Unleashing Energy Retrofits
Posted May 16, 2011
By now it is becoming common knowledge that around 40% of energy is consumed by the built space in the United States. (In New York, the nation’s densest living space, the figure is 80%). It is also broadly accepted that reducing energy consumption is a comparatively achievable, low-tech value proposition. And it is one whose value will further rise in a generally energy cost-rising environment. Yet in spite of partial progress, this low-hanging fruit is not being plucked at anything approaching scale.
We at CMI have been scratching our heads about how best to break this logjam. The absence of a single, identifiable bottleneck makes the articulation of an approach non-trivial. With the majority of reasons for not proceeding with energy efficiency retrofits residing at the building level (inertia, non-prominence of energy cost in buildings’ economics, split tenant / landlord incentives, depressed property values, general skepticism about retrofit implementation and / or performance, to name a few), we wanted to identify an entry point that would have the most impact. One thing we knew we did not want to do is to produce another study, only to add to reams of written material that are already out there.
And then it struck us: there are scores of core tenants moving from A to B, or alternatively remodeling / refitting their spaces. In other words, something is happening to their lives already, unrelated to energy efficiency. So why not convince them to include an energy efficiency overlay in the fit-out, and in the process perhaps convince the building owner to look at his or her building core as a part of the process? This way the retrofit itself is not invasive, and financially, it would represent only its own marginal cost, thereby reducing the all-important payback.
To put this to a real-world test, CMI has launched an energy efficiency retrofit demonstration initiative with a core team of industry leaders, including Goldman Sachs (providing funding to CMI), Johnson Controls, Jones Lang LaSalle, Vornado Realty Trust, and the Greenprint Foundation, to deliver efficiency installations and potential financing solutions that will serve the interests of both tenants and building owners. This is a nationwide initiative, focusing on commercial real estate projects representing all major segments of the market.
We are focusing on specific project objectives:
- Execute demonstration projects that incorporate advanced energy conservation measures (ECMs) and indoor environmental quality principles (IEQs) into the initial build-out (or into the retrofit at lease renewal) of major tenant spaces, achieving deep and sustained energy savings.
- Develop innovative financing mechanisms to fund the initial cost of efficiency measures.
- Measure, verify, and publish the achieved energy savings from the ECMs.
- Facilitate replication by:
- finding certain characteristics common to various tenant build-outs and integrated building retrofits participating in the project,
- distilling those common characteristics into a process that can be followed by a broad range of tenants to implement high performance build-outs or retrofits of their leased premises, and developing a how-to guide (the “strategy paper”) which lays out that process, and
- widely publicizing the strategy paper together with the economic benefits achievable through high performance tenant build-outs and central building system upgrades.
Two projects are already underway. We will report on these and other projects’ progress ... and of course on the progress in making energy efficiency retrofits a mainstream, profitable tool for both owners and tenants: one which saves both money and the environment.
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