Deep Retrofit: Empire State Building Deep, 2009
The Retrofit Depot
A deep energy retrofit is a whole-building analysis and construction process that achieves much larger energy cost savings—sometimes more than 50% reduction—than those of simpler energy retrofits and fundamentally enhances the building value. Deep energy retrofits create deep energy savings but not always at once—measures can be implemented over several years.
How is it Different?
Most retrofit approaches are considered “light” because they focus only on upgrading lighting equipment and adding new motors to the heating and cooling systems. This leaves out bigger savings stemming from deeper measures like new windows, which can reduce heating and cooling loads to the point where big-dollar equipment can be reduced in size and cost. Such interventions are typically not considered because of high up-front cost and perceived higher risk. Those implementing a deep energy retrofit consider all major capital needed in the building over the next several years and plan interventions to this business-as-usual scenario to create higher efficiencies and other benefits. Upgrades can occur all at once or be phased over several years, depending on your budget or financing mechanism. A deep energy retrofit can meet all business-as-usual objectives in addition to many other benefits—many more than a simple energy retrofit.
Building the Case
Owners, investors, and occupants build the case for deep energy retrofits differently, depending on their unique circumstances. Owner-occupants of larger properties usually have more resources to conduct a comprehensive building analysis and therefore a greater ability to derive benefits from efficiency investments compared to smaller property owners and occupants.
How to Retrofit
You’ve the built the case for a deep energy retrofit and now comes the time to capture the opportunity. You’ll have to think through financing for the analysis costs and capital improvements. You’ll also need to know the key action items to make your process truly a deep energy retrofit and decide when to implement the capital improvements per your financing mechanism or budget.
Financing Deep Energy Retrofits
Owners, investors, and occupants will naturally think of retrofit financing differently, depending on their unique circumstances.
Enacting a Deep Energy Retrofit
A deep energy retrofit requires a multi-disciplinary team with a “can-do” attitude where the disciplines can constructively collaborate with each other.
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Building the Case
Owners, investors, and occupants build the case for deep energy retrofits differently, depending on their unique circumstances. Owner-occupants of larger properties usually have more resources to conduct a comprehensive building analysis and therefore a greater ability to derive benefits from efficiency investments compared to smaller property owners and occupants.Likewise, occupants enjoy the direct benefits of a sustainable property, while the benefits to investors have been limited by traditional leases, holding periods, and an inability to easily have tenants pay for the benefits they receive.
However, if you consider all the types of value that deep energy retrofits can deliver for each party, a deep energy retrofit can make sense for everyone. A key part of building the case for a deep energy retrofit is targeting a building and doing the analysis at the appropriate time and under the appropriate circumstances.
Using deep energy retrofit triggers can significantly improve both the economics and convenience of energy improvements.In some cases, deep energy retrofits may add little to no cost to business-as-usual operations and capital requirements. In other cases, when the organization has a dearth of freely available capital, owners will need to secure financing.
Taking the Next Step
If you have decided not to conduct a deep energy retrofit, than we recommend low- and no-cost re-commissioning (or retro-commissioning) measures and a simple retrofit.
If you have built a solid case for the deep energy retrofit of a building but it is not the right time to conduct the retrofit, then we recommend commissioning and planning for a deep energy retrofit when a trigger is expected to occur. We do not recommend a simple retrofit for a building that has been slated for a deep energy retrofit analysis within 5 to 10 years (because most simple retrofits take that long to pay back).
A critical step in planning a deep energy retrofit is determining the ideal situations for performing a whole-building analysis. For example, if you already have a major end-of-life replacement planned for your building, you may be able to add in energy improvements or adjust the planned improvement to make the building more efficient and to build value for your organization at minimal added cost. Also, as part of your portfolio planning, if you desire one or more efficiency measures to be rolled out across a buildings portfolio, it may be best to select an archetypical building for a deep energy retrofit.
Many situations and the opportunity ideal for a deep energy retrofit are as follows:
- Adaptive reuse of market repositioning: Redeveloping an existing building will require significant capital expense to which the cost of a deep retrofit would be incremental and likely small in comparison
- End- (or near end) of-life roof, window or siding replacement: Planned roof, window and siding replacements provide opportunities for significant improvements in daylighting and efficiency at small incremental cost, providing the leverage for a deep retrofit that reduces loads and therefore costs of replacing major equipment such as HVAC and lighting.
- End- (or near end) of-life HVAC, lighting or other major equipment replacement: Major equipment replacements provide opportunities to also address the envelope and other building systems as part of a deep retrofit. After reducing thermal and electrical loads, the marginal cost of replacing the major equipment with much smaller equipment (or no equipment at all) can be negative.
- Upgrades to meet code: Life safety upgrades may require substantial disruption and cost, enough that the incremental investment and effort to radically improve the building efficiency becomes not only feasible but also profitable.
- Fixing an “energy hog”: As part of an ongoing management plan for a group of buildings, the owner may desire a set of replicable efficiency measures. These measures can be developed from the deep energy retrofit of an archetypical building.
Financing Deep Energy Retrofits
Owners, investors, and occupants will naturally think of retrofit financing differently, depending on their unique circumstances. Below we list several retrofit financing mechanisms, both time-tested and emerging. The issues with energy efficiency financing are highly dynamic, with new policy and innovative business models constantly emerging.
- Loans: Allows for flexible spending, yet building owner’s debt capacity is reduced; significant down payment is required
- Bonds: Generally a public-sector organization issues a bond; approval time can be quite long but interest rate is low
- Operating Lease: Building owner rents equipment; at end of lease the owner can renew/renogiate the lease, or purchase or return the equipment
- Capital Lease: Building owner rents equipment and ownership is almost always transferred at the end of the lease term; down payment (which can be zero) is always much less than a loan
- Performance Contracting
- Financing arranged by an ESCO: Very little hassle for building owner since financing is fully managed and implemented by the ESCO
- Emerging Mechanisms:
- PACE: Local government issues bond to pay for efficiency project; bond is repaid by building owner via property tax. Learn More
- On-bill Financing: Utility, state or 3rd party funds efficiency project and collects repayment via utility bill; repayment can be fixed to the property in the event of ownership transfer. Learn More
- Energy Services Agreement: Similar to a power purchase agreement, except for energy efficiency and not
renewable energy; no upfront cost. Learn More
Enacting a Deep Energy Retrofit
A deep energy retrofit requires a multi-disciplinary team with a “can-do” attitude where the disciplines can constructively collaborate with each other. The design professionals, in particular, should be experienced with integrative design (which is much more than holding one or two design meetings). A successful deep energy retrofit can produce a long-term strategy to phase out energy use in a building to make it super-efficient, more desirable to its occupants, and more valuable to the owner.We recommend downloading the Managing Deep Energy Retrofits Guide to specify the key action items required for a deep energy retrofit. We recommend the Identifying Design Opportunities Guide for a step-by-step approach to doing integrative design for a deep energy retrofit. Here are a few of the highlights to the deep energy retrofit process:
Often owners or design teams target a somewhat arbitrary percentage of energy cost savings as part of the retrofit. Instead, imagine if you had no economic and other non-technical constraints whatsoever. Now estimate the lowest possible energy consumption. This is the “Technical Potential” for your building. Then, begin adding in constraints to achieving this potential, as shown in the diagram below, to arrive at the “Achievable Potential.” The process of adding in constraints will allow you to minimize them and to understand the reasons why you are not able to achieve the Technical Potential.
Right Steps in the Right Order
Many retrofit practitioners will begin design by thinking immediately about what mechanical and lighting equipment they need. We recommend this approach instead:
- Identify the specific end-user needs so you know the purpose of your design.
- Then, understand the existing building systems and how well they work.
- Next, consider passive features and load reduction before introducing new mechanical and electrical systems.
- Find synergies between systems and waste streams to create multiple benefits from single expenditures.
- Finally, optimize controls and realize the intended design.
Modeling Energy and Lifecycle Costs
Design teams can use energy modeling as a tool to inform design and to predict energy use. It enables analysis that is necessary for deep retrofits: passive design analysis (such as daylighting), energy reductions from bundles of measures, and reductions in cooling/heating loads. In addition, design teams can modify and calibrate the energy model to the post-retrofit building in order to support savings verification and on-going savings.
In concert with energy modeling, design teams can employ a life cycle cost model to calculate life cycle cost. Life cycle cost analyses should include (but often do not) examining bundles of efficiency measures in relation to a business-as-usual scenario and estimating capital cost savings from equipment downsizing. Learn More