Watson: How did you get the idea to contract with building owners to serve as their energy manager for a percentage of documented savings each month Holmes?
Holmes: After I started my own business, I was approached by a Mental Health Hospital looking for help in reducing their energy costs. They wanted me to give them a “bid” to do an Energy Audit.
The objective of the project was supposed to be to reduce their utility costs. By bidding the process and taking the lowest bidder, they were limiting how much time a competent engineer could spend, which would most probably limit how much could be saved; it was a self-defeating process. Up to a point, the more time a competent engineer can spend in a building and the more they can know about it and its energy systems, the more the owner can save.
Watson: Plus the traditional approach was based on the assumption that the only way to save energy was to buy something; spend money on capital projects. You have said many times Holmes that even though spending money on audits, studies and capital projects is how Energy Professionals make their money, it is often not what is best for the owner.
Holmes: It is a definite conflict.I wanted an approach where I would be free to spend as much time as it took to produce results. I didn’t want to be constrained by time. So I came up with the idea of working for a percentage of results, actual documented savings. That way I would be free to spend as much time as it took to understand the energy systems and figure out how to create the maximum savings.
This approach not only worked much better than the traditional approach, it worked much better than I ever envisioned. We reduced the annual energy costs of the Mental Health Hospital by 59% with no capital projects.