Editors Blog


Murphy's Law: Pay It Forward

July 23, 2008

Payback is a much-maligned topic these days. Some people say it is coming back in vogue as a selling tool, others say there is no way that a payback story can work.

Payback years are like prunes; one never really knows how many are too many until it is too late.

To move forward on the subject, we must establish one point of agreement - there is such a thing as payback on an investment, and an investment can be an HVAC energy system. OK, two things.

So, who would buy-in to a payback story? Schools have entrenched ownership; they are in it for the long haul. A payback of seven years or even 12 years might be practical if an owner has a long-term agenda and can obviously reap the benefits of life cycle costs savings. In other words, they plan to stick around long enough so that energy savings from reduced operating costs means something.

Would an office-building owner with transient tenants, and a “fix and flip” mentality care about a seven-year payback? A three-year payback? Of course, you see where this one is going.

One of my favorite lines in a movie about doing random acts of kindness for people as a way of repaying those who had done the same for you, is “Pay It Forward.” In regard to an office-building owner who expects to never see the benefit of an energy system investment, the owner should be able to sell the next owner the benefit of the initial energy investment. Of course, all of you have already thought of that idea and have reminded owners that their investment can reap an even higher selling price when they flip their building a few years down the road. The problem is the owner never looks that far ahead.

Solution: The government needs to enact a tax credit for investors who purchase buildings that already have established energy-saving HVAC systems. It is not enough to mandate that all new government buildings will have greater energy efficiency requirements (as the government has already done), but the existing base of commercial buildings (millions) must be encouraged to retrofit with energy upgrades if we want to get serious about saving energy.

What better way to push this effort than make incentives for the market to change?

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