July 2010

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for Economic and Environmental Performance

Priscilla Koeckeritz,
President and COO,
EnergyPrint

Priscilla.Koeckeritz@EnergyPrint.com 
 

So you’ve been working on reducing energy consumption in your building – do you know how much progress you’ve made? Or, you want to set goals for next year – do you know where to start? Often the missing piece of the energy management picture is a lack of benchmarking before a project starts monitoring afterwards. Before continuing down the road of trying to establish an energy plan or improve energy performance, take a moment to review your goals and determine how to track your progress.

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Many professionals head down the road of implementing energy improvements for the right reasons, but without the right information. If you’ve invested in energy efficiency measures before or are considering them now, you must have some concern about energy consumption or costs. Perhaps you experienced the sudden increases in energy costs of 2007 and 2008 – which blew away budgets – and want to get a better handle energy consumption and costs so a budget blowout doesn’t happen again. Other reasons for benchmarking can include:

  • Taking advantage of federal tax incentives, energy ARRA stimulus rebates, and utility rebates for equipment upgrades and replacements

  • Respond to personal, managerial, or tenant concerns about sustainability or climate change by reducing the climate footprint

  • Respond to recent reports about the superior economic performance of buildings with LEED ratings or ENERGY STAR labels with respect to lease rates, occupancy rates, valuation, and lower operating costs (See the sidebar, The Market for Energy Efficient Buildings).

Whatever the reason, you made or will make a commitment to saving energy and the most productive and economical way to get started is to benchmark your building. A benchmark is a numerical score that conveys how much energy your building is using, how it compares to similar buildings in similar settings (i.e., weather and occupancy), whether it has strong opportunity for improvement, and whether previous investments have paid off. Essentially, a benchmark will define the building’s energy-saving potential. Corporate energy management goals, plans, and investment strategies are based on the benchmark – how much energy can be saved cost effectively relative to the business and real estate climate, your company’s finances, management commitment, and other factors. If you have multiple buildings in your portfolio, you should be setting both building level goals and portfolio goals. Benchmarking and monitoring will help you determine which buildings have the greatest opportunity for reduced consumption and which buildings are already star performers.

Drawing largely from the U.S. EPA ENERGY STAR buildings program, this article outlines proven, cost-effective ways to benchmark a building’s energy performance and how to set up monitoring systems and processes for achieving short-term and long-term energy management goals.

Getting benchmarks and setting goals

Figure 1There are a variety of tools in the marketplace to use for benchmarking and monitoring. For example, ENERGY STAR provides a free, online software tool, Portfolio Manager, that yields a benchmark score between 1 and 100. A score of 75 indicates the building is performing better than 75% of the buildings in the U.S. of similar type and setting. Let’s say your score is 70, which means it’s doing pretty well, but not good enough for an ENERGY STAR label, which requires a score of 75. Studies have shown that ENERGY STAR labeled buildings have higher property values, so there’s an incentive to make the improvements needed to increase your rating by five points or more to earn an ENERGY STAR label. So earning the five points and completing the steps for an ENERGY STAR label would be an energy management goal for the building after getting the benchmark.

Earning an ENERGY STAR label is only one type of goal, however; there are many other types of goals and means of achieving them. Table 1 shows different types of goals with examples that express energy savings goals tied to benchmarks. From this table, you can define energy savings goals at the building, portfolio, and corporate level.

Type of goal

More about it

Example

Defined reduction

Specific quantity or percentage decrease in energy use. Easy goal to set and measure.

Quantity: We will shave 300 million Btus from our annual heating bill by 2012.

Percentage: We will drop 5% of our energy use every year until we reach 50% of our 2009 energy consumption.

Best-in-class

Certain level of performance compared to an established benchmark. Easy to communicate to the public without a lot of context. Can also leverage the brands of third-party certifications.

This facility will earn an ENERGY STAR label (rating of 75 or above). This facility will earn an LEED EB Gold rating.

This facility will outperform ASHRAE 90.1-207 by 30%.

Efficiency improvement

Function of reducing the energy intensity of a specific performance indicator. Useful for business accounting purposes, and can be used to motivate and measure the performance of staffs.

We will cut 5 BTU per sq ft per year from each hotel room.

Environmental improvement

Translates energy savings into pollution.  Prevention or reduction goals. Has public relations and other external communications benefits, and can be used to motivate staffs, students, etc.

We will trim our carbon footprint by 20%. Or the emissions of our boiler plant will be cut by 2 tons of carbon equivalent each year until we get to 50% reduction by 2015.

Threshold goals

The minimum acceptable level of performance. Easy to communicate and measure; can be used to motivate staffs. Warning: this metric can also take the pressure off continually improving after the goal has been achieved.

The facility manager’s bonus will depend upon achieving a score of 75 or better in ENERGY STAR Portfolio Manager

Stretch goals

Levels beyond the minimum or targets that are used to create an incentive for greater achievement. Use this to drive and reward savings beyond the minimum threshold.

For every point above 80 in Portfolio Manager score, the Facility Manager shall receive a $100 bonus.

In practice

Organizational energy goals. Has public relations and staff/student motivation benefits.

The company will donate 20% of its energy savings for 2010 to Save Haiti.

Table 1: Types and examples of energy management goals as derived from the U.S. EPA ENERGY STAR guideline for energy management planning.

Planning for effective energy management

Figure2After getting a benchmark and setting one or more goals, you will need a plan to achieve the goals. Planning can be a complicated, time-consuming, and expensive process, so why not use a time-tested, free, and well-structured resource that represents the collective wisdom of hundreds if not thousands of projects? The U.S. EPA ENERGY STAR buildings program has a 7-step process for managing energy articulated in its publication, Guideline for Energy Management (available at http://www.energystar.gov/buildings). The seven major steps are listed below and diagrammed as a cycle in Figure 2:

1. Make a commitment
2. Assess performance (benchmark your building)
3. Set goals for energy performance
4. Create an action plan
5. Implement action plan
6. Evaluate progress
7. Recognize achievements

This article won’t describe all seven steps – but let’s look at a few of them more intensively.

The first step, making a commitment, is critical. Commitments should be meaningful and tied to specific business outcomes. Maybe you want to cut operating costs to offset slower business in a tough economy. Maybe you’re managing someone else’s properties and they want to protect the property value – or even increase it by improving operating income and getting an ENERGY STAR label. Commitments are made in collaboration with top management and are fortified with budgets and ROI expectations for energy efficiency investments.

Once you’ve made a commitment, then its on to Step 2—benchmarking

How to benchmark
When you benchmark a building, you’ll need to do some homework to gather the inputs needed by benchmarking software. For example, if using Portfolio Manager, you’ll need:

CatNet Systems Some building types, such as pharmaceutical plants, industrial manufacturing facilities, and utility buildings may not be covered by ENERGY STAR Portfolio Manager or by other benchmarking software. Also, read the software instructions carefully because you may have to handle special cases differently, such as:

After benchmarking your building, you’re ready for Steps 3 through 7.

Beyond the benchmark

From developing an action plan (Step 3) to rewarding achievements (Step 7), everything will depend on the commitment made in Step 1 and the benchmarking score in Step 2. But whether the building scored a 20 or a 100, and whether the corporate goals and commitments are large or small, monitoring energy usage and tracking progress on energy goals is important.

Experience has shown that for energy management to be successful over the long-term, energy use must be tracked; deviations from goals have to be acted upon; and staff performance toward saving energy must be rewarded. What is not measured will not be managed, and monitoring is the process of continuous measurement. Only with energy monitoring can there be energy management, and only with energy management can energy decisions become routine business decisions made by the company.

Beyond the benchmark
Figure 3: Comparing buildings to “like properties” aids users in identifying trends and anomalies – which may become reduction or cost savings opportunities.

Benchmarking your building on a regular basis provides the data needed to effectively manage Steps 3 through 7. Continuous benchmarking is the consistent monthly review of energy performance to see whether your building is getting better, or worse. See Figure 3 for an example of relevant peer benchmarking used to identify anomalies. Continuous benchmarking aids in improvement decision-making, cost management, trend analysis, ROI justification, and budget/consumption planning. This should be a relatively inexpensive item to outsource, or you can use ENERGY STAR Portfolio Manager to manage it internally.

If you choose to outsource benchmarking to a third party company, you may want to look specifically at those who integrate seamlessly with ENERGY STAR – this is an added benefit both for the additional resources and the marketing benefit. Figure 4 shows an example of ENERGY STAR integration with an existing benchmarking application.

Figure 4-1

Figure 4-2

Figure 4: ENERGY STAR Automated Benchmarking Partners, like EnergyPrint, have the ability to create new properties in ENERGY STAR Portfolio Manager, update existing properties and simplify management of your ENERGY STAR rating within one software interface.

Control Solutions, Inc Best practices for benchmarking

The following recommendations will help you begin a successful energy benchmarking and management program.

Energy Dashboard
Figure 5: Using an energy dashboard will provide visibility to cost, consumption and carbon on a property, portfolio and company level.

Conclusion

With five million commercial buildings in the U.S., there is a great opportunity to improve energy efficiency – and using less energy is the best way to conserve a valuable resource and save money in the process. With energy efficiency being driven hard by federal and state agencies and by utilities, there are many financial incentives out there in the form of tax credits, rebates, and low/no-interest loans for energy upgrades. Also, you’re not alone -- thousands of property owners and managers have already set energy management goals, and resources are available to help those who desire to make a commitment to reducing energy. Saving energy more possible and affordable than ever before, and benchmarking is the best way to start.
 

SIDEBAR

The Market for Energy Efficient Buildings

A number of academic and industry studies of economic performance of energy efficient buildings were compiled by the Institute of Market Transformation (www.imt.org). Some of the findings are below; the IMT compilation provides links to each study:

• A 2009 national study by the University of California at Berkeley found that buildings with the Energy Star label sold for 16 percent more than identical buildings without such labels.

• A November 2009 University of San Diego study of 154 buildings managed by CB Richard Ellis Group found that Energy Star buildings have 3.5 percent lower vacancy rates and 13 percent higher rental rates than the market average.

• According to Pike Research, the energy service industry – which includes businesses that provide products and services to help building owners measure, manage and reduce energy use – will double in growth over the next several years, largely due to expanded work in the commercial building sector. The energy service market is currently a $5.6 billion industry.

• A November 2009 report by Jones Lang LaSalle found that a whopping 74 percent of corporate real estate executives are willing to invest in retrofitting spaces they own to save energy and improve sustainability. The report also found that 89 percent consider energy use and other sustainability criteria when looking to buy or lease office space.

The compilation, Background on the Economic Benefits of Building Energy Performance Benchmarking, Disclosure and Labeling, can be downloaded from IMT at no charge at http://bit.ly/cWfDpz.
 

References:
Information about special cases for benchmarking was from a presentation by Aliza Skolnik of Environmental Systems Design, Chicago: “Energy STAR: Portfolio Manager and Certification Process, February 17, 2010, presented at the Webinar, “ENERGY STAR for Engineers,” hosted by Consulting-Specifying Engineer (www.csemag.com).

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