Who Benefits from an Energy Renovation?

Curt Monhart V.P.  The Energy Alliance Group

Last week the Vice President of the Energy Alliance Group, Curt Monhart, took a tour of a company operation that has a $75,000 monthly electric bill! The company’s sustainability manager wants an energy renovation so his company can improve their energy efficiency and lower the cost of utilities. The company is looking for immediate solutions!

During the tour Monhart began detailing the most immediate solutions that would provide substantial savings (outdated HVAC systems, overloaded compressed air system, lighting on 24/7). Even though solutions are readily available, a huge barrier needs to be overcome first – the barrier is known as the “split incentive.”

A simple explanation of the split incentive is this. If the building owner is responsible for paying energy expenses they have an incentive to install the latest energy efficient technology but the tenant has little incentive to conserve energy. It the tenant pays for energy their incentive is to lower energy used but the building owner has little incentive to upgrade the energy technology!

If an energy renovation doesn’t benefit both the building owner as well as the tenant – it’s easier to do nothing!

The company Monhart toured leases the building. Their lease is a triple net lease which means they are responsible for all expenses not related to the building structure. If they want to be more energy efficient, they will have to pay for all upgrades or buy out the lease and look for a more energy efficient property – both are costly propositions. If the landlord does not see any benefit in paying for the energy efficient equipment, the project is probably dead from the start.

What is needed is a solution where both parties benefit!

The Solution – Building Owner’s Energy Efficient Financing Paid for by the Tenants Energy Savings!

What if the building owner could finance an energy efficient upgrade without using any of their own cash and have the financing paid for out of the tenant’s energy savings with no reduction in rent payments?* A huge win for both parties! The owner would benefit from the FREE “green advantage” that research has clearly defined is a component of energy efficient buildings (increases property value, decreases vacancy rates, increases rental rates, minimizes tenant turnover, increased tenant comfort and productivity) while the tenant would benefit from reduced energy costs and a more comfortable environment. A true win-win solution!

That win-win solution is made possible by a program that is known as property assessed clean energy (PACE) and it provides the perfect opportunity to overcome the split incentive barrier.


About steve@bayintegratedmarketing.com

Steve Ulrich is a principal at Bay Integrated Marketing: www.bayintegratedmarketing.com. I have been working with people to maximize their use of social media and internet publishing, optimize their websites to turn prospects into customers, and establish their personal brand on the internet. We are also working with Eco Distribution, Inc. to find and implement practical solutions to help clean up our air and the environment. Eco Distribution, Inc. is a California based Distributor and Representative Firm dealing in environmentally friendly and Green solutions. We have leveraged 30 years experience in responsible construction management to provide solutions for some of the most impactful challenges facing our air, water, and land. We have an oil/hydrocarbon remediation system that is effective on everything from simple oil stains on a driveway, to complex oil disasters in the ocean. My approach to social media and internet marketing is simple. Instead of spending a fortune “buying” keywords and ads that don’t return anything we concentrate on three areas: I CAN GET YOU FOUND ON LINKEDIN - NUMBER ONE, PAGE ONE.
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