Real Estate Developer, Owners’ Association Managers and Boards are motivated by different factors to improve energy efficiency. Reducing energy consumption reduces energy bills and may result in reducing Service Charge budget or improve rental returns for developments owned by single entities. However true savings are only possible if the Net Present Value (NPV) of the energy saving project is positive.In simple terms the savings in the long run should offset the total additional costs of implementing an energy efficient technology.
The following case study will help you understand how energy savings projects can be valued if they are viable.
The Sample Tower Existing Design – The following case study will help you understand how energy savings can be achieved
The Sample Tower is an imaginary 13 story residential tower located somewhere in Dubai.
As per site survey and plans review The Sample Tower has the following infrastructure:
Each Corridor has 14 light bulbs of 18W each.
There are 13 Corridors. Total max monthly consumption is
13 (Corridors) x 18 (Watts) x 14 (Light bulbs) x 24 (hrs) x 30 (days) = 2,358kW
At current DEWA tariff’s top slab, total monthly cost of lighting in corridors would be 2358 x 0.38 = AED 896.04 (Annually AED 10,752). There would be an additional fuel surcharge levied on this cost.
If 2 light bulbs are switched always-on and the remaining 12 are controlled by 3 sensors on each floor, energy consumption could be reduced as follows:
13 (Corridors) x 2 (Light bulbs always on) x 18 (Watts) x 24 (Hours) x 30 (Days) = 336.9kW
13 (Corridors) x 12 (Light bulbs controlled by sensor) x 18 (Watts) x 4.8 (Hours) x 30 (Days) = 404.3kW (Assuming 20% (4.8hr daily) usage after installation of motion sensors)
Total energy consumption = 336.9+404.3 =741.2kW
Monthly cost at current DEWA tariff 741.2 x 0.38 = AED 281.6 (Annually AED 3,379.8)
Yearly Estimated Saving 19,400kW (AED 7,372)
Sensors 3 x 13= 39 Nos + (25 spare that may be required in a 3 year period) = 64 @ AED 50 = 3200
Wire and consumables = 2800
Installation Charges = 3900
Total Initial Cost = AED 9,900/-
Net Present Value of this energy saving project for 3 year term at 5% Internal Rate of Return is estimated to be AED 10,000
Even though AED 10,000 appears insignificant, however if only 500 Developments can achieve a saving of little as AED 10,000 in three years we are looking at overall savings in excess of a 5 Million Dirhams in just 3 years.
Developers, OA Managers, and OA Boards should not look at a mere saving of AED 10,000 in three years, which may not be even 0.1% of the annual service budget, rather they should look at it as an opportunity to make a small contribute towards a greater cause.