Deep Building Retrofits Drive Big Gains in Energy, Cost Savings

Since the economic collapse, real estate owners have sought ways to cut costs, retain tenants, increase market performance and gain competitive advantage. A deep retrofit can achieve these objectives by turning business-as-usual upgrades into profit centers.

Existing buildings are full of energy efficiency opportunities waiting to be realized. While some savings are obvious and easy to reach via one-off upgrades of windows, lighting and appliances, by using an integrated, whole-buildings design approach, profoundly larger energy savings can often be gained at little or no added capital cost.

President Obama’s announcement last week of plans to reduce energy use in the commercial building sector 20 percent by 2020 underscored the economic opportunity that retrofitting the U.S. commercial building stock presents — both to business owners looking to cut down on energy costs, and energy service providers trying to get a leg up in a competitive market.

Jump-Starting a Constrained Industry

Estimated to eventually save business owners up to $40 billion a year in offset electricity costs, Obama’s Better Buildings program could provide the jump-start the industry needs through proposed tax incentives and creative financing mechanisms to drive job creation and increase building valuation — while reducing the country’s dependence on fossil fuels.

“With 80 billion square feet of commercial space that needs to be retired or retrofitted over the next 20 to 30 years, there is an enormous market opportunity right in front of us,” said Victor Olgyay, a principal with Rocky Mountain Institute’s buildings practice.

While the Obama administration’s proposed initiative is a step in the right direction, deep energy retrofits — those that save at least 50 percent of energy operating costs with positive financial returns — offer greater opportunities for cost savings by recognizing how efficiency gains in one system can affect other building systems and attributes. These interrelationships often let many small improvements combine to create substantially larger benefits.

“Many people assume that it is too hard to do deep energy retrofits and instead invest just enough to deliver a return in the shortest amount of time,” Olgyay said. “But in reality, it may be much more prudent to go for a deeper level of investment in order to reap greater energy cost savings for the lifetime of the building.”

Going Deep: Making the Right Investment

Rocky Mountain Institute’s RetroFit initiative, part of the nonprofit organization’s larger goal to drive the transition from fossil fuels to efficiency and renewables, aims to encourage the retrofit of the U.S commercial building stock to use, on average, at least 50 percent less energy by 2050, via the wide adoption of deep energy retrofits.

Work is nearly complete to carry out the award-winning retrofit design of the Empire State Building by RMI and our partners — the Clinton Climate Initiative, Johnson Controls and Jones Lang LaSalle. The landmark will be 38 percent more efficient and save $4.4 million in annual energy costs and now many other large commercial properties are lining up to follow in the Empire State Building’s footsteps, such as the Byron Rogers Federal Building in downtown Denver.

On track to reduce the building’s energy use by 70 percent, the project — led by the General Services Administration and in conjunction with the design-build team — will create more than 2,000 jobs while saving taxpayer money through greatly reduced utility costs. Funded with nearly $140 million from the American Recovery and Reinvestment Act, the building is slated for a series of efficiency measures designed to surpass the federal goals outlined in the Energy Policy Act of 2005.

By targeting diverse projects, RMI aims to better understand the strengths, weaknesses and applicability of various approach to deep retrofits, share these lessons with the industry and ultimately bring deep retrofits to scale. Online resources like RMI’s new RetroFit Depot, for example, are available to detail the entire design and execution process, offering case studies, tools and best practices for both building owners and energy service providers.

“Although RMI has several high-impact pilot projects under our belt,” Olgyay said, “reducing energy use on a large-scale in commercial buildings requires widespread industry momentum. Obama’s initiative has the potential to move us in the right direction by bringing this opportunity to the public’s attention. Now, it’s up to the industry as whole to capitalize on it.”

(Originally Published in Greenbiz on February 7, 2011.)