HEQDF Forum Delivering Sustainable Buildings in the HE Sector

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1 HEQDF Forum Delivering Sustainable Buildings in the HE Sector Sustainable Refurbishment Myth, Magic or Mandatory Nick Hayes 9 th October 2012

2 Delivering Sustainable Buildings in the Higher Education Sector What are the Key Sector Challenges?

3 What are the Key Sector Challenges? 1. How can high performance buildings meet customer expectations, whilst reducing energy and carbon use? 2. How do we select methods and materials which give the biggest bang for bucks in relation to cost and carbon reduction? 3. How can we positively influence staff and students to encourage reduction of carbon through behavioural change? HEQDF Forum October

4 What are the Key Sector Challenges? 1. How do we recognise the role buildings play in meeting the key priorities of the University? 2. How can high performance buildings meet customer expectations, whilst reducing energy and carbon use? 3. How do we select methods and materials which give the biggest bang for bucks in relation to cost and carbon reduction? 4. How can we positively influence staff and students to encourage reduction of carbon through behavioural change? 5. Who gains and who pays? 6. How do you bring it all together? HEQDF Forum October

5 How Sustainable Buildings Deliver Key Priorities

6 Key Drivers for Sustainable Buildings Climate change act - zero carbon non-domestic by 2019 Planning requirements Energy Performance Certificates (EPCs) required for all commercial buildings on construction, refurbishment, sale, lease or renewal (Predicted rating) Display energy certificates (DECs) not mandatory for commercial buildings but leading organistaions voluntarily undertaking Energy Act F and G rated EPCs outlawed by 2018 Carbon reduction commitment (CRC) mandatory for all organisations consuming > 6000 MWh/year (approx 500,000) Fines for non-compliance with EPCs, DECs and CRC Future Policy A Code for Sustainable Buildings including mandatory energy performance standards? Corporate Social Responsibility (CSR) Reputation and Positioning Peer Group positioning, Russell Group, Green University league table Competitive advantage, marketing, student intake Financial plans and business case High performing facilities, high attainment levels, building flexibility The need to differentiate Sustainable buildings driven by a range of mandatory, sector and local priorities HEQDF Forum October

7 Why Do Users Want Sustainable Buildings? Greater indoor air and environmental quality Corporate environment commitment 88% 88% Value of public relations and free publicity Greater workforce productivity Operational cost savings from energy effiency 75% 75% 75% Attraction and retention of quality workforce 69% Greater overall building value 31% Higher occupancy rates Operational cost savings from water efficiency 19% 19% Reduction of greenhouse gas (GHG) liability 13% 0% 20% 40% 60% 80% 100% Deloitte & Lockwood Report July 2008 % of Respondents HEQDF Forum October

8 Meeting Customer Expectations, Whilst Reducing Energy and Carbon Use

9 Meeting Customer Expectations, Whilst Reducing Energy and Carbon Use What Lessons Have We Learned? There are opportunities to learn from outside the sector approaches and technologies work across sector boundaries (and exemplars within!) Win, win opportunities lower costs and better working environments The simple things are important commisioning and user guidance Behavioural change matters and is the easiest way to reduce costs and carbon Whole life costing is key...

10 Broader Studies The Value and Impact of Green Buildings Value of Occupying Sustainable Buildings Impact of Green Development Energy Saving (EPC D to B) Water Saving (Part L to BREEAM VG) Sickness Reduction (39% reduction) Productivity Improvement (5% increase) TOTAL Other Benefits to Occupier Other Benefits to Investor 24 /m 2 /year 1 /m 2 /year 180 /m 2 /year 690 /m 2 /year 895 /m 2 /year Brand, CSR, Recruitment and Retention Marketability, longer life, stable cashflows Goodwill / Brand 69% 31% Employee Comfort 62% 25% 13% Ability to Attract Talent 40% 53% 7% Employee Well-Being 38% 49% 13% Employee Health 37% 38% 25% Ability to Retain Talent 31% 50% 19% Workforce Productivity 31% 56% 13% Occupancy Levels 19% 19% 62% Property Value 13% 38% 49% Total Renovation time 29% 57% 7% 7% Permit Processing Time 7% 86% 7% Insurance Rates 93% 7% 0% 20% 40% 60% 80% 100% Increased Significantly Increased Slightly No Change Decreased Significantly Decreased Slightly Deloitte & Lockwood Report July 2008 The link between people and buildings is key to achieve and demonstrate benefits HEQDF Forum October

11 Market Value......and Differentiating Those Who Benefit Doing Good by Green Responsible Property Owner & Occupier Actions Operating Costs Laggards Outdated asset Lack of control Leaders Voluntarily displaying energy performance Automatic meter reading 7.5% (26%) PR risk / issues Unable to respond to market demand Benchmarking Continuous commissioning 8.9% Future Built into valuation Setting targets Incentivising energy efficiency 3.5% Upper Quartile Demand Finding savings 3% (21%) Reputation Keeping ahead of R&L Rents Occupancy Building Value Competition Climate change adaptation Green Leases Engaging supply chain HEQDF Forum October

12 Delivering the business case

13 Easy Wins and Whole Life Cost Savings Easy Wins Project Type Payback (yrs) Lighting upgrades 3.3 Insulation (Loft, Cavity Wall, Roof, Double Glazing) 3.8 Lighting controls 3.2 Pipe work Insulation (Cooling, Heating) 2.7 Voltage optimisation 3.4 Heating (e.g. controls, zone control valves) 3.2 BEMS - remotely managed 3.2 Insulation - draught proofing 3.6 Whole Life Cost Savings Based on a comparison of BREEAM buildings against building compliance standards (BRE Trust/Cyril Sweett) Naturally ventilated office Energy savings of 17% Water savings of 71% Air conditioned prestige office Energy savings of 26% Water savings of 55% Boilers - control systems 3.3 Time switches 1.9 Heating - TRVs 3.2 Hot Water (Distribution improvements, point of use) 3.3 BEMS - bureau remotely managed 3.6 Ventilation (distribution, controls, air handling units) 2.4 BRE Trust/Cyril Sweett HEQDF Forum October

14 Greatest Bang for Buck The Whole Life Cost Approach Case Study Review and Benefits / Savings Review of Motors for Baggage Handling System at Gatwick Airport Compared new PMM technology vs existing motors Benefits / Savings 39% more energy efficient with similar carbon footprint Initial premium recovered in 2 years 1m NPV saving in 15 years in energy savings alone at current prices Reduce exposure to future energy price rises Easier maintenance Facilitates pan airport automatic control Better conveyor braking Lower spare stock requirements Analysis of Whole Life Costs ( ) Option 1 Option 2 Option 3 Option 4 Capital Costs 1,821,534 1,589,687 1,162,953 2,043,121 Energy Costs 8,383,944 10,777,924 13,942,028 11,793,006 Replacement Costs 520, , , ,280 Maintenance Costs 467, , , ,276 Total Whole Life Costs 11,194,290 13,470,425 16,658,633 15,045,683 Ranking Value in Excess of Rank 1 2,276,135 5,464,342 3,851,392 % in Excess of Rank % 48.81% 34.40% Total Cost ( ) 20,000,000 Option 3 16,000,000 Option 2 Option 4 12,000,000 Option 1 8,000,000 4,000,000 0 SEW P MM SEW LS Siemens Capital Energy Replacement Maintenance HEQDF Forum October

15 Cost and Carbon benefits Dual Currency Model Getting Informed Decisions Challenges Making investment decisions on total cost and carbon impact is difficult Create a user friendly tool to compare various design options developed through modelling of whole life cost for financial and carbon impact Defining carbon content for key components though the component life cycle Outcomes Started with a the façade element and compared lifecycle costs over the whole life of the component asset Breakdown of initial capital investment, operational cost and replacement cost for each façade type Measurement of carbon emissions over the whole life cycle of the asset Cost vs. Carbon comparison of different façade options Establish comparative costs vs. CO2 emissions of various component options over the life cycle and building a library of green components HEQDF Forum October

16 Informed Decision Making Tools User friendly tools to compare various design options developed through modelling of whole life cost for financial and carbon impact HEQDF Forum October

17 Who Gains and Who Pays?

18 Inter-relationship Benefits to Stakeholders Stakeholder Benefits Investors Developers Designers Contractors Reduced Costs Capital costs Maintenance costs and of capital costs, plus cheaper refits and faster lets Design time and snagging Resource use and waste on site Owners Maintenance & operational costs and downtime in using building Occupiers Tenants Maintenance & operational costs and downtime in using building Reduced Risks Reduced risk on capital Letting voids Quicker planning permission H&S, pollution liabilities and time savings, no over run penalties Asset value risks and H&S liabilities H&S liabilities and flexible accommodation for future subletting Higher Returns Faster return of capital Increasing net lettable area and higher rents and occupier retention Repeat work due to satisfied clients Improved staff productivity Improved staff productivity Satisfaction Personal satisfaction / intellectual challenge Personal satisfaction / intellectual challenge Personal satisfaction / intellectual challenge Improved staff satisfaction / retention Improved staff satisfaction / retention Image Demonstrable performance for SRI FTSE4 good eligibility Profile & distinctive buildings on market Repeat work due to satisfied clients Improved image to clients and improved public image Improved image to clients and improved public image Experience Gained Future marketability Future marketability Future marketability Business Flexibility Flexibility of investment potential Flexibility of letting / sale potential Flexibility of building use Flexibility of building use HEQDF Forum October

19 Who pays? There Are a Number of Options Funded Solutions ZERO capital investment from the Client Third Party Funded - all measures paid for by specialist, sustainable funds Energy savings of c30% through a basket of measures Savings-shared model: Balance of yearly savings used to repay capital investment by Investor Client benefits from 100% of the savings thereafter Energy performance guaranteed and underwritten by reputable ESCOs Saves money and carbon Mitigates risk and facilitates compliance

20 Bringing it All Together A Route Map to a Sustainable Asset Portfolio

21 DEC and EPC Assessments Sustainability Mandatory Local Compliance Strategy and Advisory Benchmarking CRC Planning DEC Review EPC Review Environment and Sustainability Policy Actual Consumption Performance CSR BREEAM BIU SKA Prioritisation Improve Management Do Nothing Portfolio Analysis Do Both Improve Asset Modelled Consumption Performance Peer Review HEI Groupings Green League AUDE Brokering data, managing client portfolio Energy / Carbon / Sustainability Audits Strategy Plan, ROI, WLC Energy Efficiency Funding Audits and Carbon Management Action Plan CAPEX Plan and Benefits Case Whole Life Cost HEQDF Forum October

22 Summary Sustainable refurbishment Myth, Magic or Mandatory?? 22

23 Summary Sustainable refurbishment Myth, Magic or Mandatory? Mandatory What you have to do Let s take that as read Magic Sprinkle stardust on the scheme Aspirations Buildings and how they link with People There are lessons to be learned out of sector (knock on Matt Dickinson s door or ours!) 23

24 Summary Sustainable refurbishment Myth, Magic or Mandatory? Magic (continued) Get the brief right Feasibility study to inform objectives, particularly the balance between capex and opex Understand the building intimately Understand its constraints, particularly services Modelling and tools Use the project as an agent of change People and behaviours are key winners Innovative design can be key enabler Have the right framework/route map Have the right funding mix Myth Only if you don t follow some of those rules or top tips above! 24