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Beyond The Numbers
In the 10 years that the U.S. Environmental Protection Agency’s program Energy Star Buildings has been leading facility executives toward greater energy efficiency in their buildings, participants in the program have saved more than $200 million in annual energy costs. Nearly 2,100 facilities have earned an Energy Star Label for Buildings for being among the most energy efficient buildings in the country. Many more buildings — about 20,000 — have used tools provided by the program to compare energy use with similar buildings.
But the numbers don’t tell the whole story; in fact, they barely scratch the surface of what Energy Star has meant to owners of commercial buildings, hospitals, supermarkets, hotels and schools. For many facility executives, the decade-old program has brought new insight into what makes a building energy efficient and what impact energy efficiency can have on an organization’s bottom line.
Little things matter
The Energy Star program is really an assembly of tools and resources that help facility executives better manage their energy use and help promote results to senior managers and the public. The program is built around the idea that energy management should consider the whole building first and then a campus or portfolio of buildings. The Energy Star program begins with taking stock of a building’s energy use and benchmarking it against similar buildings. Then facility executives identify areas for improvement, starting with no-cost or low-cost strategies, and calculate the return on investments. Buildings that can show energy efficient operation in the top 25 percent of buildings nationwide — calculated by Energy Star’s own benchmarking tools — earn an Energy Star Label for Buildings.
The Energy Star Label program has filled a gap in the industry by defining an energy efficient building.
“Without a good whole-building metric, there is no reliable way to understand your building’s energy use compared to others,” says Jean Lupinacci, director of the commercial and industrial branch, U.S. Environmental Protection Agency and head of the Energy Star program.
What many facility executives have learned, and what often convinces owners and senior managers of the importance of the Energy Star program, is that much can be done to improve efficiency at no or low cost.
“There’s the perception out there that everything is a capital improvement,” says Brenna Walraven, executive director of property management, USAA. “In fact, there are a lot of low-cost, no-cost things that can be done to significantly improve energy savings.”
Checking controls and schedules to make sure systems turn on and off when they are supposed to; ensuring that HVAC systems aren’t firing up at peak load time; making sure economizers are working properly; commissioning and recommissioning systems; and regularly calibrating thermostats are just some of the no-cost or low-cost strategies, many of which cost less than 5 cents per square foot.
Top down and bottom up
The success of an energy program ultimately rests with senior managers, whose support is needed to sustain the program and to obtain the resources needed, whether the project needs a capital investment or staff, Lupinacci says.
“Once we started seeing some payback from the Energy Star program, there was a real impetus to become even more aggressive,” says Jennifer Kearney, energy program manager, New York Presbyterian Hospital. “This impetus came in large part from the top down.”
But getting buy-in often takes some convincing, showing either that the effort won’t cost much or the paybacks will be generous.
“At first, senior executives were probably humoring me a bit,” Walraven says. “They said, ‘Sure Brenna, sounds fine. Keep us posted.’ But after our first year and a half, we did a good job of demonstrating our results. When we won the Energy Star Partner of the Year award it really showed that we could be an industry leader with respect to energy efficiency and the environment.” Winning the award two more times reinforced that message.
For senior managers it’s not just the platitudes and payback that count but also what energy efficiency means to tenants and other building occupants. Walraven says that one result of their energy efficiency efforts, in addition to savings, was increased tenant retention, which is above average for the industry.
Thomas Fernandez, energy manager for the Colorado Springs District 11 schools, says management paid attention when the money started rolling in.
“Before the district’s energy program started, there was little awareness of how significant an impact effective energy resource management could have,” Fernandez says. “The results of the program spoke loud and clear with more than $4.1 million in savings since its inception 6 years ago.”
Now, district management sees the program as a reflection of its efforts to be good stewards of taxpayer dollars and the environment.
However, the battle isn’t won solely in the boardroom. Employees also have to accept the energy strategy. Money helped, Fernandez says. The program provided a cash-back incentive with the energy savings going back to individual schools for their use.
When a lighting project was done with in-house staff, Kearney says, the hands-on work turned the hospital’s Energy Star strategy into a real motivating factor. Rather than resist the extra work — facility staff performed the retrofit in addition to their other duties — the employees found enlightenment.
“Facility staff reported now that some rooms were too bright and decided to remove fixtures,” she says. “This led in some cases to a reconfiguration of the lighting system. They began looking for other ways to save.”
Facts are facts
If there is one thing facility executives don’t have to be told these days, it’s that energy is a significant cost to the organization. On the operations side of many organizations, energy is among the largest expenses for which facility executives are responsible. And big numbers, especially on the expense side, get recognized by CEOs, COOs, CFOs and other senior executives.
Collecting meaningful numbers is a step in winning approval for projects. Energy Star’s benchmarking tool allows for one building to be compared with others by making all things — utility costs, energy sources, climate, altitude and other factors — equal. The tool will boil all the information down into an Energy Star rating from 1 to 100, with 100 being the highest score.
But managing the data requires a commitment.
“Our company was initially a little reluctant in partnering with Energy Star for fear that reporting requirements would be too burdensome,” says Cliff Timko, energy manager, Giant Eagle. That commitment to measurement, however, has been critical to Giant Eagle’s success as a Partner of the Year for the last two years.
“The power monitoring of large energy-using equipment throughout the stores allows us to model each piece of equipment operating at its optimum and trigger weekly exception reports if any piece exceeds its optimized modeled energy use,” he says.
With these reports, plus submetering of some equipment and utility bills, Giant Eagle is able to benchmark stores by total energy use and by kilowatt-hour per square feet or by btu per square foot, he says.
The value of monitoring energy use goes beyond money in the existing stores.
“The added knowledge that is gained translates into improved designs in new and remodeled stores,” Timko says.
There is more to the bottom line than energy savings. But the asset value of energy improvement is something that many building owners overlook when considering, or not considering, energy upgrades. This impact on market values has become more defined since Energy Star has matured and has been worked into financial analysis tools used to calculate asset value, Lupinacci says.
“Some low-cost, no-cost measures we’ve undertaken are scheduling of systems, elevator operation, group relamping and even VFDs,” says Dennis Thurman, vice president of engineering services, Transwestern Commercial Services. “These are effective and a pretty easy sell to short-term owners. They can add instant value.”
There is a short-term benefit to asset value, however, even when considering capital projects with a normally long-term payback.
“Replacing an older chiller that can no longer be written off and is incredibly inefficient and may even use expensive R-11 refrigerant might make sense for short-term holders because a new one could significantly increase the value of the property,” Thurman says.
“Utilities are 30 percent of a building’s operating expenses, and every $1 invested in energy performance measures is equivalent to an increase in asset value by $2 to $3 at a 10 percent cap rate,” he says.
In its 10 years Energy Star has helped create a legacy of building technology and management that has changed the way facility executives view their roles, Walraven says.
“We’ll never lose sight of the financial benefits of our efforts on energy performance,” she says, “but we’ve also improved our ability to assess performance in terms of tenant and employee comfort, energy consumption, asset value and the positive impacts on the environment.”