Tenant Star: Market-Driven Energy Efficiency Best Practices Win Bipartisan House Support
In an extraordinary signal of strong bipartisan leadership, last week the U.S. House Energy and Commerce Committee unanimously passed “The Better Buildings Act of 2013” (HR 2126), with a game changing Tenant Star program, in an example of how to get things done to save our nation energy, money and encourage job creation through market -driven solutions and effective partnerships.
Under the legislation, which next moves to the full House, the new voluntary energy program rewards tenants who include high performance energy efficiency measures during design and optimize energy performance during occupancy. Tenant Star would complement the successful Energy Star® brand, which recognizes energy efficient whole buildings and addresses often overlooked energy savings by promoting cooperation by commercial building landlords and tenants to save energy in leased spaces.
Commercial office buildings in the U.S. are responsible for over $20 billion in annual energy expenses, of which tenant leased spaces typically represent 50 percent or more of a building’s overall energy use. The new program would save big money for tenants and landlords when energy use is decreased. In addition to the energy and cost savings, this also means cutting the need to generate electricity and reduces the carbon emissions from dirty power that harms our air and warms our planet, increasing risk to our homes and businesses.
Introduced by Representatives David McKinley (R-WV) and Peter Welch (D-VT), Tenant Star is a close collaboration with the Real Estate Roundtable, a coalition representing portfolios containing over 12 billion square feet of properties valued at more than $1 trillion seeking to address key national real estate policy issues, and coordinated with NRDC’s High Performance Tenant Demonstration Project, a ‘real world’ process of tenant energy engagement and business case studies. The bill, widely endorsed by private industry and energy efficiency advocates describes a market best practice, investment return approach to lower energy consumption in the nation’s built environment during design, construction, and occupancy.
The Philadelphia success story
Representative McKinley cited the energy efficiency process and economic case from NRDC’s project with Reed Smith at Three Logan Square in Philadelphia during his testimony, emphasizing that ‘this works.’ The High Performance Tenant Demonstration Project presented the business case for energy efficient tenant spaces, proving cooperation between commercial building owners and tenants is a compelling value proposition for both parties.
Following the lease signing of 124,000 square feet at Brandywine’s Three Logan Square in Philadelphia, a top performing building with an Energy Star ® score of 93, Brandywine introduced new tenant Reed Smith to the NRDC Center for Market Innovation’s High Performance Tenant Demonstration Project to optimize energy performance in the leased space.
The integrated process prioritizes energy efficiency and occupant comfort and quantifies the return on investment of energy saving lighting, mechanical and plug load management measures for an informed design decision making process. Reed Smith implemented a holistic set of energy saving recommendations including LED lighting, daylight dimming, dimming/bi-level lighting controls, outlet control switches, and variable frequency drives on air cooling equipment.
- 34.3% better energy performance than an ASHRAE 90.1 2010 code-compliant space
- $1.8 million total electricity cost savings of over the lease
- 1.6 year investment payback period
- 83% internal rate of return on Reed Smith’s investment
Working towards a victory dance
When it comes to the Better Buildings Act passed last week, there is certainly more to do in order to earn a victory dance. For this latest step moving the ball forward on building energy efficiency, we commend Representative Welch and McKinley for their leadership on Tenant Star, along with the tremendous effort to date by the Real Estate Roundtable. We look forward to a full House vote in the coming months.
On a parallel front, Senate testimony on Tenant Star was held last summer, with a proposal for an amendment to the Shaheen-Portman bill in a continued effort to return the bill to the floor for a vote in the coming months. With Tenant Star and energy efficiency prominent messages during the Real Estate Roundtable’s “State of the Industry” meeting also held last week it is clear that both private sector and government agree that building energy efficiency can have a positive impact to the nation’s economy, energy goals, and job creation.
Demand for energy efficient buildings is stronger than ever, and we’re proud to work together to help make it happen. Over the course of this year, we’ll be sharing additional success stories and resources from projects with tenants and owners on high performance, energy efficient spaces as examples of how the business case for energy efficiency in buildings, is a model of best practices for our nation, and its cities and states.
Special thanks to Goldman Sachs for the continued support and close partnership on The High Performance Tenant Demonstration Project and our market outreach effort.
Photo credit: Timothy Schenck