Deep Building Retrofits Drive Big Gains in Energy, Cost Savings

Since the economic collapse, real estate owners have sought ways to cut costs, retain tenants, increase market performance and gain competitive advantage. A deep retrofit can achieve these objectives by turning business-as-usual upgrades into profit centers.

Existing buildings are full of energy efficiency opportunities waiting to be realized. While some savings are obvious and easy to reach via one-off upgrades of windows, lighting and appliances, by using an integrated, whole-buildings design approach, profoundly larger energy savings can often be gained at little or no added capital cost.

President Obama's announcement last week of plans to reduce energy use in the commercial building sector 20 percent by 2020 underscored the economic opportunity that retrofitting the U.S. commercial building stock presents -- both to business owners looking to cut down on energy costs, and energy service providers trying to get a leg up in a competitive market.

Jump-Starting a Constrained Industry

Estimated to eventually save business owners up to $40 billion a year in offset electricity costs, Obama's Better Buildings program could provide the jump-start the industry needs through proposed tax incentives and creative financing mechanisms to drive job creation and increase building valuation -- while reducing the country's dependence on fossil fuels.

"With 80 billion square feet of commercial space that needs to be retired or retrofitted over the next 20 to 30 years, there is an enormous market opportunity right in front of us," said Victor Olgyay, a principal with Rocky Mountain Institute's buildings practice.

While the Obama administration's proposed initiative is a step in the right direction, deep energy retrofits -- those that save at least 50 percent of energy operating costs with positive financial returns -- offer greater opportunities for cost savings by recognizing how efficiency gains in one system can affect other building systems and attributes. These interrelationships often let many small improvements combine to create substantially larger benefits.

Here is a video of highlighting the deep energy retrofit of the Empire State Building: