The Payback of Energy Efficiency w/ David Duncan, Silver Oak

As a lifelong hunter, David Duncan, CEO & Proprietor of Silver Oak in Napa Valley, has a keen appreciation for nature. This has driven David and Silver Oak to pursue many sustainability investments, including being the 1st existing winery and new build winery to be LEED Platinum certified and be at the forefront of energy efficiency for the last 20 years. From solar panels to using waste heat to get water up to sanitization temperatures, David dives into the details of Silver Oak’s sustainability efforts and how they think about them in terms of long-term return on investment. 

Detailed Show Notes: 

Silver Oak’s background - founded in 1972

• Two wineries - Oakville (Napa) and Alexander Valley (Sonoma)
• ~100k cases/year
• ~700 acres of vineyards, ~75% estate owned fruit
• Four wine brands total, and Oak Cooperage in Missouri

Sustainability efforts began in the vineyards in the late 90s, and early 2000s

Oakville winery

• 2006 dumpster fire burnt the winery down
• Wanted to do the right thing in re-building (2008)
• Installed solar panels and became 1st LEED Platinum winery (existing building)
• They looked at LED lighting, but it was 3x as expensive at the time

Alexander Valley winery

• Built in 2014, 1st LEED Platinum winery (new build)
• A “living building,” which is mostly energy and water use
• Uses ~1 gallon of water per gallon of wine vs. ~7 gallons of water as the industry average
• Generates 105% of annual electric usage
• All LED lighting, which is now more cost-effective
• Ammonia chiller for glycol cooling to keep tanks cool - was old-school technology in the 30s and 40s; new technology is very efficient
• Sanitation water uses solar power to heat to 105F, then waste heat from the cooling system adds 10-15F; the rest of the heating uses electricity
• It has a 3-4 month peak season (harvest) where electric usage is higher and sometimes pulls from the electric grid; it has a small battery system but not a large one
• Used recycled materials, which reduced painting needs

Working towards LEED certification for other wineries

Vineyards - moving towards electric tractors, but haven’t bought one yet

Cooperage - burns scrap wood to bend barrels instead of natural gas

ROI for sustainability

• 2.5-year payback for Alexander Valley solar system - highest of all investments
• It looks at the “life cost of building” to calculate ROI, a long-term evaluation - the long-term view matches the long-term production cycle (5 years to produce Silver Oak)
• No set target IRR cutoff, but ~5-year payback is the approximate cutoff
• Looks at the impact on employees, which they call “The Whole Bunch” like a bunch of grapes, and assesses the safety of workers

Highest payback investments - solar panels and water use to treat barrels using recycled water

Sustainability also improves quality - e.g., minimizing water use in vineyards

Barriers to making sustainability investments are often due to 1 chance a year to make changes; Silver Oak does small trials on 1-2 acres to evaluate

Shares learnings w/ the industry - gives many tours of winery and vineyards, interviews, seminars and conferences, works w/ UC Davis

Also improving packaging

• Moving towards a lighter glass
• They used to send empty bottles to Canada to decorate and then ship them back to CA to fill. For the 1st time in 25 years, Silver Oak Napa Valley will have a paper label to avoid this environmental impact

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