How To Get Utility Rebates for Energy Efficiency In New Construction
When the subject of rebates and other utility energy incentives comes up, most facility managers think of upgrades to existing facilities. But increasingly incentives are available from utilities companies and other groups for new construction. A big reason: New structures can potentially go deeper in energy savings through state-of-the-art green technology and construction. “It’s easier to get a big bite of the apple at construction,” says Adam Cooper, director of research and strategic alliances at the Edison Foundation’s Institute for Electric Innovation.
The New York State Energy Research and Development Authority (NYSERDA) has been facilitating incentives for new commercial construction since 2000, according Stephen Finkle, senior project manager for commercial new construction. NYSERDA wants to expand the market of energy-efficient new buildings. “We are trying to encourage building owners and tenants of commercial properties in either new or gut-renovated buildings to make their buildings more energy efficient because that can help them reduce their energy consumption, provide a healthful, productive workplace, and contribute to the bottom line,” Finkle says.
NYSERDA provides technical and financial support for owners and tenants who pursue green building certification. The technical support is given during construction — to the owner and design team — while the financial support is awarded if the building meets certain energy efficient measures in the areas of lighting, heating, and air conditioning. The money essentially covers the extra cost of the technology that moves the building above code requirements. If green certification is of interest — either through the LEED rating system or the Collaborative for High Performance Schools (also a nationwide program) — the owner gets help to register and comply with the programs. The majority of upgrades are made in lighting and HVAC systems, Finkle says.
Seattle City Light also provides a range of incentives for new construction that exceeds code requirements, with support for high-efficiency lighting, HVAC systems, and appliances; high performance envelopes (including windows and insulation); and integrated building controls. “If a particular measure saves energy relative to what is required by code, we can likely provide an incentive,” says Joseph Fernandi, energy management analyst supervisor, customer energy solutions.
The Savings by Design program for new construction is a Pacific Gas & Electric Company initiative that “incentivizes both owners and design teams to design and build commercial buildings that exceed that state’s building code by 10 percent or more,” says Ari Vanrenen, spokesperson for PG&E. It offers cash incentives and technical assistance — up to $150,000 in owner incentives and up to $50,000 for the design team.
Often new construction has more opportunity to create energy efficiencies, Vanrenen says. One example: Wall insulation is more affordable during initial construction than during a retrofit.
A PG&E customer embarking on new construction can use a whole-building approach to energy savings or a systems approach (which includes daylighting systems, interior lighting systems, HVAC systems, service hot water systems, and other systems and processes).
While measure-based incentives are the simplest approach to new construction incentives, according to Fernandi, they “leave savings on the table” because they cannot measure interactive effects easily. Energy modeling is needed to measure interactive effects, and modeling can be expensive and hard to verify, he says. That’s why Seattle City Light is looking at performance-based incentives and paying “based on what is actually happening in the building.”
Whether incentives target new construction or existing buildings, a common challenge exists, says Finkle: “getting someone’s attention.” With new construction, it’s especially easy to overlook energy efficiency when so much attention has to be paid to integrating structural systems, installing HVAC and lighting, and worrying about finances. In encouraging building owners to design energy efficient buildings, Finkle says, it’s important to remind them that reduced energy consumption contributes to the bottom line. “The money saved over a 20-year period dwarfs what is actually received in cash incentives,” he notes.
While energy efficiency upgrades for new construction offer an opportunity to save money, both short term and long term, they are not without complications. One difficulty is defining an appropriate baseline, says Fernandi. In existing buildings, this is easier to calculate, because it is a comparison of the “existing condition” to the building post-retrofit. “But the baseline for new construction projects is a ‘what might have happened’ scenario based on what is required by code,” Fernandi says.
Another issue is that more people are at the table. Retrofits, which may affect only a single end-use, such as lighting, generally require interfacing with only one contractor. New construction, however, may include building owners, developers, architects, engineers, energy modelers, product suppliers, commissioning agents, property managers, and tenants, Fernandi says. “All of them can play a role in influencing the ultimate design of the building and may or may not have a vested interest in energy efficiency,” Fernandi says.
Tougher energy codes for new construction pose another challenge for new construction incentive programs. If a state has not updated its energy code for 20 years, there are many opportunities to achieve energy performance above the level mandated by code. But as building codes become more stringent in mandating energy efficiency, it is harder to achieve the additional performance needed to beat the code and therefore to obtain an incentive or a rebate.
That’s not to say that utilities are complaining about tougher codes. Updating building codes transform the market and teaches construction trades how to build more efficient buildings, Cooper says. Incentives are meant to further this agenda. A knowledge exchange occurs when codes are updated, creating a more educated contractor and developer, as well as a feedback loop that moves energy efficiency forward.
Seattle has “some of the most stringent energy codes in the nation,” Fernandi says. The utility has to recognize that the path to higher performing buildings requires code development and enforcement, as well as incentive programs for energy efficiency beyond code. “We recognize code development as a tool to raise the bar on energy performance,” he says.
To obtain the best incentives for new construction, it is important to contact the energy company as early as possible. The utility, building owner, and design team should forge a partnership early on to create a project that will garner the greatest incentive awards. Vanrenen says that approach will ensure the return on investment when buildings operate and function as intended.
Early engagement with building owners and design teams should establish clear project goals around energy efficiency. “If the benefits are communicated early on in the process, they are much more likely to remain in the owner’s project requirements, survive the ‘value engineering’ process, and ultimately become a part of the building design,” Fernandi says.
Early collaboration made a big difference in energy savings when a new school being built scrutinized its kitchen operation. “They looked at how they produced food, at what time of day, and what equipment they used, and the team working together reconfigured what they did to produce school lunches that significantly reduced energy usage in the kitchen area,” Finkle says. “That could not have happened without involvement of the operations staff.”
Early involvement should extend to the financial decision-makers, who should be made to understand the benefits of an energy-efficient building that creates a higher value asset.
“Utilities can often help facilities personnel make a business case for being proactive about energy efficiency,” Fernandi says. He counsels stressing non-energy benefits such as increased asset value, higher quality living/working environment, improved productivity, and fewer tenant complaints.
Maintenance savings is another potential benefit of energy efficiency measures during new construction. For example, if 1,000 fluorescent lamps are installed in a new building, the lamps will have to be replaced every three to five years, Finkle says, “Think of the labor cost of getting the tubes ordered and the bulbs changed,” he says. “If you put in LED fixtures, however, they cost a little more but save a significant amount of energy and last longer.”
Maryellen Lo Bosco is a freelance writer who covers facility management and technology. She is a contributing editor for Building Operating Management.
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