How A Little Black Box Can Save Energy

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In addition to the inherent difficulties of controlling his operation, Sanderson has another problem. When something goes awry, he must determine if the fault lies with the EMS or with the air conditioners, so that he can decide which company to call for service. When he calls oiae, it blames the other. It is as if, he says, "you've got a problem with your hand and don't know whether to see a chiropractor or an orthopedic surgeon -- and neither one of them cares for the other."

Despite the disappointments, Sanderson would install a system again if he had it to do over. Not having to run around the plant adjusting nine air conditioners is a great convenience, and he likes the fact that the device prevents employees from playing with the thermostats. Previously, he says, if the employees were hot, "they'd turn it way down and go home, and if you didn't walk around and monitor all weekend long, the place would turn into a meat locker." And he is confident that duty-cycling, by turning the air conditioners off so many minutes out of every hour, will extend the life of his equipment.

Besides, Sanderson is also saving money. The precise amount is difficult to estimate, since the company has grown and conditions have changed (more operations are three-shift, for instance). But its electric bills run from $1,600 to $1,900 a month now, while last year they ran about $1,800 to $2,000.

While Stearns leased its equipment and Sanderson bought his outright, the highly competitive energy-conservation field has spawned a curious third method for businesses that want to install energy management systems: so-called shared-savings programs.

Thomas Dreessen, senior vice-president of finance and franchise operations for Ron's Krispy Fried Chicken Inc., a $17 million-a-year Houston-based fast-food outlet, is a shared-savings enthusiast. He is so enthusiastic that he became a partner in D.T. Energy Savings Inc., nine months after D.T. installed energy management systems in the 43 company-owned stores.

With shared savings, a business pays either nothing for a system, or, as in the case of Ron's, a small installation fee. (Ron's paid $250 per store.) The company installing the unit then takes a percentage of the amount saved monthly; it also receives any tax credits. Ron's has agreed to pay D.T. half of its savings for five years. If Ron's does anything to increase its energy usage by more than 5%, D.T. can recalculate the base year against which savings are measured.

Dreessen says that in 1982, savings, which are measured by comparing kilowatt hours used in one year with those used the previous year, totaled $80,000. "I would have been crazy not to do it," he says. "A guy comes in and says, 'Let's put it in and if it doesn't save, you don't pay me a nickel.' How could a prudent, pragmatic person turn this down?"

Many observers, however, warn businesspeople to approach this kind of plan with caution. There is a potential pitfall if savings are not measured accurately. "Make absolutely certain what your base-line energy is and how much the shared-savings people are going to get, and determine exactly the formulas that are going to tell you what is being saved, advises Robinet & Associates' Tinsley. "Otherwise you can get into very big trouble, very quickly."

EMCA's Dillard claims that many shared-savings companies vastly inflate both the savings and the cost of the equipment. The IRS, he says, is looking closely into companies that increase prices in order to obtain a larger tax break. Before entering into this kind of scheme, Dillard says, "you should know who the investors are, what their capital investment is, and how they represent it to the Internal Revenue."

There are more than 300 microprocessor manufacturers and hundreds more energy management companies that install the devices. Increased competition, says Dillard, has produced a "lot of bad apples," since "there's tons of money to be made without too much capital outlay." But real savings are also possible, anywhere from 10% to 40%, depending on the application and on how much energy is really being wasted.

Before buying, get in touch with a member of the EMCA or a professional engineer who has had experience with energy management systems, recommends Dillard. The EMCA will provide a list of members in your area and a list of the major hardware vendors.

If you choose to go directly to a vendor, Dillard suggests the following:

* Obtain a list of references and check them out.

*Make sure the vendor is either a licensed electrical or mechanical contractor.

* Find out if you or someone in your company will be able to operate the system or whether it requires off-site service or comes with an expensive service contract.

* Insist that the vendor does a thorough analysis of your company's previous energy use. If any savings claim is made, obtain a detailed breakdown of how those savings will be realized, what strategies the company will use, and what impact the EMS will have on building comfort and equipment life.

Karla Evert, for example, looked at half a dozen companies before settling on Advanced Energy Systems. Advanced Energy established a base level for consumption by examining two years of Stearns's energy invoices and analyzing annual weather variations. Since the energy company seemed so certain that Stearns's payback would be less than two years Evert asked for -- and got -- a written guarantee.

For an additional $34 a month, Stearns is connected by computer to Advanced Energy, which monitors the system and provides the manufacturer with periodic analyses of its energy usage. "We wanted to be sure that the cost-justification was there and was being met unequivocably," says Evert.

Still, Dillard points out, "you can't solve all your energy problems with a box on the wall or an energy management pill. You need a good maintenance program, good mechanical systems, and periodic inspection of those systems."

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