http://www.prweb.com/releases/2014/01/prweb11510678.htm
Report details how to determine the full value of investments in building efficiency
Report details how to determine the full value of investments in building efficiency
On January 22, 2014 the Rocky Mountain Institute released a report, “How to Calculate and Present Deep Retrofit Value: A Guide for Owner-Occupants,” that defines the non-energy costs and benefits, risk reductions and overall value of deep energy retrofits.
Deep energy retrofits provide substantially greater energy savings—often reducing a building’s energy consumption by up to 50 percent—than traditional retrofits and other building efficiency upgrades. While deep energy retrofits in the United States and around the world are attractive investments, they still receive far less attention and capital than they deserve. This is partly due to a narrow definition of their value, typically focused on energy cost savings alone, as well as the confusion and uncertainty around how to calculate, present and justify such additional value streams as part of a retrofit capital request.
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This report provides a structured and evidence-based methodology for determining the costs and savings of many other value streams, from additional operating cost savings categories to revenue drivers like employee comfort, health and productivity, and even market and reputation risk mitigation.
When planned and executed properly, a deep retrofit can decrease company and property operating costs, help manage enterprise risk, and enable bigger and more sustainable company revenues, all of which lead to higher property and company value. The guide reviews a set of value elements to illustrate how the economics of investing in building energy efficiency can dramatically improve when all value that is created is recognized. Nearly all retrofit stakeholders can tap into these value streams, including corporate real estate managers, building owners, occupants, lenders, developers, corporate sustainability offices, energy managers, government entities, and the full range of sustainability and real estate service providers.
“By systematically assessing the additional value streams in the deep energy retrofit process, building or facility managers can make a strong case for deep energy retrofits in a way that unlocks value for the entire building or portfolio of buildings, instead of just doing tiny, short term projects capturing ‘low-hanging’ energy savings with very short payback periods but not improving the employee environment or reducing risks,” said Scott Muldavin, an RMI senior advisor.
The report is the latest installment of resources RMI has provided for driving the greater adoption of deep retrofits, and accelerating overall retrofit activity. RMI is seeking partners who will use this report to refine their retrofit decision making, test enhanced retrofit strategies, and drive energy efficiency even deeper on new projects. In addition, RMI is currently working with CoreNet Global—the world’s leading association for corporate real estate professionals, service providers, and economic developers—to identify more examples and best practices for getting to deeper levels of energy savings.
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Retrofit development costs are complicated to calculate and present accurately, and are often misunderstood and misrepresented due to the general difficulties of cost forecasting, made more difficult when new products, systems, and contracts are used. Further complicating the analysis is that it is often difficult to properly allocate the energy/sustainability retrofit costs, as they are generally an incremental portion of the total retrofit development budget....
Many of the most prominent studies looking at green premium costs are based on new construction, and do not well represent existing buildings. Evidence from new building developments, and the experience and claims of major contractors, suggest retrofit cost premiums for high levels of sustainability may be 10 percent
or more (compared with the cost of a major renovation) with greater cost volatility.
But ... many retrofit projects have little cost premium if timed correctly with other capital improvement projects and if the project follows best practices....
The total retrofit development cost budget for all of the planned upgrades is called the gross retrofit cost. The gross cost of deep retrofits will vary greatly based on a wide range of factors, including building type, project team experience, project location, site conditions, the varying ways energy use reductions are achieved, and the significant underlying variances in building age, construction type, and other variables. An article in the Journal of Sustainable Real Estate stated that the gross cost of a retrofit of all major energy-using systems in a typical 500,000-square-foot office building is $10–$20 per square foot. Case studies of recent deep retrofits of office buildings revealed an energy-efficiency cost premium of $3–$31 per square foot.
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Subsidies and Incentives for offsetting deep retrofit costs included the following
Subsidies and Incentives
Tax Credits & Incentives
■ Federal IRC 48 provides a 30-percent tax credit for qualifying renewable energy projects.
■ Georgia provides an income tax credit for lighting retrofits and other energy-efficiency projects.
■ Oregon offers business energy tax credits for investments in sustainable buildings or renewable energy.
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Grants, Rebates, and Other Financial Subsidies
■ A Pennsylvania program offers up to $2 million grants for high-performance building programs.
■ Numerous California utilities offer incentives up to $500,000 when building efficiency exceeds a threshold, with an additional $50,000 for enhanced commissioning, certification, and monitoring.
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Entitlement-Related Benefits
■ Anchorage refunds permitting fees for LEED projects.
■ Seattle, Chicago, San Diego, San Antonio, and Santa Barbara County offer expedited permitting or permit assistance.
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Subsidized Lending
■ An April 2012 study by Resources for the Future identified 226 government and utilities-related energy efficiency financing programs on the books in 2011, over 150 of which covered commercial properties.
■ Approximately 30 states have passed legislation authorizing PACE loans and many localities—including San Francisco, Washington, D.C., Los Angeles, Cleveland, Miami, New Orleans, and Madison—have programs underway.
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Reduced Maintenance Costs
Based on ... experience and studies on the correlation between green buildings and maintenance costs, green buildings generally cost less to maintain than the average building (in the range of 5–10 percent).
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■ A 2008 Leonardo Academy study found that properties certified with LEED for Existing Buildings (LEED-EB) had a median maintenance and repair (not including janitorial) cost of $1.17 per square foot compared to the regional average of $1.52 per square foot. After accounting for slightly higher janitorial costs ($1.24 vs. $1.14 per square foot), the overall cost of maintenance was $0.25 per square foot cheaper, or a 9 percent annual maintenance cost savings.
■ According to a 2010 Aberdeen Group study, adopting a data and performance management strategy can cut 14 percent or more of maintenance costs, allowing for visibility and routine tracking of key performance metrics such as operating costs, budget, and energy consumption; and increased collaboration between departmental stakeholders.
■ A study conducted for the U.S General Services Administration (GSA) found that 12 green GSA buildings had maintenance costs on average 13 percent less than the baseline....