Let’s talk about BEPS.
The District of Columbia is committed to reducing greenhouse gas emissions 50% below 2006 levels by 2032 and 80% by 2050. Meeting these goals will require improving the energy efficiency of District homes and buildings, switching to clean, renewable energy, and expanding sustainable transportation options.
If DC is going to meet its climate commitments, the commercial real estate industry needs to be a big part of the effort, which is why DOEE has rolled out a program targeting existing buildings. A Building Energy Performance Standard (BEPS) is a minimum threshold of energy performance for existing buildings that will correlate to the local median ENERGY STAR score by property type. DOEE has been benchmarking data to the city for a while, but the BEPS mandate is new. You can find full details at DOEE.DC.Gov.
How it works:
Buildings are being phased into the program by size. Currently, any building larger than 10,000 sf is included in the BEPS benchmarking program. We’re not going to get into the weeds on the phasing and schedule here because it’s complicated and it’s shifting in response to COVID-19 conditions. You can find updates on the program here.
Property owners and operators have five years to improve the building’s ENERGY STAR your score if it currently falls below the median. If a building falls below the median and does not improve performance within the six-year compliance cycle, there will be fines.
There are two paths to improve the property performance, and each of these paths is embedded in the BEPS rules. One is a performance-based path, and the other is prescriptive. The performance requires either a 20% reduction in energy use/score or reducing energy use enough to match the median metric. Whereas the prescriptive path will be based on a specific set of measures. What’s common between the two paths is that you will need to identify Energy Efficiency Measures (EEMs) for the property, reduce energy consumption at the property, and report outcomes to verify compliance. The rulemaking for the prescriptive path is still being developed and will need to be published so that building operators can make an informed decision. Our hunch is that the prescriptive path will set a high and difficult bar, leading more operators to pursue the performance path.
Note that if your property is significantly underperforming and it takes you every minute of those five years to achieve the median ENERGY STAR score, you’ll be right back at the bottom when the next six-year cycle starts again. Our advice to operators of clunker properties is to overshoot the median as quickly as you can so that the pressure lifts in the next cycle.
What you need to know:
This program creates an environment of continual improvement. Rather than achieve a certain score and be “done”, building operators will need to ensure that buildings achieve the median ENERGY STAR score for their property type every six years. And as everyone improves together, the median score will get higher. This dimension of the program is crucial for DC to meet its climate goals, but it might be a point of angst for building operators with underperforming assets.
Regarding the fines: We anticipate that there will be some developers that would rather risk the fines than be proactive in dealing with energy performance. There are always skeptics when a program like this rolls out – but industry leaders and close followers are already talking about improved environmental performance, and we expect that there will be more operators that recognize both the letter and the spirit of the program and get on board than not.
What do we think of it?
This program is like many showing up throughout the US as the imperative to deal with climate change returns to center stage. Big picture, we think that the commercial real estate industry will only achieve GHG targets if the sticks are as big as the carrots.
We like that the BEPS program is time-constrained and attempts to lay out clear measurable performance requirements to comply.
Because some things remain open for interpretation there can sometimes be inconsistent action and guidance for enforcement. We hope that DOEE can provide consistent support and response to building owners as the program begins moving forward. This includes the treatment of exemptions and alternate compliance options.
Note that the measure for the program is based on energy performance and ENERGY STAR scores, but carbon emissions come from a lot more than energy use – especially when clean energy is available. In the next cycle of updates, DOEE has indicated in their FAQs that the metric might shift from ENERGY STAR to greenhouse gas emissions for this reason. You can read this post about shifting from energy to carbon as the primary sustainability target to learn more. If a building operator wants to get in front of this likely change, we recommend including greenhouse gas in your performance strategy sooner than later.
What you need to do:
Building owners and operators should have received a Benchmarking Scorecard detailing their compliance and performance But If you have a building that is larger than 10,000 sf and you haven’t been notified about your building’s energy performance, you may want to reach out to DOEE. Don’t let this sneak up on you.
The BEPS program outlines a six-year cycle, which looks like this:
- Year one: Understand your building performance and make a plan.
- Year two: Identify EEMs and confirm the EEMs that you will implement to achieve the target energy performance or prescriptive options.
- Years three and four: Implementation and testing reporting with permit drawings and documentation
- Year five: Produce an evaluation monitoring report that describes savings achieved and actions are taken.
- Year six: measurement and verification, and setting the new median.
You should start with an energy audit for each property. There are different types of energy audits, with different levels of intensity. Brad Greeff wrote about your options here. Retro-commissioning will likely be another part of the strategy to improve building performance once the energy audits have been completed. The DC Energy Code has provided more details about what needs to be done, and you can find details here for the Proposed Rulemaking.
Some of the guidance provided by DOEE about the BEPS program is vague, and there are going to be opportunities for the commercial real estate community to provide feedback and influence the program’s specifics. The public comment period was extended to March 4, 2021, and stakeholders are encouraged to provide feedback and help clarify those items.
While this program is targeted at existing buildings, if you have buildings in development or in construction, they will be included in future cycles. Therefore, it is important to stay ahead of the benchmarking and make sure your delivering buildings that are designed to operate and perform better than the median. Ways to do this include, leveraging your energy model to help make better design decisions and making sure your building is being commissioned to operate as designed. For newly occupied buildings, begin tracking building your energy and ENERGY STAR score to see where you may fall and begin addressing any issues now. Additionally, design with sub-meters will help isolate potential and future issues.
Also, COVID-19 has impacted the timing of the program, although we aren’t sure to what extent. It looks like they are going to add a year to the rollout in response to the pandemic’s impact on the DC commercial real estate market.
You should start early depending on the size of your building or portfolio – if you need to fix it in time to get the baseline of your next round – you need time to implement and measure results. As we get into years 2 and 3, energy audits may be in high demand, and you want to get your ECMs while you still have time to implement them.