Building Ratings: Do the Europeans or Americans Have It Right?

Building RatingsDo the Europeans or Americans Have It Right? 12th Annual Energy, Utility and Environment Conference EUEC 2011 Elton B. Sherwin Sr. Managing Director Ridgewood Capital Palo Alto, CA ESherwin@RidgewoodCapital.com

Two Illustrative Case StudiesLondon vs. New York

Why is VC Worried about Building Ratings?Researched the book:•Buildings: – Light empty rooms – Air condition empty offices – Heat and cool the same air•Projects with strong ROI not done: – Millions of offices with 30-year-old lighting – Millions of wasteful pumps – Millions of inefficient motors

Building Inefficiency Destroys Jobs Destroys Wealth Prevents me from investing in interesting start-ups.

Could Labels, Ratings and Disclosure Motivate Change? D+ C+ B- D- C+ D- D- C+ B- D- B A-Houston skyline, grades for illustration only, not based on real measurements

“If other property managers startto put “A” and “B” energy grades on their best buildings, I will have to do it.” Silicon Valley Property Manger

Analyzed 16 Systems EU Energy Performance Certificates UK Display Energy Certificates LEED – New Construction LEED – Health Care ENERGY STAR – Commercial buildings ENERGY STAR homes PlaNYC (New York City) Australia’s Greenhouse Rating HERS ASHRE EQ CALGreen level 2 California AB 1103 California AB 758 DOE home energy scoring pilot Passive Home Certification City of Seattle OPOWER

Focus on Existing Building Ratings Two broad categoriesComputer Models Utility Data Asset Rating Operational RatingEU Energy Performance Certificates LEED – New Construction LEED – Health Care ENERGY STAR – Commercial buildings ENERGY STAR homes PlaNYC (New York City) HERS Australia’s Greenhouse Rating ASHRE EQ ASHRE EQ CALGreen level 2 California AB 1103 DOE home energy scoring pilot City of Seattle Passive Home Certification OPOWER California AB 758

London New York CityComputer Models Utility Data Asset Rating Operational RatingEU Energy Performance Certificates LEED – New Construction LEED – Health Care ENERGY STAR – Commercial buildings ENERGY STAR homes PlaNYC (New York City) HERS Australia’s Greenhouse Rating ASHRE EQ ASHRE EQ CALGreen level 2 California AB 1103 DOE home energy scoring pilot City of Seattle Passive Home Certification OPOWER California AB 758

London New York City vs.Computer Model Utility DataEU Energy Performance ENERGY STAR – Commercial Certificates buildings PlaNYC

UK SystemEnergy Performance Certificates

UK LabelEnergy PerformanceCertificate• Valid for 10 years – Commercial – Residential

Seems Useful

You Are a D todayBest You Will Ever Be Is a C

You Are a G todayBest You Will Ever Be Is a F

Numbers AreNot Right• Looks real• Numbers made up

ModelGeneratedInputs areinadequate andmodels areinaccurate

European UnionEnergy Performance Certificates“The projections are very inaccurate.” Dutch Researcher

Fantasy Football• Looks real• Actual energy consumption not used in calculation• Utility data is not used

Can employees,renters or familymembers doanything toimprove theirgrades? No

UK Energy System “Next to useless.” Jeff Howell, The Telegraph“All old buildings do poorly. Don’t worry about it. Everyone just ignores it.” London Estate Agent (Realtor)

Would Better Computer Models Help? Let’s Look at a Case Using Much Better Models

I Believe in Computer Models• Ridgewood and its portfolio companies use simulation and modeling software • Semiconductors • Circuits • Antennas • Sensors • 3-d seismic• Wealth of Silicon Valley is based on computer modeling

Problems Using Computer Models toPredict Building Energy Consumption First generation LEED buildings actual versus modeled From Energy performance of LEED Buildings, NBI and USGBC Excluding 20 worst performing buildings

Buildings Use More Energy Than Modeled First generation LEED buildings actual versus modeled From Energy performance of LEED Buildings, NBI and USGBC Excluding 20 worst performing buildings

Architect, Owner or EmployeesPerformed Better Than ModeledFirst generation LEED buildings actual versus modeled From Energy performance of LEED Buildings, NBI and USGBC Excluding 20 worst performing buildings

Computer Models Wrong onHalf of Very Best Performing Buildings Computer models were wrong in 5 of 8 top performing buildings

Should Not Use Models for Rankings Models Reverse Reality C- student gets an A B student gets a D Which is worse? First generation LEED buildings actual versus modeled From Energy performance of LEED Buildings, NBI and USGBC Excluding 20 worst performing buildings

Model Before You BuildMeasure After You Build Semiconductors Circuits Antennas Sensors 3-D seismic and Buildings

New York City’s New Rules PlaNYC

PlaNYC: Uses Real DataScores:• Energy Use Intensity, EUI* – kWh/ sq. foot – Data from the utility bill• ENERGY STAR score – Data from the utility – Zero to 100 score (100 high) – Compares similar buildings • Offices to offices, hospitals to hospitals, etc.*Source energy from the DOE’s Portfolio Manager

PlaNYC Public Disclosure • City-owned buildings first • Followed by: – Large commercial – Small commercial – Multi-family residences* • Public disclosure on Internet – On the tax assessor’s And website – Updated annually EUI * EUI only

PlaNYC New York’s Powerful Strategy • Public disclosure • Actual energy used – Captures everything: • Architect • HVAC contractor And • Building manager • • Employee behavior Plug loads EUI

Analysis of Effectiveness Rating Existing Buildings to Lower Energy ConsumptionData Somewhat Effective Most Effective 2 1 3 4 Mixed, Probably Undocumented CounterproductiveModel Private Public

Analysis of Effectiveness Rating Existing BuildingsData City of Seattle PlaNYC (New York City) ENERGY STAR Commercial California AB 1103 OPOWER 2 1 Australia’s Greenhouse Rating ASHRE EQ 3 4 HERS CA AB 758 LEED – NC ENERGY STAR homes DOE home scoring pilot EU & UK EPCsModel Private Public

New York vs. LondonNew York’s PlaNYC will “outperform”• Have greater impact• Be more cost effective• Create more highly skilled auditors• Create more highly skilled tradesmen• Better market for advanced, semiconductor-based products

Elton Sherwin’s Current Projects• Encourage cities to follow NYC model• Encourage California to follow NYC model – Add grades and window stickers• Million Building Initiative – Looking for partners/sponsors • Open source buildings • Smart buildings • Genius buildings• Large on-bill financing deployments• Invest in cleantech startups

Recommendations for Policymakers1. Use real data – Start with energy per sq. ft., then add energy per occupant2. Publicly disclose the data on the web – Create competition and accountability3. Assign letter grades – Top 40%: A and B; Bottom 40%:D and D- – Print window stickers for As and Bs • Use pluses and minuses

Questions?1. Use real data – Start with energy per sq. ft., then add energy per occupant2. Publicly disclose the data on the web – Create competition and accountability3. Assign letter grades – Top 40%: A and B; Bottom 40%:D and D- – Print window stickers for As and Bs • Use pluses and minuses ESherwin@RidgewoodCapital.com

AppendixOuttakes and provocative slides Common technical questions

Good Features of the UK System Useful F 37, F 31 grades Not accurate

Should Not Use Models to PubliclyRank and Compare Older Buildings• The models are not accurate enough• The rankings are wrong

At Time of Sale• Effective laws disclose: – Actual energy consumption, or – Energy per sq. ft. and energy per person, or – Energy Star scores, or – Actual energy costs – May include an energy audit of the building• Ineffective and counterproductive laws – Disclose a score, grade, rating or comparison of the whole structure based on a computer model or checklist

Models Are Great for Many Things But not ranking and rating older buildings

Best Rating Systems1. Monthly feedback2. Window and door stickers for the top 40% – Public disclosure strategy – Awards and PR for the best performers3. Measures everything – All employees and family members contribute • Can start with small changes, becomes addictive.4. EUI based – Energy per sq. ft., energy per person5. All existing buildings can do well affordably – If brilliantly retrofitted by talented people – “A” and “B” grades are within reach of all

Gold Standard Energy used ÷ size of buildingEnergy used ÷ number of occupants

QuestionsTechnical Q&A

LEED for New ConstructionQ: Why include LEED forNew Construction whendiscussing excisingbuildings?A: LEED-NC is used by owners andrealtors as a rating of building efficiency forthe life of the building.**If LEED-NC were automatically converted to LEED-EB on the 1-yearanniversary of occupancy, then this would be less of an issue.

Empty or Crowed BuildingsQ: What about buildings that are empty,partially occupied or crowded? Isn’t a computer model the best way to evaluate their efficiency?A: No, the best way to solve occupancyproblems is to calculate energy peroccupant.• Energy per occupant works for hotels, hospitals, offices and homes.

Energy per Occupant in HomesQ: Should homeowners be forced todisclose how many people are living in theirhome?A: No. You do want to enable the homeowner to see how they score per person. If they are doing well, then allow them to disclose their good performance and get a window sticker.

Seattle vs.New York and California Q: Why in the quadrant analysis is Seattle less effective than New York City, but more effective than California? A: New York City requires public disclosure, Seattle does not. However Seattle requires disclosure to city officials, which California does not.

California AB 1103 vs. California AB 758Q: Why in the quadrant analysis is CaliforniaAB 1103 in a different, more effectivequadrant than AB 758?A: California AB 1103 uses real data. Theregulatory details of California AB 758 arenot finalized, but it is likely to use modeleddata for existing buildings instead actualmeasured data.

McMansionsQ: Won’t people just build larger homes toimprove their energy per square foot grade?A: When building a new home, it is cheaperto make the new construction energyefficient than to make the building larger.

Fantasy Football?Q: Isn’t comparing the European system to“Fantasy Football” harsh?A: Maybe, however:• EPC models inaccurately forecast energy consumption• EPC models inaccurately rank buildings.At least with fantasy football, players know itis a fantasy.

London’s Public BuildingsQ: Doesn’t London use real data for publiclyowned buildingsA: Yes, London uses modeled data forprivately owned buildings, real data forpublic buildings• The labels look almost identical• Creates complete confusion• A warning to ASHRE EQ – Mixing model grades with real data is confusing and stifles innovation.

OuttakesAnd provocative slides

Worldwide Leaders in Disclosure• Commercial – New York City’s PlaNYC • Uses Commercial Energy Star – Australia (ABGR - NABERS)• Multifamily – PlaNYC• Single family – Australian Greenhouse Rating• Government buildings – Government of South Australia

Where Will NY Run Into Problems?• Predictions – Need more submeters • Garages, restaurants and data centers will need to be measured separately – Need more categories • Hotels – do their own laundry • Hotels – send out their laundry – Need a per person measurement

Missing Pieces in NY City• Window stickers: top performing buildings• No single family home scoring system – Existing homes – Tied to utility bill – Need Energy Star residential• Grades A to D- – With pluses and minus• More sophisticated tools owners/occupants

Carrot and the Stick• ENERGY STAR score of 70 or above – Exempt form various requirements• ENERGY STAR score of 35 or less – Require improvements• Signage Laws – Require disclosure of actual energy consumption on buildings making efficiency or green claims

Measure and Disclose• Measure real data. – Frequent updates. – System that every family member and every employee can contribute to.• Disclosure real data.

Fantasy vs. Reality• Don’t confuse fantasy football scores with real football scores – Computer simulations are helpful – At the end of season, the real scores matter – Look at the score of the real game – Disclose real scores, not simulation scores Professionals use simulators to plan Measure success with real scores

Should You Mandate Disclosure ofModeled Data on Existing Buildings? No. There is something very disturbing about laws that require public disclosure ofsimulated data, when real data is available.

Fine Line BetweenEffective and Ineffective Disclosure• Real data always has utility bill data on top – Kwh/sq ft. – Kwh/person• Simulated data uses: – Points – Checklists – Equipment ratings – Descriptions and R values, etc.

NYC has it right• Use real data – Energy Star rating – EUI• Disclose it on the web

Foundational Truth• Model frequently, but in private• Measure in public

Great Buildings• Great architect• Great mechanicals• Perform well empty• Perform well when used as designed• Perform well when over-crowded• Perform well when misused

Is This Fair?Imagine a system that tested your child fortheir IQ when they were 4 and then said:• An IQ of 117• Give this child a B- in math for the next 10 years.

Everything on the following pageis measured using energy per sq. foot and energy per person Most models and rating systems miss at least 50% of these items. Some models miss 80% of them.

Top Faults Causing Energy Inefficiencies in Commercial BuildingsBuilding Commissioning - A Golden Opportunity for Reducing Energy Costs and Greenhouse Gas Emissions Evan Mills, Ph.D., Lawrence Berkeley National Laboratory, 2009

“When performance is measured, performance improves. When performance is measured and reported back,the rate of improvement accelerates.” Thomas S. MonsonEmphasis added

Contact information Elton B. Sherwin Sr. Managing Director Ridgewood Capital 540 Cowper St., Suite 201 Palo Alto, CA 94301ESherwin@RidgewoodCapital.com www.EltonSherwin.com

Building Ratings: Do the Europeans or Americans Have It Right?

by Elton Sherwin on Jan 30, 2011

Accessibility

Categories

Tags

Upload Details

Usage Rights

Statistics

Building Ratings: Do the Europeans or Americans Have It Right? — Webinar Transcript