NRDC Ceter for Market Iovatio: High Performace Teat Demostratio Project Eergy Performace Opportuities i Commercial Office Buildigs NOVEMBER 2012 A collaborative approach betwee buildig owers ad occupats is essetial to optimizig the performace of commercial office buildigs, ad teat demad will be a critical factor i drivig the market toward optimizig commercial buildig performace. The Natural Resources Defese Coucil s Ceter for Market Iovatio (CMI) has established a High Performace Teat Demostratio Project (the Project ) aimed at acceleratig demad for high performace teat spaces i the commercial office market by demostratig their ecoomic beefits. The Project aims to promote the compoudig effect of ower/teat collaboratio, as teats who value high performace spaces choose to locate or remai i buildigs Eergy efficiecy opportuities ad gree fit-outs i teat spaces ofte go had i had with improved work eviromet ad employee productivity. Coupled with tagible bottom lie improvemet, which CMI s first set of projects are demostratig, there s a compellig busiess case for icorporatig eergy efficiecy measures i commercial buildigs. Kyug-Ah Park, Maagig Director, Goldma Sachs with highly efficiet cetral systems ad trasparet eergy maagemet practices. As a result, buildig owers ivestig i cetral system eergy efficiecy improvemets will ot oly garer operatig savigs, but will also gai competitive advatage i attractig ad retaiig these high value teats. CMI s Project team is modelig, quatifyig, documetig, ad publishig the eergy savigs geerated by a series of high efficiecy teat build-outs, ad the correspodig retur o the teats respective icremetal ivestmets i the istalled eergy performace measures (EPMs). The Project case studies will also ote the value placed by teats o various other advatages to these build-outs, icludig furtherig corporate social resposibility goals, ad icreasig employee attractio, retetio, ad productivity. CMI has egaged several idustry leaders as techical advisors for the Project, icludig Goldma Sachs, Johso Cotrols, Joes Lag LaSalle, Malki Holdigs, SKANSKA, ad ULI/ Greeprit. This work is made possible by the geerous support of Goldma Sachs ad the Rockefeller Foudatio. Authors Wedy Fok Greg Hale www.rdc.org/policy www.rdc.org/greebusiess/cmi/ @rdc_cmi
The core missio of the Ceter for Market Iovatio (CMI) is to expad the impact of the Natural Resources Defese Coucil (NRDC) by creatig market coditios that will redirect capital flows toward sustaiable uses. We believe that egagig maistream capital is a critical compoet i achievig our commo goals. We do so by egagig with the busiess commuity to articulate ad implemet sustaiable value propositios, with a curret focus o eergy efficiecy, water maagemet, ad regeerative agriculture. CMI s iteral team of experts egages directly with teat build-out projects, helpig to deliver a high performace workplace, ad documetig actual space performace results. The CMI team is versed i real estate, egieerig, fiacial aalysis, costructio, ad buildig efficiecy. This multi-discipliary approach serves to brig a more comprehesive perspective to projects. Utilizig the Project s grat fudig, our experts assist the teat s desig team i completig a thorough evaluatio ad fiacial aalysis of opportuities to itegrate eergy efficiecy ito their existig desig. CMI s process looks to preset a optimal set of eergy performace measures that will provide 30 to 50 percet eergy use savigs compared to a stadard code-compliat build out, with a payback betwee three to five years. By providig projected eergy use through eergy modelig, icremetal costig, ad fiacial aalysis durig the desig ad decisio makig phase, the CMI process equips the teat ad its existig facilities/desig team with the right iformatio to determie tiers of "good," "better," ad "best" packages of eergy measures to icorporate ito the desig of the space. The CMI team also works with each participatig teat to develop ad execute a protocol to measure ad verify the actual eergy performace of the ew space for 12 to 15 moths after occupacy. CMI s High Performace Teat Demostratio Project portfolio is comprised of several high-impact teats, icludig Bloomberg LP; 1 a umber of major teats at the Empire State Buildig; ad Reed Smith i Philadelphia. CMI will prepare a case study for each project documetig the value aalysis process, the teat s selectio of performace measures, ad the ecoomic retur o the teat s ivestmet i those measures. We expect to add a few other select teat build-out projects to the portfolio. By broadly publicizig this portfolio of case studies, a How-to-Guide detailig the etire process, ad the tools we develop to help aalyze the value of eergy performace measures, CMI s goal is to make high performace teat build-outs stadard practice for the commercial real estate idustry. The CMI team will cotiue to refie the process to address buildig idustry feedback as we complete additioal teat demostratio projects i the upcomig year. CMI looks forward to hearig from those i the field, ad is thakful for those who are helpig trasform the eergy efficiecy market ad accelerate demad for higher performig ad more comfortable commercial office spaces ad buildigs. Fid out more about the High Performace Teat Demostratio Project at: http://www.rdc.org/greebusiess/cmi/highperformace-buildigs.asp PAGE 2 Ceter for Market Iovatio: High Performace Teat Demostratio Project I Eergy Performace Opportuities i Commercial Office Buildigs
I major urba areas like New York, buildigs accout for 80 percet of the city s total eergy cosumptio. Teat spaces accout for more tha half of a commercial office buildig s total eergy use, ad buildig owers are startig to pay attetio, particularly i light of eergy bechmarkig ad disclosure regulatios beig adopted i cities across the coutry. 2 If all commercial office real estate owers ad teats i the Uited States reduced eergy cosumptio by 30 percet, it would traslate ito more tha $6 billio i eergy cost savigs a year. 3 That kid of impact is hard to igore. Yet eergy efficiecy opportuities i teat spaces remai largely utapped, due i part to the split icetive challege, 4 missig ecoomic ad performace data, ad also to a lack of uderstadig of the high-performace desig, developmet, ad value aalysis process. How a teat selects, desigs, builds, ad occupies space has the potetial to make a big differece i their eergy usage ad operatig costs. Timig eergy efficiecy work is critical to improvig the cost effectiveess of eergy solutios withi teat spaces. A teat s relocatio ito a ew space likely meas that improvemet work to the space will already be takig place. Icorporatig the istallatio of eergy performace measures ito the teat s existig build-out pla miimizes the icremetal cost ad future costructio disruptio to the teat. High Performace Teat Space Optimizatio Process: The projectios from the Ceter for Market Iovatio s (CMI) first set of teat projects show that a optimized package of eergy performace measures which are iteractive, ad ordered to reduce loads, istall efficiet equipmet, ad maage occupat behavior ca provide 30 to 50 percet eergy use savigs compared to a stadard code compliat space with a payback period of three to five years. By addressig the high performace opportuities The greatest value added to the cliet is that they literally save moey. There s o questio. I additio, they re savig eergy for our plaet. Who does t wat to do that? Goig forward, I will speak to all my cliets about it ow that I uderstad the process. It s goig to become easier ad easier ad I thik it will become the ew idustry stadard. Tamela Johso, Director of Project Maagemet, Gardier & Theobald durig the early stages of the build-out desig process, the project team is able to evaluate potetial eergy performace measures (EPMs) ad preset projected eergy ad fiacial performace data to teat s desig team i aligmet with their stadard decisio makig process ad schedule. The eergy opportuity exists throughout a teat s etire lease cycle, ad a clear process streamlies the coordiatio eeded to idetify the ecoomic case for eergy performace optimizatio. This process, outlied below, provides actioable steps for both teats ad buildig owers i a collaborative effort to capture the shared fiacial ad competitive advatage beefits durig the pre-lease, desig, costructio, ad post occupacy phases of the relatioship: 1. Select a Office Space: Cosider spaces that are separately sub-metered for their eergy usage, with good access to daylight ad views, healthy idoor-air quality, ad up-to-date cotrol systems. Review the buildig s EergyStar ratig or other eergy bechmarkig data ad past eergy related capital improvemets or plaed upgrades. Review the lease for cetral buildig system operatig expese pass-through provisios, eergy aliged clauses, utility billig structures, ad efficiecy desig criteria. Utilize resources made available by the ladlord, icludig experts dedicated to helpig facilitate teat s eergy maagemet goals. Ask if a whole buildig eergy model is available to share with teats, especially for buildigs that have recetly bee completed or have udergoe a eergy retrofit. Buildigs with a eergy maagemet program ad teat eergy platform i place emphasize the ladlord s commitmet to maagig eergy performace. 2. Select the Project Team: Sed a request for qualificatio (RFQ) for architects, egieers, ad cotractors with expertise i eergy modelig ad value aalysis. The right techical expertise o your team is eeded to calculate baselie eergy usage ad projected eergy savigs to make iformed ivestmet decisios ad to measure actual eergy performace after the EPMs are i place. Project maagers versed i eergy performace will be able to itegrate the eergy value aalysis ito the ormal desig ad costructio process ad keep the project team focused o commuicatig the eergy ad fiacial implicatios of eergy performace decisios. PAGE 3 Ceter for Market Iovatio: High Performace Teat Demostratio Project I Eergy Performace Opportuities i Commercial Office Buildigs
3. Set Eergy Performace Goals/Develop Meu of Measures: Eergy Aliged Lease Priciples: The buildig ower s base buildig cetral systems ad commo areas (lobbies, hallways, elevators, service areas, etc.) ad the teat s leased premises should operate as eergy efficietly as feasible. For istalled eergy performace measures, the beeficiary of the eergy cost savigs should be the party who pays for the istalled EPM. If the buildig ower istalls EPMs that provide cost savigs to the teat, the resultig eergy cost savigs should be allocated to pay for the cost of the EPM through a pass through clause to the teat. Eergy use ad demad data should be quatifiable ad trasparet to both buildig ower ad teat. Sub-meterig teat spaces ad total buildig eergy cosumptio iformatio promotes eergy performace bechmarkig ad ogoig eergy maagemet. For additioal iformatio see: Eergy Efficiecy Lease Guidace, NRDC CMI, November 2011: http://www.rdc.org/ greebusiess/cmi/files/cmi-fseergy.pdf Determie appropriate eergy usage baselie agaist which to measure potetial high performace desigs. The baselie may reflect a code compliat ad/or busiess-as-usual desig ad operatioal assumptios. Defie eergy performace targets ad have top leadership emphasize it as a priority alog with program ad aesthetic eeds. Work with the buildig ower to obtai existig coditios iformatio ad utility data o the buildig ad leased space. Review potetial EPMs from the project team s early desig discussios ad defie a Meu of Measures. 4. Model Projected Eergy Performace: Perform eergy modelig at 50 percet Desig Developmet. Evaluate idividual EPMs agaist eergy baselie. Order EPMs to i) reduce loads, ii) istall efficiet equipmet, ad iii) maage behavior. Create several sets of measures ( packages ) that accout for the iteractive effects of various EPMs ad fialize the feasible packages. Determie projected eergy use savigs impact of the EPM packages to both the teat space ad base buildig. The eergy model is a tool that ca be used i desig evaluatio, Leadership i Eergy ad Evirometal Desig (LEED) Eergy ad Atmosphere (EAc) submittals, icetive ad tax deductio filigs, ad ogoig eergy performace measuremet ad verificatio. The model allows a quicker, iterative, ad more trasparet evaluatio of eergy measures. Modelig costs deped o the space, the fial scope of work, ad the specific buildig site. 5. Review Icremetal Costs ad Available Icetives: The project egieer, eergy cosultat, or costructio maager has the ability to determie icremetal costs for the modeled eergy performace measures. Icremetal costs are additioal sums, et of cost avoidace amouts, compared to what was already budgeted for the plaed system or equipmet. Coordiate registratio ad filig for potetial eergy icetives ad review potetial tax deductios to assess amouts that may be available to offset gree buildig ad eergy desig ad equipmet costs. The project maager or architect ca streamlie the project budgetig process by iclude the teat s accoutig represetative i eergy budgetig discussios. 6. Perform Value Aalysis: Coduct a fiacial aalysis to determie aual ad lease term cost impact, takig ito accout potetial icetives ad tax deductios. The fiacial scorecard should iclude the payback period of each idividual measure ad a optimal package of EPMs, together with PAGE 4 Ceter for Market Iovatio: High Performace Teat Demostratio Project I Eergy Performace Opportuities i Commercial Office Buildigs
Net Preset Value (NPV) ad Retur o Ivestmet (ROI) calculatios for the optimal EPM package. Request a report from the desig team (a Value Aalysis Report ) that: (i) documets the EPM evaluatio process ad the outcomes of the eergy modelig, costig, ad fiacial aalyses; ad (ii) recommeds good, better, ad best tiers of EPM packages that could be icorporated ito teat s build-out desig, takig ito accout the project s program eeds. The project s desig, facilities, costructio, accoutig, ad maagemet teams review ad discuss the Value Aalysis Report. 7. Review Eergy Performace Measures Budget ad Make Fial Decisios: Review fiacial resources available to cover icremetal first cost of eergy performace measures, icludig allocatio of teat improvemet allowaces, potetial local, state, ad federal eergy icetives, possible exteral fiacig sources, ad teat s iteral capital resources. Decide which tier of eergy performace makes sese over the lease term based o fiacial, eergy performace, ad sustaiability criteria. Direct the desig team to icorporate selected EPMs, submeterig, ad commissioig ito the costructio set. 8. Build Out the Space: Select a cotractor who is experieced i istallig high performace measures. Coordiate operatios traiig for ay specialty techologies after istallatio. Esure meters are readable i electroic format ad coected to a eergy maagemet platform. 9. Develop a Post Occupacy Pla: Defie ad execute a protocol (based o IVMVP) to measure ad verify the actual eergy performace of the ew space after occupacy. Collect electroic meter data by space/floor at a miimum, ad ed use if possible icludig: Mothly kilowatt hour (kwh) cosumed for every sub-meter Oe-hour tred data of kwh cosumed for every sub-meter available for a two-week period i the heatig seaso, coolig seaso, ad shoulder seaso (six weeks total over the year) Te-miute tred of all heatig, vetilatio, ad air coditioig (HVAC) fa speed commads/power over such two-week periods Develop a occupat behavior pla to reduce equipmet plug loads. It is early impossible to maage eergy use without kowig exactly how much, where, ad whe eergy is beig used. Sub-meterig ad eergy maagemet systems help teats watch out for eergy waste after movig i, keep equipmet ruig more effectively through iformed maiteace, ad keep both eergy ad operatios costs dow. 10. Commuicate Results: Expad the value of a high performace build-out beyod the quatifiable ecoomic beefits by promotig the evaluatio process ad results through corporate sustaiability reports, trade publicatios, videos ad social media. Highlight the high performace space while recruitig talet. Write a project case study ad documet the eergy value aalysis process to maximize iovatio credits if LEED for Commercial Iteriors (LEED-CI) certificatio is beig sought. Motivate occupats to reduce eergy use daily through icetives ad tools usig teat eergy dashboards o the orgaizatio s itraet ad website. Desigate a eergy maager to moitor ad adjust equipmet to maitai operatig efficiecy. PAGE 5 Ceter for Market Iovatio: High Performace Teat Demostratio Project I Eergy Performace Opportuities i Commercial Office Buildigs
LEASE Cycle Eergy Optimizatio Process TENANT Select a office space i a high performace buildig Put together project team Defie eergy goals ad EPMs Model projected eergy use Review costs ad icetives Perform Value Aalysis Review EPM budget ad make decisios Build out space Measuremet ad verificatio/ operatios/maiteace Commuicate Results PRE-LEASE Develop a eergy performace marketig/fact sheet Iclude eergy aliged clause ad eergy criteria i the lease DESIGN AND CONSTRUCTION BUILDING OWNER Provide eergy desig cotact to review desig criteria ad facilitate eergy optimizatio Pre-build a high performace office space Provide access to a eergy model Post Occupacy Sub-meter teat spaces Provide a eergy maagemet dashboard Host teat eergy best practice workshops Schedule a aual eergy meetig with each teat The timeframe for each lease cycle phase will vary. A geeral estimate for pre-lease is oe year or less, desig ad costructio oe to two years, ad teat lease terms ragig betwee 5 ad 15 years. The value propositio to the teat ad buildig ower icreases as the lease term icreases. I a recet global study by Johso Cotrols Istitute for Buildig Efficiecy, 25 percet of 3,500 facility, real estate, ad eergy maagemet executives said they were willig to pay a premium for space i a certified gree buildig, ad 24 percet plaed to build out teat space to high performace stadards. Project stakeholders eed to address the eergy efficiecy market opportuity by gatherig the right iformatio ad puttig it i frot of the right people at the right time durig the teat egagemet ad decisio makig process. Eergy performace is importat to both sides of the real estate equatio. By workig together, teats ad buildig owers have the opportuity to save eergy costs, create more comfortable iterior spaces, ad gai a competitive advatage, whether seekig ad retaiig taleted employees or high quality teats, through promotio ad recogitio of a high performace teat space ad buildig. Greater eergy efficiecy meas higher profits, greater competitiveess, ad a better result for the bottom lie for everyoe ivolved, Athoy Malki, ower of the Empire State Buildig PAGE 6 Ceter for Market Iovatio: High Performace Teat Demostratio Project I Eergy Performace Opportuities i Commercial Office Buildigs
Teat Eergy Performace Meu of Measures Strategies Provided by Buildig Ower Sub-meterig by space/floor/et lease Buildig evelope (widows, widow film, radiative barrier) Strategies with No or Low Additioal Icremetal First Cost Select buildig with atural daylight access Desig ope office layout Pait walls white or light colors to reflect light Seal perimeter walls/opeigs Occupacy based lightig sesors (required by code) High Payback Measures High Efficiecy Lightig: 1) Desig for task appropriate illumiace, 2) utilize high efficiecy light lumiaires ad lamps, ad 3) desig for lower lightig power desity watts per square foot (W/SF) tha ASHRAE 90.1 baselie. Target 0.7 W/SF or below. (Two to three years) HVAC Optimizatio: 1) Right sized high efficiecy uits, 2) use variable air volume (VAV) uits, 3) low velocity/pressure drop air hadlig uits to reduce fa power, ad 4) elimiate oise traps. (Three to five years) Plug Load Maagemet: 1) Cotrolled plug outlets powered off/ o by wall switch (two to three years); or 2) occupacy sesor power strips (five to seve years); 3) computer maagemet software (oe to two years). Iformatio Techology (IT)/ server room Load Maagemet: Combiatio of Eergy Star servers, right sizig server equipmet, virtualizatio ad data distributio techologies such as a passive optical etwork (PON). The reductio i electrical use would result i savigs from the equipmet power load ad as well as reduced computer room supplemetal air coditioig ad coolig load. (Less tha 3 years) Medium Payback Measures Daylight Harvestig Lightig Cotrols: Utilize lumiaires with built i photosesors ad cotrols to dim the lumiaire whe ambiet daylight lights the space. (Three to seve years) Demad Cotrol Vetilatio: Add carbo sesors ad logic to cotrol outdoor air damper. (Three to seve years) Ogoig Maagemet Sub-meterig: Esure eergy use is well maaged throughout occupacy term. Separate ed use sub-meterig for lightig, plug, IT room, ad HVAC loads, ad a teat eergy maagemet platform will help keep the eergy savigs i lie ad provide feedback for ogoig commissioig ad maiteace of the systems. Eergy Modelig: Use eergy predictive aalysis durig desig, icetive filig, ad ogoig measuremet ad verificatio. Evaluatig Eergy Reductio Opportuities Though oe size does ot fit all i teat spaces, a commo meu of measures ca be a startig poit to evaluate lightig, HVAC, ad plug load eergy reductio opportuities. The followig set of measures has bee idetified through the Project as those that have strog potetial across a wide rage of teat types. PAGE 7 Ceter for Market Iovatio: High Performace Teat Demostratio Project I Eergy Performace Opportuities i Commercial Office Buildigs
1 Bloomberg LP is located at 120 Park Aveue i New York, New York. 2 New York City, Washigto DC, Philadelphia, ad Sa Fracisco have adopted bechmarkig ad public disclosure regulatios. Austi ad Seattle require bechmarkig ad disclosure at time of property sales trasactio. 3 Based o commercial office eergy expeditures oted i Uited States Eergy Efficiecy Retrofit Report, DB Climate Chage Advisors, March 2012. 4 Split icetives are a result of a lease structure that shares operatig ad capital costs, ad divides eergy savigs returs betwee buildig ower ad teats. This structure sigificatly reduces the ecoomic beefit of istalled eergy performace measures to the buildig ower. Prited o recycled paper Natural Resources Defese Coucil November 2012 www.rdc.org/policy www.rdc.org/greebusiess/cmi/ @rdc_cmi PAGE 8 Ceter for Market Iovatio: High Performace Teat Demostratio Project I Eergy Performace Opportuities i Commercial Office Buildigs