Why green engineering shouldn't be cut from your budget
Green engineering is often ignored in projects, in many cases because it is considered too expensive, but this is a mistake. If projects are compared based on initial cost alone, green engineering appears to have a high price tag; however, when considering the total cost of ownership over the entire life cycle of the project, green engineering emerges as the cheapest alternative.
There are many reasons in favor of budgeting for green engineering, and they apply to residential, commercial and industrial environments.
Green Building provides financial benefits and increases asset value. Learn more about 10 Inventive Green Trends for 2017.
1) Green Engineering Provides Greater Return on Investment in New Projects
Green upgrades to buildings and their systems are much more affordable if they are included in the project from the beginning during the design phase.
- New projects already have a base cost – building systems like lighting and HVAC represent necessary and unavoidable expenses. Therefore, green upgrades are valued based on their incremental cost beyond the baseline rather than their total installation price.
- Upgrades are more expensive on existing projects: there is an extra labor cost when decommissioning current systems and then you have to assume the full price of the upgrade.
To illustrate this, suppose 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 offers annual savings of $40,000.
- On a new project, the incremental cost is $100,000 and the project provides a 40% ROI.
- In an existing installation, the total price of $250,000 must be assumed and the ROI is reduced to 16%.
- LED fixtures from top manufacturers typically last more than a decade and come with warranties, so this project yields more than $400,000 in guaranteed savings.
While both projects make financial sense, the first is significantly better. In a nutshell, green engineering can provide superior financial benefits if it is integrated into a project when it is initially designed and built.
2) Green engineering makes you eligible for tax incentives and rebates
Utility companies and governments often offer incentives to building owners who invest in green measures. The following are some of the most common types of incentives:
- Rebates: These are direct monetary incentives from utility companies. For example, solar photovoltaic systems in New York with an installed capacity of up to 25 kW are eligible for a $400/kW discount, and for households making less than 80% of the median income, the discount is doubled.
- 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 to all renewable energy systems in the US, including technologies such as geothermal heat pumps, solar heating, and combined heat and power. Depending on the specific technology, the tax credit is 10% or 30%.
- Tax Exemptions: Many green products are exempt from US sales tax. In the case of solar panels, which increase the value of a property, many states also offer IPTU exemption.
When incentives like these are available, green engineering becomes even more valuable, further reducing the lifetime cost of ownership of a facility. If you have access to low-interest loans, you can implement green upgrades with zero upfront cost and then pay off the loan with the savings you generate.
3) Green Engineering Improves Corporate Image
Keep in mind that green engineering doesn't just focus on energy efficiency, but also on reducing the environmental impact of buildings. “Green” has become an overused word in modern media, and companies that implement green engineering are seen as corporate citizens and environmental stewards. This can be a decisive factor in commercial relationships, as many customers place great importance on corporate citizenship when selecting their product and service suppliers.
Green engineering reduces the operating cost and environmental impact of buildings, but it can also be a marketing tool for companies that implement it.
4) Green Engineering Reduces Maintenance Expenses
Green technologies not only offer reduced energy consumption; They often have a much longer lifespan than conventional building systems, reducing long-term maintenance expenses. Below are some examples of this:
- Tubular fluorescent lights typically last around 20,000 hours, while their LED counterparts offer a lifespan of 50,000 hours. When an LED tube reaches the end of its useful life, two fluorescent tube replacements are necessary.
- Solar water heaters have a useful life of around 20 years, while conventional water heaters only last 10 to 15 years. Solar and electric water heaters also have reduced maintenance costs when compared to gas heaters, as they do not require a chimney to exhaust combustion gases.
- Adiabatic coolers consume about 30% less energy than conventional cooling towers, while also reducing costs associated with water treatment and evaporation.
This trend is common to 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, more profitable uses, such as business expansion or research and development. A large facility that utilizes green engineering from the start can save millions of dollars in long-term operating costs.
Additionally, consider that electricity, water, and gas prices tend to rise annually due to inflation. Therefore, the economic benefit of green engineering increases year after year: savings increase in direct proportion to increases in energy prices.
6) Green engineering offers long-term sustainability
The price of conventional fossil fuels fluctuates drastically depending on economic conditions, so companies that rely heavily on them always face uncertainty regarding their energy expenditure. On the other hand, companies that use renewable sources, such as solar and wind energy, can be assured that inputs for their business operations will always be free and widely available.
Final Observations
Green engineering provides economic benefits to companies that implement it, while reducing their environmental footprint and improving corporate image. While green improvements to existing buildings are attractive investments, they deliver maximum financial performance when implemented from the start in new construction. Green engineering may seem expensive at first glance, but its long-term benefits far outweigh any additional upfront costs.
