8 Financial Selling Strategies to Close More Energy Savings Projects

The Dilemma – A Good Deal Doesn’t Close

You’ve convinced your customer’s operations contact that replacing the chiller makes sense.  But there’s one last hurdle – the CFO must sign off.  No problem, you’re thinking, this project sells itself. 

In the follow up meeting, you’re surprised to hear a member from the finance team say the dreaded “sorry but this project doesn’t meet our return requirements.”  You’re shocked.

The economics of the project are better than many you’ve closed.  Your gut tells you their finance team doesn’t get it.  You would like another shot to defend the project but getting them to re-engage is a long shot. Realizing your likely fate, you decide to pitch it again next year.

This is a classic case of a good project not getting closed for all the wrong reasons.  The financial sell, an often-misunderstood part of the process, was not executed properly.

A Better Way

The purpose of this article is to show you how to avoid getting in this position in the first place. My perspective is unique as I’ve spent years selling to CFOs.  I’ve also served as a CFO and understand the process companies use to decide how to invest their capital.  This process is similar in most companies.

Below you will find eight strategies for project sales reps in HVAC, BAS, lighting and similar projects.  These strategies are the product of failures and successes I have experienced in my own selling efforts, or, in working with contractors honing their financial selling skills.

The Finance Department: How the Sausage Is Made

Your customer’s finance department has a model to determine whether an investment generates a sufficient rate of return. For many companies, the targeted rate of return is not cast in stone.  Quite often there are intangible benefits that are difficult to quantify that can cause an investment to be approved even if the target is not met.  Remember this.  It becomes important later.

There is an art and a science to your customer’s model.  The science part is tons of mathematical formulas that are carved in stone. If you try to argue the math behind their logic, you’ll lose every time.  NEVER go down this road.

The art of the model lies with the assumptions that are fed into the mathematical formulas. The output from a model is only as good as its underlying assumptions. Your ability to influence these assumptions is where you can make an impact. So, if you want your customer’s model to green light your project, focus on the art part.

CFOs keep their jobs by avoiding bad investments. One way they do this is to  “under promise and over deliver.” In financial modeling, that means CFOs tend to be conservative in projections because the initial assumptions can be affected by the economy or other factors. CFOs rely on a model that is built by a trusted member of the finance team who works with someone in operations (your contact) to determine the appropriate assumptions to use.  This is the art of the finance team member’s job, but if they get it wrong by being too conservative, the rate of return is artificially low causing the project to be declined.

No doubt, good projects you’ve proposed have met a similar fate. Though you can’t control your customer’s decision making process, you can influence it with these eight strategies.

#1: Guide your contact towards the proper assumptions and show him how to defend them. 

As you know, your contact is your internal advocate and wants your project to move forward. When you learn the project needs to be approved by the CFO, your job is to equip your contact with the right economic assumptions to feed to the finance department.  This must be done now, and with great precision relying on your years of experience as to why projects do not get approved.  Remember, you have likely done this more often than they have. If you wait for the meeting with the finance team, it’s too late.  They would have already invested hours building the model and have become wedded to its assumptions.

#2: Assumed reductions in energy consumption and maintenance are much more certain than what the finance team is used to seeing.

Interest rate movements and economic growth are difficult to predict, so finance teams  use very conservative assumptions in their models for these variables. But other assumptions, as I outline below, are more predictable, and therefore don’t merit such conservative estimates.  Make sure your contact understands this and emphasizes its importance when introducing it to the finance team.

Reduction in Energy Consumption: Estimating a reduction in energy consumption (assuming no change in operations) is a scientific exercise and there is likely third-party data you can share that justify your assumptions.  This is much more predictable than guessing the impact of an economic downturn or other factors that typically go into building assumptions.

Maintenance/Repair Costs: When you’re projecting maintenance savings, consider comparing the new costs against the avoided repair costs in the next few years if the equipment is not replaced. Make sure to emphasize this so the finance team uses avoided costs rather than the average for the last couple of years.

#3:  Focus on Early Year Assumptions

Most of your customers’ models will place greater importance on cash flow generated in the early years. This is because a dollar today is worth more than five years from now. That’s why small “wins” in the early years are so important.  Examples are provided in #4 and #5 below.

#4:  Some assumptions are a guess, but reasonableness should prevail.

Future Energy Prices:  the assumed energy price makes a huge impact in determining the dollar amount of future energy savings.  Don’t fall on your sword debating what should be used because no one really knows.  Instead, focus on achieving a “small win” in the early years.

As an example, assume the finance team used the average price over the last couple years of $.17/kwh but the current price is $.21/kwh, a 25% increase. The higher current price multiplied by the reduction in volumes yields more dollars of savings and dramatically changes the economics of your project.

#5: HVAC Retrofits placed into service in 2018 can be written off for tax purposes at 100%!

I can see why this can cause angst for you as well as your contact since interpreting complex tax laws makes people squirm (including me!).  Let’s keep it simple and feed these words to your contact:

“HVAC retrofits placed in service in 2018 can be written off 100% (subject to some limitations) as a result of the change to Section 179 of the tax code created by The Tax Cuts and Jobs Act signed December 22, 2017.”

At a minimum, you should literally cut and paste this phrase and share it with your contact.  Strongly encourage them to share it with the finance team who may not be familiar with this change to the code.

A simple example below shows why this is such a game changer.

At today’s corporate tax rate of 21%, a $300,000 chiller replacement has a real after- tax cost of $237,000.*

*300,000 X .21 = 63,000 in tax savings;

*300,000 – 63,000 = 237,000 – the real cost of the project

As mentioned earlier, the early year benefits have a substantial impact on the rate of return calculations for your customers.  This benefit equals a little more than 20% of the value of the project in Year 1.


Use this approach for all of your HVAC retrofit proposals for projects that will be placed in service in 2018. It can make a huge impact. 

#6: Don’t Forget the Intangibles

For a smart CFO, it’s not just all about the math. You need to stress additional intangible benefits to your contact that could earn your project the CFO’s thumbs up.  Examples include:

  • with comfortably conditioned offices, tenant retention is higher for a commercial office building;
  • many prospective tenants strongly prefer buildings with efficient equipment that are LEED certified; and
  • worker productivity is higher in an industrial work environment (with other types of projects).

It’s difficult to quantify the dollar benefit of these items but they are an absolute reality that can get your project approved.

#7: Put it in writing.  

Putting what your contact needs to know in writing can reduce miscommunication amongst those who have input into the approval process.

Regardless of the industry, I believe the primary reason good investments – those which should otherwise meet the return hurdles of the investor — do not close is the miscommunication of the underlying assumptions used to evaluate the investment. This most commonly occurs once the project starts moving through the layers of the approval process of the company considering the investment.   

The following is theoretical but gets the point across.   As the sales rep, you know 100% of the pertinent facts and share them with your contact who accurately retains 85%. Your contact meets with the finance team who retains 70%.  The finance team presents the deal to the CFO who retains 60%. If 40% of the pertinent facts are lost along the way between you and the CFO, your project is likely DOA.

Go beyond your typical presentation.  While it does a great job of laying out benefits, take it one more step. Work with your contact to identify those areas in which the finance team could object to your assumptions. Then, put in writing the reasons their objections are not well founded. Your contact is now armed with the facts in writing which can be referred to and used in whatever manner they think is most effective.

The Dilemma Revisited: Closing the Deal

Let’s rewind and assume you’re in that first meeting with a member of the finance team. Assume you have done all the above in advising your contact of the importance of getting the assumptions right.

The meeting starts and half-way through your pitch, you hear the return hurdles aren’t being met.   All is not lost – not at all.  You’re well prepared to discuss their assumptions.

#8: Don’t hesitate to inquire how the finance team arrived at their assumptions.

Don’t feel like you must walk on egg shells asking these questions. Finance types are used to this type of dialogue and shouldn’t be offended. This your chance to get the finance team to tweak their assumptions.

Here are some examples of how this dialogue might work.  Please understand, these are just examples showing how you might go about the conversation.

Upon hearing the return hurdles are not being met, you respond with:

“OK, do you mind sharing what your targeted return is and where we’re coming out on your calculations?”

Don’t worry about trying to decipher all the terminology used in their answer.   Pay attention to their target and compare it to where your project comes out from their model. If they say the target is 15% and your project is at 5% then you have a big challenge. Don’t give up as there might be a major miscommunication affecting their assumptions.  If they say your project is 13.2%, you don’t have such a large hill to climb and a tweak here or there can make the difference.

In probing further about their assumptions, start out with the big items.  Here are some examples of questions you can pose and how you can respond to their answers.

Example 1: “OK, do you mind please sharing some of your assumptions because this project has strong economics versus others I’ve seen. I certainly could have made a mistake. How about we start out looking at your assumptions about the reduction in energy consumption?”

Assume the answer is they lowered assumed energy volumes 20% starting immediately because “that’s just how we do things to be conservative.”

“I certainly understand your need to risk adjust the volumes, but energy savings are very predictable. Might you be able to consider not risking them the first three years since those are much more certain than the outer years?”  If you think it helps, validate your assumptions by referencing a third-party unbiased source as to the expected reduction in energy consumption.

Example 2: “What did you use for the price of energy?”  Assume the answer is $.17/kwh as opposed to the current price of $.21/kwh.

“I can see why you used that price but the price you received last couple of months was $.21/kwh. There is certainly no magic to my crystal ball as to where energy prices are headed. That said, might you consider starting out at the actual price and then lower it to $.17 over three years or whatever period makes sense to you?”


Side note: some companies may have fixed the price of energy for some portion of their volumes over the next few years.   If that’s the case, use that number on that portion of the remaining usage.  You should understand this might work for, or, against you but your primary goal here is to collaborate with your customer for accurate assumptions. Asking this type of question will make them appreciate your insight.

Example 3: “Does your model take into account you ability to write off 100% of the cost of the project since it’s going to be placed into service in 2018?” The answer is “no, we are not aware of that.”

Well I’m no tax guru, but it’s my understanding that HVAC retrofits placed into service in 2018 can be written off 100% this year.  That being the case here, the write off has substantial value.”  

This will get their attention! 

You continue by referring to the notes copied from this article. “Yes, this was included in a change in the tax code made right at the end of 2017. It’s called the Tax Cuts and Jobs Act which was signed December 22, 2017 and there was a special provision to Section 179 of the code.”  

Now is the time to play this card, which could be the difference in making the deal move forward.

“Based on everything you’ve share with me, it’s clear you all have done a really thorough job of building your assumptions. However, this chiller is on its last legs and must be replaced within the next couple of years regardless.  When that happens, and you’re forced to replace it, the special 2018 write-off might not be available.”

The finance representative says let’s break for now and we’ll get back to you in a couple of days.  They want to huddle internally and reevaluate your proposal. Pat yourself on the back for a job well done. Perhaps the deal still doesn’t close, but you took all the right steps to make it happen. That’s all you can do, but if use these strategies with every project, it’s bound to make a difference.


So, let’s quickly review the 8 strategies:

I hope you found this article helpful and encourage you to share it with others. If you would like to discuss a webinar for your company only to learn more about these eight strategies, please contact me at lderrett@enfluxbuildingsolutions.com.

If you are interested in an online sales tool that complements the eight strategies above, I encourage you to learn about the EnFlux Project Savings Analysis which lays out project economics in a simple one-page format. You can personalize it with your logo and share with your customer. Learn more in a short video:


About the author:  Larry Derrett is the founder and CEO of EnFlux Building Solutions, which provides contractors with access to financing, energy solutions, and online sales tools to help them win more business. Larry brings a unique perspective to financial selling having sat on both sides of the desk as a banker and a CFO.  In addition, he has a very strong background in developing financial selling techniques for clean energy projects ranging from a simple $10,000 change out to projects for hundreds of millions of dollars for Fortune 500 companies.  For three years, he led the financial structuring group at Enron Energy Services working solely on the origination side of the business helping clients understand the importance of allocating capital to energy efficiency projects. Upon the demise of Enron, he formed HVAC Capital Corp whose clients included large mechanical contractors with a national footprint. HVAC Capital provided a finance program that contractors could access to offer financing to their customers for replacement projects.  During this time, Mr. Derrett trained hundreds of sales reps at mechanical contractors on the finer points of incorporating financial selling into their sales process.