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In June 2008, officials from the Building Owners and Managers Association (BOMA) International and Clinton Climate Initiative (CCI) gathered at the Denver Convention Center to make a landmark announcement: The two organizations had agreed on model language that would make it easier to execute performance contracts in commercial buildings. The documents would be released to the industry for free.
The goal of the agreement, reached cooperatively with some of the nation’s largest energy service companies, was to use performance contracting to reduce the carbon footprint of commercial real estate.
For all the excitement about the announcement, the timing couldn’t have been worse. A few months later, the real estate industry became ensnarled in the global financial crisis. End of story for the new contract documents? Not quite.
Although the financial crisis has drawn attention away from energy upgrades in many firms, there are still signs of progress.
Earlier this year BOMA published a finalized version of the documentation, called the BOMA Energy Performance Contracting (BEPC) model. In April, the owners of the Empire State Building announced that a $20 million performance contract had been signed to reduce the building’s carbon footprint, using BEPC as a model.
“They edited it like we expect all users to do,” says Brenna Walraven, former chair of BOMA who made the announcement. She is also managing director of national property management for USAA Real Estate. “It’s not like you can take the document off the shelf and just fill in the blanks. You need to take the complete document and tweak it for a project’s needs, and that is what they have done.”
The Empire State Building is significant because it marks the first high-profile commercial building to undergo retrofits under CCI. The project is also a milestone because it is particularly aggressive and because the owner has been unusually open about the process.
The team from CCI, Jones Lang LaSalle, Johnson Controls and the Rocky Mountain Institute settled on eight measures that could reduce the 77-year-old building’s energy use.
To reach a decision, the team evaluated 67 building measures, which were grouped into different combinations. Each combination was plotted on a chart that evaluated the impact on net present value (NPV) and greenhouse gas emissions, says Peter White, Johnson Controls’ director of response for CCI. The goal was to find the combination that maximized NPV and greenhouse gas reductions.
“You could really see by doing the math that way where you were and were not getting the best bang for the buck,” says White.
The measures selected include refurbishing the building’s 6,500 windows on site, adding insulation behind the building’s radiators to reduce heat loss, improving tenant lighting (including daylighting measures), replacing air handlers with variable speed units, retrofitting the chillers, upgrading controls and submeters, and adding Web-based energy monitors for tenants.
Key to making the project work was identifying how energy efficiency improvements complemented the building’s existing capital improvement plan, then optimizing the sequence of work. For example, the building already was replacing constant volume air handlers. Now it will replace them with floor-mounted variable units instead, which will save energy and reduce operating costs.
The building also had plans to add air conditioning to hallways, an expensive project because the HVAC system is at capacity. But window improvements will reduce HVAC load for hallway cooling. Those savings were used to stretch the retrofit budget.
The Empire State Building project isn’t the only sign of progress. Just last month, Willis Group Holdings — owner of the Sears Tower, now known as the Willis Tower — announced plans to slash common area energy use by 80 percent. Though the upgrades are independent of CCI, the plans call for deep changes: upgrading the building’s 16,000 single-pane windows, a boiler upgrade, advanced lighting controls and elevator modernization.
“The Sears Tower project is an extremely aggressive, cutting edge project that sets a great standard for other owners out there,” says Arah Schuur, director of the building retrofit program for CCI. “The Sears Tower and the Empire State Building are old buildings, not something that was built five years ago that needs some tweaking.”
Meanwhile, retrofits are occurring in local government buildings. CCI has partnered with C40, an organization dedicated to reducing climate change that is made up of the world’s largest cities, to drive retrofits. The largest markets for performance contracting are still municipal government, higher education and the federal government,” says Tammy Fulop, regional director of sales for TAC.
Houston has partnered with TAC and Siemens to execute performance contracts in a variety of the city’s buildings, as part of its goal to reduce the city’s greenhouse emissions in 2010 to 11 percent below 2005 levels. London partnered with Honeywell in a performance contract to reduce electricity and gas use in 22 buildings, a project with guaranteed energy savings in excess of $1 million.
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