Collaboration, Energy Efficiency, Facilities Management, Uncategorized

Building Energy Efficiency: Why is it so Darn Hard to Sell?

Businesses nationwide would save about $1 billion each year in energy costs if they replaced their 10-20 ton commercial units with units that meet this specification.

http://www.advancedrtu.org/find-a-product.html

The US Department of Energy launched the Advanced RTU Campaign to encourage the replacement of existing rooftop units (RTU) with new high performance units.  These replacement RTU could increase energy efficiency by up to 50 percent, and economically be installed on about 2 million rooftops (all tonnages), if they weren’t so darn hard to sell.

Note: $ 1 billion in annual energy savings would require the replacement of about $3-4 billion worth of equipment which would be approximately 200,000 (10-20 ton) RTU units.

There are approximately 17 million RTU on commercial rooftops in the US, most less than 10 ton capacity.

What are the barriers to selling energy efficient RTU products and related services, and what can we do about it?

Let’s start with visibility. Manufacturers have little idea what is actually on rooftops, so its difficult to develop products (retrofits or replacements) to meet an unknown demand (ie. if targeting 10-20 ton units, where are they? How efficient are they?).

Often building owners themselves are not aware (in detail) of what they have on their own rooftops. How can we replace RTU if we don’t know where they are?

Once we find them, we don’t know how they perform. The economic viability of an RTU replacement is highly dependent on the actual energy efficiency (expressed as energy efficiency ratio (EER)) of the currently installed equipment. Without a baseline energy efficiency measure, it’s difficult to know evaluate replacement opportunities.

Then, building owners need to be “sold” on the potential for RTU replacement before they will invest effort to complete technical and financial analysis. Often, they don’t have all the required skill sets to complete the task themselves.

Unfortunately, creating buyer driven demand for replacement is a hard sell.

So, sellers can’t see opportunities to sell RTU, and buyer’s aren’t convinced that they should buy them…

How do we (as an industry) overcome these barriers?

We need re-frame the problem, and view energy efficiency as a sales process.

We’ve identified lack of visibility, incomplete value proposition, and a mismatch of skill sets, as major barriers to the sales process. Let’s address each:

Lack of Visibility

One potential “seller” is already on the rooftop, and familiar with customer equipment. Mechanical service contractors are influential in the industry, in that a relatively small number of contractors service many buildings, for many building owners. These contractors play a key role in identifying and acting on opportunities. We need to partner with mechanical services providers to help them deliver added value to their customer, and connect with other stakeholders to streamline sales.

Working with mechanical services providers will leverage existing relationships and provide more visibility for stakeholders to rooftops. The reason is simple. Most buildings are serviced by multiple RTU (a 10 ton RTU will service about 4,000 square feet), each likely of the same age and condition , therefore the 200,000 target RTU (identified above) may only be found on 20,000-40,000 buildings. Each service technician typically services up to 20 buildings, meaning that we may need to reach only a few thousand service technicians to gain visibility to those opportunities. A typical mechanical service firm employs 5 or more technicians, reducing first contact to perhaps 200 firms.

Incomplete Value Proposition

Sales will happen when a seller delivers a credible value proposition that meets the needs of the economic buyer. We need better data about the actual efficiency and expected total operating costs of existing RTU equipment, either by actual measurement, or at least with benchmark data for similar equipment. We need tools to provide both technical and financial assessment, with visible and configurable assumptions, that allow stakeholders to tailor the value proposition to the local market. Measurement of success, against those assumptions provide value for future propositions.

Mismatch of Skills

The sales process for building retrofits is complex. Often there many other stakeholders (other service providers, facilities,engineers, finance, tenants, banks etc.) and influencers (government,utilities) involved, and they must also be brought to the table, to develop and validate the value proposition. Each has their own skill set, and criterion for success. Collaboratively connecting these stakeholders, each with the information they need, will speed consensus, to close more sales.

Energy efficiency is a sales process.

If you sell products or services to owners of commercial buildings, BuiltSpace can help. Let’s talk.

Rick@builtspace.com

About Rick Rolston

Rick is CEO of BuiltSpace Technologies Corp. (Vancouver Canada). BuiltSpace provides integrated building information management services to help building stakeholders create more sustainable and valuable building ecosystems.

Discussion

One thought on “Building Energy Efficiency: Why is it so Darn Hard to Sell?

  1. Cuz they use payback years instead of IRR. Few managers see how attractive it is.

    Posted by Herman Choy | April 1, 2015, 4:17 am

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

We make buildings better!

Click here to visit our website!

Enter your email address to follow this blog and receive notifications of new posts by email.

%d bloggers like this: