Three Things Driving Energy Efficiency in Buildings Today

on September 09, 2013 at 12:00 PM

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Buildings account more than 40% of energy consumption in the United States, and 30%-50% of that usage is routinely wasted. Despite this significant economic and environmental opportunity, building energy efficiency is vastly underfunded today.

Government, utilities, technology vendors, energy service providers, software providers, and a host of other organizations are working to change this dynamic. Specifically, in order to spur greater investment in building energy efficiency, there are three key ingredients driving this shift: policy frameworks that encourage market activity, the ability to dramatically lower time and cost to evaluate buildings for efficiency, and easier access to financing.

Fortunately, there are a variety of new and ongoing activities related to government mandates, open data and analytics, and financing, which target these industry challenges. Each is helping unlock the potential in building efficiency.

Government Mandates

Government entities at every level are making building efficiency a priority and setting the tone for the entire market.

Starting at the top, President Obama and recently appointed Energy Secretary Ernest Moniz have made it clear that energy efficiency will be a cornerstone of future climate change policy. The federal government is leading by example as well: Federal government buildings are subject to Executive Order 13423 and must reduce energy intensity by 30 percent by the year 2015.

At the state level, mandates are driving efficiency as well, especially those coupled with utility programs. State-wide energy efficiency programs funded by utility rate payers have existed for decades, but goals and spending are intensifying. In 2011, $6.7 billion was spent on utility energy efficiency programs in the United States, according to the Consortium for Energy Efficiency. That number is expected to reach as high as $15.6 billion by 2025, according to The Lawrence Berkeley National Laboratory.

At the city level, building efficiency ordinances are popping up across the country. A slew of cities, including Boston, Seattle, Philadelphia, Chicago, New York, and San Francisco, have mandated that buildings receive an ENERGY STAR rating as a first step to benchmark their energy usage. New York and San Francisco have taken an even bigger step by requiring energy audits that help owners and operators find cost-effective ways to reduce consumption.

Together, these government forces are encouraging building owners and businesses to invest in energy efficiency.

Data and Analytics

In order to bring scale to building efficiency, we need data, and sophisticated analytics to evaluate that data. Fortunately, both of these trends are emerging.

In terms of data, quite simply, more of it is becoming available. With the increasing penetration of smart meters, for example, more and more of the building stock is generating granular consumption data. And accessing that data is getting easier as the industry embraces initiatives like Green Button. Asset data — or information about a building’s physical systems — is also becoming more readily available.

We need to move faster on the data availability front and continue to push standards, but progress is being made. New York City, for example, has made a number of meaningful building data sets available to the public.

Raw data by itself has limited impact.  But when analytics are applied to data, we can derive powerful insights – like determining energy efficiency potential of every building in NYC shown in the map below.

NYC Data Cropped

New analytic solutions enable four key functions:

      1. Target buildings with the best potential. According to Retroficiency data, 30% of the buildings account for 70% of the efficiency opportunity, so it is important to focus on the buildings that matter the most.
      2. Engage stakeholders with customized recommendations. Customers are more likely to become interested in a program if they understand the opportunity — analytics helps identify operational changes and retrofits without ever going on-site.
      3. Convert audits into real energy savings projects. Today, too many energy audits do not turn into projects. New solutions allow the industry to evaluate buildings more comprehensive and quickly, so that owners and managers are presented with the best offers while they are interested.
      4. Track for new opportunities. Retrofit technologies and incentives are constantly evolving. With cloud-based analytic solutions, it becomes much easier to dynamically retarget and re-evaluate buildings.

All of this means that we can save more energy at a fraction of the time and cost that it used to take.

Efficiency Financing

Energy efficiency can often offer businesses a high return on their investment. The challenge is that businesses are sometimes hesitant to invest capital in an area that may not be core to their operations.

A number of initiatives are designed to remove this capital barrier. On-bill financing options, whereby the customer pays for efficiency upgrades through their energy bill, continues to gain momentum. Energy retailers and service providers are using on-bill financing to make the investment a no-brainer. Constellation’s Efficiency Made Easy program is one such example.

On the other end of the equation, there are initiatives to ensure more and more financial institutions can easily fund efficiency projects. Environmental Defense Fund’s Investor Confidence Project is an industry program designed to provide guidelines for retrofit projects so that banks can make sound investments.

Conclusion

Making building energy efficiency happen at scale has traditionally been complex. But it doesn’t have to be.

The innovations and activities like the ones I touched on above will help us address new segments of buildings and go deeper in each one with a more comprehensive approach.

With the right infrastructure in place combined with educating those who stand to benefit most, we can and will tap the full value of building efficiency.

Bennett Fisher has spent more than a decade building businesses in the real estate sector, acquiring and operating more than $500 million in commercial building assets and directly developing innovative enterprise software. In 2009, Fisher founded Retroficiency, the building efficiency intelligence company, to enable energy service providers, utilities, and owners to cost-effectively prioritize high potential commercial buildings and evaluate thousands of energy efficiency measures in minutes. He holds a BA in Economics from Johns Hopkins University and an MBA from Massachusetts Institute of Technology.