Who says money can’t grow on trees 9.30.2014

  • Published on
    01-Jul-2015

  • View
    100

  • Download
    2

DESCRIPTION

Who Says Money Cant Grow on Trees? Green Solutions for Tomorrow Part 1: The sources for free money when doing environmental upgrades and how to go about getting the funds. Part 2: When updating the reserve study, how can you incorporate going green so that you save money in the future? Moderator: Mohammed Salyani , CPA, Manager Wilkin & Guttenplan P.C. Speakers: Allan Samuels Energy Squared, LLC Mitchell Frumkin, PE, RS, CGP Kipcon

Transcript

  • 1. Who Says Money Cant Grow on Trees? Green Solutions for TomorrowCertified Public Accountants and Consultants

2. ModeratoroMohammed Salyani, CPAoWilkin & Guttenplan P.C.SpeakersoMitchell Frumkin, PE, RS, CGPoKipconoAllan Samuels, LEED APoEnergy Squared, LLCOur Moderator and SpeakersIndependent Member of the BDO Alliance USA1 3. HousekeepingTo ask questions please use the questions pane in the GoToWebinar dashboard on your screen. We will try to answer as many as possible.This webinar is being recorded and will be uploaded on to our website at www.wgcpas.comWe will be sending a survey after the webinar via email. Please return it we value your comments!Independent Member of the BDO Alliance USA2 4. Mitchell Frumkin, PE, RS, CGPPresidentKipconGreen Reserve StudiesIndependent Member of the BDO Alliance USA3 5. Independent Member of the BDO Alliance USA4First, Lets Clear Up the ConfusionWhat is GREEN?Is it a color? 6. Independent Member of the BDO Alliance USA5First, Lets Clear Up the Confusion (cont.)What is GREEN?Is it a color?YES 7. Independent Member of the BDO Alliance USA6First, Lets Clear Up the Confusion (cont.)What is GREEN?Is it a money? 8. Independent Member of the BDO Alliance USA7First, Lets Clear Up the Confusion (cont.)What is GREEN?Is it a money?YE 9. Independent Member of the BDO Alliance USA8First, Lets Clear Up the Confusion (cont.)What is GREEN?Is it a environment? 10. Independent Member of the BDO Alliance USA 9First, Lets Clear Up the Confusion (cont.) What is GREEN? Is it a environment?YES 11. Today I Will Be Talking AboutWhat is a Green Reserve Study and how it can be the starting point to saving money and helping the environmentIndependent Member of the BDO Alliance USA10 12. We All Know What A Reserve Study IsA budget planning tool which identifies a stable and equitable Funding Plan to offset anticipated future major common area expendituresIndependent Member of the BDO Alliance USA11 13. But, What Is A Green Reserve Study?A budget planning tool which identifies the long term costs associated not only with Reserves but also with Maintenance and Energy. It identifies opportunities for long term savings based on the relationship between the 3 which will also result in environmental benefits.Independent Member of the BDO Alliance USA12 14. Your Associations Reserve Study Is the Perfect Starting PointIt lists the physical components of the community which are the responsibility of the Association to maintain and replaceIt helps identify all components which require maintenanceIt helps identify all components which consume energyIndependent Member of the BDO Alliance USA13 15. How Can This Impact the Budget?Independent Member of the BDO Alliance USA14Operating Expenses (Including Energy Costs), 31% Administrative Expenses, 16%Fixed Expenses, 11% Repair/Reserves, 40% Other, 2% 16. The Relationship Between the 3 Is the Key!Independent Member of the BDO Alliance USA15EnergyReplacementsMaintenance 17. When You Set Up the Budget, Where Do You Get the Costs?ReservesMaintenanceEnergyIndependent Member of the BDO Alliance USA16 18. When You Set Up the Budget, Where Do You Get the Costs? (cont.)ReservesoReserve studyMaintenanceoHistorical informationEnergyoHistorical informationIndependent Member of the BDO Alliance USA17 19. The Basis of Our Analysis Is Your Reserve StudyIndependent Member of the BDO Alliance USA18 20. And Cash Flow ProjectionIndependent Member of the BDO Alliance USA19 21. Which Looks Like ThisIndependent Member of the BDO Alliance USA20 22. Now Lets Begin Looking at the Entire Picture Independent Member of the BDO Alliance USA21ReplacementsCost of Maintenance and Energy 23. The Real Cost.Independent Member of the BDO Alliance USA22 24. So, What Do You Do?Independent Member of the BDO Alliance USA23ReplacementsReduced Cost of Maintenance and Energy 25. With A Cumulative Effect of..Independent Member of the BDO Alliance USA24 26. To SummarizeIndependent Member of the BDO Alliance USA25Total Contribution Over 30 YearsReplacement Only$5,719,459Replacement, Maintenance and Energy with Original Components$6,318,553Replacement, Maintenance and Energy with Alternative Components$5,609,82130 Year Savings !!Which does not include looking at the various funding plans!$708,732 27. Which Leads To A New Way Of Bidding Replacement ProjectsThe Classic First Cost ApproachOption One Option TwoMaterial CostLabor Cost ________ ________Total CostIndependent Member of the BDO Alliance USA26 28. Which Leads To A New Way Of Bidding Replacement Projects (cont.)Independent Member of the BDO Alliance USA27The Evaluated Cost ApproachOption One Option TwoMaterial CostLabor Cost ________ ________First Cost30 Year Maint. Cost30 Year Energy Cost ________ ________Total 30 Year CostAlso must consider any rebates, tax credits, etc. 29. Analyzing the InformationWait until replacement is scheduled?Perform replacement now?Independent Member of the BDO Alliance USA28 30. Analyzing the Information (cont.)Independent Member of the BDO Alliance USA29Existing HVAC SystemReplacement Cost$175,000Useful Life20 YearsAnnualized Cost$8750Annual Energy Cost$70,000Total Annualized Cost$78,750 31. Analyzing the Information (cont.)Independent Member of the BDO Alliance USA30Proposed High Efficiency HVAC SystemReplacement Cost$250,000Useful Life20 YearsAnnualized Cost$12,500Annual Energy Cost$50,000Total Annualized Cost$62,500 32. The ResultsIndependent Member of the BDO Alliance USA31Increase in Installation Cost ($250,000 - $175,000)$75,000Rebate at 50% of Incremental Cost$37,500Incremental Cost($75,000 - $37,500)$37,500Annual Energy Cost Savings($70,000 - $50,000)$20,000Years to Breakeven ($37,500/$20,000)1.9 yearsCumulative 20 Year Savings($20,000 x 18.1 years )$362,000 33. QUESTIONSIndependent Member of the BDO Alliance USA32 34. Allan Samuels, LEED APManaging PartnerEnergy Squared, LLCGreen a la GratisIndependent Member of the BDO Alliance USA33 35. What Makes A Project Ideal for Incentives?Independent Member of the BDO Alliance USA3420+ years oldBuilding envelope (windows) in good conditionOld/original systems and equipmentFocus on low-cost upgrades firstoWindows/insulation are typically high costIdeal when heating and cooling are centralized 36. Look beyond the up front costs!oDecision makers often feel the need to choose the option with the lowest capital costsoEven if long-term savings are understood, theyre often forgottenoCost of an upgrade is returned well before the end of useful life of equipmentoIf equipment needs to be replaced anyway, incremental costs are even less significant!Life Cycle CostsIndependent Member of the BDO Alliance USA35 37. 3 major components:oEnergy savingsoImmediate reduction in energy costsoSavings are multiplied as energy costs increase over timeoMaintenance/Non-energy savingsoMaintenance costs can be lowered (fewer equipment replacements)oWater/sewer cost savings (i.e. low-flow toilets)oIncentives/RebatesoUp-front cost reductionoMake high-efficiency equipment more competitiveLife Cycle Costs (cont.)Independent Member of the BDO Alliance USA36 38. Life Cycle Costs (cont.)Independent Member of the BDO Alliance USA37Many upgrades have payback period 3 yearsoLightingoThermostat/temperature set-backsoBoiler controls (i.e. outdoor air temperature reset)oPipe insulationoAir sealing and weather strippingoLow-flow water fixtures 39. Switch to Natural GasIndependent Member of the BDO Alliance USA38Save up to 50% of heating costs versus oilIncreasing environmental regulations against oilSimple burner upgrade 40. Going Green - Its Not Just Solar!Independent Member of the BDO Alliance USA39Solar and renewables are often seen as the cornerstone of being greenoShould be considered only once a facility is made as energy efficient as possibleEnergy efficiency is more cost effectiveoU.S. DOE foundoSaving energy ~ $0.03/kWhoGenerating energy ~ $0.10 - $0.15 41. Going Green - Its Not Just Solar! (cont.)Independent Member of the BDO Alliance USA40Solar is not ideal for mid/high- rise buildingsoUse lots of energy, no room for solarNo direct incentives available anymore in New JerseyoOnly SRECs remainoPrices dropped from $600 to $170 (per 1,000 kWh generated) 42. New Jersey set aside $380M+ for energy efficiency projects in FY 2014 alone!Funds come from fees in your utility billsAnyone paying into the programs can receive incentivesMust apply and be approved before installationPrograms target individual measures and whole buildingswww.njcleanenergy.comNew Jersey Clean Energy IncentivesIndependent Member of the BDO Alliance USA41 43. $71M+ budget for FY 2014P4P targets holistic approach to saving energyExisting buildings and new construction$2M available per projectMandatory building modeling is performed by pre-approved P4P partnerP4P provides largest potential incentivesPay for PerformanceIndependent Member of the BDO Alliance USA42 44. Must save 15%+ energy and IRR 10%High-cost measures (i.e. boilers) are grouped with low-cost measures (i.e. lighting) to make entire project cost effectiveMost projects achieve 30%+ overall energy savingsLower maintenance fees (condos) increase property value (apartment complex)Up to 2 years given to install measures3 stages of incentivesPay for Performance (cont.)Independent Member of the BDO Alliance USA43 45. 3 stages of incentivesoIncentive #1: Based on building sizeo$0.10 per square footoPaid upon approval of Energy Reduction Plan (ERP)oERP outlines the efficiency measures and their expected savingsoIncentive #2: Based on projected savingso$0.09-$0.11 per kWh, $0.90-$1.25 per ThermoProjections come from simulating facility in energy modeling softwareoPaid upon installation of all measuresPay for Performance (cont.)Independent Member of the BDO Alliance USA44 46. oIncentive #3: Based on REAL savingsoSame per kWh and per Therm as incentive #2oPaid upon verification of savings, true-up for projectionsoVerification performed by analyzing 12 months of utility billsoLow cost loans for P4P approved projectsPay for Performance (cont.)Independent Member of the BDO Alliance USA45 47. Target standard/prescriptive measuresLighting/controls, boilers, chillers, HVAC, motors, VFDs and refrigerationSmaller incentives than P4PSimplified application, approval still required before installingFunding committed upon approval, paid after installation1 year given to install measuresSmart Start BuildingsIndependent Member of the BDO Alliance USA46 48. What is CHP?oCHP and Fuel Cells are generators that put wasted heat to workoBuilding space heating, process heating (laundry/kitchens), or additional electric generationo~70% efficient, versus ~33% for traditional power plants$3M available per projectAdditional incentive (up to $250k) for completing P4PCombined Heat-Power and Fuel CellsIndependent Member of the BDO Alliance USA47 49. ResiliencySandy made long-term blackouts very realWhen grid goes down, CHP/FC system can separate from the grid, keep building poweredoAka IslandingCombined Heat-Power and Fuel Cells (cont.)Independent Member of the BDO Alliance USA48 50. Incentive structureo30% of incentive paid upon purchaseoMeant to mitigate high up-front costs of CHP/FCsoAdditional 60% paid upon installationoFinal 10% paid upon performance verificationo12 months of data used to confirm complianceCombined Heat-Power and Fuel Cells (cont.)Independent Member of the BDO Alliance USA49 51. LightingoLEDs, reduced wattage T-8sLighting controlsoOccupancy sensors and daylighting controlsBest UpgradesIndependent Member of the BDO Alliance USA50 52. BoilersoNew, condensing boilers are 96% efficient!oThis is the largest source of overall savings for most P4P projectsChillersoSignificant portion of electricity usagePumps and variable frequency drivesoControl flow/power to only what is neededBest Upgrades (cont.)Independent Member of the BDO Alliance USA51 53. Cooling towersoEfficiency and equipment life diminished by weatherAir-sealing/weatherizationoVery low-costoIdeal for older facilitiesBest Upgrades (cont.)Independent Member of the BDO Alliance USA52 54. VentilationoFix undersized/malfunctioning equipmentoIncrease comfort levelsInsulationoEnsure that your boilers dont heat the outdoors!Piping (main building risers)oAvoid costly failures in older buildingsBest Upgrades (cont.)Independent Member of the BDO Alliance USA53 55. Ideal applicationsoCondos, co-opsCost shifting advantagesoEliminate uniform/per-square- foot chargesoEncourage efficient behaviorSub-MeteringIndependent Member of the BDO Alliance USA54 56. Proven savings!oDOE notes 21% drop in usage when occupants pay for their own usageWhat is involved?oMeters, web-based interface, auto-billingoLimited wiring requiredSub-Metering (cont.)Independent Member of the BDO Alliance USA55 57. Incentive programs will continue!oNew Jersey programs arent going away despite rumorsContinual cost reductionsoAdvancements are pushing down costsStronger SREC marketoBPU stabilizing to increase installationsPJM demand savings incentivesoRegional grid operator gives incentives for kW savingsWhat the Future HoldsIndependent Member of the BDO Alliance USA56 58. Dont get distracted from life cycle savingsMost common: lighting, boilers, HVACBehavioral changes have big impactsLots of NJCEP money availableIncentives make efficiency a no-brainer!Dont embark on any infrastructure upgrades without investigating incentives!In SummaryIndependent Member of the BDO Alliance USA57 59. QUESTIONSIndependent Member of the BDO Alliance USA58 60. THANK YOUIndependent Member of the BDO Alliance USAMitch FrumkinPE, RS, CGPPresidentKipcon Inc.800.828.4118mfrumkin@kipcon.comAllan SamuelsLEED APManaging PartnerEnergy Squared, LLCallan.samuels@energysquaredeng.comMohammed Salyani CPA Manager Wilkin & Guttenplan P.C. 732.846.3000 msalyani@wgcpas.com