Mr. Poad

Eco-Friendly Practices

Cheat Sheet: Financial Incentives for Greening Your Energy Load

By Jim Poad, Director of Client Solutions, Advantage IQ

The hotel industry spends nearly $5 billion annually on energy costs, from lighting to heating and cooling. Adding to the challenge is the continually increasing number of energy-intensive devices in hotels, including plasma televisions and monitors, laundry appliances, and the computers and devices that belong to guests. Hotel energy loads are going strong up to 24 hours per day, making the need to “green” energy loads a priority for hotel owners. Fortunately, there are ample opportunities for hoteliers to cut energy consumption and costs without adversely affecting the comfort of guests. Better yet, greening your hotel’s energy load comes with plenty of financial incentives.

A comprehensive, long-term energy strategy can cut energy consumption by up to 10 percent. Hotel executives can guide energy and money savings through a variety of ways, including investments in energy-saving devices, behavior modification, and participation in government grants and programs. In addition to all the federal incentive programs, most U.S. states have rebates and initiatives available. This article will touch upon why it is financially advantageous for hotel owners to work with their energy managers to reduce their energy consumption.

Conduct an Audit for Credit

Before you can start saving, you have to know where you’re starting, so it’s important to create a baseline of your energy use. An internal energy team or third-party energy consultant can be hired to observe your hotel’s energy usage, water use, and waste volume. You can use this information to develop an accurate “load profile” that reflects your energy usage and can be found within your utility invoices. Once you have gathered all of the demand information, a quality profile will consider how demand might have been affected by operating hours, occupancy, temperature, and lighting. An energy consultant can also track your energy usage for you and use their in-depth knowledge of the energy industry and energy markets to identify where you may be overpaying.

What can you do to prevent overpaying for energy? Reviewing the accuracy of utility bills prior to payment and checking with utility providers to make sure you are on the best possible utility rate are quick ways to reduce energy costs. If you have a database that captures utility billing information, you can identify the facilities with the highest cost per square foot and review opportunities to purchase energy in deregulated markets. An energy consultant can also identify if you are on the appropriate rate for your load profile. Hotels qualify for a Time of Use rate that may be more favorable for your 24-hour operation. If a hotel is being billed at a rate suitable for a 9-to-5 operation, it dramatically increases monthly costs. Rate review should be revisited regularly as sites open, close, or demand characteristics change.

Energy consultants can provide site performance benchmarking to help you understand how your hotel performs. Consultants can recommend high-return capital improvements and energy-efficiency investment opportunities, such as the following:

• Lighting alone can be as much as a third of energy use, so switching to energy-efficient lighting can save big bucks with minimal investment.
  • Replace inefficient incandescent and old linear fluorescent (T-12) lighting with new linear fluorescent (T-5 or T-8) and compact fluorescent lighting technologies.
  • Compact fluorescents (CFLs) can also be installed in guest rooms and lamps.
  • Although CFLs cost two to three times more than incandescent bulbs, they use 75 percent less electricity and last 10 times longer. That’s a $30 reduction in electricity costs over each bulb’s lifetime. Think of the savings when multiplying it by the hundreds of bulbs per building.
• Efficient lighting can also positively impact labor costs, because lighting will be replaced less frequently.
• Install lighting controls and motion sensors to make sure areas that aren’t in use aren’t lit.
• Utilize building automation systems where available.

Again, developing a long-term energy strategy and sticking to it can cut energy consumption by up to 10 percent, which in turn reduces costs. These savings can then be reinvested in more capital-intensive conservation measures, leading to even greater savings. Most long-term energy conservation initiatives will pay for themselves over time.

Green is a Team Effort

Encouraging new behaviors when it comes to energy use is a critical component of any energy strategy. Where your energy consumption per square foot is high, communicate with your employees what impact energy has on the bottom line and enlist their support in cutting energy waste. For example, turn off lights when conference rooms, offices, and restrooms are not in use and turn off office equipment when employees go home for the day to quickly reduce energy consumption. Employees should understand how building automation systems work and not override the settings on equipment that is designed to maximize energy efficiency.

Reducing laundry cycles is another way to save money, and this is where you can get guests involved. Offer guests a choice of washing their towels and sheets every three days. Running washers and dryers less often will save water and cut electric bills. This can cut water and sewage costs by up to 40 percent, and decrease labor costs by the same amount. Technologies such as The National Energy Services’ Ozone Laundry System can also cut laundry expenses by 50 percent.

As you meet prescribed benchmarks and see the savings roll in, be sure to publicly recognize the achievements of the hotel and its employees and guests to feel good about their new behaviors.

Green Government

There are many federal and state programs that reward businesses that green their operations. One particular incentive is the energy-efficient commercial buildings tax deduction, which can save hoteliers $0.30 to $1.80 per square foot, depending on the technology implemented and the amount of energy reduced. This tax credit is awarded to owners of new or existing buildings who install efficient interior lighting; building envelope adjustments; or heating, cooling, ventilation, or hot water systems that reduce the building’s total energy and power cost by 50 percent or more in comparison to minimum requirements set by ASHRE Standard 90.

Another federal incentive is the business energy reduction tax credit, which was expanded significantly under the American Recovery and Reinvestment Act of 2009. These energy reduction tax credits are available for eligible energy systems placed in service on or before December 31, 2016. Solar equipment that is installed to generate electricity or to heat or cool the hotel can reward you with a credit that is equal to 30 percent of your expenditures, with no maximum credit.

Fuel cell projects can also give significant savings, and many hotels, including Sheraton, have recently installed these clean energy fuel cell systems into their hotels to improve their sustainability. With the business energy reduction tax credit, hotel owners can get a credit equal to 30 percent of expenditures, with a cap of $1,500 per 0.5 kilowatt of capacity.

These are just a few of the ways that hotels can receive tax credits. Other green uses that reduce energy loads and are eligible for tax credits include geothermal systems, microturbines, small wind turbines, and combined heat and power systems.

On the state level, many utilities offer free in-person or online audits, and may also offer rebate programs that can be applied to energy efficiency measures that can lower energy usage and reduce electricity bills.

A great resource for hotel executives to research the federal and state incentives is the Database of State Incentives for Renewables and Efficiency (DSIRE), a source of information on state, local, utility, and federal incentives that promote renewable energy and energy efficiency. The DSIRE (www.dsireusa.org) is a federally-funded project of the Interstate Renewable Energy Council, whose membership includes state and local government agencies, national laboratories, renewable energy companies, and advocacy groups.

Go Green to Make Green

Your guests visit you for comfort and amenities, and you can still provide these while reducing the amount you spend on energy-related costs. Lighting and heating systems can be more efficient and reliable, and employees can be empowered to get involved and take ownership of saving energy. Even guests will feel good about contributing to saving energy and reducing the impact of their stay.

An energy consultant can provide invaluable and expert services to point out savings opportunities you never knew existed. Once you complete your assessment of energy usage and what incentives work best for you, ensure that management and employees stick to the recommended action plan to ensure efficiency and financial improvements over a reasonable amount of time. Using the tools that are currently available, hoteliers will save time, energy, and ultimately money for guests and owners.

Jim Poad, a 30-year energy industry veteran, serves as Director of Client Solutions for expense and energy management firm, Advantage IQ. In this capacity, Mr. Poad is responsible for developing and directing the Company’s energy management programs on behalf of clients. He works with clients to develop and implement a customized strategy to better manage energy usage, reduce overall operational costs, and meet overriding corporate objectives. He has helped clients save millions of dollars through the implementation of supply-side and demand-side initiatives. Mr. Poad can be contacted at 608-755-1650 or jpoad@advantageiq.com. Extended Bio...

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