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May 5, 2018

Mark Jewell – “The Three Buckets Of Energy Efficiency Benefits”

by prophecy / How to Tattoo / 0 Comments



“There are no less than three separate buckets driving energy efficiency decision-making. Unfortunately, most of the professionals in this industry – perhaps many of the people in this room – focus only on bucket #1.

What’s bucket #1? Utility-cost financial benefits. Anybody worth his salt in this business can calculate – using the property utility tariff – what is the economic benefit when expressed as rebates – dollars and cents – you know, incentives and rebates, and of course, the utility cost savings per month. That’s fine. It sounds like a big bucket, especially in a high-cost area like Hawaii, where I just came from, where utility prices have been between 30 and 45 cents a kilowatt-hour depending on which island you’re on, recently. Bottom line though is what about Salt Lake City? You know, four cents? Six cents? You know, what about other places in the country where you don’t have that tailwind of 40 cents a kilowatt-hour to fuel your value propositions?

Okay. Second bucket. Non-utility-cost financial benefits. These are things that are calibrated by quantifying and monetizing financial benefits that show up somewhere else on the profit and loss statement. Doesn’t show up on a utility line item. It’s my studied observation, having been in this business for two decades, that that second bucket is at least ten times as large as bucket #1 if you take the time to quantify and monetize them. And, of course, that preconditions or presupposes that you actually know which ones to quantify and monetize because you have a segment-specific understanding of how your benefits map into their benefits – benefits they care about. More on that later.

Bucket #3. Non-financial benefits. Things like getting an ENERGY STAR® label or LEED® certification. Sounds like a “nice to have,” but guess what? Some of those non-energy, non-financial benefits actually leak back into bucket #2, and I’ll show you a slide later that shows that in no less than six studies over the last half-dozen years there is a statistically significant relationship between a building that has an ENERGY STAR® label on it and higher rent per square foot, higher occupancy, and higher appraised value per square foot. Now, in my former career we had a $200 million portfolio of shopping centers in Southern California, and that sounds a lot like a non-utility-cost financial benefit to me.

So essentially what I’m trying to say here in the brief time I have here with you this morning is that if you take a look at all three buckets, the first one – the one that you focus on the most – is actually the smallest bucket. The second one is the one that’s going to resonate the most with your customers because you’re giving them benefits that can be measured with the yardsticks they’re already using to measure their own success. And the third bucket, if properly couched, actually leaks benefits back into the second bucket.

Very important slide. This slide is tattoo-worthy.”

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