Facility managers and building owners have many options to consider regarding heating and cooling a property. However, evaluating these options isn’t always straightforward.
To ensure decision-makers make the best choice to meet their organization’s business objectives, these questions are critical to ask when vetting energy providers.
1. What are the lifecycle costs?
A lifecycle cost analysis will give you the most comprehensive picture of an energy option’s costs and benefits. You can then use this data-backed analysis to support your decision when discussing energy alternatives with internal stakeholders.
An energy lifecycle cost analysis typically reviews costs over a 20-year cycle, to account for the full lifespan of energy infrastructure. A typical lifecycle cost analysis assesses the following variables:
- The up-front costs required to finance the energy option
- Costs associated with operating and maintaining the infrastructure
- Variable energy costs related to the infrastructure, such as fuel costs
- Fixed costs such as taxes, insurance, and capacity rates
It’s essential to understand how your energy provider can help your organization mitigate capital risk. District energy systems, for example, often help reduce capital risk by avoiding large upfront costs and ongoing maintenance costs.
Steam distribution systems can interface with any type of HVAC building system to provide low cost and reliable thermal energy and cooling. Centrally produced chilled water eliminates the need for customers to purchase, operate, and maintain chillers and cooling towers. These benefits allow building owners to take advantage of competitive energy pricing and eliminate capital costs, interest payments, property taxes, and insurance costs.
2. What renewable energy options do you provide?
Today, many companies and institutions have sustainability goals to meet, and energy decisions directly impact these initiatives.
As your organization seeks to reduce its carbon footprint, an energy infrastructure decision should be influenced by the solution’s emissions output and a provider’s ability to adopt more sustainable energy options in the future.
Decision-makers should explore the energy provider’s renewable energy options and inquire about their plans to incorporate more sustainable fuels into their energy mix. This will help reduce an organization’s carbon footprint and attract top tenants who prioritize working in a sustainable, energy-efficient space.
In addition, buildings that do not conform with local, state, and federal climate legislation requirements can pose several risks to organizations. In many places, the risk of non-compliance can include fines, damaged brand image, and the increasing costs of green technologies over time.
District energy systems, however, are fuel agnostic, meaning they can swiftly and aggressively integrate renewables into their energy mix as more renewable electrons are available on the grid. By replacing fossil fuel infrastructure with electric boilers, heat pumps, thermal batteries, and other clean technology, district energy systems can effectively decarbonize communities without retrofitting or installing new electrical infrastructure in individual buildings.
This sustainable pathway is a major strategic advantage for district energy over other energy options, especially when companies like Vicinity Energy are setting customers on a rapid pathway to decarbonization by 2050, when many emissions standards will be in effect.
3. What are my opportunity costs?
It is also important to consider the opportunity costs associated with your investment decision, such as the loss of potential gain by opting for an alternative.
For example, by spending capital on a new mechanical room, more budget is needed to invest in your core operations. For a hospital, this budget could be used for new technologies or equipment to treat patients, upgrades or expansions to tenant spaces for commercial real estate, or a new lab building on a college campus to educate students.
Depending upon the required capital cost for an energy infrastructure project, it’s important to consider the investments your organization forego that could better serve your customers or constituents.
Space is also associated with opportunity costs, particularly in cities where it is limited and expensive. Typically, mechanical rooms, large chiller or boiler plants, and cooling towers take up a considerable amount of space within urban buildings that could otherwise be used to drive income with amenities and parking.
4. Can you explain our energy usage patterns?
Once service begins, the potential to better understand your property’s energy usage is critical. Discovering when a space’s usage peaks and ebbs can help with budgeting and adjusting consumption habits accordingly.
Access to resources that track your energy consumption empowers tenants to identify patterns and areas for improved efficiency. Vicinity’s team can provide our customers with a monthly or yearly report that details their energy usage, including when it was highest and lowest.
5. Are your energy systems redundant?
Redundancy is a critical feature to look for in your energy provider. A redundant system is an electrical system designed to feature two or more of the same power supply. This means that if one power supply fails, the extra power supply will be able to take over the full operation of the system. Redundancy ensures that your energy supply remains uninterrupted and continues service even during an emergency.
District energy systems have built-in redundancies with numerous backup sources, equipment, and infrastructure. Because these systems operate at scale, district energy systems like Vicinity’s can eliminate the risk, headache, and expense associated with maintaining building mechanical rooms.
A district energy system’s ability to switch fuel allows Vicinity to be more reliable than other alternatives; as our systems transition to cleaner fuels, we will still have access to backup fuels if needed in an emergency.
6. What level of support do you provide regarding maintenance and equipment?
Operations and maintenance (O&M) for a facility or on-site energy system requires expertise in several cross-departmental fields and could require full-time staff or contractors to operate the system. You must check your local regulations to ensure you factor in the appropriate number of people with the right qualifications and licensing to meet your city’s requirements.
Owners must also account for ongoing maintenance, including parts replacements and future upgrades, to keep the system running optimally. Asking energy providers to demonstrate their level of support can help ensure your business will be spending only what is necessary in the future.
By outsourcing the management of energy infrastructure to Vicinity experts, our customers minimize their energy-related costs, maximize efficiencies, and devote more focus to their core mission.
An energy provider with expertise in O&M can help minimize operational risk for your organization, while maximizing infrastructure investments by keeping building energy systems working at peak performance for years to come.
7. What are your emergency procedures in case of power outages?
For buildings and tenants where operations are mission-critical, it is essential to prepare for natural disasters and power outages. Hospitals and life sciences laboratories, for example, need a reliable energy source to guarantee they can perform research and provide critical surgeries and life-saving procedures.
Whether it be a power outage, mechanical interruption, or extreme weather event, your energy provider should be able to detail their plan to resume service and ensure the safety of all parties involved.
For instance, district energy systems are incredibly resilient in the face of a service interruption. Due to their ability to isolate issues and utilize various fuel sources in an emergency, these systems can maintain extremely reliable service even in the most demanding weather events or emergencies. By design, district energy infrastructure comprises insulated carbon steel conduit piping encased in concrete, which will withstand flooding and other extreme weather.
Vicinity’s team undergoes regular safety training to ensure safety is a daily tenet of our day-to-day operations. Our employees are armed with the tools and resources needed to ensure work is always conducted safely and that emergency protocols are carried out in the face of a service interruption or safety hazard.
Making the right choice
Ultimately, the factors that lead to your energy infrastructure decision will be unique to your organization’s goals and circumstances. However, by posing these essential questions to energy providers, building owners can be empowered to make more informed purchasing decisions, save on costs, and contribute to a greener future.
