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How Quick is the Energy Payback with Smart Building Automation?

Jul 19, 2018 4:27:10 PM

Payback / ROI on 75F System

When asked why they haven't invested in smart building automation systems (BAS), many people zone in on the ROI timeframe based upon energy savings, questioning whether the energy payback period is short enough to justify the upfront investment for their commercial buildings. The energy payback equation really is quite simple. And, new intelligent building automation systems can offer payback in as little as 1 year. Though, a focus solely on energy savings leaves out smart building returns that can be 10x to 100x higher, further shortening the BAS ROI timeframe.

Traditional building automation and controls systems are complex and expensive to implement and manage, creating a barrier to adoption for some businesses. So, only about 15% of commercial buildings have smart controls. Newer, born-in-the-cloud building controls solutions like 75F offer an affordable option and shorten the energy payback period, as a result of the lower initial Capital Expenditure (CapEx) investment, in addition to several ongoing Operating Expense (OpEx) savings. In some cases building automation systems deliver a return on your investment in as little as a year on energy savings alone, before factoring the other operational efficiencies and occupant experience value.

A 1-3 Year Energy Payback is Just the Start!

You can use this simple energy payback formula, as long as you have your current average utility payment per period and a quote for the estimated energy savings your building will achieve with the retrofit.

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These numbers can also help you calculate net present value (NPV), internal rate of return (IRR) and the impact on your net operating income (NOI). Energy savings free up additional investable dollars for other building improvement or tenant improvement projects.

Beyond Energy Savings - Smart Buildings offer Many OpEx and CapEx Reduction Benefits

Intelligent BAS solutions can help reduce commercial building expenses, above and beyond utility bills. The CapEx reductions start with the lower total cost of acquisition (TCA), considering the lower overall hardware and installation costs of new building controls solutions, from low-cost IoT sensors to wireless and intuitive controls that minimize the required time and resources at time of installation. Cloud-based solutions eliminate on-premises workstations and other IT hardware and support costs. And, the energy efficiency of the controls solution can even reduce the required capacity  for HVAC equipment, lowering the capital expenditure. The ongoing total cost of ownership (TCO) is lower too. Automated alerts and remote monitoring can significantly reduce facility management costs, from on-site technicians to truck rolls, even pre-empting and resolving issues remotely, before they escalate, cause downtime or other expense impacts.

OpEx reductions also have a multiplier effect on asset value, as well. Property investors can recognize asset valuation increases of up to 25x for operational expense reductions, assuming a 4% capital rate. 

Faster Energy Payback than LED Lighting.

Plus, More Efficient Lighting!

Boosting Value in the Balance with Quick Energy Payback through Smart Building Automation

In recent years, LED Lighting retrofits have been a popular approach to reduce energy demand at the fixture level. However, smart HVAC solutions can offer even higher efficiency and ROI compared to LED. Consider that the typical payback period on relamping is about six years, whereas the typical energy payback period on a smart HVAC system upgrade is about three years.

And, a smart lighting controls solution can take your LED  lighting savings even further, with calendar scheduling combined sensors for light-level and occupancy to use lighting only when needed, and dimming capabilities. Smart building systems can seamlessly integrate controls of both HVAC and lighting, in a single-pane-of-glass user interface. 

Occupant ROI can be 100x that of Energy Savings

Perhaps the greatest value in smart buildings is in the improved workplace experience, with comfortable, healthy, productive and easily-managed indoor environments for tenants.The 3-30-300 rule made popular by JLL highlights that, on an annual cost-per-square-foot basis, organizations spend roughly $3 on utilities, $30 on buildings and $300 on employees. So, if a smart building can provide ROI on energy costs alone in 1-3 years, consider the speed of payback and ongoing returns when factoring employee productivity. An intelligent building system can play a key role in attracting, retaining and delighting tenants, offering lower energy bills, eco-friendly offices, and creating great places to work with healthy indoor air quality and unique occupant experiences (OE). 

3 30 300 RULE

Interested in how 75F's automated building control solutions can increase your commercial property value and cut your operating expenses, giving you a quick energy payback? Download the Smart Buildings Boost Portfolio Value eBook to learn more!



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