BTL Mark: Resolve interoperability issues & increase buyer confidence
Gina Elliott, MBA
For anyone who’s ever taken a Psychology 101 class, you are most likely familiar with positive and negative reinforcement. For years federal, state and local governments and utility companies have been asking nicely for us to curb our energy usage. In the last few years, these entities have dangled many incentives to entice users to manage and reduce energy. In 2008, the Energy Tax Deduction was extended to 2011 to allow building owners more time to take advantage of credits. However, progress on reducing energy consumption appears to be slow and many of these incentives are giving way to more (negative) action to get our attention. Unlike many European countries, the US has yet to penalize companies for energy consumption or lack of conservation measures. However, the coming wave of energy reporting appears to be the first of many strategies to induce companies to monitor and manage energy, leading the way for perhaps more “negative” reinforcement.
It’s been said that “As California goes, so goes the nation”. California, the sixth largest economy in the world, is the first state to mandate energy reporting for all nonresidential buildings. Assembly Bill 1103 mandates that all California nonresidential buildings report energy use beginning January 2009 and make this information available in January 2010. The most recent 12-months data will be available to all prospective buyers, lessees, or lenders. The purpose of the energy reporting is 1) to allow comparisons to similar buildings, 2) aid owners and operators in managing their energy costs, 3) motivate owners to take action to improve a building’s energy usage, 4) help investors justify financial investments, and 5) enable energy efficiency to be valued as other building assets are valued within a real estate transaction.
Electric and gas utilities are required to report to the Energy Star Portfolio Manager energy consumption data on all nonresidential buildings to which they provide service. The reporting process is relatively simple for the building owner/manager:
1. The owner opens an account on the EPA’s Energy Star Portfolio Manager website and provides the following information;
a. Identify the building and all utility companies that serve the building
b. Supply building characteristics (usage, square feet, hours of operation, etc.)
c. Contact information
d. Authorization of release
e. Request utility company release 12 months of data
f. Authorize the California Energy Commission (CEC) to access the Portfolio Manager
2. Open an account with the CEC
3. Within 14 days of authorization and request, the utility company uploads the 12 months data
4. The building owner will receive a U.S. EPA Statement of Energy Performance and a CEC Nonresidential Energy Performance Report
The EPA Statement of Performance compares the energy performance against
all similar building types over 5,000 square feet, regardless of geographic
location. Buildings are rated based on kBTU per square foot per year on a scale
of 1 to 100, with 1 being the least efficient. A score of 75 or greater
qualifies the building for Energy Star. In contrast, the CEC report compares the
building against only California buildings of similar type and size. One concern
for California building owners is whether this reporting is an accurate
reflection of the energy efficiency of the building or an accurate reflection of
the behavior and usage patterns of its tenants/occupants.
It may surprise many of us, but the federal government is more proactive in energy management than the private sector. Since 2006, all federal buildings (owned and leased) must have a completed Energy Management Data Report. This report is more comprehensive than the California plan and includes reporting of annual consumption and cost of fuel, oil, propane, gas, coal, steam, electricity and renewable energy self-generated or purchased.
The data is evaluated against prior years’ energy usage, at least to 2003, to provide a benchmark and measurement of energy management. The government’s goals are lofty and extend beyond energy and buildings to resources, sustainability and transportation.
Since 1985, the government has been concerned with energy use and its first goal called for an energy reduction of 10% by 1995. Other Acts followed and the goals and requirements became higher and more stringent. Currently, the goals include;
30% reduction in energy by 2015
7.5% or greater use of renewable energy by 2013
16% reduction in water usage by 2012
30% lower energy consumption than ASHRAE standards for new buildings
Metering in all buildings by October 2012
Buildings are responsible for almost 50% of the UK's energy consumption and carbon emissions. Since 2006, the UK has mandated energy ratings for commercial and residential buildings. Like California, the UK issues Energy Performance Certificates (EPCs). All commercial and public buildings and homes when bought, sold, or rented are required to have an EPC. All public buildings are required to display energy certificates. EPC’s also include a list of cost-effective measures to improve energy efficiency although there is no requirement to implement these recommendations. In addition to the EPC, inspections are required for existing air conditioning systems.
Unlike California, the UK energy ratings are based on calculations from a site survey. The EPC calculates energy performance based on a set of national standards. (The use of metered energy consumption data is thought to be influenced by the occupants’ behavior and building use.) The energy model will produce a grading on an A to G scale with the scale related to the current minimum energy performance standards required by the 2006 Building Regulations. The grading is based on the CO2 emissions per meter of floor area. For dwellings, an indication of running costs is also given.
UK’s EPC mandate is expected to influence the market and encourage additional investment. The UK has taken a decidedly succinct approach to why the EPC is necessary and best understood in their words:
“The main rationale for Government intervention is the obligation to implement the Directive and that the energy market is failing to deliver cost-effective energy efficiency improvements to buildings at a fast enough rate to reduce the risk of climate change. The reasons for the lack of investment are well understood and include: lack of information on the opportunities, the short payback periods required if there is no perceived increase in asset value, and landlord/tenant issues concerning who invests and who benefits.”
In September 2009, the Charlotte, North Carolina real estate market implemented the Home Energy Ratings Systems (HERS) to the MLS (Multiple Listing Service). HERS is a scoring system based on an index of 100 with a score of 0 being a net zero home.
The rating is based on standards established by Residential Energy Services Network (RESNET) and is determined by a site survey. The survey includes an analysis of construction plans and onsite inspections. Data is input into a software analyzer which yields a pre-construction index. Any changes or improvements can be made at this time to meet Energy Star performance guidelines. The inspector performs a site assessment using a blower door test and a duct test. Results are combined with the plan review to generate the score.
Each one point decrease in the HERS Index corresponds to a 1% reduction in energy consumption compared to the HERS Reference Home. Thus a home with a HERS Index of 85 is 15% more energy efficient than the HERS Reference Home and a home with a HERS Index of 80 is 20% more energy efficient.
No doubt about it, energy reporting is in our future. I would opine that a few things are happening to bring this about. Governments will eventually mandate energy reporting, whether at the federal, state or local level. Investors, tenants, and owners will demand more energy efficient buildings and information on the energy efficiency of the building. New LEED certifications require a commitment to “sharing” with USGBC a report on actual energy and water usage data for a period of at least 5 years. Green leasing will become standard between owners and tenants. Cap-and-trade will require reporting. The upside for energy reporting for building owners is that the data and information can provide more visibility into how their building is performing, and in turn form the basis to take the actions which can lower operating costs and increase the building’s value.
About the Author
Gina is Project Director at Smart Buildings, LLC. She has been in the advanced technology industry since 2002 where she started as a consultant in Unified Communications. Currently she serves as Chair of the Marketing and Development Committee for the USGBC Charlotte Region as well as an Editor for the World Architecture Organization.
For more information, contact Gina Elliott, Project Director at Smart Buildings, LLC email@example.com
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