Jason helps investors free up some cash flow but minimizing energy bills. He’ll look at everything within the building, and how the building is utilizing its current utilities. From small commercial properties to large industrial projects, Jason does it all, and can help property owners find government grants to pay for part of the upgrades up front. To hear how he can help you save money on energy bills, be sure to tune in! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Jason Delambre Background:
– Founder and Owner of Interdependent Energies, LLC; a Carbon and Sustainable Energy Consultant Company
– Consultancy focuses on providing money-saving solutions that are economically, socially and environmentally sustainable
– Since 2009 he’s done 130 individual projects, 9 Institutional Climate, Energy & Sustainability Plans, and over 12 Million Total Square Feet of Facility Space Audited
– Based in Frankfort, Kentucky
– Say hi to him at: http://www.interdependentenergies.com/
– Best Ever Book: The E-Myth
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Jason Delambre. How are you doing, Jason?
Jason Delambre: Pretty good, Joe.
Joe Fairless: Nice to have you on the show. I’m glad you’re doing pretty good, because we’ve got an episode that we’re going to undertake today where we’re gonna free up some of the Best Ever listeners’ – and myself, for that matter – operate our properties more efficiently, and that’s because Jason is the founder and owner of a company called Interdependent Energies. It is a carbon and sustainable energy consultant company.
He basically, as I mentioned, helps property owners free up their cashflow by doing an energy audit, upgrade the property, and then run it more efficiently for years to come. He’s been doing this since 2009, he’s done over 12 million total square feet of facility space that he’s audited. He’s based in Frankfurt, Kentucky.
With that being said, Jason, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Jason Delambre: Yeah, absolutely. My background is in architecture, and then I have a masters’ in energy planning from the University of Cincinnati, and between those two degrees, I can focus at the building level, all the way up to the regional level on how the building fits within a larger energy framework. So I’m able to look at utility bills, costs, rates, all the way down to the building, and then how the building uses its individual light bulbs, HVAC, thermal envelope, to operate within that larger utility structure.
Having that whole spectrum is really an advantage, because there’s savings and opportunities for savings all the way along that spectrum that I can help unlock for the client.
Joe Fairless: Give us an example of a deal that you audited, cost savings, what specifically did they enhance… All that good stuff.
Jason Delambre: Well, I work with all different types of clients. I get a lot of calls from clients saying, “Hey, I’d like to go solar”, and then I stop and go “Well, have you actually upgraded your lighting and HVAC?”, which usually the answer is no, and then I start with conservation, energy efficiency and THEN renewables as the three tiers they should be looking at for investments.
Conservation is your quickest savings, energy efficiency is your second, and then renewables obviously has a much longer return on investment. Many customers have never really even done the consultation part, so I like to start there and kind of dig in that.
I work with clients all around the spectrum, from small, commercial, all the way up to industrial. Throughout that whole spectrum there’s opportunities for inflation upgrades, lighting, HVAC, solar, geothermal – I’ve done all sorts of projects like that. I also like to utilize the USDA REAP program in rural areas to be able to write grants to be able to leverage funds from the Federal Government to help kind of pack those projects. I’ve done about two million dollars worth of grants, awarded today on about 60 different projects.
Joe Fairless: What do you like to do in rural areas?
Jason Delambre: There’s a program under the USDA called the REAP program, and it’s set up for small businesses to give a 25% match to an eligible energy efficiency or renewable project in a rural area. Most of Kentucky is a rural area, much of Ohio is a rural area under the guise of that program, and I use it pretty effectively to help small little businesses… And small can be quantified quite differently under USDA. It can range from small to a fairly large business of 1,000 employees, but still be considered small, and they’re able to go for this grant to help them leverage that money.
Joe Fairless: Did you say REI?
Jason Delambre: REAP.
Joe Fairless: If someone wants to learn more about that program in particular, they just google “REAP government program”, or what?
Jason Delambre: “USDA REAP.”
Joe Fairless: Alright, let’s go back to the three pillars of the process, and it’s an in-order thing, it sounds like… First, conservation, second, energy savings, and third, renewables – did I write those three down correctly?
Jason Delambre: Pretty close, yeah. Conservation, energy efficiency upgrades and then renewables.
Joe Fairless: Okay.
Jason Delambre: I can walk you through that… Conservation is turn off stuff you don’t need, and set back things when you’re not utilizing the building. So making sure your HVAC systems, your lighting around setbacks and schedules so when you’re not in the building the lights not on, the HVAC throttles back to a lower degree; no point in using the energy when you don’t need it. And it can also include looking at your building from a more holistic point of view, and starting to take equipment out that’s not needed or is running redundantly that maybe is not needed anymore.
Joe Fairless: Like what, for example?
Jason Delambre: Well, I ran into situations where there’s too many air compressors in the building when really they just need one, or air compressors are set at too high of a PSI and it can be throttled down, or boilers are stepped too high and they’re creating 140-degree water when they only need to be creating 120-degree water. So taking equipment and sort of right-sizing it, making sure it’s working at optimal parameters is a conservation strategy.
The cool thing is it’s basically a return on investment because it’s instant savings with little to no investment cash. Energy efficiency, as you move up–
Joe Fairless: Wait, wait, wait… I’ve got some questions on conservation. You know this so well, and I don’t, and I’m taking it in a little bit slower than what you’re talking, and that’s great, because a lot of people listen to this podcast on two or three times X because I talk so slow, so you’re gonna be perfect for them… I actually slow those people down to listen to the podcast, like “Hold on…”
Alright, conservation – turn off stuff you don’t need, set back things when you’re not using the building… Let’s talk about “turn off stuff you don’t need.” Lights – that’s an obvious thing. What else?
Jason Delambre: Let’s see… So you’ve got lights… A really easy conservation strategy — you can also throttle down things you don’t need. For me a really popular one is working with hotels to go in and actually switch [unintelligible [00:08:17].26] You’re not only saving water, sewer and hot water… It can be a dramatic payback on a very simple solution that takes a few seconds to switch down. You’re throttling down that water use.
Shower heads can be the same way… They’ve got shower heads down to one, even half a gallon per minute; I’m not sure if I’d wanna take that shower, but down from two and a half to two… Every minute someone uses that shower, it uses that much less water.
A few other options would be — with lighting you’ve got these really advanced lighting sensors now. Back in the day you had to kind of pick between motion or light diode or warmth of the room… Now they’ve kind of combined them all together. So you put these up through these controls through your building and when someone’s not in a room after [unintelligible [00:09:04].19] lights turn off, turn down, bathrooms turn off, turn down, stairwells turn off, turn down…
You obviously wanna balance safety with turning things back, so you might want every other light in the stairwell to turn down or turn off so that in an emergency situation it kicks back on… But it’s really going through and looking at every usage of energy and thinking holistically about “Why am I using this and how is it being used properly?”
I’ve seen many situations where buildings and building owners — the building just kind of matriculates how its energy is being used, and no one ever goes through and kind of asks some dumb questions, “Why is this on? Why is that on?” It can lead to a lot of energy being used carelessly, that once you go in and time that up you can see some significant savings.
The rule of thumb generally is with just conservation alone, if done properly and the space has never really been timed down before, you can gain 5% to 10% of savings right off the utility bill annually.
With energy efficiency being more like 10% to 30%, 40%, 50% range, depending on really how aggressive you get with energy efficiency… So you know, between conservation and energy efficiency, you might be able to [unintelligible [00:10:15].24] your building down to 30%, 40%, 50% reduction in utility costs, somewhere in the order of, on the low end, one year return on investment, up to as much as eight or ten-year returns… Like I said, how aggressive you’re getting.
The thing I get really excited about when I’m talking about these things, especially in Kentucky where we have a fairly low cost of utilities per kilowatt hour is often times you can combine an energy efficiency project with a capital investment project. So you have a boiler that you need to upgrade – well, some people just grab another boiler and swap out what they’ve got, and some people take the opportunity to upgrade the boiler of maybe about 10% cost to a much more efficient boiler, which then has a return on investment.
Now, that boiler might have a 12 or 15-year return on investment, but think about it – it’s a capital investment they’re making that actually has a return on it, not just a sunk cost in their building. That’s where I get really excited, where you can find those moments where the equipment or the lighting no longer functions as it should, and you can use that opportunity not only to upgrade the asset in the building, but you can use it to go to the next level and actually have a payback on that capital cost when you do that. I try to align those as much as possible when I’m dealing with buildings, so that the owner can kind of get a double win there.
Joe Fairless: What type of going to just a simple thing like lights, having the right lights that turn off, turn down, maybe they dim a little bit – what type of brand do you recommend, if any?
Jason Delambre: It’s funny you ask that. I think there’s a lot of brands out there now; there’s obviously the top shelf ones – [unintelligible [00:11:54].19] and then there’s a lot of new brands coming out in the market in the LED world from China and other places.
Talking about lighting vendor [unintelligible [00:12:02].15] they say those top-shelf brands usually are pretty like for like. As long as you’re picking from one of the top brands that have been around for while, they’re pretty interchangeable. Some will have some strengths that others don’t, but for the most part you’re doing pretty well.
The thing to look at in lighting really is T12, T8, T5, LED. When you’re dealing with commercial buildings, you’re usually dealing with those fluorescent bulbs. If you go in and look at these fluorescent bulbs and you see the really big, fat ones, about an inch in diameter, that’s a T12 bulb, and it is generally a slam dunk for that, down to an LED. T8 are the slightly thinner bulbs – that is also a pretty good payback down to an LED. T5 is the really teeny, thin bulbs that start to look like a pencil almost – they haven’t quite got the return on investment yet there for LED, and there are some [unintelligible [00:12:52].21] with that type of ballast and fixture… But if you have clients out there with T12, T8, they definitely should be looking at the LED swap at this point. Definitely the T12 LED is a freaking phenomenal slam dunk.
Joe Fairless: Okay, just so I’m clear – you’re saying if we have a T12 or T8, then we should replace it with an LED?
Jason Delambre: You should definitely look at getting a vendor, or if they have facility staff, looking at what that replacement to an LED equivalent would be. Lighting is very complicated and there’s a lot more we could talk about, from delamping a situation, where if you have a space that’s overlit, maybe you only need one bulb every two bulbs; you could even take out lighting to some degree, because it’s an overlit space. You can also heat a space, cool a space by different designs…
Whenever you look at lighting, a commercial user should thing about — if they’re a showroom, if they need a certain type of light, or they’re a factory building, or they’re a warehouse… There’s a kind of light for every situation, but as a general rule, LED’s time has come, and they are rocking out the market, and the price just keeps plummeting. If someone hasn’t looked at lighting in 5 to 8 years, it’s time to look at lighting in a big way.
Joe Fairless: What type of light bulbs do you have at your personal residence?
Jason Delambre: I’ve switched them all up to LED now.
Joe Fairless: LED. And any particular brand on that?
Jason Delambre: Well, I like to go to Lowe’s and just sort of see what they have there. They’ve now got these bulbs so cheap, they’re under $2, $1,80, and they’ve got a long lifeline. Three years ago they were three times as expensive and the prices just kind of plummeted. It’s a little game I play – I just go to Lowe’s and see what the average consumer can get off the shelf and at what price point, and it’s just amazing watching that price in the last three years kind of fall off the cliff.
Joe Fairless: Now let’s talk about the energy efficiency upgrades, where you said you could save between 10% to 50%, depending on what you implement. What are some specific ways of doing that?
Jason Delambre: Lighting is the first place you wanna look. After lighting, there are some basic equipment upgrades, air compressors [unintelligible [00:14:59].07] If you have a motor that does not have a variable speed drive which allows it to adjust to the amount of load it has on it, it’s usually a pretty good payback.
Then you wanna start getting into your HVAC system, thermal envelope. The only trick about the thermal envelope is the payback can vary pretty drastically, depending on what you’re doing to the building. If you have a building that you’re coming in and ripping all the walls out and all the ceilings and kind of replacing it all, that is an excellent payback on insulation; it’s just a slam dunk.
If you’re going into a building that it’s very hard to inject things into the wall, or you have to rip out walls and then put insulation and then you’re just putting it back, the payback is not as good. A lot of people are talking about doors and windows, like coming in and replacing a single pane with double pane or triple pane as a thermal envelope upgrade, and my advice to them from everything I’ve read and talking to professionals in the field is [unintelligible [00:15:56].15] usually is gonna have the biggest bang for your buck in a window situation, because infiltration into the window is usually your biggest loss. The actual pane of glass between a single pane and triple, with argon gas in between isn’t that great; it’s still a pretty terrible insulated surface.
Your biggest bang for your buck is your roof, your running band at the bottom of the building, and then trying to work the walls as much as you can, and using [unintelligible [00:16:24].16] your windows to prevent radiation and other things happening to the windows.
Joe Fairless: It’s great stuff. So you aren’t best friends with windows sales people out there then, because you’ve just killed the single/double pane thing, one of their selling points.
Jason Delambre: I’m only speaking from an energy performance point of view. Esthetically, all the other fronts, mirror windows could be awesome, but from an energy point of view, if you’re looking at the biggest bang for your buck, I would look at other parts of the building first from the thermal envelope.
The roof – generally the taller your building, you have [unintelligible [00:17:00].12] Hit that roof as hard as you can, with as much insulation as you can. Work down to the bottom, make sure there’s no infiltration coming in at the bottom of the building, and then work upwards to the walls. That’s where you wanna start.
Joe Fairless: Now renewables.
Jason Delambre: Renewables is an interesting conversation. I’d say there’s really four kinds of renewables out there, maybe five. There’s geothermal, which is ground source heat pumps, there’s solar PV, which everybody kind of knows about, there’s solar thermal, and there’s biomass. Those are kind of the five renewables if you’re talking about renewables for a site.
Joe Fairless: Okay, and we’ve got — let’s see… I’ve got geothermal, solar, solar thermal, biomass… What was the fifth?
Jason Delambre: Geothermal, solar thermal, solar PV, biomass, and… Okay, there’s four.
Joe Fairless: Okay, cool.
Jason Delambre: Sorry, I’ll throw you a fifth one out – micro wind.
Joe Fairless: Well, you don’t have to make anything up.
Jason Delambre: Oh, I’m not making anything up…
Joe Fairless: I’m kidding.
Jason Delambre: I’m just doing air quotes, which may be appropriate here for micro wind. In some climates, micro wind could be a slam dunk. If you’re out in Colorado, there’s some wind picking up at high speeds; if you keep a micro wind turbine on your building, they could be a slam dunk. I’m just thinking [unintelligible [00:18:19].09] we don’t have those higher average wind speeds that you’ll find in the Western parts of the country, or maybe out along the coast, so… Micro turbine with the fifth one, I kind of had it in the back of my head.
Joe Fairless: When you are hired for a project and your focus is now on the renewable category, how do you think about that?
Jason Delambre: Well, number one, I definitely stress them to look at conservation and energy efficiency first if they’re attempting to free up cashflow and reduce their utility costs. I usually talk to them about renewables as an investment strategy. If they have extra cash that they wanna invest in something with a certain return on investment, renewables might be very well a good thing to do, that they’re in control of, that’s not out there in the stock market, that’s tied to their building. I usually start there.
The other way I come at renewables is a marketing approach. If they’re a business that’s trying to sell themselves as green or trying to promote their green image or things along that line, renewables can go a long way in their marketing budget to be justified, above and beyond just the energy savings or energy generation it can bring to the property.
A third way that now is starting to come on the table which I find pretty interesting… The price of storage is dropping pretty dramatically, and with the drop in storage, renewables can actually start to service kind of a backup system to the grid. So if you’re able to store power, you’re actually able to start to utilize it if the grid goes down, or in blackout situations. So if you have a business that needs to be open in a blackout situation, such as a gas station that wants to work pumps or other things like that, then renewables might have an extra dimension, a value above and beyond just energy savings.
Joe Fairless: That’s a great point. As far as the five options – I think I know how you’re gonna answer this, so I’m gonna have to rephrase it, but I’m gonna ask it the way I was thinking of asking it… What are a couple of your favorites?
Jason Delambre: Well, what I really love is, when applicable, the geothermal/solar PV combo is pretty powerful. Your geothermal system kind of knocks out your conventional HVAC situation. Then the solar PV substitutes a lot of your electrical stuff. So if you do geothermal, solar and a lighting retrofit altogether, you’re pretty much knocking out 70%-80% of your utility bill, or at least redistributing it away from a traditional grid situation.
There’s a lot of factors at play into that – where is your peak? When is your energy demand? Are you using storage or are you not using storage? In an ideal situation, and I’ve definitely worked with them before, that [unintelligible [00:20:59].17] solar PV is a pretty powerful trifecta that I think is worth looking into.
Now, a lot of buildings are constrained on properties where they just simply [unintelligible [00:21:09].04] the ground conditions aren’t proper… With geothermal, you’ve gotta really assess the site. Solar PV, unless you have some large trees or buildings shadowing over you, they generally work anywhere in the country. Of course, they work better in the Southern areas than they do in the Northern areas, but the lighting – if you have older lighting, [unintelligible [00:21:30].19] is generally always gonna save you money, unless you’re gonna drastically increase your usage of lighting beyond what your current profile is. So I think those three are definitely worth looking at in combination, or individually, or in pairs.
Joe Fairless: I thought you were gonna say, “Well, whatever makes the most sense for that property”, which you kind of did, but then you answered it, so thanks for playing along with me. With your experience as an expert in energy savings and sustainable energy, what is your best advice ever for real estate investors?
Jason Delambre: Well, I work with a lot of clients and I like to think that I’m doing a good service; I work on so many different directions – I write grants, I help with utility incentives, I help package audits, but I think one of the best values I bring to a client is one of my simplest and actually most enjoyable, which is kind of just come in and walk around the building and ask them really dumb questions. I sometimes call myself an energy detective, kind of like the Sherlock Holmes [unintelligible [00:22:28].03] because just walking around and sort of looking at them and saying “Why is that working that way?” and “Why are you doing that?” and “What’s going on over there?” can sometimes bring some of the best slam dunk paybacks I’ve ever seen. It’s amazing.
Just having someone from the outside coming in, walking around, asking let’s say some inform dumb questions… What’s that? Why are you doing that? How does that work for you? And just sort of poking around a little bit. I can give you some examples of some fun ones I’ve run into before if you want.
Joe Fairless: Please do.
Jason Delambre: I had a hotel client that I worked with for a couple years, and I came in and they had North of $300,000 annual utility bill, and by the time I finished up they were down in the 180k or so, so I almost halved their utility bill. Some of the biggest savings were almost instant paybacks that I helped them with.
One in particular was I was looking at some demand interval data – it’s a way of getting your meter to spit out data on a 15-minute interval… Almost like a pulse for your building so you can see when you’re using the energy throughout a 15-minute curve of the day. And I was looking at the 15-minute interval, and just at [5:30] in the morning something really whacky was happening in the hotel I could account for. So I started asking questions, and once again asking dumb questions, and I said “What’s going on at [5:30] in the morning?” They said “Well, nothing really, except our kitchen is kind of heating up at that point.”
So I ran down in the kitchen and I pulled the chef aside and I said, “Okay, can you just walk me through exactly what you do at [5:30] in the morning? Because something weird is happening here.” So he started pointing around, he said “Oh, we turn on that hot plate, we turn on that grill, we turn on that deep fryer”, and then as we’re talking, my eyes drifted up to the ceiling where they had a 25-foot long fume hood over the entire cooking area of the kitchen. So I pointed up and said “When do you turn that thing on?” As he was looking up at it, one of the [unintelligible [00:24:20].03] guys turned around and said “Oh, we never turn that off because someone lost the key five years ago”, and I said “Excuse me?” He said, “Yeah, right there, there was a key switch to turn it off and someone lost the key, so we haven’t turned it off in five years.”
So I got an electrician for 30 bucks to come in and switch the little key lock to a switch and it saved $12,000 a year by turning that fume hood off when the kitchen wasn’t in operation.
Joe Fairless: Oh my gosh… Wow, $12,000 a year at an 8-cap, that’s $150,000 value.
Jason Delambre: With a $30 investment. The cool thing though is the second part of that story was I had a colleague of mine and I was just kind of proud [unintelligible [00:24:58].26] over this little discovery I made, and we were up in the mechanical room, and I pointed to the motor for the fume hood up in the mechanical room and I said “You see, that’s it! That’s what I ratcheted down.” He nodded and he looked over in the corner and there was another exactly the same motor, except it was much smaller, spinning as fast as you can imagine. He said, “What’s that?” Once again, inform dumb question, I said “Huh…!?” So we called down to the kitchen and said “Is there another fume hood in the kitchen?” and they said “Yeah, there’s a small one in the back of the kitchen but it hasn’t been used in about seven years. We’ve got boxes stuck up under it.” And I looked at the motor and said “It’s running.” Sure enough, it had been running for seven years. We pulled the breaker on it, because it’s not in use, and turned that thing off, and that was another $5,000 in savings right there, from that little motor just running, but no one had a clue it was running.
So that’s a good example, back to what we were talking about, having someone come in and just poke at “Why is that running?” from a conservation point of view… Because sometimes things just get left on and then no one ever asks why it’s running, they just assume there’s a reason. So having someone come in as a third-party, who’s not affiliated with any brand or any type of company that they’re trying to upsell or sell anything, just coming in and asking questions, see what’s going on and help the owner get their head wrapped around their own property can really be beneficial.
Joe Fairless: Bravo! Thank you for telling those stories. It was entertaining, informative, and it shows the ROI for sure. What’s your fee structure?
Jason Delambre: It can range. I have a lump sum with the products that I’ve kind of developed over the years, so a certain type of energy audit, a certain scale of building – I can do it as a lump sum. If I’m coming into a property and kind of walking around and poking around for a few hours (I do it on an hourly basis), but I’m pretty flexible depending on what situation I’m getting into.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Jason Delambre: Let’s hear it.
Joe Fairless: Alright. First, a quick word from our Best Ever partners.
Break: [00:26:53].21] to [00:27:44].22]
Joe Fairless: I’m personalizing it for you, but the first one I ask everyone – best ever book you’ve read?
Jason Delambre: The best book I’ve ever read – I consider myself a pretty hardcore entrepreneur… The E-Myth by Michael Gerber. But it’s not the Revisited, it’s the original, which is a little harder to find, but it is the most amazing book. I read probably 100 a business books at this point and it’s my favorite.
Joe Fairless: Best ever way that a single-family homeowner can be more efficient with their energy, not including lighting?
Jason Delambre: Well, it can be tricky with a homeowner. Like I said, identifying infiltration is probably a pretty big slam dunk. Going down to their basement if they have a basement, looking for that running band that goes between the first floor [unintelligible [00:28:30].17] that’s usually a very narrow piece of wood that’s straight to the outside. Putting in two-inch rigid insulation with caulking around that band, and then insulating as much of the roof attic space as they can… There’s some trickiness with insulating the attic that you need to talk to an expert about, where you actually draw your thermal envelope either at the top of your ceiling or the actual attic roofline, but those two spots can really be some of the most effective, cheapest way the homeowner can start to reduce the costs.
Joe Fairless: Best ever way to get in touch with you?
Jason Delambre: By phone – 513 646 3225.
Joe Fairless: Jason, thank you for being on the show and talking to us about how we can make more money with our properties, conserve energy… It is the three-step process. One, you’ve got to conserve. Two is energy-efficiency upgrades, and three is renewables. So before we put on solar panels, we first must look at conservation, and then secondly energy efficiency. Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Jason Delambre: Thank you.