In the mountains of western North Carolina, a midsize manufacturer recently faced a major pivot to its longtime product line. The product shift made it necessary to upgrade 500 T12 fluorescent high-bay lights to energy-efficient LEDs, a pretty hefty financial outlay for any company, but especially for one undergoing a large-scale product and plant overhaul.
After analyzing their options and learning about Duke Energy’s SmartPath™ program, the manufacturer realized they could upgrade their high-bay lights, receive rebates from Duke Energy, and leverage a loan through SmartPath that allowed them to complete the project with no money out of pocket and pay back the upgrade loan within two years. Future energy savings in addition to a lower carbon footprint for the facility were a welcome bonus.
But first, what will it cost?
Business owners in every industry are faced with similar questions: How can I upgrade expensive systems – buildings, HVAC, lighting, to name a few examples – and pay for the upfront costs? How can I find a trustworthy contractor? And how am I supposed to figure this out while running a successful business at the same time?
Energy efficiency upgrades are a huge lift for most business owners. Although they know that improvements to energy efficiency can help reduce operating costs, lower utility bills, reduce carbon dioxide (CO2) emissions, and lead to increased revenue, the bottom line is that upgrades can be a costly proposition.
Where business meets improvements
The amount of energy that businesses consume is staggering. According to the National Renewable Energy Laboratory (NREL), 4.6 million small buildings (which often house small businesses) in the U.S. utilize 44% of the overall commercial building energy use. ENERGY STAR® estimates industrial plants spend nearly $125 billion on energy every year. Small businesses ring up more than $60 billion in energy bills, mostly in the form of electricity.
But opportunities to reduce costs through energy efficiency improvements abound in nearly all industries. When looking at industrial plants, as one example, energy powers numerous systems: air conditioning, lighting and appliances. Add to that list furnaces and boilers, motor systems that pump fluids and compress gasses, and machinery driven by compressed air. These systems have been identified by ENERGY STAR as offering sizable potential energy efficiency improvements and energy cost reductions.
Benefits to the business and the planet
Most business owners know that older equipment and systems cost them in various ways, not the least being higher energy bills. When upgrading to greater energy efficiency, businesses can look forward to increased profits realized through lower operating costs and utility bills. Boosting energy efficiency should also raise overall property value and increase potential rental income.
The EPA reported the electricity sector was the second-largest source of U.S. greenhouse gas emissions in 2019, making up 25% of the U.S. total. Improving energy efficiency means that businesses will rely less on carbon-intensive power plants. As demand for electricity falls, less carbon dioxide emissions are released into the environment. For environmentally conscious business owners and plant managers, upgrading to energy-efficient systems, lighting and equipment is a win-win for the planet and the business.
Consumers are becoming increasingly concerned about sustainability, which can extend to making spending decisions based on a brand or company’s investment in contributing to the health of the environment. By investing in energy efficiency, businesses have an opportunity to increase market share and marketability for this important topic.
Improvements beyond the bottom line
When considering an investment in energy efficiency, most plant managers and business owners think of system improvements such as heating, ventilation or air conditioning. But upgrades in lighting technology can lead to increased productivity and safety.
A study from the International Journal of Industrial Ergonomics compared fluorescent and LED lighting and discovered an 8.3% performance improvement in visual and cognitive assignments. Study volunteers also had quicker response times, less fatigue and elevated activity.
Imagine a plant running two shifts, with employees crossing a dark parking lot once the sun sets. For these employees, a well-lighted parking lot can lead to fewer workplace accidents and contribute to a valuable sense of safety and security.
Investing in energy efficiency can affect more than utility expenditures and employee well-being. It can also give a boost to the customer experience through improvements such as air conditioning, heating, lighting or other comforts. Environmentally conscious customers may wish to know that their favorite business is concerned about the health of the planet. Consider updating marketing materials, websites and social media in an effort to burnish the organization’s brand image.
Next steps: forecasting future savings
The first step most energy efficiency experts agree on is to determine the business’s energy usage with an energy assessment. Many utility companies offer free assessments where they will search for leaks and insulation needs and assess ways to upgrade to more energy-efficient lighting.
Next, work with a contractor to estimate energy savings. Utility companies may provide a list of vetted contractors who have experience forecasting savings based on energy and cost efficiency targets. Consider involving employees who may wish to lower the business or plant’s carbon footprint. Their creative ideas may benefit the business as well as create a stronger workplace culture as the team works to cut costs, energy use and greenhouse gas emissions.
Explore energy efficiency financing options such as tax credits, loans, grants and leases. Often, these programs have a five-year payback (or less) period to help make the project more affordable. Using projected energy savings, business leaders can clearly see the costs and benefits to these options so they can make a solid business case for the upgrades.
Taking the SmartPath
Duke Energy knew that business leaders in North Carolina and South Carolina often wanted to improve the energy efficiency of their facilities, buildings and plants but were hesitant due to steep upfront costs. SmartPath,* a new program for business customers in the two states, offers a way to get those energy-efficient upgrades done with little to no upfront investment.
How it works: SmartPath offers robust rebates based on an energy savings calculation after an initial free assessment and proposal by a trusted contractor. After the customer is accepted into the SmartPath program, the estimated energy savings are calculated and verified by the Duke Energy engineering team. The final rebate amount is paid based on the customer’s actual savings. For qualified customers, upfront costs may be eliminated through the use of financing provided by the National Energy Improvement Fund.**
As one of the nation’s largest electricity providers, Duke Energy is committed to the environment and strives to lower the risk of climate change by reducing carbon emissions and investing in resilient infrastructure. The energy provider aims to reduce carbon dioxide (CO2) emissions from electricity generation at least 50% below 2005 levels by 2030 and to achieve net-zero CO2 emissions by 2050.
Learn more at duke-energy.com/SmartPath.
*SmartPath is available to all North Carolina and South Carolina business electric customers of Duke Energy and Duke Energy Progress. Companies must also be opted in to the Energy Efficiency (EE) Rider. Customers must choose from a published list of company-authorized trade allies to perform an energy assessment at the eligible customer’s facility at no charge to the customer. Customers are responsible for verifying certifications/licensing, if any, of the trade ally they choose.
**Financing is offered to those who qualify and is not offered by Duke Energy. Financing is solely between the National Energy Improvement Fund and the customer or trade ally.