UNEP-SBCI 2012 13/06/2012

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The Economics of Green Buildings and Green Cities

G r e g K a t s , C a p i t a l E

UNEP-SBCIJune 2012

Shanghai

1989

2010

UNEP-SBCI 2012 13/06/2012

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Jatoba commercial buildingLEED Gold, São Paulo

Big Perception Gap on Cost Effectivenessof Green Design

Additional cost to build green:

Evidence from 146 green buildings

0

10

20

30

40

50

60

0-1%

1-2%

2-3%

3-4%

4-5%

5-6%

6-7%

7-8%

8-9%

9-10%

10-11%

11-12%

12-13%

13-14%

15-16%

16-17%

17-18%

18-19%

Range of reported premiums

Median in the

data set: < 2%

added cost

Public

misperception:

17% added cost*

*2007 opinion survey by World Business Council for

Sustainable Development

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Costs and Benefits: utility savings only

$0

$2

$4

$6

$8

$10

$12

$/S

f

Costs and Benefits of Green Buildings: Present value of 20 years of estimated impacts based on study data

set collected from recent green buildings

increased building cost

water savings

direct energy savings

Green School Green Office

Additional benefits not estimated:+Productivity and student performance+Property Value impacts+Indirect water systems impacts+Brand+Operations and Maintenance savings+Embodied energy savings

Source: Greening Our Built World (Island Press, 2010)

6

Green/efficiency = risk reduction

Cumulative energy savings in green offices

$0

$5

$10

$15

$20

$25

$30

$35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

year

$/s

f

annual 10%price increase

annual 6%price increase

annual 2%price increase

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7

Green = increased tenant satisfaction

Abbaszadeh, S., L. Zagreus, D. Lehrer and C. Huizenga, 2006. Occupant Satisfaction with Indoor Environmental Quality in Green Buildings. Proceedings, Healthy Buildings 2006, Vol. III, 365-370, Lisbon, Portugal, June.

Health & Learning Benefits of Green Schools

Increased Learning, Productivity & Performance (3%)

Increased Future Earnings of Students (1.4%)

Reduced Asthma (25%)

Reduced Colds and Flu (15%)

Reduced Teacher Turnover (3%)

Source: Greening Our Built World (Island Press, 2010)

UNEP-SBCI 2012 13/06/2012

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$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$/S

f

Costs and Benefits of Green Buildings: Present value of 20 years of estimated impacts based on study data set and

synthesis of relevant research*

increased building cost

health

water savings

energy savings

indirect energy savings

employment

emissions

Green School Green Office

Additional benefits not estimated:+Productivity and student performance+Property value impacts+Indirect water systems impacts+Brand improvements+Operations and maintenance savings+Embodied energy savings

Costs and Benefits of Green Buildings

Greening = Wealth and Jobs Creation

($400)

($200)

$0

$200

$400

$600

$800

$1,000

$1,200

GreenPremium

NPV onlydirect

energy

Plus water Plushealth

Plussocietalenergy

Plussocietal

CO2

Bil

lio

ns

NPV of Net Benefits of BAU and Green

BAU

Green

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($750,000)

($650,000)

($550,000)

($450,000)

($350,000)

($250,000)

($150,000)

($50,000)

$50,000

$150,000

$250,000

$350,000

$450,000

$550,000

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 Years

Cu

mu

lati

ve

Co

st

vs

Ba

se

lin

e

Reduce Loads

Passive Strategies

Active Strategies

Energy Recovery

On Site Power

Green Power Purchase

Whole Bldg

`

Whole building integrated upgradeSource: ARUP/Stanford

Green Building Benefits: Increased Rent, Sales & Occupancy

1st Quarter 2008 Non-LEEDLEED Certified

Offices Difference % Change

Occupancy rates 88% 92% 4% 5%

Rent ($/SF) $31 $42 $11 35%

Property value ($/SF) $267 $438 $171 64%

1st Quarter 2008 Non-Energy star Energy Star Offices Difference % Change

Occupancy Rates 88% 92% 4% 5%

Rent ($/SF) $28 $31 $3 11%

Sale Price ($/SF) $227 $288 $61 27%

Source: CoStar

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Comcast Building

All Building Types are Greening

Wentworth Commons - IL

Greening impacts: three Sources of Brand Equity

• Increased brand awareness (e.g., free media exposure)

• Greater preference due to specific attributes (e.g., better IEQ)

• General non-attribute preference (e.g., association with quality, lower risk)… AAA rating

• LEED > Zero net energy > living buildings

Brand Impact of Greening

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Pearl River Tower, Guangzhou

Carbon Dioxide Intensity and Per Capita CO2 Emissions

(Fossil Fuel Combustion Only)

0.00

5.00

10.00

15.00

20.00

25.00

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00

intensity (tons of CO2 per 2000 US Dollar)

To

ns

of

CO

2 p

er

pe

rso

n

Canada Australia

S. Korea

California

Mexico

United States

Austria

Belgium

Denmark

France

Germany

Italy

Netherlands

New

ZealandSwitzerland

Japan

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Aug 2003: European heat waveTemperature anomalies reached 10°C52,000 Europeans died

Country Fatalities

Italy 18,257

France 14,802

Germany 7,000

Spain 4,130

England & Wales

2,139

Portugal 2,099

Smaller countries

4,025

Total of above

52,452

17http://earthobservatory.nasa.gov/IOTD/view.php?id=3714

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Cool Cities: GCCA Network www.globalcoolcities.org

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Rewarding energy efficiency and green design for emissions reductions benefits

0

2

4

6

8

10

12

14

16

18

20

0 10 20 30 40 50 60

Ye

ars

Pa

yb

ack

Pe

rio

d

Percent Energy Use Reduction

CO2 to EE Model: Illustrative Impact

Status Quo

$15/ton

$30/ton

$50/ton

New EE Finance, Service Models

� Smart EE reshapes load far more cheaply than hard storage

� Extend PV Power Purchase Agreement (PPA) ownership models:

� eliminates up front costs

� EE, solar thermal, gshp

� SaaS business model

� Cloud based, V Low capital costs

� Building IQ

� Cooperative consumption

� BetterWorkplace

� EE through social media platforms

� MyEnergy

� U Military: Security driven

� Zero net energy bases, green buildings

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New European Electricity Capacity, 2011

European Wind Power Association

Reducing Peaking Power and T&D can achieve huge savings

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Net Zero Building

Building as energy storage

zerozero

00

++--

solarsolar

BIQ optimized HVACBIQ optimized HVAC

windwind

ice storageice storage

In net zero buildings this strategy:

• uses the building’s thermal mass as energy storage to balance renewable sources

• forecasts and adjusts timing of peak HVAC loads to match renewable power supply

By load shifting and intelligently adjusting interior temperatures, BuildingIQ optimizes HVAC operations, balancing :

• reduced energy usage/cost

• maintained or improved occupant comfort

• maximized DR event performance

Levelized District Optimization

Net Zero NOC

Portfolio/ Campus Energy Management

Facility-level Predictive Energy

Optimization

Use predictive energy optimization in 2 ways:

• At District Level: predicts and analyzes

DR capacity and energy storage capacity to aggregate

• At Facilities level: BuildingIQ:

provide operational and analytical oversight on entire portfolio and campus – from predictive, real-time, historical perspectives.

Rolling Optimized Reserves

TargetUsage and

Demand ceiling

Block of building loads before optimization

Block of building loads after

optimization (rolling)

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Smart Cities: Large increase in potential savings, but large increase in complexity (slide source: Schneider)

SMART DB

Starter Apps

UI

SMART Engine

SMART Modeling

Business Apps

Resource Apps

Core

Pla

tform

Core

Pla

tform

SM

AR

T A

pps

SM

AR

T A

pps

SMART AppMarketplaceSMART AppMarketplace

Core Platform Direct Sales (SaaS)

Core Platform Direct Sales (SaaS)

Data Management key to Data Management key to Green Cities eg ScreampointGreen Cities eg Screampoint

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Green > Quality + Healthy >Better Brand

Cities can drive green at negative costs

Web enables shift from waste/water expansion + disposal to waste/water reduction

DC Green

Rationale:

• Employment

• Cost effective

• Brand Benefits

Green Building Performance Database: www.gbdata.org

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• www.globalcoolcities.org• www.cap-e.com• gkats@cap-e.com

• gbdata.org

Thank you!