Why Green Engineering Shouldn't Be Cut From Your Budget
Green engineering is often overlooked in projects, in many cases because it is considered too expensive, but this is a misconception. If projects are compared based on upfront cost only, green engineering seems to have a high price; however, when the total cost of ownership through the entire project lifetime is considered, green engineering emerges as the cheapest alternative.
There are plenty of reasons in favor of budgeting for green engineering, and they apply in residential, commercial and industrial settings.
Green Building provides financial benefits, and increases asset value. Learn more about 10 Inventive Green Trends for 2017.
1) Green Engineering Provides a Higher Return on Investment in New Projects
Green upgrades for buildings and their systems are much more affordable if they are engineered into the project right from the start, during the design phase.
- New projects already have a baseline cost – building systems such as lighting and HVAC represent necessary and unavoidable expenses. Therefore, green upgrades are assessed based on their incremental cost beyond the baseline, not their full installed price.
- Upgrades are more expensive in existing projects: There is an extra labor cost when decommissioning current systems, and then it is necessary to assume the full price of the upgrade.
To exemplify this, assume a building owner is trying to choose between a fluorescent lighting system with an installed cost of $150,000, and an equivalent LED installation with a cost of $250,000. The LED lighting option provides yearly savings of $40,000.
- In a new project, the incremental cost is $100,000 and the project provides a ROI of 40%.
- In an existing installation, the full price of $250,000 must be assumed, and the ROI is decreased to 16%.
- LED fixtures from the best manufacturers typically last for more than a decade and come with warranties, so this project yields over $400,000 in guaranteed savings.
Although both projects make sense from the financial standpoint, the first one is significantly better. In a few words, green engineering can provide superior financial benefits if integrated into a project when it is first designed and built.
2) Green Engineering Makes You Eligible for Tax Incentives and Rebates
Utility companies and governments frequently offer incentives for building owners who invest in green measures. The following are some of the most common types of incentives:
- Rebates: These are direct cash incentives from utility companies. For example, solar PV systems in New York with an installed capacity of up to 25 kW are eligible for a rebate of $400/kW, and for households under 80% of the median income the rebate is duplicated.
- Tax credits: Tax credits allow you to deduct a portion of green technology investments from your tax burden. For example, there is a Business Energy Investment Tax Credit (ITC) that applies for all renewable energy systems in the US, including technologies such as geothermal heat pumps, solar heating, and combined heat & power. Depending on the specific technology, the tax credit is either 10% or 30%.
- Tax exemptions: Many green products are exempt from the sales tax in the USA. In the case of solar panels, which raise the value of a property, many states also offer a property tax exemption.
When incentives such as these are available, green engineering becomes even more valuable, further reducing the lifetime ownership cost of a facility. If you have access to low-interest loans, you can implement green upgrades for zero upfront cost, and then pay off the loan with the savings generated.
3) Green Engineering Improves Corporate Image
Keep in mind that green engineering not only focuses on energy efficiency, but also on reducing the environmental impact of buildings. “Green” has become a hype word in modern media, and companies who deploy green engineering are viewed as corporate citizens and environmental stewards. This can be a decisive factor in business relationships, since there are many clients who give high importance to corporate citizenship when selecting their product and service providers.
Green engineering reduces the operating cost and environmental impact of buildings, but it can also be a marketing tool for the companies who deploy it.
4) Green Engineering Reduces Maintenance Expenses
Green technologies not only offer reduced energy consumption; they often have a much longer service life than conventional building systems, reducing maintenance expenses in the long run. The following are some examples of this:
- Tubular fluorescent lamps typically last for around 20,000 hours, while their LED equivalents offer a service life of 50,000 hours. By the time an LED tube reaches the end of its service life, two fluorescent tube replacements are needed.
- Solar water heaters have a service life of around 20 years, while conventional heaters only last from 10 to 15 years. Solar and electric water heaters also have reduced maintenance expenses when compared with gas heaters, since they don’t require a chimney to exhaust flue gases.
- Adiabatic coolers consume around 30% less energy than conventional cooling towers, while reducing the costs associated with water treatment and evaporation.
This trend is common for multiple green technologies: their maintenance needs tend to be lower than those of the equipment they replace.
5) Green Engineering Frees Up Capital for Business Operations
Every dollar not spent on energy or building maintenance is freed up for other uses that are more lucrative, such as business expansion or research and development. A large facility that uses green engineering from the start can save millions of dollars in long-term operating costs.
Also, consider that electricity, water and gas prices tend to rise on a yearly basis due to inflation. Therefore, the economic benefit of green engineering increases year by year: savings increase in direct proportion to energy price increases.
6) Green Engineering Provides Long-Term Sustainability
The price of conventional fossil fuels fluctuates drastically depending on economic conditions, so businesses that rely heavily on them always face uncertainty regarding their energy expenses. On the other hand, companies that use renewable sources like solar and wind power can rest assured that the input for their business operations will always be free and widely available.
Green engineering provides economic benefits for the companies who deploy it, while reducing their environmental footprint and improving corporate image. Although green upgrades for existing buildings are attractive investments, they provide their maximum financial performance when deployed right from the start in new constructions. Green engineering may seem expensive at first, but its long-term benefits far outweigh any extra upfront costs.