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Facebook, Bank of America buoy $1.7 billion Better Buildings expansion

The Department of Energy is enlisting new corporate muscle in its bid to power businesses more efficiently with the Better Buildings Challenge.

A social media company, a big bank, a fast food conglomerate, a university and a Vegas casino: That's not a premise for a bad joke, but rather a snapshot of the large companies that this week signed on (PDF) to the Department of Energy's Better Buildings Challenge.

Silicon Valley mainstay Facebook joined the initiative by committing to improve energy efficiency at 10 data centers. Arby's Restaurant Group and Carl's Jr. parent company CKE Restaurant Holdings joined the challenge as food service partners, while Florida A&M University and the Las Vegas Sands Corporation chipped in millions of square feet of real estate to experiment with energy savings.

Fittingly, Bank of America was brought in as a financier of the operation, providing $1.5 billion to increase funding available to companies interested in instituting new energy efficiency measures that may lack the resources to actually implement new programs.

Dozens of other national and regional businesses also committed to the Department of Energy (DOE) initiative that aims to reduce energy intensity 20 percent within 10 years — part of President Barack Obama's climate plan that includes an effort to double American energy productivity by 2030. All told, new Better Buildings Challenge partners announced Thursday committed $1.7 billion and 70 million square feet of real estate.

Maria Tikoff Vargas, director of the challenge and a senior advisor for DOE's Office of Energy Efficiency and Renewable Energy, said her priority is ensuring that the value proposition for energy efficiency translates across sectors.

Maria Tikoff Vargas Department of Energy Better Buildings Challenge
"One of the barriers we hear about is people not believeing that these savings are real," Vargas told GreenBiz. "Whoever you are in the U.S. economy, you can find somebody who’s dealt with the same issues — you can find a solution that you can borrow or steal or replicate."

The challenge was first launched in 2011 with a goal of saving companies $40 billion per year while making commercial building space 20 percent more energy efficient. The White House also has instituted parallel policy measures designed to contribute to energy savings, such as tax credits and access to funding for building retrofits.

Existing business partners include the likes of Citi Group, Sprint, Home Depot and InterContinental Hotels Group. Aside from big names such as Facebook, new partners annlounced this week include regional and national financial institutions and real estate developers, as well as government entities such as King County, Wash. (which houses the city of Seattle), the city of Philadelphia and New Jersey's Newark Housing Authority.

Ramping up efficiency

Even without new energy savings programs initiated in Washington, green building design and energy management are hot topics.

Companies are experimenting with everything from biophilic office design that mimics elements of nature to passive or living structures and rapidly evolving Big Data-powered energy management software. When it comes to underlying energy technologies, purchases of energy offsets or on-site renewables — particularly wind and solar — are two other areas attracting interest.

Energy savings implemented as part of the Better Buildings Challenge vary widely, Vargas said, from low-hanging fruit such as turning off lights to establishing better baseline energy data for a company's real estate portfolio. Other savings might be introducing businesses to options for transitioning to renewable energy or looking to improve their power supply chain.

"What we’re finding is that the solutions fall into a bunch of different camps," Vargas said. "They really do line up around the barriers that people are seeing.”

Lining up funding and getting buy-in from management are two broadly applicable obstacles that often can be overcome with capital and a better understanding of organizational structure.

And then there are companies upping the ante a bit higher. 3M started a new fund for seemingly small energy projects that otherwise might have been overlooked, she said. Aluminum company Alcoa decided to tie pay for relevant employees to the company's energy efficiency performance.

"Lots of times people think the problems are technically based," Vargas said. "The technology is there and very low risk. It’s aligning yourself as an organization to avail yourself to it — and then follow through."

Although 2014 performance metrics for companies participating in the Better Building Challenge won't be public until May, Vargas said partners since 2011 have saved an average 2.5 percent on energy, totaling "hundreds of millions of dollars."

She is encouraged by interest from both high-tech sectors of the economy — a la major data center owners such as Facebook and eBay, another recent sign up — and relatively low-tech power users, such as the food service industry, which uses about 400 trillion BTUs of power annually.

Vargas also hopes to make greater inroads with multifamily property owners, who can be a tough sell with turnover and utility bills paid by tenants. Large-scale industrial users traditionally reticent to engage are another target audience.

Luckily or unluckily, it sometimes takes only extremely basic questions to open the door to participation.

"You’d be amazed how many people don’t know either how many buildings they own or how much energy they use," Vargas said.

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