Monday, December 26, 2011

Commercial energy efficiency retrofits in the Greater Philadelphia region could spur $618 million in local spending, support 23,500 jobs
A report released on November 6, 2011 estimates that nearly half of the commercial buildings in the Greater Philadelphia region are good candidates for energy efficiency retrofits, and that undertaking these retrofits could spur $618 million in local spending and support 23,500 jobs. Another report details the policies and programs already undertaken in the region to encourage retrofits, and outlines additional proven steps that could help the region take advantage of this economic opportunity.

“These reports provide ample evidence that the Philadelphia region is well-situated to take advantage of the economic opportunities inherent in energy efficiency retrofits. Removing barriers and employing new policy tools to spur retrofits will not only save energy, but also grow jobs and stimulate the regional economy” said Dr. Mark Alan Hughes of the University of Pennsylvania, and leader of the Policy, Markets and Behavior task team for the Greater Philadelphia Innovation Cluster (GPIC) for Energy-Efficient Buildings, which commissioned the reports.

GPIC is a consortium of 24 institutions funded by $129 million in U.S. Department of Energy and other federal funds to create an Energy Innovation Hub at The Navy Yard. GPIC’s goals are to transform the building retrofit industry toward an integrated systems approach, to improve design tools, building systems, public policies, market incentives, and workforce skills needed to achieve a 50 percent reduction of energy use in buildings, and to stimulate private investment and quality job creation in Greater Philadelphia and beyond.

“The Market for Commercial Property Energy Retrofits in the Philadelphia Region”, conducted by Econsult Corporation, identifies 47 percent of the commercial and flex-industrial space between 20,000 and 100,000 square feet in the Philadelphia area for which data is available as potential candidates for energy retrofits. The eligible space includes 4,201 buildings with 154m square feet of space. The report compiled information on commercial building age, type, enclosure, materials, energy load, and owner concentration in the region.

The second report, authored by Cozen O’Connor staff, is entitled “Policy and Process Factors Impacting Commercial Building Energy Efficiency in Pennsylvania and New Jersey.”. The factors examined include laws, regulations, financial incentives, contracts, public bidding requirements and more. The study concluded that while Pennsylvania and New Jersey have enacted many of the available policy levers that could help encourage energy efficiency retrofits, there are still numerous direct and indirect barriers in place.

Additionally, the study found that processes necessary for full valuation of energy efficiency improvements are immature, causing increased transaction costs and making investments less valuable.
The typical Philadelphia commercial property spends $2.84/ft per foot per year on energy costs. By contrast, the average U.S. commercial property spends $2.21 per foot per year. Thus, Philadelphia’s energy expenditures are 29% above than the national average, and the fourth highest among 14 large cities studied as shown in the table below.

To narrow the universe to identify the "lowest hanging fruit," the study filtered properties by their end use, construction materials, and shape. The optimal candidate for energy improvements would be an older, low-rise brick building.

Not all buildings consume energy equally. Flex-industrial buildings, including warehouses, account for about 53 percent of the structures studied. But they consume about half the energy per square foot as the average commercial building, such as an office.

The study identified 2,047 buildings as retail, hospitality, or health-care businesses, which consume more energy, according to federal statistics cited by Econsult.

The authors said that lower-rise buildings - with fewer than six floors - are more cost-effective candidates for improvements.  Using data and findings from Emmerich, et al that suggest primary energy savings (HVAC) from reducing air infiltration averages 20-30% is only cost-effective for low-to-mid-rise buildings of five stories or less, the authors determined that buildings five stories or below in height are likely candidates for envelope or enclosure improvements, irrespective of age.

Buildings that depend on electric lighting rather than daylight for interior illumination are good candidates for improvements.  According to the Energy Star building manual (2006), electric lighting accounts for upwards of 35% of electricity use in commercial buildings.  If more than 50% of a building’s floor area is not daylit, then the building must necessarily utilize an above-average amount of synthetic lighting as a necessary substitute, and hence it is likely to cost-effectively benefit from an energy load retrofit.

Masonry buildings are likelier to have more exterior gaps and benefit from improvements rather than steel-and-glass buildings.

The authors narrowed the focus to those buildings owned by the 25 largest commercial landlords for the "purely practical" reason that it will be easier for GPIC to deal with a few owners of multiple properties if its goal is to maximize its impact.

It whittled the prime list down to 232 larger buildings totaling about 50 million square feet, mostly in the commercial corridors of inner-ring suburbs such as Pennsauken, Valley Forge, Plymouth Meeting, Malvern, and Mount Laurel. The buildings were also concentrated in industrial corridors in Thorofare, Bridgeport, Hamilton, Bristol, Northeast Philadelphia near Philadelphia International Airport, and at the Navy Yard.

The reports and supporting materials can be found at

Greater Philadelphia Innovation Cluster (GPIC) 
November 6, 2011

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