Month: March, 2018
When you buy printer paper, you are likely buying something like 500 sheets of 8 ½ by 11 white stock. You know what it is and know exactly what to expect. Paper is a tangible product that has pricing and product choices that are relatively stagnant. And it doesn’t revolve around markets that move every minute. Energy does.
Why Energy Procurement Matters
Buying energy isn’t like buying paper. Multifamily building owners in New York City can spend 20-30% of a building’s annual operating budget on energy. But through energy procurement, owners can lower supply costs, solidify building budgets, and hedge the risk of inevitable market fluctuations. It’s particularly important for our clients who own and manage multiple buildings in a portfolio. Large portfolios can often receive reduced rates by bundling energy purchasing contracts for multiple properties.
Having an Energy Purchasing Strategy
Electric and gas costs are large expenses but they can be strategically controlled by having an energy purchasing strategy. There is no set standard for buying energy as there is for paper. There are many options available, to match differences in energy consumers’ preferred terms and exposure to price risk.
The most common product is a fixed rate. However, it’s a common misconception that a fixed rate is a price that is fully locked, or that it is the best (or only) energy purchasing strategy in every situation. A fixed electric rate from an energy supplier may or may not include a dozen or so cost components like capacity costs, line loss, and GRT tax fees. Each of these costs can represent a significant percentage of your total energy cost. Plus with a fixed rate, your supplier is taking some future price risk, and there is a cost to that baked into the rate.
A trusted energy procurement consultant can help you navigate this complex process and make a decision that is right for you.
What’s the Best Option for You?
With one of our commercial clients, the lease structure indicated that tenants pay our client each month for the electricity they use, at the market rate (the utility’s varying price) for that month. The best product for this client was a floating rate contract to ensure they can achieve a consistent margin on submetering their tenants’ contract each month.
In contrast, through our BEPI aggregation program, we help some of NYC’s largest supportive and affordable housing owners procure energy to create budget certainty. Operating with extremely tight budgets, they need to focus on operating their buildings and providing valuable services for their residents. For them, fixed-rate contracts captured at low dips in the market are the best procurement option.
Find an Expert
Energy procurement should be a seamless and efficient process that leads to results and operational benefits for your buildings. It’s a key tool for managing budgets now and in the future, though it may require a trusted expert, like Bright Power, to help you achieve those benefits. Done right, buying energy can feel almost as easy as purchasing paper – with all the unknown variables handled and monitored for you.
Continue to learn more about energy procurement and best practices by following our blog posts. Want to keep reading? Check out:
Just because a building was built recently, or has “high-efficiency” equipment, does not mean that the building will actually be energy efficient. In fact, often high-efficiency equipment and systems need more highly trained engineers, more rigorous maintenance, and more careful tune-ups in order to work their best. It’s kind of like the difference between doing a tune-up on a Prius versus the old stick-shift that your uncle could fix himself. What follows is the story of a decade-old building with some really big energy problems and some relatively simple fixes… once we figured out what was going on!
NYC’s Local Law 87: Energy Audits and Retro-commissioning
New York City’s Local Law 87 (LL87) has motivated and, in some cases, obligated building owners and operators to analyze the performance of their energy systems since its inception. However, the benefits of a retro-commissioning study are far greater than simply adhering to a compliance requirement.
If you are unfamiliar, LL87 requires all buildings in New York City that are larger than 50,000 square feet to perform an Energy Audit and Retro-commissioning Study every 10 years. This initiative gives building owners an opportunity to investigate and evaluate their building’s energy performance and address concerns with their major equipment.
As one of the leading LL87 service providers, Bright Power has come across several buildings where this compliance requirement has uncovered major issues with systems operation and overall efficiency. These audits have helped our clients dig deeper into their utility consumption, identify critical areas of concern, and discover opportunities to save energy and water. In many cases, we have uncovered solutions to improve the performance of major systems in the building and to address inefficiencies that would otherwise cost owners thousands of dollars more in utility spend.
We have observed that multifamily buildings with central hot water heating systems often illuminate the vast benefits of retro-commissioning projects. This is largely the case for heating systems that consist of a high-efficiency condensing boiler — and their issues can be compounded when the system includes a cogeneration (cogen) system. While these highly efficient systems are capable of realizing significant energy savings, they can only do so when they are designed, installed, and operated appropriately.
The most significant benefit of condensing boilers is their higher efficiency. This is achieved by recovering the latent heat from the exhaust gases and is predominantly dependent on the temperature of the return water served to the boiler as shown in the figure below. When the return water temperature rises above a certain temperature (120℉ in this instance), the boilers are no longer able to recover the latent heat, thereby losing their efficiency benefits. For this reason, it is imperative to accurately control the operation of these boilers to ensure the lowest return water temperature possible.
Over the past few years, we have seen issues at over a dozen properties with nearly identical systems and operation parameters. In most cases, the condensing boilers were operating such that they were incapable of taking advantage of higher overall efficiency. What started as a compliance-driven study in these buildings became much more, delivering real value to the owner and residents.
Condensing Boilers and Cogeneration System: A Case Study
Here is an example of an LL87 audit we performed on a 10-year-old building where we encountered issues with the operation and efficiency of the heating system. This building is representative of a typical high-efficiency heating system that includes condensing boilers and a cogen unit. On paper, this building should be fairly energy efficient considering the age and equipment. However, that was not the case. It is likely the building owner would not have considered performing an energy audit had it not been mandated by LL87.
Building Type: Multifamily Rental
Location: NYC Metro
Major Mechanical Systems: Condensing Boilers and Cogeneration System
Client Concerns: High utility consumption and spend
Client Engagement: Local Law 87 Energy Audit and Retro-commissioning Study
We started our analysis by benchmarking energy and water data for the property in our EnergyScoreCards platform. We immediately saw red flags. The first of which was the property’s Energy Use Index (EUI): it was more than double the national average for multifamily buildings. And when compared to buildings in New York City, the EUI was in the bottom 50% among buildings of similar age and occupancy.
Through our analysis, we discovered some major issues with the operation and control strategy of the heating system. Most importantly, we found problems with the integration and controls of the heating and cogeneration systems – the biggest reason why the building had a significantly higher energy usage.
Typically, a majority of these issues are discovered and addressed during the commissioning phase of construction, but, unsurprisingly, we learned that this system was never commissioned upon installation. Some of the most critical issues observed with the systems include:
- The cogen unit was operating at all times, regardless of the thermal or electric loads, resulting in excess natural gas usage.
- The cogen unit was isolated from the heating system, effectively reducing the cogen unit to an inefficient and very expensive natural gas generator, basically negating the benefits of the plant.
- The boilers were operating throughout the year to provide heating and domestic hot water (DHW) because the cogen was not being utilized as intended.
- While the DHW setup was installed in the boiler room, the piping was set up so that the heated hot water had to travel through the whole building before going to the DHW system located right next to the boilers.
- The boiler controller did not have any feedback from the DHW setup, resulting in the boilers operating continuously regardless of the loads.
- The controls setpoints were overridden to provide high-temperature hot water all year round to the DHW system. The high water temperature yields significantly lower boiler efficiency thereby reducing the advantages of condensing boilers.
Based on our findings, it was clear that the recommendations needed to comprehensively target the distribution and controls for the system. In order to resolve these issues, we recommended these measures:
- Reconfigure the current piping setup to integrate the cogen thermal output into the heating system loop. This would ensure the cogen plant would work as it was originally designed, not as a natural gas generator.
- Reconfigure the distribution system to direct heated water straight to the DHW setup, rather than loop through the whole building before reaching its intended destination.
- Upgrade the existing controller to one capable of integrating the boiler, DHW setup, and the cogen unit. Install temperature sensors on DHW tanks and provide an input to the new controller. This would allow the building to change its operations based on the weather and season. It would also allow the boilers to operate at higher efficiency in the absence of a DHW demand.
- Install cogen unit controls to optimize its operation based on either the electric or thermal load.
Implementing these recommendations is expected to resolve the existing issues with the operation and overall efficiency of the system. Based on our energy modeling, the measures listed above will reduce the building’s energy usage overall by over 35% per year. This would place the building in the top 25% for buildings in its category in the City. Paired with other measures recommended as part of the study, the building’s overall energy usage could be reduced by half and have an expected simple payback of less than 5 years.
This project illustrates the potential benefits a qualified retro-commissioning agent can provide. Through retro-commissioning studies, property owners not only comply with City law, but also create energy-saving projects that have long-lasting impacts on the efficiency, operation, and maintenance of their buildings’ systems. In many cases, the savings generated from finding and fixing critical issues and their root causes have been significantly greater than the cost of performing the audit and retro-commissioning study.
Do you have similar systems in your building and have concerns about their efficiency? Is your building performing similarly? Contact us and we’ll find the root cause of your issue!
- LAARS Heating Systems 6000 Condor Drive Moorpark, CA 93021 ©LAARS Heating Systems 0409 Document 1183C
- One City Built to Last TRANSFORMING NEW YORK CITY BUILDINGS FOR A LOW-CARBON FUTURE – Technical Working Group Report by The City of New York
Every month, we want to give you a quick sense of what’s going on in energy markets.
Coming out of winter, prices are down short term, but long term that may change.
Electric and natural gas prices across the country are impacted by supply and demand in the wholesale natural gas market. Currently, supply of gas storage levels are very low compared to recent history, which may cause higher prices. Natural gas is also the primary fuel for electric generation, and so its price directly impacts electric rates. Weather and temperature trends also affect prices.
The Bottom Line
Current prices for electricity and natural gas compare favorably to 2017 rates and present opportunities to reduce costs through both fixed and variable supply contracts. The lower prices are supported by record high levels of natural gas production.
What to know about 2018
Today’s lower prices may be temporary. Despite the high production, this past winter’s high natural gas usage has increased the storage deficit to 32% below last year’s level. There is a serious concern the 2018 forecasted hot summer may cause high natural gas demand for electric generation to meet cooling needs. If this happens, gas prices may rise this summer and impact next winter as well. If you have contracts expiring in 2018 or early 2019, you will want to price them early and evaluate your timing on completing your supply contracts. If you are receiving energy procurement services from Bright Power, we will be evaluating this for you.
Why Act Now
Prices forward are less volatile and more favorable compared to 2017 rates. Two key factors worth watching in the near term are the size of the storage deficit at the end of winter and the continued record levels of natural gas production. You may think that watching those two statistics might not be as engaging as the second season of Stranger Things, but we’re riveted by them.
We regularly visit buildings across New York City to diagnose problems with their mechanical and steam systems. But one visit impacted me in an unexpected way. Typical of many multifamily buildings scattered across the City, it is a pre-war masonry apartment building. The super was friendly and gave me access to the entire basement, as I requested. He also said that he would be in the office if I needed anything.
As I went about my routine, I noticed one of the main steam pipes led straight into his office. When I approached the office to do my testing, I saw two pairs of shoes in the doorway – one of which I assumed belonged to the barefoot super, and the other likely belonged to a porter or a friend. Opening the door, I saw them both sitting on a couch watching a soap opera.
I paused for a moment, perplexed by the fact that the floor seemed to be at least as dirty as the bottom of my shoes, and I’m ashamed to admit that I wondered why the building super was lounging around watching TV with his buddy at 3:00 pm while I was sweating in the boiler room, trying to improve their building.
But when I noticed that the nearly windowless adjacent room had a bed and a dresser, it occurred to me that their shoes were off because this dingy basement “office” isn’t merely an office, it is this man’s living room. The bathroom, with no ventilation, is where he gets ready in the morning, and the dusty, moldy, water-bug inhabited corridor in which I was standing is the entrance hallway of his home. (Of course, living in a NYC basement has its upsides too; this super’s several thousand square foot “apartment” is spacious enough for a ping-pong table, a bench press, and anything else he could ever want.)
I took off my shoes and entered the office, careful to work as respectfully as I would if I were entering anyone’s home, wondering how many of my friends and family could tolerate such living or working conditions. Then I realized that I had greatly misjudged the situation. Yes, he was socializing and watching TV during the workday, but his workday isn’t 9-5 or even 8-7. When a toilet gets clogged, ice freezes on the stairs, trash needs to be taken out, or a resident is looking for a punching bag to hit with complaints, he is working to resolve those issues and make his residents feel comfortable and safe, day or night. So what if he takes some breaks during the day?
As I left, I noticed a large crowbar near the door. Now, it is entirely possible the super had casually placed it there after using it, but it is much more likely that its placement was intentional as a ready-to-use defense weapon. After all, his front door is also the basement entrance. And in fact, it is common to see baseball bats, machetes and other weapons stashed in these basements, even in neighborhoods most people would consider safe.
I don’t presume to know anything about this man’s personal life or whether he is happy with his job, and I certainly don’t mean to imply that all building staff have the same situation. But what I do know is that it is the building staff who keep our basic needs met, who deal with the repugnant rodent or insect in our apartments, and who can often be our first line of defense against intruders.
This experience was an important reminder to me of how critical their jobs are in making our lives livable and how easy it might be to overlook their real value. They should be respected, not pitied or judged. And particularly during these cold winter months, it’s important to remember to be grateful to one’s building staff, both at work and at home, and perhaps even to flash a friendly smile the next time we see them.
We’re proud of the intelligent, passionate, and hardworking people that make up the Bright Power team. Each month, you’ll get a chance to meet one of them, understand how they contribute to the organization, and what makes them excited to come to work every day.
Meet Colleen Woodson, Chief of Staff.
What are some projects and accomplishments you’re most proud of?
EnergyScoreCards Minnesota is definitely on this list. That was a 2-year research project where we got to study 500 properties to determine if hands-on benchmarking results in energy and water savings in buildings. (Spoiler: it does!) It was an awesome experience to work with amazing partners and participants. You can read more about EnergyScoreCards Minnesota here.
What’s something people might not know about you and your role at Bright Power?
People may not know I’m a mechanical engineer. I think my engineering background helped me learn about solving problems of all kinds. Understanding parameters, stating assumptions, and methodically working through a problem is a skill that’s been useful to apply in lots of scenarios.
What’s the one service offering we have that you think is the most beneficial to clients and why?
That’s an unfair question! Our services are most valuable to clients when they are combined with one another. Serving our clients with all the expertise we have in-house – engineering, data, analysis, software, procurement, new construction, on-site generation – is what makes us unique and able to provide more value to our clients.
You were promoted to Chief of Staff after managing the Energy Analysis team for 2 years last summer. How did your experience leading the Energy Analysis team prepare you for this role?
Being a part of, and then managing, the Energy Analysis (EA) team gave me a great perspective on the whole company. The EA team interacts with every team at Bright Power on many types of projects. Seeing first-hand the communication between EAs, Software Development, Account Managers, East and West Coast engineering Teams, and our internal Operations team – I saw a lot of diverse needs and situations. Working on processes for the Energy Analyst team naturally meant I had to understand other teams’ processes and needs, which really prepared me for the unique challenges as Chief of Staff: coordinating the diverse needs of the organization while effectively communicating across the company.
In celebration of International Women’s Day, what advice can you give to women starting their careers in the energy industry?
Oh boy, I could give a lot of advice! Here are two that come to mind:
- Ask for feedback. The way feedback works in a work environment is drastically different from how it works at school, and I’ve found that to be one of the harder adjustments for folks early in their career. Get in the habit of asking your manager, coworkers, and clients what they thought of the work you delivered, and then be open and receptive to their response! The more specific, the easier it will be for both of you. Try out asking questions like: “Was that email clear and concise enough?” and “Would you have gone about this any differently?”
- Surround yourself with diverse examples. Look for people (ladies, especially look for other women!) who have made different decisions about their lives and careers, and talk to them. When I took on a promotion after returning from maternity leave, I spoke to women who made different decisions about taking on more responsibility while they had young children. Having different (see a trend?) real-life examples helped me imagine what it would be like to make that decision, feel confident that I could make the right decision, and that all of these options were possible! In real life! When it’s time to make a big decision, I strongly encourage you to take stock of the people you know and purposely seek out a diversity of experience. It helps to have reference points in many directions to really imagine the range of possibilities for yourself.