Colorado Real Estate Journal - December 3, 2014
Denver buildings are sitting on an untapped wealth of savings, and the city and county of Denver is calling on local building owners to unlock billions of dollars in these reserves. The key to achieve this is to make our buildings significantly more energy efficient by measuring energy use and making improvements based on these findings. While it is proven that energy-efficient buildings offer lower operating costs, barriers continue to prevent owners and tenants from seeing the benefits. One barrier is a split incentive – capital upgrades are made by the building owner and energy costs are usually paid by the tenant. Another barrier is that efficiency upgrades are paid from the capital budget, yet the energy savings are seen in the operating budget, and these two budgets are often set independently. Lastly, there is still little information in the market comparing the energy performance of different buildings, which keeps building owners in the dark about how their buildings are performing. The city and county of Denver launched the Denver City Energy Project Oct. 28. The goal is to generate $1.3 billion in energy savings from Denver’s largest commercial and multifamily buildings by enabling $340 million in energy efficiency upgrades in those buildings. The savings estimates are based on models published in “United States Building Efficiency Retrofits: Market Sizing and F i n a n c i a l Models,” from the Rockefeller Foundation and Deutsche Bank Group, March 2012. The launch event, held at the Brown Palace Hotel and Spa, had around 200 attendees. Key speakers included Denver Deputy Mayor Cary Kennedy and Doug Linkhart, executive director of Denver Department of Environmental Health, as well as CEP project partners from Building Owners and Managers Association Denver Metro Chapter, the Energy Efficiency Business Coalition, International Facility Management Association Denver Chapter and Xcel Energy. As the project’s first step, DCEP encourages building owners to benchmark and disclose their energy use to the city. Benchmarking refers to the process of measuring and comparing performance metrics. In the building industry, the Energy Star Portfolio Manager program is the standard benchmarking tool and is free to use. To date, 57 private building owners have voluntarily benchmarked their buildings and shared their score and energy use intensity with the city. A full list of participants is available at www.denvergov.org/cep. In return, these building owners will receive training on how to benchmark and improve building efficiency, and assistance in engaging building occupants to improve building performance. Participants will also help Denver develop the most effective programs and outcomes. At the launch event, the Brown Palace announced that over the past two years the hotel saved 26 percent on electricity costs and 24 percent on natural gas costs per occupied room. Changes include a guest room lighting retrofit that aims to provide a 167 percent return on investment, and a new laundry system that is projected to save 54 percent in energy use while providing more than a 200 percent return on investment inless than six months. Also recognized at the event was 1670 Broadway, a local building that is projected to save more than $128,000 per year in energy costs thanks to a new energy-management system that monitors, controls and optimizes building performance. The project is anticipated to pay for itself in less than three years. In six months from its completion in January, the property saw a 20 percent reduction in overall electrical use as well as a 25 percent reduction in overall district steam energy use. Measuring energy use and investing in efficiency is a win for building owners because it identifies and informs strategies that owners can use to establish a continuous cycle of improvement benefitting both the bottom line and the environment. Research from the Environmental Protection Agency (EPA) shows that building owners who benchmark their buildings are more likely to make energy-efficiency improvements and, on average, reduce energy use by 7 percent over three years. Benchmarking and investments in energy-efficiency improvements aren’t just for the private sector. Denver is leading the way, having committed to reducing the energy use of city-operated buildings (representing more than 6 million square feet of space) by 20 percent from a 2011 baseline by 2020. As the city helps more buildings unlock energy savings, the next steps for DCEP include trainings on how to benchmark and how to access Xcel Energy’s energy efficiency incentives. Denver is also working to provide better access to capital and reduce barriers to investments in energy-efficient buildings. DCEP will meaningfully engage with stakeholders throughout the project.