PGE - Financial Analysis of Energy-Efficiency Projects

Friday, May 4, 2012 - 8:30am to 4:30pm
Also Offered May 04 (Friday, 8:30 am to 4:30 pm) Santa Cruz--Police Dept. Community Room
May 16 (Wednesday, 8:30 am to 4:30 pm) Stockton--ETC
June 11 (Monday, 8:30 am to 4:30 pm) San Francisco--PEC
Description
    Following is a representative selection of concepts to be covered:

    Expanding the definition of "owner-occupied" to include certain tenant situations

  • Owner-occupied buildings in which the occupant has full control over capital budgets and operating costs, can directly control energy-efficiency upgrades, and fully enjoys savings
  • Triple-net-leased tenant spaces in which the occupant essentially "owns" the capital and/or operating expense budgets for its square footage even though it does not own the building
  • Tenant spaces in which the occupant shares in the costs and savings of energy-efficiency improvements, but may or may not have significant input into the configuration and/or operation of energy-related building systems.
  • Overcoming myths and organizational inertia

  • The role of energy efficiency in the drive toward "sustainability"
  • Myths that can prevent worthwhile energy projects and how to dispel them
  • Organizing assorted energy-related management directives into a single, time-efficient and cost-effective interdisciplinary exercise
  • Knowing what and when to outsource in this process
  • The economic value of accelerating the identification and implementation of energy-saving capital projects.
  • Finding opportunities for energy-efficiency improvement

  • Designing and implementing portfolio-wide screening using BOMA's BEEP, Energy Star, and/or other checklists of best practices
  • Prioritizing the most promising buildings and projects
  • Ordering retrofit and retro-commissioning activities to maximize returns.
  • Understanding financial returns

  • The basics of Time Value of Money (TVM), including interest rates, amortization factors, how to use a financial calculator, and equivalent Microsoft Excel functions
  • Financial metrics used in capital budgeting in owner-occupied facilities, along with the pros and cons of each (e.g., Simple Payback Period, Return on Investment, Discount Rate, Present Value, Net Present Value, Internal Rate of Return, Modified Internal Rate of Return)
  • Life-Cycle Costing and its practical application to investment decision-making.
  • The value of enhanced efficiency in owner-occupied settings
  • Understanding the components of energy cost (charges for energy demand vs. usage, power-factor penalties, fuel adjustments, etc.)
  • Understanding the division of energy-related costs into capital vs. operating expenses
  • Assessing the financial impact of energy costs and savings on various budgets (e.g., the interaction of capital budgets and operating budgets and tracking that departments pay for and benefit from energy-saving investments)
  • Moving beyond "dollars and cents saved per square foot" and equating the impact of energy-efficiency improvements to various industry-specific profitability equivalents
  • The impact of high-performance building spaces on employee attraction, productivity and retention; occupant comfort and convenience; and, ease of space reconfiguration
  • Relationships between energy efficiency improvements, building obsolescence, and appraised value
  • The importance of asking the right questions when assessing an owner-occupied facility for potential acquisition, renovation, remodeling, etc.
  • Best practices for working with vendors and service providers in owner-occupied (or triple-net-leased tenant) settings.
  • Quantifying the benefits of contemplated upgrades

  • Inputs needed to do the math properly when calculating the costs/benefits of a potential upgrade in owner-occupied (and certain tenant) situations
  • How to determine the level of financial analysis necessary to allocate costs/benefits
  • Various approaches to the analysis (e.g., Excel worksheets, other discounted cash flow valuation tools, US EPA Energy Star online resources, and, hybrid approaches)
  • Recognizing and overcoming the perils of Simple Payback Period when selecting upgrade projects for approval
  • Understanding the decision-making chain when proposing energy-efficiency projects in owner-occupied properties (particularly where facility management and/or building engineering is outsourced or where the occupant is attempting to motivate a building owner to upgrade space that the occupant leases)
  • Fine-tuning capital budgeting proposals to maximize the likelihood of project approval
  • Calculating the benefits of the Commercial Building Energy Efficiency Deduction (EPACT 2005 Section 1331)
  • Evaluating other tax benefits in owner-occupied (and certain tenant) situations.

COURSE MATERIALS

Digital versions of the following course materials will be provided to each attendee in the form of a CD-ROM or USB drive:

* All PowerPoint materials, in two-slides-per-page handout version
* All Microsoft Excel-format exercise templates (with duplicate worksheets providing answers to exercises
* Glossary of terms
* A copy of Upgrading Tenant Spaces (provided for owners who may also lease space for their own use)
* Additional white papers, articles, Microsoft Excel templates

Audience Level Class is intended for an intermediate audience. It is best that attendees have some knowledge of building systems and energy-saving strategies. A working familiarity with MS Excel is required.
Agenda
  • Quick primer on using Microsoft Excel for cost/benefit analyses (OPTIONAL)
  • Understanding financial returns in owner-occupied and income-producing properties
  • Using Microsoft Excel and other approaches to generate compelling value propositions
  • Financial modeling of projects in owner-occupied properties
  • Hands-on exercises that model projects in owner-occupied properties
  • Financial modeling of projects in income-producing properties
  • Hands-on exercises that model projects in income-producing properties
  • Wrap-up discussion
Instructor(s) Mark Jewell
Mark Jewell's experience includes over 25 years in commercial real estate and more than 15 years in energy efficiency. He is the founder and president of EEFG, a consultancy that has designed energy-saving improvements for more than 350 buildings and is now focused on education, training, coaching and analysis related to energy management. Earlier in his career, Mark helped the US EPA deploy both the ENERGY STAR Buildings Program for Commercial Real Estate and the Portfolio Manager benchmarking tool. Mark is a graduate of The Wharton School at the University of Pennsylvania, where he specialized in Economics and Finance.
Resources EDR Design Briefs: Performance-Based Compensation
PG&E Resource: Large Business Energy Management Solutions and Incentives: Solutions designed for your industry segment.
PG&E Resource: Small and Medium Business Energy Management Solutions and Incentives
PG&E Third Party Incentive Programs
Cost No fee for this program
Credits N/A

Click here for more information and to register.

Location: 
Santa Cruz - Police Department