A Business up to 100 Times Bigger than that of ESCOs

news story image

by Reinhard Radermacher, CEEE Director and Minta Martin Professor of Engineering

We are all familiar with ESCOs, Energy Services Companies that reduce the energy cost of a building in exchange for a cut of the savings. The underlying technology and business model are well proven and established.

However, the largest operating cost of a building (and often of operating a business) is the payroll of all the people working there. In the literature the personnel cost is estimated to be 50 - 100 times higher than that of the building operating and maintenance cost 1,2. It is also well established, at least in the engineering and scientific literature, that increased comfort of individual workers leads to greater productivity as measured in reduced number of sick days, turnover and increased output from workers 3,4,5.

Thus, we are facing a huge business opportunity: Let us expand the model established by ESCOs to increasing comfort in buildings and thus worker productivity, for potentially much higher ROI than ESCOs accept today.

There are just a few problems to solve: how to measure productivity convincingly and convince building owners/operators thereof. And increasing comfort is not just an HVAC/IEQ task but needs to address other aspects of the human psyche related to comfort as well. All challenging tasks, but the payoff is huge. Are we ready to tackle this?


References (Examples from a much broader body of literature)

  1. https://aquilacommercial.com/learning-center/how-much-office-space-need-calculator-per-person/#calculator
  2.  http://www.facilityservicespartners.com/facility-costs/
  3. https://www.sciencedirect.com/science/article/abs/pii/S0378778810003117
  4. https://escholarship.org/uc/item/2374990t
  5. https://www.sciencedirect.com/science/article/abs/pii/S0360132316304449


Published September 23, 2020