Sustainability is often portrayed as the intersection of environmental, economic, and societal factors in project development. However, sustainability doesn't have to be an unattainable nexus of three unrelated factors; it's best to incorporate all three. When considering economics and return-on-investment (ROI), keep the following in mind:
Use a Holistic Approach
There are numerous sustainable technologies and solutions available today. When you evaluate solutions for your organization, consider a holistic approach across the entire organization in order to maximize opportunities. Lighting upgrades are among the most effective sustainability projects for organization wanting to reduce energy bills. The ROI can be as little as one year and money saved can be used to implement other, less cost-effective measures, including renewable energy options.
Financing Options
When choosing how to finance a sustainability project, consider the following options:
- Self-funding
- Pros: Streamlined implementation; savings may pay for capital costs
- Cons: Many public agencies or government bodies cannot take advantage of tax incentives for renewable energy or sustainability projects
- Examples: Sustainability grants and programs
- Pilots and studies for new technologies
- Pros: Savings may lower investment requirements; subsidized up-front cost
- Cons: Project may have more risk than traditional technologies and may not be suitable for first-time efforts
- Private financing
- Pros: Tax advantages may improve savings, and you don't always need formal triple P agreement
- Cons: With a "profit motive," more risk is involved—choose your partners carefully!
- Examples: Formal triple P agreements, energy savings performance contracts, power purchase agreements, or sale/lease back real estate property
Evaluation
Nail down your evaluation parameters—no two organizations are alike! Parameters include payback periods and cost of capital. Consider savings from environmental and energy benefits as well.
Cash flow analysis is also an easy way to evaluate different options—summarize deficits (capital investments, operation and maintenance cost, component replacement, insurance, fees) and benefits (taxes, energy savings, environmental attributes, reduced fees, component life extension), itemized on a periodic basis.
Case Study—Con Edison Learning Center
As part of a presentation for the U.S. Green Building Council, I evaluated the financial benefits of a green roof on the Con Edison Learning Center in Long Island City, New York. The green roof offers a number of benefits including better stormwater management; a larger building footprint; energy savings through lower roof temperatures, reductions in heat flow, and additional thermal mass; and extended roof life.
Columbia University conducted a year-long study that involved monitoring long-term thermal and energy performance of the roof to quantify the energy savings benefits of the green roof system compared with other roofing options. I took Columbia's energy savings numbers for the green roof and assigned them actual costs.
A similar analysis was performed for a theoretical solar photovoltaic system on the same roof. The outcome: The green roof saved Con Edison more than a solar roof would have. Case studies of actual built projects and their performance provide us with valuable insights in evaluating sustainable projects.
Additional "Soft" Benefits
Other non-financial benefits include community support, higher resale value of the building, using sustainability efforts as a marketing tool, sound mitigation, LEED® certification, and employee satisfaction. While these factors are difficult to put hard numbers on, they are critical to consider in the evaluation process.
Remember: It's not sustainable if you can't pay for it!