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February 23, 2012

Does a green retrofit make sense for your building?

  • Better tools will help building owners assess their options and get funding.
    Northwest Energy Efficiency Alliance


    If just 16 percent of the commercial building space in the region made energy-efficiency renovations, regional energy savings could reach nearly 100 average megawatts by 2025 — equivalent to powering nearly 73,000 homes each year.

    That’s an impressive number and one that the Northwest Energy Efficiency Alliance is working to meet through our initiatives, education and pilot programs. Yet challenges remain for Seattle building owners and developers wanting to retrofit properties more energy efficiently. These challenges need to be addressed to move forward with a realistic energy retrofit renaissance.

    Better models needed

    Walk through downtown Seattle on any given day and you’ll notice empty office spaces undergoing a retrofit. As someone involved in energy efficiency my first question is always: Is the building owner retrofitting because a new tenant is moving in or to obtain deep energy savings?

    Photo by Sam Leinen/Coates Kokes [enlarge]
    The 18-story Edith Green–Wendell Wyatt Federal Building in Portland is undergoing a $139 million renovation. The project is designed to help the 37-year-old building meet LEED platinum standards.

    Chances are an energy-efficient retrofit might not be on a building owner’s radar. To encourage this, there needs to be a tested model in place that makes it easy for owners to renovate as energy efficiently as possible.

    Right now, the market lacks any sort of model that gives building owners a menu of building systems and materials, and then allows them to integrate all those choices to make their buildings perform better.

    Contractors have the same issues. If they’re working on a commercial building, and they want to evaluate their retrofit options, there isn’t a single model that shows the interaction between, say, swapping out windows and adding a new HVAC, and how that will affect the building’s performance.

    Look at the residential sector to see how successful remodeling green homes has been. Again, this success is largely due to the fact the builder has a prescriptive model and support mechanisms to follow, a supply chain to tap into and (for the most part) financing.

    Commercial retrofits, on the other hand, are more complex than residential ones. Building types such as retail, offices and hospitals vary wildly, with each of their own specific challenges.

    Help for funders

    Another barrier for building owners and managers is finding an approach that financial institutions can use to determine the worthiness of a project. Optimistically, there’s not an absence of funders and funding, but an absence of a finance model.

    Building owners need to unequivocally convince lenders and investors that they will save money by retrofitting their buildings using energy-efficient programs and techniques. Most investors and lenders want assurance that if they finance an energy-efficient retrofit it will improve the building owner’s cash flow.

    Financing for an energy-efficient building renovation that will lower lighting use and reduce monthly electrical bills isn’t accepted yet because there is no lending model. It’s a Catch-22: Finance models will only exist if there’s a market for energy-efficient retrofits, which won’t develop without financing.

    There’s some movement on the horizon. One step in the right direction is to develop measurement systems, or templates, for designers that help model retrofits.

    These templates let designers pick and choose materials and products much like from an a la carte menu. Templates also let the designer analyze each project and ideally gather enough data to convince a lender or investor that there are quantifiable benefits to retrofitting.

    The goal is to create enough models to reduce cost and reduce the risk. And even more importantly, the models overcome skepticism that energy efficiency can’t be done economically and intelligently in the commercial sector.

    What’s next

    A survey last summer by the Urban Land Institute revealed a 14-point increase in North American building owners who believe energy management is important (66 percent) compared with the prior year (52 percent). Building owners, the survey also said, expect lighting and smart building technology to have greater adoption rates over the next 10 years in North America.

    That’s a positive sign and illustrates that building owners are increasingly knowledgeable about the benefits of retrofitting existing commercial building stock as energy efficient.

    Couple that with the evidence that energy efficiency creates economic gains beyond reducing an owner’s energy bill and — with the potential of modeling — the gap between financial institutions, suppliers and building owners could be closing.

    Phill Guay is senior manager of the commercial sector at Northwest Energy Efficiency Alliance.

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