Each person registered was assigned a team they would be working with for the duration of the event, and MSCA didn’t seem content to let participants leave with anything less than a working knowledge of what it was presenting — energy service agreements (ESAs).
No time was wasted as Woody Woodall, MSCA chairman, opened the summit with a welcome and an introduction to ESAs as well as the new tools that MSCA is providing for its current membership.
Adapting to Energy Sales
Woodall was followed by business consultant Don Neal, who discussed the changing energy marketplace, stressing that contractors need to adapt to consumers needs and desires for energy efficiency and savings. Neal also emphasized that a company must be able to define itself in one sentence. He demonstrated how this sentence could be created by answering a few simple questions — who are we, what do we do, how do we do it, and why do we care.
“This sentence is the filter you have to pour your ideas through,” he explained. “Ask yourself if your competition can say the same — or are they already saying it? You want to emphasize what makes your company unique.”
He went on to provide some selling tips as he showed the importance of building an emotional bank account with customers and reinforcing with them everything a contractor’s company provides their customer’s business. “Customers often buy to make money, save money and time, mitigate risk, for status, or to calm their fears, uncertainties, and doubts,” said Neal. “In fact, 70 percent of all decisions people make are driven by emotions.”
Understanding Financial Motivation
On the heels of Neal’s business motivation for adopting ESAs came a financial discussion from Dr. Sharon Levin, MBA, CPA. The former aerobics instructor loosened up the crowd with a few jumping jacks and then dove into her presentation, “The Financial Value of Improved Energy Performance.”
Levin showed the importance of being able to calculate and communicate financial metrics with C-level decision makers as contractors endeavor to show them the value of an ESA.
“Understanding financial metrics helps you more effectively communicate with decision makers and tenants,” she explained. “It also allows you to prioritize equipment upgrades, increase your decision making skills, as well as compare and verify vendor proposals.”
According to Levin, there are six major financial metrics in three different categories that mechanical contractors should be able to understand and discuss. The first category is non-discounted and it contains simple payback period (SPP) and return on investment (ROI). The second category is discounted, and it contains net present value (NPV) and internal rate of return (IRR). The final category mentioned was income and valuation. It contains net operating income (NOI) and asset valuation. In further discussing the third category and applying it to the concept of selling ESAs, Levin showed that in essence a customer could say, “My energy bill is lower, which means my building is worth more.”
Capitalizing on ESAs
Levin’s statement opened the door for the crux of the presentations that were presented on the next day of the Energy Solutions Summit, which began with Russ Borst, LEED AP, Hurst Industries, Belmont, Mich. Borst laid out the details of an ESA and gave instruction for how to implement one.
“An energy service agreement — you could call it an energy solutions agreement — is an agreement that is sold either in conjunction with a preventive maintenance agreement [PMA] or stand alone,” he explained. “They are intended to reduce the long-term operating costs of a facility.”
In his experience, Borst is on a 90 percent hit ratio on adding ESAs to current PMAs — not only that, but he is also increasing the price when customers he is talking to are expecting cost reductions. “This is a tool you can use to differentiate yourself, make more money, and provide an added value to your customers,” he said. “Determine the energy-use baseline of a facility, indentify and implement energy conservation measures, measure and validate savings, repeat. It is the repetition of those last two items that will help cement the energy relationship you have with your customer.”
Thom Brazel, LEED AP, Hill York, Sarasota, Fla., presented with Borst. He has been experiencing success in converting PMAs to ESAs as well. Brazel cautioned that putting together and selling ESAs is an art and not necessarily a science that requires creating a culture within a mechanical contracting company.
“Match the capability of your staff to the needs of your clients, and remember that it’s only a new facility once but it’s an existing facility forever,” he encouraged.
Filling the Toolbox
Throughout the conference and each speaker’s presentation; handouts, tips, and online tools were provided to the teams of attendees. They were tasked with listening, learning, and providing a short ESA presentation that included benchmarking a facility and making suggestions as to energy-saving changes that could be made. The two teams with winning proposals were awarded with textbooks and MSCA swag.
To help the teams and those interested in adopting a culture of ESAs, MSCA explained products such as its Energy Solutions Profile (ESP) reporting software. This software provides GreenSTAR (see sidebar) qualified contractors with a “web-based tool to quickly generate professional, customized energy assessment reports for existing or potential customers,” according to the association. During the software demonstration, Barbara Dolim, executive director at MSCA, highlighted the extra effort that the software designers had taken to ensure that each user could create a highly customized look unique to their company. The software not only makes reports, but also helps keep track of facilities that have been or are being worked on by a company.
ESP gains its primary benchmarking information from the Energy Star® Portfolio Manager freely available to anyone at www.energystar.gov/benchmark.
Taking the Energy Challenge
Although the attendees of the summit experienced a hands-on walkthrough of ESA processes and tools, MSCA is encouraging others to get involved with energy contracting. “This work belongs to mechanical contractors,” said Woodall emphatically. “This doesn’t belong to ESCOs or electricians. It’s HVACR’s nugget.”
For more information, visit www.msca.org/greenstar
Sidebar: MSCA GreenSTAR Program
Over the past several years, the MSCA STAR program has evolved and grown in response to market opportunities and changing times. In 2007, MSCA’s GreenSTAR Qualified Contractors Program was introduced in response to the demand for LEED certification, green, and sustainability. With today’s focus on energy services and cost-saving strategies, the STAR program is once again positioned to respond. In 2012, the goal is for all current MSCA STARs to achieve GreenSTAR qualification. To help contractors achieve this, the requirements for GreenSTAR have been revised and updated to better reflect today’s conditions.
Any company new to the STAR program will now be able to immediately apply for GreenSTAR qualification. Current GreenSTARs will be grandfathered into the new program and no action is required on their part. Through local, regional, and national marketing efforts, MSCA’s GreenSTARs will now be recognized as the “Energy Solutions Providers” of choice and the experts to call upon for all of a building’s energy service needs. MSCA is supporting this effort with Energy Star® webinars that can be viewed at any time online and also with energy solutions customized report software.
Learn more about the program in this video featuring multiple contractors: http://bit.ly/M80HR8.
Source: Mechanical Service Contractors of America
Publication date: 7/23/2012