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Show Me The Money: Building Management Workshop


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Show Me The Money: Building Management Workshop

  1. 1. Show me the Money Manage Buildings Proactively To Reduce Energy Use and Save MoneyDavid Unger, US Energy Group Asset Management Symposium John Klein, JDM Associates March 21, 2012
  2. 2. Agenda1. Energy Use in NYC2. Energy Use Index and Benchmarking3. Who pays the bills?4. Types of Energy Use5. Short- and Long-Term Strategies for Energy Efficiency6. Awareness and Education 1
  3. 3. Energy Use in NYC Most recent data Total = 725 million MMBTU Large buildings (<50ksf) Small buildings (<=50k sf) Source: 2
  4. 4. Energy Use by Building Type in NYC Heat & Hot Water costs account for over 50% of Energy use in NYC Source: Con Edison, Keyspan, DOE, NYSERDA 3
  5. 5. Resident Survey It is important to me to live in I would be more likely to an apartment community that renew my lease if I were living is reducing its environmental in a community that is or "carbon" footprint implementing green practices Agree 80% 68% Neutral 16% 25% 4% 7%Disagree >200 communities, >50,000 units surveyed Various markets across the USA
  6. 6. The Importance of Benchmarking Energy Water Waste Cost and consumption You can’t manage what you don’t measure Benchmark with ENERGY STAR Set goals of target reductions  Multifamily buildings currently do not receive an Energy Star Score
  7. 7. Energy Use Index EUI = index that represent energy use at the site Sum total of BTUs used by the building / square footage of the building kBtu/SF/yr = 1000 BTU (British Thermal Units) per SF per year Site vs. source energy use Weather normalized vs. non-weather normalized EUI 6
  8. 8. Source vs. Site Energy For every 1 kWh delivered, 3 are consumed Each source of energy has its own efficiency in delivery Electricity is the least efficient and natural gas is the most efficient Source: ENERGY STAR 7
  9. 9. Multifamily EUI Averages Source: Architecture 2030 8
  10. 10. Statement of Energy Performance 9
  11. 11. Types of Energy UsageType of Energy Usage Description CalculationNon-Seasonal Electric Use All Electric use less Electric use less increase cooling during cooling seasonCooling Electric Use Electric use for Electric use less non- cooling seasonal electric useDomestic Hot Water Production Fuel use for hot water Fuel use less increase during heating seasonHeating Fuel use for heat Fuel use less domestic hot water use. 10
  12. 12. Who covers costType of Use Who Pays DescriptionCommon Area Electric Owner Separate meter paid by ownerTenant Electric Tenant / Owner Normally sub-metered or direct metered by Con Ed. Still many master metered Multi-Family buildings in NYCWater Tenant/Owner Typically covered by owner or ratio utility billing system (RUB)Heating Owner Normally covered by owner in all centrally heated buildingsCooling Tenant / Owner Normally handled by window units in smaller buildings. Larger buildings may have chiller plants. 11
  13. 13. Controlling Energy Costs Older buildings make up a majority of the building stock in NYC Owner typically pays heat and hot water costs Tenant typically pays electricity costs Office buildings: common area maintenance (CAM) costs Overheating is a pervasive issue in NYC, as well as over lighting Energy costs represent the largest controllable operating expense 12
  14. 14. Impact of Energy Efficiency The building is the business Financial drivers are net operating income (NOI) and asset value Capitalization rate (cap rate) Energy’s impact on NOI and asset value can turn pennies into millions
  15. 15. Energy Efficiency’s Impact on Asset Value Multifamily building size = 150,000 SF (approximately 190 units) Initial energy costs = $1.50/SF Reduce energy consumption 10%, saves $0.15/SF New energy costs = $1.35/SF Increase in NOI = $0.15/SF x 150,000 SF = $22,500 annually Asset value increase = NOI increase / Cap rate  $22,500/0.05 = $450,000 Reducing energy consumption 10% has the potential to increase asset value by $450,000
  16. 16. Impact on a Multifamily Portfolio 5 million SF portfolio (approximately 6,250 units) Cap rate = 5.5% Initial energy costs = $1.50/SF Reduce energy consumption 10%, saves $0.15/SF New energy cost/SF = $1.35 NOI increases $0.15/SF x 5 mil SF = $750,000 Asset value increase = NOI increase / Cap rate  = $750,000/ 0.05 = $13,600,000 Reducing energy consumption 10% across the portfolio has the potential to increase the asset value $13,600,000
  17. 17. Overheating Example Fixed the issue in the beginning of February 2011 For every degree change in temperature set point, 3-5% energy use and cost savings Maximum 70°F in heating season, minimum 74°F in cooling season 16
  18. 18. Energy Efficiency Measures - Heating Enhance boiler operations to increase efficiency and reduce wear  Implement a regular maintenance routine  Maintain proper setting on burner/boiler controls  Maintain proper combustion efficiency Insulate piping Balance Heating Distribution System Seal Building Envelope Identify & Repair Return Line and Steam leaks Example - large multifamily property in NYC  Boilers that use #6 oil are 20+ years old  Plan to convert one boiler to natural gas in the summer months in 2012, followed by the other boiler next summer 17
  19. 19. Stack Effect Moving large volumes of air through a building In the winter, the warm air in a heated building is lighter than the cold air outside the building  The warm bubble of air wants to rise up and out The flow of air leaving the top of the building draws cold air into cracks throughout other areas of the building
  20. 20. Energy Efficiency Measures – Lighting and Appliances Light bulb purchases average thousands of dollars per year in most multifamily communities – monetary value typically not itemized  Replace incandescent common area lighting with CFL or LED lamps  Replace T12s with lower wattage T8s  Consider photocells and occupancy sensors Replace appliances with ENERGY STAR-qualified models  Install ENERGY STAR qualified 7-day programmable thermostats 19
  21. 21. Energy Efficiency Measures - DHW Maintain proper DHW temperatures – NYC law states 120°F to the tap Check and maintain mixing salves Add DHW recirculation pump controls Insulate DHW piping Install low flow showerheads and faucets 20
  22. 22. Awareness and Education Increase resident awareness  Gain buy-in for increased sustainability  Encourage them to consider ENERGY STAR appliances Building manager education  Vacant and model unit operational changes  Turn lights on during tours only  Turn thermostats off or to a minimal setting.  Turn off refrigerator or reduce temperature  Conduct preventative maintenance on heating and cooling equipment  Turn off water heater  Check vacant and model units regularly  Review common area bills each month
  23. 23. Building Intuition Within Your PortfolioQuestions? 22