After adding insulation and replacing light fixtures and HVAC systems, the owners of CityRock are saving almost 60 percent on utility bills — about $11,000 a year.
It’s a huge savings, said Joe Groshong, who owns the 17,000-square-foot climbing gym in downtown Colorado Springs with his wife Lara. While they weren’t solely motivated by finances, there was a strong business case for making the upgrades.
That’s something a lot of Colorado Springs business owners are discovering, says Gregor Huesgen, who runs an energy efficiency consulting business.
“It’s a myth that if you’re saving energy you’re a real liberal,” Huesgen said. “You’re actually just a good businessman.”
Huesgen says he’s worked with a lot of office-building owners throughout the city. Most make smaller changes to start with, not diving into solar panels on the roof and completely new ventilation systems. But lighting upgrades are popular.
Rich Swope, senior project engineer for demand side management at Colorado Springs Utilities, says he has seen significant increases in the number of businesses submitting rebates for lighting upgrades, especially for LED lights, in the past six to eight months.
He said he suspects the increases are driven by lower costs for LEDs, increasing awareness about cost savings opportunities associated with making green adjustments — and the immediate payback.
“I can offer a fair amount of savings to make lighting upgrades,” Swope said. “I can go up to 50 percent of the project cost. And sometimes it gets there. It usually averages about 30 percent.”
Those rebates, combined with federal tax incentives, can reduce the amount of time it takes business owners to realize a return on investment. Utilities also offers rebates to commercial customers for cutting their peak-demand energy consumption. Peak is roughly 3 to 6 p.m. in the summer.
“We have all these power plants, but there’s only a couple hours during the day in the summer when we really need all that capacity,” Swope said. “If you can reduce your load during peak times, that benefits the utility by putting off having to build new generation.”
If commercial customers can cut their peak energy consumption, the utility pays out up to $400 per kilowatt saved with a minimum of 20 kilowatts.
Companies that aggressively tackle lighting can realize big savings quickly, Swope said.
“A lot of facilities are overlit anyway,” he said. “It benefits us because lighting, especially commercially, is usually on during the day and during peak load.”
Other rebates aren’t as significant as light and peak load rebates, Swope said. He can only offer about a 50 percent rebate on high-efficiency HVAC units beyond what it would have cost to replace the unit with a typical one. That caps out around $1,000 and usually isn’t worth it unless a business owner planned to replace units anyway.
Jim Riggins, president of EnerSmart, an energy efficiency auditor, helps businesses and homeowners identify the upgrades that will pay back fastest — typically insulation and lighting, he says.
“The next part of what I do after businesses are able to make these upgrades, is I can perform the required analysis for the IRS to qualify for a federal tax deduction for energy efficiency,” Riggins said. “That requires some pretty sophisticated modeling.”
But it pays off.
Groshong said he was able to write off about $40,000 in improvements, which amounted to a $10,000 tax refund.
Riggins said federal tax deductions vary based on the extent of the project, but they max out at $1.80 per square foot.
“If a company doesn’t meet the overall criteria, they could meet the criteria for individual categories, such as HVAC and lighting,” he said.
Most of the businesses Riggins works with have big envelopes — places like CityRock and Cripple Creek casinos. But smaller improvements like lighting can pay off quickly for small businesses and homeowners, he said.
“It may not necessarily be the biggest energy savings,” he said. “But lighting is the most cost-effective. It usually pays for itself in a year or two.”
Besides saving about $11,000 a year, Groshong received a $10,000 tax incentive. But he invested $115,000 in everything — increasing insulation from R7 to R37, replacing all the light fixtures and recycling 28,000 pounds of steel from the old HVAC system.
Mathematically, it looks like it would take 10 years for the savings to pay for the investment.
“That’s the tangible direct costs,” he said. “The fact that we put air conditioning in here — we’re twice as busy in the summer as we were. The real ROI for us is two years.”
He doesn’t count changing his light fixtures to accommodate LED bulbs. That will take longer, he said.
But the improvements have increased the quality of the building and the business.
They’ve made the space more comfortable and attractive to customers. LED lights aren’t just cost-effective and green, they’re also cool, so they won’t overheat the climbers.
HVAC systems aren’t just more efficient, they aren’t cracked and possibly leaking carbon monoxide. There are a lot of intangible benefits.
Those intangibles had a lot of influence on Richard Skorman and his wife Patricia Seator’s decision to make energy upgrades at their downtown Poor Richard’s restaurants and retail shops on Tejon Street.
“We decided to invest in it, both to save money and to use it for marketing, and also to have a better building to sell down the road when we get to that point,” Skorman said.
They installed 117 solar panels on the roof, meeting about 50 percent of their energy demand in the summer. They replaced 235 halogen light bulbs with LEDs and nine 20-year-old air conditioners with seven high-efficiency units and an economizer that fills the space with cold air from outside at night.
All of those improvements dropped Poor Richard’s electric bill from $5,500 a month to $3,500 a month, saving the business about $25,000 a year, Skorman said, adding,
“It feels really good.”
But it also makes the customers feel good.
Skorman says Poor Richard’s clientele tend to appreciate the business’ greenness, which helps draw loyal customers back and attract new ones.
“We do milk it for marketing,” he said.
During the holidays, the store and restaurants gave customers a CFL light bulb with every purchase. It was a small token worth about $4 that will ultimately save customers $30 to $40 on their utility bills.
“We wanted to give back to our customers,” Skorman said. “And hopefully they put it somewhere visible and think of us when they turn it on.”