Strategic Energy Management for Non-Profits: Reducing Operational Expenses to Continue your Mission

In today's economic landscape, where operational costs are continually increasing, non-profit organizations are turning to energy efficiency and renewable energy solutions to reduce operational expenses and promote a positive environmental vision. Strategic Energy Management (SEM) systematically optimizes an organization's energy consumption, modernizes critical building systems, reduces operational costs, and minimizes its environmental impact.  Ultimately, a SEM plan enables non-profits to redirect personnel and monetary resources towards their core missions.

OCOsink specializes in Energy Program Facilitation services that drive the execution of your Strategic Energy Management plan. Reach out to us to explore how our EPF services can transform your SEM vision into a successful reality.

1. Inventory Building Systems:

Labor and material shortages are straining the building industry, which is why outside maintenance costs are on the rise. Building systems like boilers, chillers, air handlers, and pumps have a useful life, and when repair and maintenance costs become more common on a particular asset, it is likely ready to replace. Our rule of thumb is, “If it’s from the 1900s, it’s ready to replace.”

Action item: Inventory your assets! Put together a spreadsheet of HVAC assets and maintenance cost for the previous 12 months. Extrapolate maintenance costs for 5 years and highlight and bold the total; that value is a realistic “bank” of savings that can be used to help fund energy efficiency upgrades. We use 5 years to be conservative as new systems may have new maintenance costs after a break-in period.

2. Understanding Energy Costs:

Energy efficiency programs start by establishing a utility baseline, whether it be electric, gas, fuel oil, or water/sewer. You do not have to “weather-normalize” the data, a simple month-by-month total is all that is needed to understand usage patterns and annual costs. Delivered fuels (oil and propane) are a bit trickier to analyze, but having delivery dates, costs, and quantity in tabular form will make your energy advisor happy.

Action Item: The utilities have a quick way of downloading 36 months, or more, of usage and cost history. Energy costs are volatile, which is why we recommend evaluating three years of utility data. Take the average of the previous three years for electric, fuel, and water/sewer costs, this average is a reasonable estimate for your energy baseline.

3. Sizing your Energy Program:

To provide a high-level, Energy Program budget, we first estimate attainable operational savings.  A good rule of thumb is that a comprehensive energy program saves an average of 25% of your annual energy costs.

A well-structured Energy Program can be self-funded using operational savings. Financing should always be considered for large Energy Programs to enable immediate action as opposed budgeting for specific pieces of equipment. 

There are many “Green” lenders and programs that offer below market rate loans for energy efficiency. Check with your local utility for more information on these special loans. Alternatively, there is C-PACE, Commercial Property Assessed Clean Energy, which offers competitive interest rate loans, but with loan terms up to 20 years. We encourage you to investigate the benefits of C-PACE to fund your energy efficiency program.

Action item: Estimate your energy efficiency program budget using this formula:

Program Budget = Attainable Savings * 15 + Outside Maintenance Costs * 5

Note: This formula does not account for interest or utility incentives, but it is a great starting point.  Applying 5 years of maintenance is reasonable as new equipment should not have major maintenance costs for at least 5 years.

This formula provides an order-of-magnitude estimate of a self-funding energy efficiency program using a long-term funding mechanism like C-PACE. Shorter term financing can still make an impact, but loan costs may be higher than the operational cost savings for a period of time.

The table below can be used to estimate the total size of a self-funding energy efficiency program.

4. Stakeholder Engagement:

Having an estimated Energy Program budget and multiple funding avenues, it's time to engage decision makers within your organization. Present the quantified benefits in terms of cost savings, building performance enhancement, and environmental impact. 

Action Item: Connect with the experts at OCOsink to accelerate your project using our Energy Program Facilitator services! EPF@OCOsink.com

Embracing a Strategic Energy Management approach empowers non-profits to enhance operational efficiency, reduce costs, and establish commitment to sustainability. This proactive stance allows organizations to navigate the evolving energy landscape while remaining aligned with their core missions.