Deep Energy Retrofits

Opportunity for Architects

Zachary HartManager, State and Local RelationsPolicy and Community RelationsThe American Institute of Architectszacharyhart@aia.org202-626-7354

2012 AIA Firm SurveyIn response to the recession, firms are adding

services

Firms are adding design specialties to their practices. Sustainability/green design grew 19% between 2005 and 2008.

• To stay competitive in the changing design and construction industry architects need to expand the skills and services they offer.

• To reach full employment the architecture profession needs to find new sources of revenue.

The Energy Efficiency Retrofit Market Could Be Huge

• Deutsche Bank report estimated $279 billion investment opportunity in EE retrofits

• Clinton Climate Initiative - $83-113 billion in large buildings alone (>100,000 ft2)

• EE is good for communities• Decrease emissions from building sector• Avoid cost of new power plants• Save building owners money• Put the design and construction industry back to work

• Opportunities for architects to profit

High Volume of Potential Projects

• 72% of US building stock is over 20 years old1

• Many of these buildings were built without much regard to energy performance

1. US Energy Information Agency CBECS 2003, Table B9

Market Signals

• Regulations – light bulbs, stricter energy codes, building labeling and energy disclosure mandates in bigger cities

• Energy efficient buildings are correlated with higher occupancy rates1

• LEED, Energy Star• Banks are lining up

– Deutsche Bank report estimated $279 billion investment opportunity in EE retrofits - $97 billion in commercial and institutional sectors

– Barclays Capital - $650 million line of credit to PACE Commercial Consortium– FL Green Energy Works: Wells Fargo, RBC Capital Markets, PNC Bank,

Clean Fund

1. ENERGY STAR buildings have 3.5% higher occupancy rate

What does the EE market look like now?

• Only 2.2% of commercial building stock retrofitted per year1

• At this rate we’ll only reach 7.5% of 2030 goals in carbon savings1

• Most retrofits do not optimize savings

1. Olgyay and Seruto, Rocky Mountain Institute

Standard, small-scale retrofitInstalling a limited number of Energy Conservation Mechanisms for which payback is reliable even if savings are only middling. The typical ESCO model. Savings usually about 20-25%.

ECMs:•New HVAC (80% of ESCO projects)•New lights (80-90% of ESCO projects)

Energy Service Companies (ESCOs)

• Market is ESCO-led: $5.1 Billion revenues in 2011

• ESCOs work mostly on institutional projects – 69% of revenues from MUSH projects– 15% of revenues from federal projects

• Finance projects through performance contracts

• Mostly replace and maintain equipment and mechanical systems

How do we reach 2030 goals?

• Scale up Deep Energy Retrofits– 2030 Challenge defines them as retrofits that

achieve 60% energy savings, working definition 45-50%

– DERs are more than just replacing equipment• Include programming, envelope

– Require knowledge of systems interactions– Require integrative design– Require experienced project lead– Require more capital

Deep Energy Retrofit

Requires design team to look at all energy inefficiencies and find the optimal solution.

Design team must understand the building as a whole: how its systems work together and how the space is used.

ECMs:

•Lights

•Electronics

•HVAC – replacement and design

•Solar Power

•Building Envelope

•High Performance Windows

•Building Programming

Empire State Building• Deep Energy Retrofit

• Collaboration between: Rocky Mountain Institute, Jones Lang LaSalle, Clinton Climate Initiative, Johnson Controls

ESB achieved payback in 3 yearsTimed energy upgrades with $500 million renovation project to allow simultaneous implementation of multiple ECMs to create synergies in energy and cost savings.

Window upgrades, increased daylighting, light fixture upgrades, ventilation control upgrades, and radiator insulation all reduced ESB’s peak cooling load enough to avoid replacing chiller with a bigger one. Avoided capital cost of $17 million.

DERs = Opportunity for Architects

• Architects already have an understanding of the building as a system – Applying integrated design principles to retrofits results in

greater savings

• Traditional role as owner – contractor liaison • Integrated Design Team requires strong project

manager• Already doing renovation work • Facilities management planning• Market is still immature – there is time to learn

Challenge for Architects

• Technical Knowledge, Role– Perception that retrofits are only for

engineers and ESCOs– How are project delivery teams structured?– Energy modeling not widespread

• Financing

Architects’ Guide to Deep Energy Retrofits

• Collaboration with Rocky Mountain Institute

• Introduce architects to the DER opportunity

• First attempt to define architect’s role in retrofit process

• Provide resources archs will need to learn more

Architect’s Value to DER• Who is better trained to consider the building as a whole

working system?• Project Management

– Knowledge management, selecting team members, facilitating communication between owner and design team, coordinating design and construction activity

• Knowledge of building programming– Building layout and user behavior have large effect

on energy consumption• Broad knowledge of design and construction means

architect best positioned to lead design charette

Business Case

• Life Cycle Cost Analysis vs. Simple-Payback– What is the true cost of the BAU case vs.

DER?– Avoided Capital Costs

• Value Beyond Cost Savings– Productivity gains– Property value premium