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The Opportunity Cost When Green Renovation Sounds Too Good To Be True!

October 6, 2014 by Kerry Kilpatrick Leave a Comment

There was an interesting article out of Detroit, Michigan last week that detailed a growing “Green Building Culture” that is taking place in that city. Buildings that were constructed at a time when energy was cheap are undergoing green renovations using the latest energy efficient technology. According to the author “The most salient effect of green renovation…is reduced energy consumption, which results in lower utility bills.”

The article cited two examples of the savings that are possible with green renovation. One building cut their energy usage by a whopping 85%! Another building cited was able to use one-third the energy they formerly consumed! With energy reductions that big a lot of cash that formerly went to utility companies will now go to the bottom line!

At the same time the article was being published Scott Ringlein, CEO of the Energy Alliance Group (EAG), was making a green renovation proposal to the CFO of a Detroit company. The CFO was responsible for the financial decisions associated with a company owned building. Ringlein had formerly met with the building owner and was now meeting with the company CFO who would look closely at the numbers before a final decision was made.

“The most salient effect of green renovation…is reduced energy consumption, which results in lower utility bills.”

The CFO understood the 50’s era building was in desperate need of an upgrade because it was literally hemorrhaging energy and money. The CFO had done an impressive job of due diligence on EAG and had reviewed the energy savings the company had achieved on other projects. Point blank the CFO stated: “I have a hard time believing those savings are even possible”!

It is at this exact point that green renovation projects either move forward or come to a screeching halt! If it sounds too good to be true, decision makers often decide it is and do nothing!

“There is an opportunity cost that results when skepticism stalls energy upgrade projects.”

Luckily Ringlein was able to provide compelling references to a variety of business leaders, who had arrived at this same point of making a decision, overcame their skepticism, and ultimately made the decision to move forward. They now had their own success story they were willing to share with the skeptical CFO.

The project is now moving to the next phase as the CFO’s skepticism was diffused. The exciting green renovation project will include a total makeover of the building including a new roof, geothermal heating, energy efficient laundry facilities, high tech windows, as well as a solar array. With the availability of Property Assessed Clean Energy (PACE) financing, the goal will be a cash flow positive project that is completely paid for out of the net energy savings!

“The opportunity cost is paying for energy that could be eliminated..”

As illustrated in the article out of Detroit, cutting energy expenses by 85% is a real possibility. There is an opportunity cost that results when skepticism stalls energy upgrade projects. That cost is the expense of the energy use that could be eliminated using energy efficient technology.

Don’t let the feeling that energy efficiency sounds too good to be true stop you from saving money. The Energy Alliance Group created our Complimentary Energy Use Assessment to help you take the first step in determining if energy savings are possible for your facilities.

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Filed Under: Blog Tagged With: Green Building Culture, Green Renovation, Opportunity Cost

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