Wednesday, May 14, 2014

Energy Solutions - Addressing Rising Energy Costs

As you may recall from Mike Morley’s blog on April 11, electricity cost has risen an average of 7.3% for the last seven (7) years: http://bit.ly/1nc01LB. The bigger question is: What is going to happen for the foreseeable future? According to several sources, (Edison Electric Institute, U.S. Energy Administration, Purdue University, and the L.A. Times) electric cost will rise by an average of 40% over the next eight (8) to ten (10) years.

Fixed budget agencies such as municipal governments, state-supported universities, K-12 public school corporations, and many hospitals will have to contend with these rising costs. We all know they simply cannot turn off the lights to reduce energy cost. We also can predict with certainty the state will not increase base budget dollars to offset the increased utility cost each year. Therefore, something has to give. If there is a set amount of money and energy cost rises, what options do they have? In our homes we can address this issue by reducing the number of times we go out to eat or go to the movies or fewer pizza deliveries, etc. etc.  

In governmental agencies these choices are much more impactful and can cause harm to the public:  Do they reduce public safety officers in order to leave the street lights on? Do I increase class size to air condition the school? Do I eliminate services and send patients to a different hospital? These are very difficult decisions for our elected and non-elected officials responsible for these agencies.   

At Telamon Energy Solutions, we are suggesting to these agencies to not wait but to address energy consumption now. We suggest they address this dilemma by first investigating energy savings options. We are offering to do an energy analysis for these clients. This analysis addresses many high energy users such as HVAC systems, hot water heaters, kitchen areas if they have them, and luminaries inside and outside. We then meet with the decision makers and suggest ways they can update equipment to reduce energy costs. We have seen in many instances payment for this new equipment can be paid via energy savings in the first 2 to 4 years of savings.  

We also do an analysis of using self-generated solar energy for a portion of their energy needs. The key here is to produce a portion of your energy needs on-site. Here is an example: The typical elementary school of 700 students burns about $100,000 of electricity per year. If you self-produced $40,000 of solar electricity on the roof of the school, you reduce your cost for electricity to $60,000 per year for 20 years (assuming no other changes). Even after eight (8) to ten (10) years when energy cost has risen 40%, your new adjusted cost goes to $84,000 still saving $56,000 per year ($60,000 X 1.4 compared to $100,000 X 1.4). The cost to produce this $40,000 of electricity varies by region but as Mike referenced in his April 11 blog, the cost to self-produce electricity is reducing to the point you can pay for your solar array in three (3) to five (5) years.

Telamon is excited to be able to provide these energy cost-saving options to cash-strapped governmental agencies to help find ways to prevent difficult decisions later.

-Bruce Breeden
Director Business Development
Telamon Energy Solutions

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