Written by Kieran McLean, Certified Energy Manager, Certified Measurement & Verification Professional and Founder of EQ esco.

In the December 2016 Australia and New Zealand Property Journal, it was noted of the commercial property market,

“Going green has become the norm, and those left outside the movement will find their Return on Investment (ROI) may be rigorously tested.”

How does not being ‘green’ relate to your ROI being tested exactly? Managers and owners of inefficient buildings may find it difficult retaining and attracting tenants, as well as being exposed to increasing energy costs and more expensive maintenance.

The good news is that property managers can help owners protect their investments and enjoy the financial, social and environmental benefits of energy efficiency. In a recent study, Sustainability Victoria featured 20 commercial office buildings that had undertaken energy efficiency upgrades. The report identified the following benefits; reduced tenant complaints, reduced call outs for contractors, faster rectification of issues and improved transparency of building operations. Additionally, the energy efficiency projects achieved:

Historically, maintaining the status quo in regards to energy efficiency has not adversely impacted investment returns. However, with ‘green’ becoming the norm and the Commercial Building Disclosure (CBD) program requiring energy ratings are advertised, maintaining the status quo is almost certainly going to test your investment return. The question is, can building owners afford not to be going green?

Whilst it may be clear that energy efficient buildings are becoming mainstream, what is less clear is how to become energy efficient. There are numerous service providers, selling a range of products from LED lights to turnkey air-conditioning systems, as well as constantly changing government regulations, policies and incentives. Combined, this makes the industry tricky to navigate, understandably causing hesitation in becoming energy efficient.

The remainder of this post outlines how property managers can navigate the energy efficiency industry to deliver investment certainty for owners.

How to Improve Energy Efficiency

Delivering a successful energy efficiency project requires both a financial and technical solution. It takes time and effort to navigate the energy efficiency industry to get the right solution. Fortunately, this post will step you through each stage of your journey.

Navigating the energy efficiency industry is our bread and butter, whilst this guide will give you all the skills you need to deliver your own project, we will shout out along the way in areas we can help if you get stuck.

What finance options are available for energy efficiency?

Three of the big four banks (Commonwealth Bank, NAB and Westpac) all offer specific financing products for energy efficiency upgrades. The loans are similar to standard commercial equipment loans but are offered with a 0.70% discount on the interest rate.

Certain local councils around Australia are also offering Environmental Upgrade Agreements (EUAs). An EUA is a loan that is secured against a property, rather than a business, and is repaid through a council environmental upgrade charge (i.e. on the rates). EUAs also offer a way to accept tenant co-contributions to your upgrade and offer longer term loan periods. Not all Local Councils are offering EUAs at this stage, so check here to see if your local council does.

Of course, there is also the options of standard commercial loans or self-financing.

How do I get the right technical solution?

Getting a quality contractor or contractors to deliver the right technical solution for your building can be daunting.  Here’s our tips on avoiding the energy efficiency ‘cowboys’.

Set a Goal

It’s a good idea to start by setting a target for what you want to achieve from the building upgrade. Don’t worry too much about getting your goal ‘perfect’. As you learn more about energy efficiency and your facility, your goal can be refined. The hardest part is starting, so think about what you want to achieve and set a goal. If you need help, goals commonly will fall into the following categories: NABERS rating improvement (a star improvement or a targeted rating), percentage energy reduction, payback period or specific budget. Because there is so much choice it can be overwhelming to get started. To help we classify projects into 3 broad groups:

Minor Improvement
The 'Low-Hanging' Fruit
Small NABERS improvement

1 - 4 year simple payback

25 - 100% Return on Investment

Energy Saving up to 10%

Technology: LED Lighting, BMS Tuning, Variable Speed Drives, Power Factor Correction

Moderate Improvement
Some Asset Renewal
Moderate NABERS improvement

5 - 7 year simple payback

14 - 20% Return on Investment

Energy Saving up to 20%

Technology: As for minor upgrade plus Solar, Minor HVAC Upgrades, Voltage Optimisation

Major Improvement
Major Asset Renewal
Sale/lease or end of life upgrade

8+ year simple payback

Up to 12.5% Return on Investment

Energy Saving above 30%

Technology: As for moderate upgrade plus Major HVAC Upgrades, On-site Generation

Engage a Certified Professional

Look for the following certified professionals, and inform them of your goal. Ask for a preliminary energy assessment/consultation firstly. This should be free. They will give you an idea of the energy saving opportunities available and how realistic your target is. From here, they will be able to develop a scope of works and quotation for you. As with any professional service, get multiple quotes.

Tip: look for professional that deliver end-to-end projects not just audits. This means you’ll get continuity from start to finish.

CertificationAccrediting Body
Certified Energy ManagerAssociation of Energy Engineers
Certified Measurement & Verification ProfessionalAssociation of Energy Engineers & the Efficiency Valuation Organisation
NABERS AssessorNSW Office of Environment & Heritage
CBD AssessorNSW Office of Environment & Heritage on behalf of the Australian Government
Green Star AssessorGreen Building Council of Australia
Certified Energy Efficiency Specialist/LeaderEnergy Efficiency Council

Already feeling overwhelmed? Well, this is where EQ esco can come in and help you out. 

Our Launch service is FREE, and will help get you started by broadly assessing the energy efficiency opportunity in your building. We develop a Request for Quote document based on our preliminary assessment and assign up to 3 suitable contractors who can deliver an end-to-end service for your project. They will conduct a more detailed assessment and provide a quote for your upgrade. We’ll also give you our guide to delivering energy efficiency projects.

Reviewing Quotes

Assuming you’ve now received quotes that meet your energy efficiency goal, you now need to assess them for quality.

Check for Compliance

This isn’t energy efficiency specific, but make sure that any products are compliant with Australian Standards (particularly electrical safety). Ask what warranties are available from the manufacturer and the supplier.

Measurement & Verification

Ask your contractors for a Measurement & Verification (M&V) plan. In short, a M&V plan details how the supplier is going to prove the energy savings that their product achieves. If they don’t know what a M&V plan is, and aren’t familiar with the international protocol on how to prove energy savings (International Performance Measurement & Verification Protocol), alarm bells should be ringing. If you’d like to know more about M&V, check out our post here.

In the era of “Big Data”, there’s no excuse not to have data that proves energy savings in real terms.

Start Small

If you’re unsure about a product, ask for a free trial or free (or at least heavily discounted) installation in a small area of your building. Put the product through the rigours of day-to-day use, ask your tenants if they’ve had any issues since the product was installed. Get the supplier to measure and verify the savings.

Ask for real case studies

If there are no case studies, real results or previous customers that you can call, you’d have to assume you’re either the first customer, or their previous results have been underwhelming. Let’s stay on the positive side of the fence and assume you’re their first customer. Ask for a heavy discount (or free!) in exchange for being their first customer/case study/opportunity to get real results.

Google it!

A little bit of background research can go a long way. There are several forums for electricians and HVAC technicians where discussions are often “Does PRODUCT actually work?”

The next level up is our Develop service. It has all the benefits of our Launch offering but we work closely with the prospective contractors to develop a firm proposal for your project. This includes providing quality assurance expertise to verify realistic energy costs, review and approve baseline energy models, ensure compliance of measurement & verification plans and review suitability of all energy efficiency measures. After we provide quality assurance on the proposals, we hand over to you to deliver the project.

Delivering the Project

You’ve selected a contractor, got buy-in from the building owner and are all set to deliver your first energy efficiency project. What next?

Commissioning Verification

As your project is being implemented, verify the installation and performance of new systems. A well commissioned system lays the foundation for long term performance and achievement of energy savings.

For all systems, the energy efficiency provider should supply a commissioning plan which verifies the operational performance of the systems they are installing. For simple upgrades, such as replacing lighting, it may be as simple as verifying that a new light fitting has been installed, turns on/off and provides the required lighting level.

For more complex systems, such as HVAC or cogeneration, this may involve testing the system in various modes of operation. Your contractor should demonstrate to you that the functionality outlined in the commissioning plan is being achieved in all operational modes.

A poorly commissioned system, can cause massive underperformance in energy and cost savings. If you’re responsible for maintaining a poorly commissioned system, an expensive recommissioning process may have to take place to realise the energy savings that were promised.

Measurement & Verification of Energy Savings

Within the M&V plan, the energy efficiency provider should detail how they are going to take pre- and post-installation energy measurements. Along with providing calibration certificates for the devices they are using to take the measurements. Ensure that you are provided the opportunity to witness these measurements being taken, verify they are recorded correctly and in accordance with the M&V plan.

Measurements will often require an ongoing period of data logging, especially for air-conditioning systems which are subject to very different operating conditions in summer and winter. Ask for details on how the data logging or trending is going to take place, if this will introduce any uncertainty into the savings calculations, and what redundancy is there if data is lost?

Maintenance and Continuous Commissioning

Energy efficiency initiatives range from the simple to understand products (e.g. LED lighting) to extremely complex systems (e.g. trigeneration). Understanding who is responsible for maintaining these systems is crucial to the effective delivery of energy savings. If the responsibilities are passed to an under skilled or under resourced facility management team, savings will deteriorate rapidly.

If a maintenance contract is offered, it will either include continuous commissioning or one or more recommissioning phases. Continuous commissioning is the process of constantly fine-tuning the systems to ensure optimal performance. Recommissioning is the process of bringing the system performance back to the original standard that was achieved at implementation.

Continuous commissioning and recommissioning are important as systems, particularly air-conditioning systems, are prone to drifting from original standards either due to physical characteristics changing or changes/tweaks implemented by system operators.

Finally, our Deliver package gives you all the benefits of our Develop service plus more. You’ll get the full benefit of an ‘in-house’ certified energy efficiency expert. We’ll act as an independent commissioning agent to ensure equipment and systems are installed correctly, manage the ongoing measurement & verification of energy savings, and validate maintenance and continuous commissioning activities.

Next Step

Well done! You now have the knowledge and skills to prosper in the 'green' commercial property market. If you have any further questions about energy efficiency send me an email or if you're ready to dive in you can register your energy efficiency project with us.

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Cover photo originally sourced from here used under Creative Commons Attribution 4.0 Australia License (https://creativecommons.org/licenses/by/4.0/). 

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