to 18 months, with faster payback occurring for Queensland firms under the state’s supply and tariff structure.
LED Lighting projects, which include replacement of ballasts and fittings, come in at 12-24 month paybacks, and he said the firm also identifies a lot of “ad hoc” opportunities for replacing motors on plant including refrigeration and evaporators, and this has a one to three year payback. Installing variable speed drives on motors and pumps is also a one to three-year payback proposition.
“There is not an appetite to spend capital [in the market],” Mr Robinson said.
“We recently brought in vendor finance models where clients don’t have to spend capital. We have tried in the past to suggest clients could fund a project out of the energy savings, but [mostly] they’d rather bank the savings.
“It hasn’t helped that energy prices have dropped either.”
Mr Robinson said he saw an opportunity to help businesses become more energy efficient through lighting upgrades, solar power installations and building services optimisation and tuning. A cloud-hosted software package, Building and Asset Tuner, was developed in collaboration with a US-based engineering firm.
This package is being marketed in the US by a separate entity called Utilities Watch, and the collaboration between the two firms has to date undertaken 30 substantial projects focused strictly on energy-efficiency.
In Australia, BAT has been used on projects including Sydney’s Aero Building in Mascot. The 10,000 square metre office building’s management committee wanted to reduce energy costs and improve the building’s energy demand profile, particularly by ensuring the HVAC system was responsive to real-time weather conditions.
NES also provided its continuous commissioning product, which identifies energy conservation measures and improves tenant comfort through correcting sequencing that had been running elements of the HVAC system in a 24/7 occupied mode, diagnosing equipment failures, adjusting heating and cooling in response to actual outdoor temperatures in real-time and enabling demand response and demand curtailment to minimise peak demand charges.
The result was a 27 per cent reduction in energy use in the first nine months of implementation, equating to $18,680 in savings.
Mr Robinson said that generally, the Australian clients look for initiatives that have a payback of three years or under, the notable exceptions being clients in the government space.
In New Zealand, he said energy-efficiency has been of lesser concern in terms of reducing carbon emissions, but the market is warming to the concept after energy prices began to escalate and the company has undertaken between 15-20 NZ projects undertaken in the past six months.
Energy procurement can kill the appetite for energy efficiency
Negawatt was originally a part of Essential Utilities Corporation, a Queensland-based firm that provided both telecommunications and energy procurement. The energy business was divested and became NES. It currently has five full-time staff, and 200 distribution agents across Australia and New Zealand.
Mr Robinson said that the appetite for investing in energy efficiency can fall away if a company can save money on its bill through a better electricity contract.
In the past 12 months, NES has undertaken about 400 energy procurement projects for Australian clients and of those, only 50 or so have proceeded to the next level of engaging the company’s energy-efficiency services.
It’s almost ironic, given the company was founded in 2014 due to perceived demand for energy-efficiency services.
Australia, Mr Robinson said, there were no clients seeking energy-efficiency measures because they wanted to reduce carbon emissions for corporate social responsibility reasons.
They might pay lip service to the idea, he said, and it might be in the PR materials, but if the commercial imperatives don’t stack up and the payback is not under three years, interest wanes rapidly.
For this reason he is finding few clients looking to solar power systems as an energy-efficiency measure, particularly in North Queensland where achieving a better electricity price from the major provider pushes the solar PV payback well out past three years.