Commercial Energy Audits For Better Business Profits

Don’t think of energy audits as savings… Think of it as profits.

How to turn $4,500 in Energy Efficiency savings into over $30,000 in profits.

By Michael Denby, Certified Energy Manager, LEED-AP, Owner, Denby Energy, LLC More about Mike Denby here.

Saving businesses money by reducing energy use through energy audits has significant rewards, but they are often overlooked in favor of more immediate, tangible returns. One of the overlooked benefits of energy savings programs is that they rarely create only a single year of savings, but instead generate bottom line profits that return a benefit year after year.

Energy audits show you the actual size of your energy bills

Often company executives are in the dark when it comes to understanding the amount of money they actually pay for energy. They know with great certainty exactly how much they pay for each component that is used to create the widgets they sell, but they don’t know how much power their buildings and processes consume. And that is a significant gap in their business model.

This article shows how, by investing in energy savings, a business can make significant returns to the bottom line, year after year. Get that energy audit done now!

For purposes of this article, let’s assume that you own a small business with average energy bill of approximately $15,000 a year. If your business could reduce that energy bill by 30% by investing $4,000 in energy efficiency would it be worth it? First, let’s look at the simple payback method. At $15,000 a year, a 30% savings would generate $4,500 in yearly savings. And if you were spending $4,000 to get that energy savings, you would have a simple payback period of .88 years, or about 10 and ½ months. For virtually all businesses, that is a very desirable return on investment.

Second, let’s look beyond the simple payback method. Let’s look at the investment return over the life of the investment and see what it can do for us. For simplicity, let’s assume that the investments made to increase energy efficiency had a useful life of 7 years. The initial investment would have been paid off in 10 ½ months, but the benefit (profits) from that investment (returns) continue for the next 7 years. That means after the first year, the business will have 6 more years of those improvements generating a $4,500 return each and every year. The result? The answer comes out to $30,608.55 in total returns(profits) over those 7 years.

Now, let’s look at one alternative – what would happen if the business owner decided instead of investing in energy savings, that he would take the $4,000 and put it into his retirement account. Let’s assume his retirement account is earning a really strong return of 10%. After 7 years he would have a total of $7,794 in his retirement account.

If he invested in the energy savings instead, he would have made $30,608 instead. By ignoring energy savings, that business owner would have paid the local utility companies $22,814 more than he paid himself for the privilege of wasting energy.

Editor's note

Denby Energy is an approved, peer-reviewed, US Green Building Council (USGBC) Education Provider. Denby Energy provides online energy audit training as well as face-to-face classes. All of the Denby Energy Home and Commercial programs are available to the over 140,000 LEED certified professionals to use as Continuing Education Credits,as well as to the general public. As this company's President, Mike Denby,is himself an accredited energy auditor. His accreditations are LEED AP and Certified Energy Manager (CEM) and he has an environment degree.

An alternative to Denby Energy is the Energy Audit Institute. Be sure you pick training that is right for you and compare these programs by using this information here.

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