The District Of Columbia, which has more LEED certified buildings than any other city, recently finalized legislation that requires owners of large buildings to benchmark and report energy and water consumption. This information is made public. DC Mayor Vincent Gray has stated that he wants the District to be “fossil-free” by 2030.
DC is not alone. Over the last two years Austin, Seattle, New York City, San Francisco and Philadelphia have all enacted similar legislation, with several others at the draft stage. Benchmarking is becoming the norm and over time will no doubt extend to most major cities.
Initially the rules in DC cover buildings over 100,000 sf. In 2014 the regulations will be extended to those over 50,000 sf, impacting approximately 2,000 buildings.
Buildings represent 75% of DC’s energy consumption and carbon emissions. Benchmarking and disclosure are seen as the first steps to improving performance, and a cornerstone of the District’s longer-term goal of embedding energy and water efficiency in the transaction value of buildings.
Owners must submit data via the U.S. EPA’s ENERGY STAR Portfolio Manager web portal. Portfolio Manager is an interactive tool that allows an owner to track and assess energy and water consumption across its entire portfolio of buildings in a secure online environment.
Owners who are not in compliance will be fined $100 per building per day. Many in the commercial real estate market place are already familiar with the tool. Approximately 15% of the buildings covered by the DC rules already achieve the EPA’s ENERGY STAR designation and many more use Portfolio Manager for data tracking. We are often asked to help with ENERGY STAR certification and many owners go through this process at the same time as a LEED for Existing Buildings rating.
Paladino has worked with a large portfolio of buildings in the metro DC market that used Portfolio Manager to benchmark energy, and they benchmarked water usage with their own proprietary tracking tools.
These are lessons learned from that process that other building owners can apply to their own benchmarking efforts, whether or not their buildings fall under the DC disclosure laws –
- Facilities staff should walk through their building using the Data Checklist available in Portfolio Manager to physically verify the tool’s data inputs (such as number of server rooms and other types of spaces in the building) as these can have a major impact on the rating.
- The staff will need to coordinate with tenants to assess the use of space and IT equipment, including desk based, in server rooms and data centers, and to confirm full time and part time occupant counts. For example, a tenant may be paying rent on vacant space.
- Several utilities offer tools and technology that make data collection much easier. For example, DC Water uses smart meter technology that can reduce the burden of manually taking meter readings, especially if the readings are in a manhole!
- DC Water also uses online tools that can report water consumption daily or at more regular intervals, allowing an owner to update Portfolio Manager without waiting for the bill. This feature is accessible in the “My DC Water Login” section of the utility’s website.
Currently the legislation allows owners to decide how to act on the information once the benchmarks are established, without requiring specific remedies. There is talk about legislation that would also require owners to improve performance based on what they learn – NAIOP offers a summary of the pros and cons of this approach. However, improvement is more likely to be driven by market forces given the practical issues with execution. Municipalities are betting that the public disclosure of energy performance data will bring transparency to energy consumption and create market pressure for more efficient buildings.
Benchmarking Not the Full Story
Benchmarking against other buildings is only one indicator of performance, and often doesn’t tell the whole story of what is driving energy or water consumption in a building.
For instance, two identical buildings could have dramatically different energy profiles based on how tenants are using the space, a factor that the landlord may have little or no control over. If a publicly disclosed performance rating shows one as efficient and the other as less efficient the landlord may see an impact in terms of the transaction value of the building.
Based on our experience working with national and international building portfolios, there is often more value in focusing on year on year improvement within a subset of the portfolio, or on individual buildings. This is because while the people who work in each building are the most important factor in how much performance can improve, controlling energy and water consumption falls lower on the to-do list compared with keeping systems working and responding to everyday emergencies.
Annual benchmarks are a baby step to getting actual feedback on how the building is performing. Then building operators need to be empowered and equipped with the resources to make an impact – not just training.
Want to See Real Change?
The largest real estate companies can more effectively manage individual building operations, and staff training, based on receiving consistent feedback on building performance.
Consider the following questions that we ask clients when planning energy and water management programs:
- Can you find personal reasons why your team should get on board? Not everyone is passionate about improving shareholder returns or balancing the budget, but we all have issues we care about like leaving a better place for our kids, or protecting the environment.
- Are you providing practical training on tactics your team can take to save energy and water, that go beyond telling them to meet high-level targets? Ensure the program includes very explicit direction on not just WHAT the team needs to accomplish, but HOW it will get done.
- Who in your organization exhibits the behaviors and performance you want others to emulate and how can you encourage them to set the standards? Benchmarking your portfolio discloses the high and low performers.
- Have you identified internal “champions” with the technical skills to support operations teams? Can you encourage them to share their knowledge? Can you use energy manager champions or resource conservation managers as a support mechanism to do the technical heavy lifting and give the operators a head start? Are there champions in the portfolio who are already doing great work who can share their knowledge? In the facilities management world “show me” trainings delivered by peers build trust and make the case for reducing water and energy consumption.
- How will people be held accountable? Do job descriptions incorporate responsibility for achieving conservation benchmarks? Several of our clients track the performance of operations teams so that everyone knows who is completing the benchmark tasks on time, and who is saving the most energy or water.
- Is there an appropriate reward system in place — personal recognition, financial or other incentives — when performance improves? If owners rewarded staff with iPads, they might see ROI for that investment in a matter of hours in sustained energy savings.
- Is the feedback frequent and actionable? Do the feedback tools make it easy for the operators to know what to do next? Supervisory staff with excellent knowledge of how their building systems work may be held back by a lack of basic IT skills or language barriers. They have the will but not skills to succeed but could improve with training.
Once companies have the answers to these questions they will begin to realize measurable savings in their water and energy consumption.
Does your municipality require owners of large buildings to benchmark and report energy and water consumption? If you are an owner, how are you benchmarking your progress? Please share your thoughts in the comment box below.
Patrick Leonard is the leader of Paladino’s Portfolio Management Practice that specializes in performance optimization of existing buildings.