Commercial buildings consume 46 percent of all building energy in the United States. Most of those buildings—potentially as many as 70–80 percent—are owned as part of a larger portfolio of buildings and are managed by a central entity. This portfolio demographic provides a powerful lever for achieving dramatic energy use reduction in buildings, and RMI is counting on that lever to drive the U.S. toward reducing building energy consumption by 50 percent.
Until recently, most building portfolio managers saw and treated their holdings as a collection of individual buildings, cream-skimming energy measures opportunistically. Now, industry leaders are realizing that the entire portfolio is the asset and can be optimized more intelligently and more broadly to achieve deeper energy savings. The U.S. General Services Administration and the State of California are both modeling such portfolio approaches to energy management. Yet, guidance on this type of approach remains elusive … which is where RMI comes in.
RMI has developed a working approach to improving building portfolio energy management, which we are testing through our Portfolio Energy RetroFit Challenge. Engaged with AT&T and the Exchange, we have shaped our initial hypotheses into a viable methodology.
First, we’ve learned five key principles that should guide every service provider and building owner when approaching any building efficiency project:
1. Doing nothing is expensive.
2. Know what’s possible before deciding what’s feasible.
3. Bundle efficiency measures.
4. Eliminate something.
5. Time it right.
These are a distillation of RMI’s well-known 10Xe principles and serve us well when seeking bold energy efficiency opportunities in building portfolios.
Our Challenge team has honed our technical approach since the program launched in April. We’ve simplified the process and broadened the outcomes, focusing on three key components: strategic energy analysis, bundling, and parallel paths.
Strategic Energy Analysis
Simply tracking utility records is kindergarten when we really want to capture all the opportunities in a building set. Capturing building data via metering has emerged as a critical priority when assessing a portfolio. Yet, while metering buildings individually is a key to conducting an accurate assessment, it remains a hurdle, even after a decade of industry pressure to quantify building energy use. Building managers who are rewarded for reducing energy use should be at the forefront of ensuring accurate energy tracking. Additional considerations include:
- If an energy-intensive operation, such as a data center, food service, or a lab, is present in the building, those areas should unquestionably be sub-metered so they can be isolated in an analysis.
- A portfolio database should also feature location, context (campus or stand-alone), and a detailed physical description of the building (such as age, construction, window-to-wall ratio, light fixture count, and HVAC type).
- Building owners should also maintain a breakdown of space types in each building and a forecast of anticipated capital expenditures (especially equipment replacement cycles).
- Lastly, an occupant count is important for energy use calculations as well as for assessing value beyond energy cost savings for the owner.
We’ve identified two primary types of building portfolios that need different approaches: a) portfolios of similar buildings (such as branded retail or suburban office parks), and b) portfolios of unique buildings.
We believe similar buildings are easily broken down into archetypal subsets and analyzed for lowest technical potential using a single building to represent all of that subset. This provides a rational energy use intensity (EUI) target as well as a list of the most effective energy measures for those particular buildings, and is the method we are using in the Portfolio Challenge. In addition, RMI is now exploring remote building analysis (such as Retroficiency and First Fuel) as a potential substitute for preliminary audits. These tools are emerging as game changers in building portfolio energy planning, but we recommend using the outputs of these tools as a foundation for parallel paths of implementation, not just cream-skimming. Remote analysis allows us to find patterns of performance that differentiate problems in what otherwise appear to be very similar buildings. These may be mechanical issues or management issues.
Portfolios of unique buildings are more complicated, and owners more often leave savings on the table when implementing efficiency projects. Remote analysis is now changing how the industry assesses these buildings as well and provides critical information for long-term planning when overlaid with capex outlook and utility incentives. Unique buildings are mostly differentiated by management practices and will involve more attention given to internal policies and processes.
RMI has preached bundling for at least a decade, and it remains central. Whether bundling energy measures for bigger impact or bundling building projects for better financing, we realize far more significant results by optimizing rather than itemizing. But don’t stop there. Bundle changes to internal policies and practices as well. Studying cause and effect, we see that the way building owners make decisions about building energy can have a positive or adverse effect on achievement. Understanding comprehensive benefits of energy efficiency and sustainability means that more value is given to these projects, so policies change. Bundling financing is also a consideration. What tax incentives are applicable to the portfolio and where? Can we layer energy tax credits with historic preservation tax credits? Are there utility incentives, and how does that affect long-range planning?
Now the rubber hits the road. Implementation of these analyses and recommendations becomes a multi-pronged effort. Do not simply take the top five energy measures and broadcast them across the portfolio. We’ve seen too much unrealized opportunity when that happens, and it’s not much different than what the industry has done for years. Instead, establish plans for parallel paths of implementation:
- Start with internal policies and politics, and fix whatever is preventing success so that no building is left behind. Incentivize program and building managers to be innovative and get excited about their work.
- Then identify crosscutting measures to implement in every building, like a vaccination. This could be real-time systems tracking and sub-metering, or it may include vacancy sensors and wholesale lighting retrofits, but it’s critical that the savings be reinvested into deeper measures later, possibly as part of a deep energy retrofit.
- Deep energy retrofits take advantage of right timing to achieve at least 50 percent energy savings, often more. One path may emerge as a schedule of these deeper projects coinciding with other investments such as space consolidation, market repositioning, or replacement cycles of major systems.
- Make time and budget for innovation. This path can establish the portfolio owner as a leader, both in energy efficiency and for branding purposes. The market is moving very quickly, and new tools emerge every few months, new products come forward every year, and the financial world is experiencing an epiphany in the energy efficiency realm.
- Address new construction standards. Be bold, and understand the impact of getting stuck with a brand new yet inefficient building. Case studies abound for no/low additional cost high-performing buildings. Take advantage of new practices such as Integrated Project Delivery and next generation rating systems and guidelines such as the Living Building Challenge. Stop paying designers to spend money, and start rewarding them for saving energy and resources.
- The final path is to install renewable energy. Everybody likes the “shiny stuff,” and we know it’s hard to wait until the end of years of effort to put a sparkling PV system on buildings or a campus. Go ahead, invest in renewable energy now, but do it with an understanding of how little you may actually need once you’ve optimized your building portfolio. The cost of these systems is coming down steadily, and may eventually go lower than the cost of retrofitting buildings; however, we still want to provide that energy on or near the building, so real estate limits and capacity will continue to drive further energy efficiencies in buildings.
With our five key principles and three-pronged approach, portfolios stand poised to reap much deeper energy savings than they have before.
Office building image 1 courtesy of www.shutterstock.com.
Office building image 2 courtesy of www.shutterstock.com.
New York University's School of Business photo courtesy of littleny / Shutterstock.com