The Financial Considerations for Smart PlugDeployment bosscontrols.com /financial-considerations-smart-plug-deployment/

Energy efficient practices and programs are so important to today’s business. Most organizations areaware of this. They know that their employees want to work for a green company. They know that theyhave a responsibility to operate as sustainably as possible. And yet, so many hesitate to implement thesolutions they need in order to achieve true sustainability. Why?

It is true that energy efficiency solutions sometimes come with a hefty price tag. But once you understandhow to look at the costs and benefits from a “big picture” perspective, it’s easy to see that energy efficiencyinitiatives such as smart plug deployment are completely justified. In fact, they pay for themselves.

Here’s what you need to consider.

Consider the Costs

When considering a smart plug deployment, the first thing you need to look at are the costs involved.

First, look at the cost for the products you’ll need to complete your solution. Then think about how thoseproducts will integrate with your network infrastructure. Will they connect using your existing WiFi or is it aZigbee-based solution using a dedicated Zigbee network?Then, look into the cost of installation. Installation costs can vary depending on if you’re installing thesolution yourself, or requesting installation from the provider. While turnkey installations by the provider arean additional cost, they’re worth it. They give you the peace of mind that the job is done right the first time.

The total installed cost of your smart plug deployment will include the cost of all products needed plus anyinstallations costs, minus any utility incentives.

Additionally, consider the operational costs of your solution. For example, there are lower IT costs if yoursmart plug solution leverages your existing WiFi network vs. a separate dedicated network (e.g. Zigbee).

Important Metrics

When examining the cost of deployment, take a look at these key metrics.

The simple payback period

How to determine what the simple payback of your energy efficiency solution would be:

This is fairly easy to calculate. It’s a quick measurement of the total installed cost of your solution divided by your estimated total annual savings, multipliedby 12.

Here’s an example. If you have $100 in installed cost with $50 in annual savings, your simple payback would be: 100 / 50 * 12 = 24 months

Annual energy savings

The rate of return on your capital investment

The cost of doing nothing

Consider the Benefits

After you have an understanding of the cost itwill take to get your smart plug deploymentunder way, it’s time to start thinking about thebenefits you’ll enjoy as a result.

Utility Incentives

Many states and electric utilities offerincentives and funding for energy efficiencyprojects. This funding comes in handybecause it helps reduce the out of pocket costof becoming a more sustainable workplace.You can easily see what incentives are offeredin your state on DSIRE or Energy.gov.

Plus, integrating smart plugs into yourbusiness will help in reaching compliancetowards energy efficiency and energyconservation goals.

Energy Savings

Then, of course, there’s the huge benefit ofenergy savings. Once your solution isinstalled, you can easily measure your energysavings. But to get an estimate prior toinstallation of what you could save, considerthese factors:

Energy Consumption by Device

Every device in your building consumes different amounts of energy. Therefore, your energy savings aregoing to depend on the devices you’ll be connecting to the smart plugs. For example, a vending machineconsumes much more energy than a coffee pot – so the potential for savings is higher for the vendingmachine.

Operation Schedule

The great thing about smart plugs is that they’re programmable. You can set them to power off yourdevices at night when your building is empty, and have them power back up in time for the early birds. Yourenergy savings will depend on your smart plugs’ operation schedule and the number of weekly hours thatthe devices can be turned off. Plus, with remote access via web and mobile applications, your staff canremotely power up devices for special events at your facility.

Energy Rate

This variable is based on things such as the supplier of your building’s electricity and tariff rates.

Operations Savings

Your savings don’t stop with your energy savingswhen you install a network of smart plugs. You canalso expect to operational savings. While operationalsavings due to smart plug implementation are veryreal, they can be pretty hard to quantify. In fact, mostfinancial decision makers exclude operations savingsfrom the cost/benefit analysis. But the savings are outthere, and it’s important to put them intoconsideration! Here are examples of the kinds ofoperational savings you could see:

Internal Labor

With smart plugs, you no longer have to spend labor on manually turning equipment on or off. Your plugsdo that for you.

Enhanced Equipment Life

Due to operating on reduced hours, your equipment and machines could live longer lives. That means lessmoney spent on repairing and replacing expensive equipment.

Consider Financing and Shared Savings Programs

Many energy efficiency projects stall for internal lack of up front capital. Leveraging financing or sharedsavings programs for these types of projects may reduce the CFO’s concerns, allowing your facility toachieve operational savings more effectively.

When it comes down to it, energy efficiency upgrades (such as a smart plug deployment) provide benefitsthat greatly exceed the cost of implementation. When considering the financial investment needed,consider the full financial picture including installation costs, energy and operational savings.

Courtesy of: BOSS Controls

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