Think About Energy Saving When Leasing a New Site

Published on Thursday, 14 August 2014 07:04:51    Written by Marc
For most companies, the notion of saving energy is an interesting one. After all, few people would say, “No,” to reduction in costs, regardless of the type of their operations. In addition, since energy is a part of every business one way or another, very few companies would find no benefit to reducing their energy costs.

think about energy saving when leasing a new siteHowever, as we, all know well, thinking about something and acting upon it are two very different things. In the case of saving energy, if the company does not have some kind of program or process in place in order for good energy-saving ideas to get implemented, then chances are most ideas will never see the light of day.

Take the leasing of a new site for example. For much different reason, many companies lease their space instead of purchasing them. It may be that the company only needs a part of a building or that the company’s plans are short term, or simply a strategic decision. Regardless of the reason, companies will often lease space for their operations. While some lease are short term (less than a year), the majority of these leases are for either medium term (from one to five years) or for long-term (let us say more than five years for argument’s sake).

When you consider the cost involved in moving a site with potentially hundreds of employees and often equipment of all kind, the larger the leased site the longer the lease term normally tends to be. If for example a company if moving its operations into a 300,000 square feet space for production and has dozen of relatively large production equipment, there is a big chance that the company is not going to be moving from site to site each two or three years. In this case, they tend to sign for terms like 10 years and often add a few options to allow them to extend that lease.

Validate if you would directly benefit from energy-savings

Of course, before even starting to plan for energy-saving measures, the first question companies need to ask themselves before engaging in any energy-saving process is if reducing their energy consumption will actually reduce their costs. Depending on how the lease is structured, they might have no advantage at all to reduce their energy consumption. However, depending on how the lease is written, if they have control over their energy costs and if they directly benefit from reducing their energy costs, then they should look at energy-saving measures. In some cases, the landlord might offer a lease where the landlord takes control of the energy and the tenant has no incentive of reducing energy consumption. However, in some case, the lease can be modified so that the tenant does take control over its energy meters and obtains the ability to benefit from whatever energy reduction the tenant implements.

Plan and implement early in the new lease

Coming back to the example above, if on one hand, a company is committing to a major lease for a significant period and on the other hand, the company welcomes energy-saving ideas, should it not look for energy-saving opportunities before it actually moves into the site? When you think about it, when is the best time to do any type of energy-saving measure to a building or to equipment?

Normally, it would be when it is the least disruptive to the company’s operations. In addition, what better time to do this than before the operations starts in the new site? Of course, some energy efficiency measures actually require the operations to ne ongoing to be able to test implement and tweak the energy-saving measures. However, even in this case, many of the ideas can be planned, prices and companies can prepare for these energy-saving ideas or measures the moment the operations are ready.

Get the maximum benefits

By doing this, the company can reap a number of benefits that it would not get normally. First, from an obvious timeline, if the company implements energy-saving ideas before or at the same time it is moving into the site, it will be able to get the benefits from the energy-savings for the maximum length of time under the lease. If the lease is for say five years, the company can get a full five years of energy-savings. If the company waits one year to do the energy-saving ideas or measures, then that saving period falls to four (a 20 percent drop in the total potential savings (assuming that the lease might not be renewed)). Even on a full 10-year lease, one year of loss of energy-savings represents 10% of the total energy saving the company could benefit from. Doing the energy-saving project at the start of the new lease also allows companies to be able to conduct projects with longer paybacks, projects that they would not normally do.

For example, if you have a 7-year lease, if you implement an energy-saving measure with a 5-year payback at the start of the lease, you know you will have two full years of savings after your project is fully paid. However, if you wait 18 months to do your project, now you only have 6 months of net savings after your project is fully paid, and chances are executive management might start to question if the project really makes sense. In real life, many companies do extend their lease, but this is not how management will see this. They will likely see a 7-year lease for now. In today’s economic world, few companies project themselves far in the future. In the end, doing an energy-saving project early will help get longer payback projects approved.

In addition, by planning the energy-saving measures before the company moves into the site, it allows the people to implement better them. It may not be very difficult to retrofit most building equipment in an office building, but in a manufacturing site that is in operations, the implementation can cause major headaches. Sometimes, planning an energy-saving measure while planning for the positioning of operations equipment, at the same time, can alleviate some of the problems. For the people planning these energy-saving measures, you might have a better conversation (and assistance from them) with the maintenance and operations departments if they are in their planning process than if they are already in operations. Once the operations department starts their production, good luck in making them stop for any type of energy retrofit, this rarely makes it on their priority list.

Make your life a little easier

While this situation is more obvious for industrial sites, even for office spaces it often makes more sense to do the energy-saving measures before people move in with their furniture. Take lighting retrofits for example. Today, most office buildings have already been retrofitted with high efficiency lighting, but many could still get an upgrade. These white ceiling tiles we are so used to seeing in offices are great, but we all know that each time a technician or electrician goes to change a ballast, a fixture or even a lamp and has to lift and move the ceiling tiles, it makes a mess on the floor with small pieces of tiles going everywhere. Doing a retrofit when people have papers and computers on their desk might not be the best way to make friend. Doing the retrofit before the people, come with their furniture not only keeps the employees happy, but also makes the life of the technicians and electricians and their work more efficient. You can probably get a better price on a retrofit if there is no furniture in the site because it will take less time to do the work.

As we can see, planning and implementing energy-saving measures when moving into a new site often makes more sense than waiting months for everyone to be fully installed. There are situations like in industrial production where we need to have the equipment installed to be able to plan for the energy-saving measures, but many others can and should be planned before you move into the new-leased space.