How to scale deep retrofits through portfolios and campuses
How to scale deep retrofits through portfolios and campuses
Since 2009, RMI's work to advance deep energy retrofits has focused on a multi-pronged approach to scaling: collaborate with project teammates, owners and other fast movers who learn from and copy pioneering deep retrofit projects; engage entire portfolios and campuses of buildings to affect more than scattered singular building retrofits' and develop new, better and more comprehensive ways of assessing risk and value associated with deep green buildings, to drive greater investment by financial decision makers.
Engaging portfolios and campuses and better assessing risk and value are both new and challenging topics, and our donor-funded work to advance them is by no means complete. But we believe we must aggressively accelerate the nature and quality of retrofits of all sorts in most commercial buildings — and it is imperative that we do so in order to rapidly drive down energy use and CO2 impact.
In today's part one of a two-part series, we take a look at RMI's work on portfolios and campuses.
Portfolios and campuses
Deep energy retrofits are not for every building, and cannot be efficiently or economically done at random. Our portfolio and campus work — a significant thrust for four years — has been revealing insights into this area and helping major players shape plans, standards and processes. We continually have moved the bar higher on expectations for energy savings in a well-run portfolio or campus of buildings, especially when taken as a whole. Universities and corporate campuses are leading the way toward zero carbon emissions — in fact, they can be re-envisioned as renewably powered microgrids.
Shortly after we wrapped up our work on the iconic Empire State Building, we began another influential — if less sexy — project focused on car dealerships. These are small buildings, not very valuable or appealing, metaphorical islands in seas of parked cars under powerful lights.
Working with Ford Motor Company and a big energy services company (ESCO), we selected three dealership facilities and executed our standard deep energy retrofit diagnosis and whole-system design effort. The resulting build-outs saved 60 to 80 percent of the energy with good economics. Despite three geographies, RMI identified a common package of energy-saving measures focused on indoor and outdoor lighting, mechanical controls, commissioning, weatherization (plugging leaks) and when-it-fails HVAC equipment upgrades. This package saved the vast majority of the energy and could be scaled up — a lot.
More than 17,500 new-car dealers have total energy use exceeding 50 trillion BTU/year. Only a handful have been upgraded for energy efficiency. Many ESCOs and several financing players have discussed this opportunity with us, and some players recently have begun their own rollout of dealership retrofits complete with financing options, all taking advantage of relatively short paybacks available because of the heavy role lighting plays in the car sales business. The ball is rolling, although it could use a big push.
Malls, retailers and supermarkets
Car dealerships represented a huge portfolio of reasonably similar buildings, but they comprised a portfolio with many (many!) owners. What about other large portfolios, but with fewer owners?
We realized that retailers and the mall owners that housed them presented another opportunity. The largest players in this arena had thousand of buildings, huge energy demands and well-structured processes for setting standards and driving change. We already had worked with two big names: SuperValu [PDF], a northeastern supermarket chain, and Wal-Mart, back when it was first beginning to consider what a more energy-efficient store might look like.
We quickly found and executed two more projects with large supermarket chains, Kroger and HEB, where tiny margins make energy savings a very, very big deal. In both cases we helped develop designs — now built and running well — for new test bed stores. These not only formed the new standard for all new stores, but, on a component basis, serve to pre-qualify equipment for retrofits or upgrades. Energy upgrades are one of the most profitable investments available to both store chains, and an RMI speech on the topic at the Food Marketing Institute in 2011 confirmed that these examples and their value are now well understood by the supermarket industry. Finding capital for projects remains a challenge, however.
A focus on the owner-occupant
We then reached out to other retailers and major office building owner-occupants to look into more diverse (and less energy intensive) buildings portfolios. After discussions with many, The Exchange, which runs department stores, quick-service restaurants and convenience stores on military bases, answered our call. So did Kaiser Permanente, one of the country's largest and best-regarded health care organizations with a fleet of hundreds of office buildings and dozens of hospitals. As did telecommunications giant AT&T, which boasts a huge portfolio of more than 60,000 structures, courtesy of its Bell System heritage.
In all cases, our scope was research, planning and limited testing focused on a central question: How to save the most energy from a large set of buildings, over time, with the most compelling economics?
RMI found that AT&T had huge opportunities requiring multiple strategies integrated carefully with workplace upgrades and equipment replacement cycles. Given corporate capital allocation requirements, it was also vital to bundle many projects together to leverage external, efficiency-focused capital to speed impact. At Kaiser, it became clear that efficiency provided a fantastic path toward meeting the company's goals of a 30 percent absolute reduction in its carbon and energy footprints, but new governance, funding and other mechanisms had to be created to capture it. Work at The Exchange, still underway, has revealed deep and broad savings opportunities, but economics, even in very similar buildings, vary widely. Project returns are best when linked with equipment upgrade cycles; much poorer when they are not.
These findings are among many that are universally applicable in larger owner-occupied portfolios, including almost all the large retailers such as Target, Best Buy, Macy's and Wal-Mart, as well as mall owners like Simon Property Group, with which we have built relationships over the last few years. These insights, and other practical advice, are integrated into RMI's tools sets and frameworks on RetroFit Depot. It is clear that the impact potential in these large portfolios is huge but challenging to plan and capture.
Working with the nation's largest landlord
In 2010, RMI partnered with the largest and most influential office owner of them all: the U.S. General Services Administration (GSA). Long a real estate leader — and well recognized as such within the industry — the GSA's 80-million-square-foot portfolio must become net zero by 2030 and 3 percent more efficient every year, according to Executive Order 13514.
The GSA does not have the capital to do this, however. So RMI has teamed with GSA leadership to define how performance contracting can be optimized, in order to drive broader and deeper retrofits. Rallied by a Deep RetroFit Challenge Summit in Boulder, Colo., in 2011, energy service companies (ESCOs) already have roughly doubled the amount of savings (39 percent vs. 18 percent) they expect to deliver to GSA, although projects are not yet completed. We expect continued GSA leadership in expanding the potential of ESCOs.
State governments are another institution with significant building portfolios. In a still-evolving effort, we have advised government staff that are shaping, or practitioners serving, no fewer than six states planning or executing energy saving programs in state buildings. For instance, we contributed ideas and experiences to planners designing Gov. Cuomo's New York state program to improve energy efficiency in state buildings 20 percent by 2020. Meanwhile, the contractor supporting Missouri's highly effective 2 percent (additional) savings per year program approached RMI to consider how to learn from and expand the Missouri program to other states.
After the 2011 release of "Reinventing Fire," our book highlighting the longer-term fossil-fuel-free potential of the U.S. economy, it became clear that "what to do Monday" was a key question, so we executed the first (we hope) of a number of smaller "Reinventing Fires." This first one was with the state of Connecticut. Connecticut's leading state building efficiency program became a key part of the resulting 2013 comprehensive energy strategy focusing on efficiency, natural gas and renewables.
RMI has a long history of studying universities as many are perfect test beds, and properly led, are capable of moving quickly. They have high diversity of buildings, but half or more of the energy use is often centered in three key areas: labs and hospitals, dining facilities and data centers. All three are areas where RMI has done design work for new facilities, thus providing insights relevant to retrofits.
Some of our early work with campuses set the scene. Our Accelerating Campus Climate Initiative study [PDF] and book with the Association for the Advancement of Sustainability in Higher Education (AASHE) dug into the challenges and opportunities of setting aggressive climate strategies, and gave us significant insight into the complexities of university campus decision-making.
At Penn State, we learned of the vast gulf often present between facilities, research and teaching in larger universities. At the University of British Columbia, we discovered potential solutions to bridging those gulfs, using very clear and active governance mechanisms. With Appalachian State and the University of North Carolina system, we have learned about the huge differences in campuses within large public university systems, and the benefits from shared learning such as the annual UNC Energy Summits we co-host. At the University of Southern California we have learned that with patience, the sources of value and drivers of change can be found even for universities where sustainability and climate are not shaping important agendas. And our long-time links to our local university, the University of Colorado at Boulder, helped us realize that there was a timing opportunity. Many key academic buildings in this country were built during a boom time — part of the reaction to Sputnik — in the 1960s and '70s, and now constitute one of the "ripest" sets of buildings for retrofit anywhere.
These all have led to our current, capstone university project: a partnership with Arizona State University and Ameresco to develop an explicit roadmap to deliver a net-zero carbon university by 2025, one of the most aggressive climate commitments from any major university. Initial details of the program were released in October, but results will not be made public until summer 2014 when ASU, Ameresco and RMI finalize the university's climate neutrality implementation plan.
RMI has very high hopes and has made initial plans on how to rapidly spread insights from ASU and other leading universities because of a simple fact: universities are not only great test beds; they also shape and execute research. And the research opportunities in the areas of efficiency and renewables are tremendous, as we have found when serving as reviewers for government research grants and as judges for commercial real estate management company CBRE's recent million-dollar research grant program. Finally, and perhaps most important, universities shape the knowledge, attitudes and careers of their boards, alumni, leaders, students and staff. They in turn shape the cities and regions in which they live and work. Universities are one of the most powerful leverage points we have in driving energy transformation, and we are launching programs to do just that.
This article, the first of two parts, originally appeared at the RMI Outlet.
Building image by ArtisticPhoto via Shutterstock.