Energy efficiency can affect many line items on a business’ Income Statement (also known as the “Profit and Loss Statement” or “P&L”). If you look at the full picture through the lens of business acumen, you’ll see how effective it can be to discuss the potential P&L benefits of your efficiency project with your prospects. The following list gives you an idea of the types of line items that you may choose to discuss:
- More sales: If you install attractive LED lighting in a grocery store, for example, the store will likely see an increase in grocery sales.
- Less payroll: If your efficiency solution increases productivity (as we have discussed in previous blogs), employees may be able to do more work in less time.
- Less repairs/maintenance: A new, high-efficiency product usually requires less maintenance than an old, less reliable one.
- Less scrap: You may recall a story I told about the aluminum windows and doors manufacturer that reduced scrap rate by 25%, effectively transforming the simple payback of their lighting retrofit from 4.2 years (calculated using only the energy savings) to 39 days (calculated using the aluminum scrap savings as well).
- Lower utilities: Of course, your efficiency product will probably have a positive effect on the utility bill, so this one will be included in virtually every case.
- Higher rental rates: With all of the added benefits of efficiency (not only lower operating costs but also greater convenience, comfort and/or control), your prospect may be able to increase rental rates without deterring potential tenants.
- Better tenant retention: An efficient building is more comfortable, more attractive, and requires less maintenance. All of these factors help retain existing tenants who might otherwise choose to move to a building that features the high-end amenities you could now be offering your prospect.
- Better tenant attraction: As in the case above, an efficient building is more comfortable and attractive than an inefficient one. Add in an ENERGY STAR® or LEED® certification and you’ve got yourself a recipe for tenant attraction.
- Less need for Cap Ex Reserves: This is a topic that warrants further discussion, so stay tuned for more on this tomorrow!