Photo courtesy of: Greg Land

On Energy Strategy: Reducing Costs, Improving Operating Efficiency, And Meeting Green Operating Goals

October 16, 2020  |  Katie Lutton

Energy strategy is a frequently overlooked component of successful venue operation. From system capacity planning to life-cycle cost analysis, a strong energy strategy can take a facility from good to great. But why are so many venues still in the dark ages when it comes to modern energy planning? We sat down with Dave Karlsgodt, director of B&D’s Energy Advisory Practice, and Bill Mykins, LEED® AP, vice president for B&D Venues, to learn more.

 

In addition to meeting environmental goals, saving money is the major driver for many venues when it comes to energy planning. What range of savings is achievable through equipment modernization and other strategies?

Karlsgodt: Well, every venue is different of course. And it depends on what work is done. A given ballpark could spend $2M annually on electricity. By implementing what are widely considered “low-hanging fruit” basic improvements, like LED light retrofits and automated lighting and HVAC, coupled with an effective building automation system and schedule, you might—conservatively speaking—improve your energy efficiency by 10%. That’s potentially $200,000 in cost savings annually. An energy diagnostic could identify opportunities like this for any venue or campus.

For those who aren’t aware, an energy diagnostic is a tool to look at the way the current energy system is configured. What’s the likely future? How might that future play out, if you were just to continue your current practices… or how might it play out if you were to prioritize initiatives? What are the most important changes you can make in priority order? And then, finally, what’s the best way to get those projects done?

With many live events canceled for the time being, utility costs and energy planning may not be top of mind for most people. Why do venue owners and managers still need to think about their energy strategy at this time?

Karlsgodt: Eventually, we’re going to come out of this. Cost savings, efficiency improvements, green operating goals—the reasons that venue stakeholders should have been paying attention to energy strategy before Covid haven’t gone away. And these factors will certainly still be relevant once things come back in full swing.

Now is actually a great time for venue owners and managers to get in and do some of the work they’re regularly not able to do because they’re forced to work around events. In addition, after Covid there’s going to be a premium on facilities that demonstrate safer operation. You certainly want to go to a space that’s got clean air and modern facilities.

 

What are the biggest challenges a venue operator might face in pursuing green operating goals? How can they be overcome?

Mykins: There’s a time and effort cost associated with energy planning. You have all these other maintenance and capital needs; how do you incorporate energy into that—especially when energy goals can feel like a lower priority, even when needed or mandated? It can be a challenge because you have other things competing for your time and attention.

Karlsgodt: Energy planning can be out of sight, out of mind. Leaders are more focused on putting on great events and great sports experiences for the fans. But actually, energy is a major enabler of that. The expectations people have of facilities have increased a lot. They expect air conditioning, they expect clean air. They expect reliable power, they expect a comfortable space. So energy planning is a key part of improving the event experience. Unfortunately, because of that “out of sight, out of mind” aspect of energy, people tend to neglect energy investments until they become much more expensive to tackle.

Mykins: We’ve advised sports teams through comprehensive capital plans and found that, while teams know they need to plan for energy and sustainability improvements, by and large they are unaware of how best to do so. As a result, they’re missing out on the opportunity to improve the facility and maximize return on investment. Thus, energy planning should be part of the capital planning process. For more insights on Capital Planning for Venues, see our recent Q&A with industry experts.

Karlsgodt: Another challenge lots of venue operators face is a lack of understanding among most people about energy and facility equipment generally. The people who do understand it tend to be specialized in it, and so tend to not also be experts in financial planning. And then the people who are experts in financial planning are not experts in energy and facilities.

Mykins: And that’s also exactly why energy must be part of the capital planning process.  A comprehensive capital plan helps bridge that gap between the physical energy assets and the financial.  It also pushes owners and operators to work through different strategies for how to approach their energy and utility management that improve their bottom line. Working energy planning into venue capital planning is crucial to reducing costs. That process can start with an energy diagnostic.

 

What are some financial considerations for venue operators wondering how to fund energy investments?

Karlsgodt: The most important consideration is planning for any improvement to enable some revenue-generating opportunity. This could be directly, through energy generation, or indirectly, through improving a guest experience and boosting revenue that way. A good example of this is being able to efficiently air condition a previously non-conditioned space, elevating the experience and allowing you to charge a premium price.

There are also ways for venues to have external experts come in, make their facilities better and more efficient, and share in the value that’s created in that process, basically splitting the financial benefits. We call that Efficiency Equity.

 

Can it be assumed that relatively new buildings—less than 15 years old—are already operating efficiently with the lowest possible energy costs?

Karlsgodt: Actually, no!  Renewable energy and HVAC equipment—all that technology has come miles from when a lot of facilities were originally built, and has even come miles from when the newer ones were built. If you’re not continually re-investing in those things, you’re going to end up with what feels like an antiquated facility and you’re going to lose competitive advantage.

Another recent change is environmental stewardship. Increasingly, fans expect that if they’re going to buy products from a major organization, that that organization better have its environmental ducks in a row. It’s not just about water bottle recycling anymore; there’s a lot more to it.

Mykins: I think venues have a unique kind of opportunity and responsibility to lead the way in environmental stewardship. The connection between sports and the natural environment in which these games are played is obvious, and venues also have the ability to become assets to the community by leveraging unused capacity. The visibility of their operations provides an immense opportunity to catalyze everyone’s increased usage of sustainable practices. So when you also consider the cost savings side, energy planning just makes sense.

"From community relations through the heart of construction and planned completion, we have been blessed by just the right counselor who provided exactly the wise counsel we needed at precisely the right time. And we have even had fun in the midst of a very challenging process."

David O. Treadwell, Executive Director
Central Union Mission

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