Response to Rising Energy Costs

Jul 1, 2007 3:39 PM

In a survey by Milwaukee-based Johnson Controls, only 13% of respondents — business leaders from a wide range of facilities and locations who were decision-makers for energy management issues in their organizations — cited environmental concern as a greater motivator in implementing energy-efficiency strategies than cost savings. The Johnson Controls Energy Efficiency Indicator research reports that just over half of the executives surveyed say cost savings is their main motivation for going green, and 35% indicate cost savings and environmental responsibility are equal drivers.

“For the last 20 years or so, energy efficiency has really been about saving money,” says Clay Nesler, vice president of global energy and sustainability of Johnson Controls' building efficiency business. “Most of those improvements have been driven primarily through financial means.”

Not surprisingly, 79% of respondents answered that they believe electricity and natural gas prices will increase significantly during the next 12 months, with an average price hike of 13.25% expected. “That's actually very high,” Nesler says. “That would stress most organizations from a financial budgeting standpoint.”

Consistent with the rising energy cost forecast, 62% say their companies are paying more attention to energy efficiency today than they did five years ago. As a result, they are acting on it: Almost 57% expect to make energy-efficiency improvements using their capital budgets in the next 12 months, spending an average of 8% of those budgets. In addition, 64% anticipate using their operating budgets, allocating 6% to energy-efficiency improvements.

However, companies are still reluctant to invest in complete refurbishments in the name of energy efficiency. “More and more organizations will choose to do short payback types of things around lighting,” Nesler says. “They are sort of quick-win things because they require no capital outlay and can have a fairly significant impact. The other improvements people reported doing were sort of in the low-hanging fruit category: more efficient lighting and occupancy sensors.”

That leaves the bulk of energy-efficiency strategies to major retrofits or new projects — around 75% that expect to have such projects in the next year say energy efficiency was or will be a priority in the design of these projects. “Obviously, that's the best way to do it,” Nesler says. “In a new building, upfront will provide the greatest benefit, as opposed to having to come in a few years later and retrofit it.”