Does Energy-Efficient Equipment Make a Difference in Operating Costs?

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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Energy-efficient light bulbs are promoted as a way to save money, both on how long they last before you need to buy replacements and on how much power they save your business. In reality, when you run the numbers, an office that has converted fifteen light sockets to compact fluorescent light bulbs will save about $100 a year. When you're used to thinking in terms of thousands of dollars in your business, that number doesn't sound like a lot. It makes you wonder if the money saved by using energy-efficient equipment is making a noticeable difference in your operating costs.

The Cost of Energy Efficiency

When you jump into the numbers, you'll quickly find that buying energy-efficient office equipment of any kind comes with a higher price tag than less efficient options. Each piece of equipment promises to save you money in the long run by requiring less energy. Going green can be an important choice for a business, but it's also important to remember that there are other types of green involved. Knowing how much money your business is actually spending is crucial, even if you're willing to spend extra to be environmentally friendly without there being a financial upside.

The right equipment will certainly bring down your utility bills at the office, but it's important to consider what that number really means. If you're in a business where you're handling accounts worth thousands of dollars, it just may not make financial sense to invest time on pricing and acquiring energy-efficient equipment just for a bill lowered by a hundred dollars a month. It's a question of the value of your time and that of your employees.

However, depending on the type of equipment you need to use on a regular basis and the amount of time it will take to swap out your current technology, the difference in your operating costs over a year may more than cover the cost of your time.

Calculating the Costs

It could be that simply sitting down and running the numbers may not seem to be worthwhile in terms of finding out how a new piece of equipment could change your operating costs — if you find that the difference isn't enough to matter, the time spent may have no return. Nonetheless, it's useful to do at least a basic energy audit on your business. Professionals will come in, looking over the equipment you use and the space where you operate it. They'll put together a report pointing to where you can save energy and, depending on who you work with, lay out what equipment you can swap out for energy-efficient models, perhaps even pointing to the best models. A professional energy audit may be the fastest way to get an idea of what you may need.

However, an outside energy audit may be unnecessary. There are numerous online tools to help business owners conduct an energy audit, such as that offered by GreenYour.com. In most cases, you'll need to collect information about your business, from your operating habits to the physical layout of your office to your energy bills. The factors that play into just how energy efficient your business is can be complicated, making it worthwhile to follow an existing questionnaire.

Implementing Changes

For many businesses, the limiting factor in how much energy efficiency can change your monthly utility bill comes down to whether you rent office space (or other work space) or you own. The upgrades that can be added to a property you or your business own can make for a dramatic difference where simply switching to more energy efficient computers or copiers won't move the needle. Furthermore, there are tax incentives in place for many such improvements, dropping the actual costs and speeding up the point when your energy savings will have paid for the change. If, however, your business rents space, making such modifications may be significantly harder. Many landlords are willing to negotiate about improvements to their property, but they may ask for you to cover a significant portion of the cost — not necessarily worth your while if you don't expect to stay in the space long-term.

When it comes to replacing equipment, there are decisions that have to be made beyond just picking out the new model. One of the most important is deciding when to purchase an energy-efficient model and replace what you currently have in your office. It makes sense to get as much use out of an old model as possible, although there is a question of sunk costs. Just because you paid more for an older model at some point, it may not be worth holding on to it when you could immediately start saving money on energy. The sensible choice depends heavily on what you're swapping out and the age of your equipment. It may also depend on whether you can sell an older model and recoup any of your costs.

It seems like there is a new, more energy-efficient model of every type of office equipment coming out each week, making the choice more complicated. When you buy a new printer or copier, you could easily find that there's an even more efficient model out the next week. With that consideration in mind, it may make sense to simply plan on replacing existing equipment with energy-efficient models when you need to replace anyhow. Such an approach also allows you to budget for them more easily. You may not get the full savings you could get, but it can be the easiest way to get the greatest overall benefit for your business.