Energy, HVAC News Roundup and Denmark’s Net Zero Island

December 16th, 2011 by Jim Crowder

Catch these telling articles this week?

And, The Building Advisor interrupts its regularly scheduled programming of HVAC-flavored energy savings to present a really cool video about an Energy Academy in Denmark.

Happy Friday!

Energy Efficient Buildings: We Don’t Have to Wait

December 8th, 2011 by Jim Crowder

Big savings. REALLY big.

$4 billion investment = $40 billion savings is estimated from the Better Buildings Challenge. That isn’t just savings, it’s Sumo sized savings resulting from a nationwide 20% cut to energy usage in existing buildings.

Through a public-private partnership, President Obama and former President Bill Clinton last Friday announced a $4 billion commitment to increasing energy efficiency in the nation’s government and commercial buildings. Despite the US Department of Energy’s share being roughly half, there will be no upfront cost to taxpayers.

With deadlocked Supercommittee-itis cramping the Obama administration’s style, at least we can hold hands over one thing: saving money on inefficient buildings’ energy use. Or as Huffington Post commenter and USGBC Founding Chair Rick Fedrizzi put it: “for one moment we found something we can all agree on.”

Barack Obama, Bill Clinton

President Barack Obama (R), and former President Bill Clinton (L)

“If there’s one item on the energy agenda that’s managed to remain free of controversy, it’s energy efficiency,” proclaimed SmartPower owner Brian Keane in the Huffington Post this week. The investment is part of President Obama’s “We Can’t Wait” measures, or initiatives aimed at spurring the economy that don’t require Congress’ stamp of approval.

We can’t wait, indeed, for energy savings – nor do we have to.

As part of the program, 60 CEOs, mayors, university presidents, and labor leaders have committed to invest nearly $2 billion of private capital into energy efficiency projects. The $40 billion in savings is the projected result of upgrading energy performance nationwide – 1.6 billion square feet of office, industrial, municipal, hospital, university, community college and school buildings for those of you keeping track at home – by a minimum of 20% by 2020.

Big-time San Francisco firms such as Ygrene Energy Fund and Metrus Energy backed the announcement, showing their support as the kind of companies willing to step up and foot the bill on the other $2 billion. Of course, they will then reap some serious savings…

The Obama Administration is clear on how its not using taxpayer dollars for the initial investment, reported the Washington Post:

“The way it works is that the private firm [doing the renovations] takes the risk here,” Jeffrey Zients, the government’s chief performance officer, said. “They make the investment. They are paid through energy savings. Once they are paid back, the [federal government] enjoys the savings going forward.”

The Better Buildings Challenge is estimated to add approximately 50,000 jobs.

The announcement expands on an existing Clinton Global Initiative energy efficiency investment program announced last summer, that has already committed $500 million in private sector funding for energy upgrades.

Kinda trippy how Pike Research just issued that report last week predicting that HVAC systems will double to become a $6.4 billion business by 2017.

Image courtesy newsone.

Complete Energy Profile in Minutes. That’s What We Said A Long Time Ago!

December 2nd, 2011 by Jim Crowder

The Building Advisor got fat and happy over Thanksgiving (instead of writing a blog post), and…well…a bit ornery.

“When you look at reducing the carbon footprint in the United States, there’s a huge bottleneck right now, and that is the way we assess buildings for energy efficiency opportunities,” Bennett Fisher remarked to Boston.com’s blog, Innovation Economy, this week.

Fisher cofounded a company called Retroficiency, maker of software to evaluate energy savings potential via a web-based program. (Sound familiar?) Since forming in 2009 the company has recently become a media darling, gathering writeups recently from GigaOm and Martin LaMonica due to another round of angel investment funding and, well, pedigree. [Note to Martin: AirAdvice was putting buildings “on a diet” way back in 2009 too. See picture.]

“…the way we assess buildings today is that we send people in to count lightbulbs and look at HVAC units,” Fisher was quoted as saying. “That can cost tens of thousands of dollars per facility.”

As one of those people counting lightbulbs and looking at HVAC units, what do you think? Maybe you didn’t go to MIT, but perhaps you know a thing or two about energy savings?

HVAC systems use the most energy of any system in a building. Therefore, looking at them? Not such a bad idea.

On the other hand, Pike Research gave us something to smile – and think – about. This week, the cleantech market research firm issued a report predicting that HVAC systems will double to become a $6.4 billion business by 2017. “Energy Efficient Buildings: Global Outlook” predicts the building energy efficiency market will soar more than 50 percent between in the next six years, rising to $103.5 billion.

“As we’ve been saying for many years at The Building Advisor GreenBiz.com, building energy efficiency may not be sexy, but it is big business.”

More good news: ACCA (Air Conditioning Contractors of America) is relaunching its print publication, Contractor Excellence. Rather, “actually transforming into a whole new magazine,” according to The Building Advisor’s sources. The new glossy/web edition, IE3 Magazine, will set sail in January.You might be able to get more out of ACCA SVP Kevin Holland by following him on Twitter at @acca_kevin.

Social Energy

November 17th, 2011 by Jim Crowder

They said it couldn’t be done. But ConduitNW, an online watering hole for energy efficiency professionals, has nearly 1,000 members since launching in May of this year. As Sustainable Business Oregon reported last week:

Led by [Northwest Energy Efficiency Alliance] NEEA in partnership with the Bonneville Power Administration, Conduit was built and will operate through 2014 on a $1.25 million budget, about $400,000 of that dedicated to development costs.

The BPA contributed a separate grant, in addition to the startup website’s group of utility funders, to get ConduitNW up and running. The two agencies have been working for the last two years on the project.

The new social media site – which is a mix of LinkedIn, Facebook Groups (from way back when?) and Google Docs – gained some social media cred recently when it stole what would have been serious Twitter thunder from this year’s Efficiency Connections Northwest 2011 held in Tacoma, WA.

This is what a futurist looks like.

[BTW: the conference featured David Zach (who’s job title is “Futurist.” WTF, what a great title. Apparently there are only a few on the planet). The other Keynote Speaker was L. Hunter Lovins, Author of Climate Capitalism: Capitalism in the Age of Climate Change.]

Though ConduitNW’s main target for the site is the 150 nationwide utilities working toward energy efficiency, it also attacts a number of contractors and “impementers,” according to NEEA’s online community manager, Ben Fowler. The site came out of a call for collaboration by utility execs to state govenors in 2008, according to a BPA public utilities specialist in energy efficiency.

At ConduitNW, you can catch up on industry news as well as upcoming energy-related and NEEA events. Browse by sector, function, topic or group, receive email notifications and share information with colleagues through document sharing.

And of course, upload a great profile pic.

Sidenote: Have you checked out “A Profitable and Resource-Efficient Future,” the new report from the World Economic Forum (WEF) yet? The ever-vigilant EarthTechling picked it up and spit it back out to us this week:

According to to the report, commercial buildings are responsible for about 30 percent of greenhouse gas emissions worldwide and, in some countries, 70 percent of electrical consumption. Nearly one-half of all energy consumed by buildings could be avoided with new energy-efficient systems and equipment, and the energy savings would exceed the cost of upgrades, generally within five years or less, the report said.

MSCA Musings: Following Up After the Conference

October 27th, 2011 by Jim Crowder

Guest post by Jim Crowder, AirAdvice CEO, as excerpted from last week’s Building Monitor e-newsletter. If you would like to receive the Building Monitor in the future, you can sign up here.

We just returned from the Annual MSCA Educational Conference in beautiful Colorado Springs. It was a well organized event chock full of useful sessions that will help members improve their performance.

It also marked the passing of the Association leadership torch from Thom Brazel, Hill York, to Woody Woodall, W.L. Gary Company.

Thom helped drive association awareness of the opportunity energy services provides the HVAC industry. Under his leadership, and with the support of Barb Dolim’s MSCA staff, Thom helped create a new vision for the MSCA GreenSTAR program that will help members incorporate energy solutions into their core service offerings. Not only is the association planning to provide tools, but they are developing an impressive training program to educate members.

We at AirAdvice applaud Thom and the rest of the association for providing the leadership the industry needs to make commercial building owners and operators aware of how valuable HVACs can be in helping to eliminate energy waste in commercial buildings.

No industry is better positioned to provide these types of services to commercial buildings. Energy expenses represent 30% of the controllable operating cost of a building. HVAC and lighting combined typically constitute about 75% of the total energy spend.

AirAdvice CEO Jim Crowder

So, who can deliver real, measurable value to building owners? It’s not the janitors or the elevator guys! We look forward to working with Woody, Barb and the rest of the MSCA team as they move into this lucrative field.

Building Advisor’s Note: Have you seen the MSCA’s new YouTube channel? Check out their first video below.

Dave’s World: Conferences, Clients and Energy

October 20th, 2011 by Jim Crowder

Here’s another post from Dave HewettAirAdvice senior advisory consultant and  former Chairman of BOMA International. It’s part of a series of guest posts from his blog, “Dave’s View,” a from-the-hip view of issues facing commercial real estate executives published on his site, ecobuildertoday.com.

Enjoy!

This past week was a week of conferences and travel. I was in Colorado by invitation of a AirAdvice at the Mechanical Service Contractors Association (MSCA) Annual Conference in beautiful Colorados Springs’ Broadmoor hotel.

While there, I snuck away to Las Vegas for a few hours (about 28) to attend the Facilities Decision Conference and Expo at the invitation of the Building Owners and Managers Institute International.

I was privileged to speak at both conferences, but was most encouraged by what I was hearing. The big message was all about listening to the customer, and using energy baselines and monitoring.

It is good for all of us to remember the old adage that you cannot measure what you do not know. I continue to see the dire importance of baselines, and yet, a small percent of people who are using them. Whatever the task, this is important; with energy it becomes essential.

I am surprised by the fact that building owners and managers as are not at 100% use of energy measurement products, given how easy it is to use the free Energy Star Portfolio Manager and other energy services delivery platforms such as BuildingAdvice.

Software like BuildingAdvice and Portfolio Manager ensure that the impact of potential savings from energy conservation measures is clear to a building owner in size and scope. Moreover, BuildingAdvice gets consistently high marks from its national HVAC contractor base for usability, simplicity of reporting, and speed of information delivery. Our developers work hard with individual clients to address their specific needs in order to make BuildingAdvice better with each upgrade. BuildingAdvice comes with a team of energy experts reachable by phone or email to help contractors with data input and interpretation, recommendation implementation, report customization, and any other issues that may arise.

A quick word of caution, if we do not do this voluntarily, we will be forced to do it by the same government that allows us this voluntary method. Mandatory energy benchmarking has already come to New York, Seattle, and other city and county municipalities (for a national listing, go to the Database of State Incentives for Renewables & Efficiency).

A free government sponsored product for energy measurement is available, and still so many buildings have yet to adopt it. If you are using it CONGRATS to you, if you are NOT, check it out and start SAVING energy today. In my next blog I want to explore some ideas on monitoring and low- and no-cost ways to take you from a baseline to monitoring and on to SAVING!

Turning ‘Invisible’ Efficiency Measures Into Visible Savings

September 30th, 2011 by Jim Crowder

How Energy Measurement and Verification Services Measure The ‘Invisible’ for Facility Managers

Author: Jim Crowder

Note: This article was originally published in Oregon Facilities’ Summer 2011 Issue.

For most people, efficiency can’t be seen: it’s hard to tell how efficient a building is just by being inside it. Most commercial building dwellers can’t detect subtle shifts in temperature setpoints, let alone tell a building’s energy performance by looking at it. If it were easy to see the amount of energy being wasted in most commercial buildings on a daily basis, like piles of money flying out of the building on cold nights, hot days, and long weekends when the building is empty – then energy measurement and verification would be top of mind and agenda.

By contrast, operating budget excess is easy to see: energy comprises a third of most buildings’ controllable operating costs. Now that owners and managers are learning that just low- and no-cost energy efficiency measures alone can reduce their annual energy spend by an average of 15%, they’re having facility managers run energy saving diagnostics to uncover big savings from simple fixes. However, these types of savings opportunities typically revert back without rigorous oversight on the part of the facilities staff. After diagnosing and changing your systems, how do you know if your energy-saving adjustments are working? And what do you do if they aren’t?

New, affordable methods are increasingly available to help. Ongoing energy measurement and verification services, known as “M & V” in the industry, prove that predicted savings from proposed energy conservation measures are happening (or not) through scientific measurement. Energy measurement and verification helps facility managers bridge this gap of invisibility by providing real time data that help to ensure the delivery of monthly savings. As facility managers feel increasing pressure from management to reduce utility bills, they’ll need data to show and prove savings from actions taken to reduce energy usage.

What is energy measurement and verification?

Energy measurement and verification is the ongoing, continuous monitoring of a building’s energy use over time, tracked and analyzed by sensors, software and consultants who interpret the data. Many call it the equivalent of adding a 24/7 energy expert to building management staff to continuously watch the energy use of the facility, and tell facility managers when they are saving money, or wasting it. If it is paired with cost-cutting recommendations from the system and energy analysts, it goes beyond making the facility manager’s job easier, to making that person look like a hero.

Building conditions and tenants are in constant flux. From weather conditions to interior office and cubicle rearrangements, energy management is a moving target. Measurement and verification allows the potential for instant adjustment should building conditions change, tracking how much energy is being saved as a result of changes on a day to day basis.

How it works

The most effective measurement and verification systems stay quiet when building systems are functioning optimally, constantly looking for data that is out of the expected range for that building and quickly identifying the most serious energy waste. Real-time alerts are issued when energy use exceeds baselines. Continuous monitoring allows energy analysts to identify changes in building efficiency as they happen, and make immediate corrections to avoid unnecessary costs.

Most measurement and verification services use sensors to collect energy usage through an interface to the building’s electric meter. Those pulse measurements are sent wirelessly to a server, where the data is collected. When run through a sophisticated software platform, that data can be analyzed and presented via a real time energy dashboard or reports. The information is then reviewed by an energy analyst, and recommendations can be made when opportunities to save energy are identified. Measurement and verification provides the information needed for executive leadership to ensure energy waste is eliminated in their buildings leading to lower operating costs.

Measurement and verification in practice

Generally, facility managers’ demanding schedules and breadth of oversight aren’t best suited to day to day measurement of continuous data. But with energy costs inevitably on the rise, facility managers – and their managers – will want to keep a watchful eye over every dollar.

One example of an M & V solution economically positioned to meet the demands of mid to smaller sized commercial buildings is BuildingAdvice Verify, a powerful Energy Information Management System (EIMS) that incorporates both energy modeling diagnostics and continuous measurement and verification in one tool. BuildingAdvice Verify utilizes permanent, on-site meters that continuously monitor energy use by establishing baseline usage and looking for any variation from that baseline. Data can be tracked in real time to catch and correct usage spikes immediately.

As facility managers know, energy management isn’t a one-time event; energy waste and cost control requires continuous monitoring, analysis and management. To simplify those tasks, one of the most important tools in the effort to improve buildings’ energy efficiency is to solve the difficulty of eliminating waste with a robust energy measurement and verification system.

Jim Crowder, AirAdvice CEO

Jim Crowder, AirAdvice CEO

Jim Crowder is President and Chief Executive Officer of AirAdvice, an industry proven Energy Services Delivery Platform. During his 25-year career, he created dynamic new divisions within several Fortune 500 companies and led key turnaround efforts in smaller corporations. He spearheaded business development and successful technology startups within both established and emerging companies. 

Exciting Times for Energy Efficiency in Buildings

September 29th, 2011 by Jim Crowder

Ygrene Consortium as Monsters of RockYgrene followup: though you’d think an article in the New York Times makes it so, Sacramento only just approved of Ygrene’s Monsters of Rock-style consortium – put together by Richard Branson and his Carbon War Room – to use PACE financing for energy efficient improvements to the California state capital, writes the Sacramento Business Journal. Under PACE programs, cities or counties offer loans to finance upgrades that are paid back through property tax bills over a number of years.

Here’s more about Branson’s Carbon War Room:

Green Capital Global Challenge from Carbon War Room on Vimeo.

 

AIA NY's Center for Architecture presents ENERGY=BUILDINGS

AIA NY's Center for Architecture presents ENERGY=BUILDINGS

When you look at a commercial office building, do you think of it as a rectangular block of energy standing in front of you? A freestanding tube of energy is what that building contains. And if it were more efficient, a whole lot more energy would be available out in the world. An upcoming exhibit at the Center for Architecture in New York will look at the energy represented in buildings, starting with calculating embodied energy in building materials.

Buildings=Energy (E=BLDGS) is a new exhibition opening October 1 at the Center for Architecture (home to the American Institute of Architects New York chapter). If you’re in New York, the exhibit runs through January 21, 2012.

Perkins+Will, a global design firm, has designed a prototypical energy-efficient office building for the exhibit which shares “critical design decisions, policies and choices” building planners go through as a building comes to be, as well as the many design decisions made across a building’s lifecycle.

Boom, it’s going to include to tools used to assess and analyze energy as well. The BuildingAdvisor has always wanted to be memorialized in a museum.

And speaking of making choices about your buildings

tenants and landlords 'running' side by side

Tenants and landlords 'running' side by side. 'Chariots of Fire'? No? Anyone?

In Toronto, the Race to Reduce is on. Greening Greater Toronto, an environmental nonprofit partnership is accepting submissions for “shining examples of action and innovation in energy conservation” to give awards out at Canada’s leading real estate conference, Real Estate Forum.

The awards will recognize recognize landlord and tenant participants’ action, efforts, and performance in energy conservation and efficiency. If you’re an owner of Canadian office space, Race to Reduce landlord participants need to submit their energy data and normalization information by September 30th to the Real Property Association of Canada (REALpac)’s 2011 Energy Benchmarking Survey.

“The goal of the Race to Reduce is to make landlord-tenant collaboration the ‘new normal’,” said representative Linda Mantia.

Lastly, did you know that we’re the best? Oregon State University’s already rockin’ industrial energy efficiency program, headed by Joe Junker, will double, thanks to a five-year, $1.5 million grant from the U.S. Department of Energy, writes the intrepid Sustainable Business Oregon. The program trains students in energy efficiency while providing Oregon companies with free assessments of their energy use and potential areas of improvement.

OSU officials estimate that the Energy Efficiency Center has saved Oregon businesses $88 million during the life of the program. Another $35,000 from Oregon Built Environment and Sustainable Technologies Center, known as Oregon BEST, helps companies save an additional $70,000 or more per year in energy costs.

Urban Cowboys, Going Deeper with EEI

September 22nd, 2011 by Jim Crowder

UrbanLand Magazine recently turned out a thoughtful analysis, Energy Efficiency Markets Evolve Globally, of The 2011 Energy Efficiency Indicator (EEI) , the fifth time a global survey of real estate decision makers has been conducted by Johnson Controls. For the first time, ULI got into the research fracas with Johnson Controls, to analyze and release the results. The Building Advisor touched on the EEI a couple weeks back in Summer HVAC Wrap + BetterBricks Video, but nobody does serious data like ULI.

If you’re not familiar, the EEI is the last word, the “state of the union,” if you will, gauging the hearts and minds of of global executives and building owners responsible for energy management and investment decisions in commercial and public sector buildings. This year, the EEI surveyed 4,000 respondents in 13 countries on six continents and was conducted in eight languages. That’s a lot of bubbles to fill in completely with a #2 pencil!

‘Extremely’ or ‘Very’: Energy Efficiency Makes the Big Time

What you probably already know: as many as seven in ten executives globally say energy management is extremely important or very important to their organizations. Execs have pursued an average of nine different energy efficiency measures in the past year.

And what’s motivating them? Simply put, the rising cost of energy. We all know energy costs will keep on rising. It’s sort of like gravity – you can pretty much count on it. Up significantly in importance from 2010, however, is government incentives. With over half the states offering some kind of financial incentive for efficiency measures, execs are now listening. It’s sort of like getting cash back at the grocery store on a big ticket item: why not? Third biggest motivator was to enhance the branding of a building.

In fact, interest in certified green buildings doubled from 2010 and for the first time, certification efforts are more prevalent for existing buildings than new ones. Lower on the motivational list: reduction of greenhouse gas emissions, domestic energy security, and other government policies.

Now, the challenges: while the graphic to the left shows that 67% of executives surveyed report that they have allocated capital from their operating budget to energy efficiency in the last year, (yay!) significant market barriers to pursuing further investment (boo).

These barriers come in all colors and flavors, depending on market sector. From the report:

The five key barriers to energy efficiency investments reported in the survey are:

  • lack of awareness of opportunities for energy savings;
  • lack of technical expertise to design and complete projects;
  • lack of certainty that promised savings will be achieved;
  • inability of projects to meet the organization’s financial payback criteria; and
  • lack of available capital for investment in projects.

For the contractor serving small to midsize buildings, it is interesting to note that respondents with control over more square footage in larger facilities report having implemented more energy projects than those with smaller facilities. But trickledown is sure to follow.

Four is the Magic Number 

According to the EEI Survey, real estate organizations sharing the following four key strategic practices are most likely to get on the energy efficiency bandwagon, and implemented four times as many energy efficiency improvement measures as those that did not:

  • goals established for reduced energy use or carbon emissions;
  • energy use data measured and analyzed at least monthly;
  • added resources dedicated to improving energy efficiency through the hiring or retraining of staff, or the hiring of external service providers; and
  • external financing sources used for projects.

The Building Advisor can’t help making a couple of points here. For energy use data measured and analyzed at lease monthly, our Verify product for ongoing, continuous monitoring is the solutions. I mean, have you read what it did for J.E. Shekell in Smart Solutions (J.E. Shekell Uses Building Advice to Slash Energy Bills in Half ) or the NEWS (Facility Energy Audit Leads to Huge Savings)?

And in the second place, BuildingAdvice is like adding a team of expert management, sales, and engineering personnel acting as an extension of an HVAC Contractor’s current team to drive the development and ongoing execution of an energy services business. ‘Nuff said.

And Speaking of Incentives Changing the World

Sacramento development image by Michael Nagle/Bloomberg News

The Gray Lady’s Energy & Environment section reported  on a $650 million private sector investment in energy efficiency for existing buildings in this week’s article, Tax Plan to Turn Old Buildings ‘Green’ Finds Favor.

It’s getting around that a retrofit can typically cut a building’s energy use so much that the project pays for itself in as little as five years. A new tax arrangement in Miami and Sacramento allows property owners to upgrade their buildings at no upfront cost, typically cutting their energy use and their utility bills by a third.

Lockheed Martin, Barclays Bank and some other big boys, headed up by Ygrene Energy Fund of Santa Rosa, Calif., have formed a consortium that will invest $650 million in such upgrades over the next few years.

The article called waste in older buildings “one of the nation’s biggest energy problems” and cited energy as a sector that could eventually be worth billions.

The meat of the plan is pretty genius: the constortium is kind of like a strip mall serving all of your energy efficiency needs in one stop. Ygrene and its partners gain exclusive rights for five years to offer this type of energy upgrade to businesses in a particular community. Lockheed Martin does the engineering work. Short-term loans come from Barclays Capital to pay for the upgrades. Then, “Contractors will offer a warranty that the utility savings they have promised will actually materialize,” the article states. Insurance underwriter, Energi, of Peabody, Mass., backs up that warranty. It goes on from there.

Best of all, owners pay no upfront cost for energy efficient upgrades. Instead, a surcharge is attached to subsequent property tax bills for five to 20 years. However, as the surcharges are less than the savings, the upgrades pay for themselves. Really. The new approach could garner substantial private capital for many midsize and smaller businesses to get on the energy efficiency bus.

In the past three years, half the states have passed legislation permitting energy retrofits financed by property-tax surcharges, and hundreds of cities and counties are considering such programs. The new financing approach is called Property Assessed Clean Energy, or PACE financing. PACE saw some serious backlash last year when an arm of the federal government that oversees the mortgage market took a hostile stance toward such projects on residential property, on the grounds that they add risk to mortgages. But, the article notes, “So far, it appears that PACE programs for commercial properties pose fewer legal complications.”

Richard Branson by Michael Nagle/Bloomberg News

The consortium was put together by the Carbon War Room, a nonprofit environmental group based in Washington set up by Richard Branson, the British entrepreneur and billionaire, to tackle the world’s climate and energy problems in cost-saving ways.

Git Along, Little Doggie

“Perhaps the most serious risk,” the article notes, “is that fly-by-night contractors will be drawn to the new pot of money, pushing energy retrofits that are too costly or work poorly.

‘Contractors are cowboys,’ said Dennis Hunter, chairman of Ygrene. He promised close scrutiny of the ones selected for the Miami and Sacramento programs.”

What say ye to that, boys?

Ride ‘em, cowboy!

Cowboy image courtesy themurkyfringe.com.

Integrating HVAC and Energy Services with Energy Service Agreements

September 16th, 2011 by Jim Crowder

Advice to HVAC Contractors on Making the ESA Sale, Avoiding Anklebiters, and Long Term Relationships

Thom Brazel, our hero

Thom Brazel, our hero

by Thom Brazel, Chairman of the Mechanical Service Contractors of America (MSCA) Board of Managers and General Manager of West Coast Operations for Hill York, a leading provider of commercial air-conditioning and energy solutions. This 75 year old company is a leading provider of commercial air-conditioning and energy solutions with six locations across Florida. With nearly twenty years experience in the HVAC industry, Brazel is a LEED AP, and was part of the Task Force that created the MSCA LEGS (Labor Estimating Guide for Service) as well as the MSCA Green Star certification and MSCA Green PM.

Note: This article appeared in HVAC Business on June 28, 2011. The Building Advisor wanted to get it over to the blog for archival purposes. 

When I look back at the HVAC industry over the last few years, I’m amazed that in 2007, nobody in our industry was talking about LEED or green. At that time, honestly, finding enough retrofit and service techs was an HVAC company’s biggest problem.

Now it’s absolutely different. I’m hearing anecdotally that a 60% decrease in HVAC contractor business is common. We’ve had people flat out tell us they don’t know what to do. Contractors who used to be in residential and light commercial are competing with bigger companies, because the smaller projects have dried up.

I call them the “ankle biters,” because they’re underbidding; they want to get the job now, get the money and move out. It’s creating significant price competition. However, many of the small guys are going under, and the larger companies that aren’t adapting to change are going away as a result of competing a losing battle on price.

Anklebiters Vs. Value

We are now seeing a culture shift between contractors competing merely on price, and those companies really executing on more of a value-add. And I see an ever widening rift between these two types of companies. We can fight over the scraps for awhile, but the smaller contractors who are in it for the short term will eventually run out of cash, fall away, or get gobbled up by a bigger company.

Many contractors seem to be dealing with difficult times by grieving over it, rather than reinventing themselves. They go from denying there’s a problem, to being angry, to bargaining and making deals, until they’re depressed and finally move into acceptance of the marketplace for what it is right now.  Unfortunately for many companies, it is now too late.

A lot of businesses think if they stick with it, things will go back to the way they were.

Everything Existing Is New Again

At Hill York, our focus for decades has been predominately on new construction, and we’ve had to adapt beyond an additional focus on service, maintenance and retrofits all the way to creating safer, healthier buildings that are serviced from a holistic viewpoint.

We have restructured the company in response to current economic times, and made multiple changes to provide solutions. The biggest change is our attention to existing buildings, and energy driven retrofits. We like to say, ‘It’s only a new building once, but it’s an existing building forever.’ That is where the majority of our focus now lies.

Two years ago, our hyGreen division [Hill York’s team dedicated to providing strategic, energy-saving solutions to new and existing buildings] was a department made up of seven or eight people. Today, it is becoming a company-wide culture. Almost every retrofit project we do has an energy component. We now don’t simply take it past the hyGreen team – we ask ourselves going in, “what is the hyGreen component of everything we touch?”

We’ve sold approximately 35 Energy Solutions Agreements (ESAs), and we use a building performance diagnostic program, BuildingAdvice, in conjunction with many of them. BuildingAdvice uses data collection and analysis to generate comprehensive reports such as energy benchmarks, assessments and audits with escalating levels of detail on improving energy usage in the building. There are other tools available, but BuildingAdvice is our preferred tool because it’s automated and applicable to the widest number of building types.

At Hill York, we have it structured where the customer pays for the initial energy reports only if they don’t elect to complete a project we recommend as a result, assuming that project meets their buying criteria. By and large, we know there’s the potential for energy savings in pretty much any facility we survey, so we have little risk of not finding a viable project.

Looking Forward 

If you’re the driver, you’re never going to get driven around. My advice to HVAC contractors working with an ESA model is that right now, it’s a financially-based sale,  but it’s a relationship-based sale as well.

You have to show the hard numbers on ROI or it’s not going to happen. Tools like BuildingAdvice reports help to quantify statements. [Hill York’s hyGreen also partners with other companies, including utiliVisor, OptiNet, Energy Expert, and SmartCool, to sustain and measure energy performance for commercial and industrial businesses.] For example, in Florida, HVAC is typically 60% of a building’s overall utility cost. We can anticipate overventilation, but measuring carbon dioxide levels with BuildingAdvice helps us put a dollar figure to it, rather than simply being speculative. The findings have to be real, and tangible. But that’s only half the battle. You need a customer who knows and trusts you. A customer who sees you as a partner.

Learning from Mistakes

Here’s a little example of where Hill York blew it with a potential customer. We were recently going after a maintenance agreement with a customer who has been using another vendor for years. From a pricing standpoint, our proposal on the 200,000 square foot commercial office building was in the same ballpark as the other vendors. Our program was clearly a value-add to the potential customer, as it included a simple energy benchmark, determined the building performance relative to other buildings and identified a handful of opportunities, all of which yielded significant energy savings opportunities. Here’s how the conversation went after they’d received that info:

Potential Customer: “Thanks for the info. Good stuff! However, we are happy with the folks we’ve been working with. We know them and they know us.”

Hill York: “If your current vendor is truly looking out for your best interests, why have they never mentioned any of these cost-saving opportunities to you before?”

Potential Customer: “Good point, however, now we are aware of the opportunities for savings, and we really appreciate the information!”

Long story short, we didn’t get the maintenance agreement, and the other company did the energy projects we recommended.

Where did we fail? We used the finest technologies available to gather data, did the analysis and proved to the customer we were smarter than the other guys, but we didn’t bother to develop a level of trust and rapport first. Did we differentiate ourselves?  Absolutely. But we missed the most important piece – the relationship.

Relationships Still Key

During challenging economic times, the companies who survive will do so due to strong relationships. Work within your company’s relationships, and strengthen them with the credibility that comes from harnessing the information that can be obtained from the technologies that are readily available. Continuously look for ways to make every one of your customers operate their facilities better, and they will remain your customer.