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Maryland Leads the Nation in Energy Efficiency Initiatives

June 2013

Maryland businesses benefit more from State Legislature initiatives to save energy, money and the environment than their counterparts located anywhere else in the country.

The EmPOWER Maryland Act of 2008 was implemented to reduce energy consumption by 15 percent in the State of Maryland by the year 2015 through a small surcharge added to the monthly utility bill of nearly all business and residential customers. The Public Service Commission then distributed these funds to each regional power company to offer energy reduction incentives. In 2013, five years later, Maryland is on track to meet or exceed this 15 percent reduction goal. By contrast, in other areas of the country, utilities offer energy efficiency reduction incentives that vary from 15 percent to 50 percent of those offered by Maryland programs, if they are offered at all.

IdeasEnergyBGE, Pepco, Delmarva Power, SMECO and Potomac Edison all offer utility-sponsored energy reduction programs that provide business customers direct payments and rebates to defray the costs of energy efficiency upgrades. These upgrades include the latest technological versions of high-efficiency LED lighting, heating, ventilating, air conditioning equipment, water heating equipment, commercial kitchen equipment, variable frequency drive motors, and energy efficiency control systems.

In one such program, Delmarva and Pepco small businesses receive whopping direct payment incentives of up to 90 percent of all costs for labor and material to install upgrades that reduce energy consumption. Typical incentives for larger businesses cover up to 50 percent of all material and labor with some specialized applications qualifying for as much as 70 percent.

These programs enable businesses to offset the relatively high initial cost of upgrades, which result in dramatic energy savings for years to come. As an example, LED lighting typically consumes 65 to 90 percent less energy than fluorescent or incandescent lamps with no loss of lighting levels. As an added bonus, the quality of LED lights is superior; they last well over 10 years, and operate at cooler temperatures to reduce air conditioning energy demands.

The resultant statewide reduction in energy will not only delay the need to build a new power plant, but also these reductions have lowered the state’s carbon footprint with significant reductions in greenhouse gas emissions. The more utility customers that participate in these programs, the longer we can delay or even eliminate building new power plants in Maryland.

A typical small business utility-sponsored energy efficiency upgrade consisting of LED lighting only, can improve the environment by eliminating 10 tons of carbon dioxide, 200 pounds of sulfur dioxide, and 100 pounds of nitrous oxide from the atmosphere every year! This is the equivalent of removing four cars from the road each year or planting seven acres of trees each year and every year after completing the upgrade.

The upgrade process is simple:
Business owners contact a “Trade Ally” or “Participating Contractor” from their utility company’s website to set up an energy audit of their facility. In most cases there is no charge for the audit. In some cases, such as in Pepco and Delmarva Power’s “Walk-Through Energy Assessment” program, the auditors will even install a number of energy efficiency measures at no charge during the audit. These measures may include CFL or LED light bulbs, water heater pipe insulation and “smart” energy strips to reduce power consumption of computer system peripherals. The auditor will also point out additional no-cost or low-cost measures that the business can implement to start saving energy and money immediately.

After completing their analyses, auditors will provide the business owner with a report demonstrating the amount of savings that can be realized with particular energy efficiency measures along with their proposal and schedule for implementing those upgrades.
Upon agreement, auditors will supervise the installation of upgrades and process the utility incentives on behalf of the owner. In some utilities, the owner must pay the vendor first before receiving their rebate. Alternatively, some vendors accept an “assignment” of the rebate from the owner. Other programs, (again Delmarva Power and Pepco, as an example), provide direct payments to either the owner or vendor.

One strategy offered by some trade allies or participating contractors is to finance the upgrades completely to eliminate any expenditure by the business. As yet another bonus, this method yields an immediate positive monthly cash flow! In this strategy, the cost of the upgrades and the finance charges are all paid out of the reduction in the business utility bill. As an example, an LED lighting upgrade would include lamps with a minimum five-year warranty period with the upgrade fully financed over a five-year term. The initial monthly utility savings (positive cash flow) will be reduced somewhat by the amount of installment payments during the first five years. Since LED lights last 10-14 years, the full amount of monthly utility savings (positive cash flow) will accrue to the business owner for the remaining five to nine years of the LED life. Additionally, these savings will actually increase as utility costs rise over time, since less energy is being consumed.

Will the Maryland Legislature extend the EmPOWER Maryland Act beyond 2015? Will the Federal Government extend the EpAct of 2005, which offers federal tax credits for energy efficiency reductions? Since no one is sure of the future of these programs, businesses in Maryland are well advised to take advantage of the current utility-sponsored incentive programs to reduce energy as soon as possible before funding dries up.

Many very exciting new and alternative energy technologies are evolving seemingly each day in the area of wind turbines, solar panels and geothermal HVAC systems. The costs of many of these technologies, however, are still not within reach of most businesses and many utility energy reduction programs either have significant limitations on the amount of available incentives or offer nothing at all. Despite this, current state-of-the-art technology in energy efficiency upgrade measures, coupled with utility-sponsored incentive programs to defray expenditures, provide Maryland businesses with ample opportunity, right now, to save energy, money and Maryland’s environment!

Wes Burton, AIA is a Registered Architect and Owner of ZERODRAFT Maryland, a Towson-based Commercial and Residential Energy Efficiency Consulting and Contracting firm specializing in utility-sponsored energy efficiency programs and services. I95