The Truth about Buildings, Energy and Green

There are several trends creating opportunities, concerns, and pitfalls with respect to retrofits of commercial buildings in New York. These trends include increasing federal, state, and local legislation, rebates and incentives, as well as the desire “to go green”.

A recent event hosted by NY report and Donnelly Sustainable Energy Services, “Building Retrofits for Energy Savings: Why Doing Nothing Will Cost You More,” addressed these myths and opportunities. The panel discussion included Charles Goulding, president and founder of Energy Tax Saver’s Inc.; Robert J. Ragozine, president of Donnelly Sustainable Energy Services, and Stephen Del Perico, construction and real estate attorney with Arent Fox, and Donald J. Winston, vice president of technical services at the Durst Organization. The panel’s comments also addressed where legislation and opportunities for energy savings will be in the near future.

How to get started

When considering energy efficiency issues when performing retrofits, cost-savings and legislation (both existing and expected) must be a part of the decision process. Paybacks from rebates and tax incentives are not the only measurement of cost savings.

To that end, panelist Ragozine suggested, “a preliminary walk-through of your site visit with an expert to identify opportunities for electrical, mechanical, and even water savings in the building. After the preliminary site is done, that’ll be your go/no-go for whether a full energy building audit makes sense.” Ragozine added that it is important to take a holistic view of any energy savings project and balance energy savings with comfort. Look at the systems and energy bills, and make sure you are buying energy as cheaply as possible. Winston suggested it is also important for building owners to keep in mind that energy is typically 3 percent of tenants overall cost of doing business, so energy savings may not be a big issue in tenant/landlord discussions.

Planning is key

After completing an audit, it is critical to understand the targets. Since tax incentives are tied into the American Society of Heating Refrigerating and Air-conditioning Engineers (ASHRAE) 2004 Building Energy Code, planning any energy saving project to meet those codes before any work begins is essential to qualifying. “We do see clients that just miss the ASHRAE targets. . . we just saw a client who was eligible for a $600,000 tax savings (worth $250,000) who had to bring the lighting wattage in at .60 or less. The result was .61 and the client lost the entire deduction,” said Goulding.

Pay attention to details

“Incentives might look like free money, but you may find you spent substantially more than what the incentive actually is,” said Winston. Because federal, state and local governments have been so eager to enact green legislation the incentives might not be all they are cracked up to be. “Be careful about being seduced by ‘free’ money,” said Winston. “Every retrofit activity needs to be evaluated on its own merits. Incentives can make a good job better, but it can’t make a bad job good.”

According to Del Percio, because legislation is such a moving target, it is critical that contracts with suppliers related to retrofits comply with legislation.

NYC building codes

The landscape for energy saving legislations is like the wild west. Often, federal state, and local laws contradict each other. When planning retrofits, make sure you are up-to date on all the legislation at every level.

According to Del Percio, NYC has begun to be affected by “LEED Creep.” LEED Leadership in Energy and Environmental Design – is a certification from the U.S. Green building Council that is required of public projects. LEED started to be applied to public projects, but have “crept” over into legislation applying to the private sector. The NYC Greener, Greater Buildings legislation is one example. New York City landlords and tenants need to be up-to-date on the Greener, Greater Buildings, which consists of four pieces of legislation:

New York City Energy Conservation Code:

Closes the “50 percent loophole” in the current New York City Energy Code, which does not require owners who renovate less than 50 percent of their building’s total space to comply with the most current– and energy-efficient- version of the code.

Benchmarking:

Requires buildings to perform an annual assessment of their water and energy use using EPA’s Portfolio Manager tool for the purpose of comparing themselves with their peers, but exempts certain buildings for which public disclosure would be problematic (i.e. high energy users such as data centers).

Lighting Retrofits and Submetering:

Requires large tenants to be submetered and lighting systems to be upgraded during renovations (whether or not those renovations contemplate electrical work) or, at the latest, by 2025. Residential tenants are exempt. Renovations where construction costs are less than $50,000 are also exempt.

Audits & Retrocommissioning:

Requires energy audits for all buildings, but retrocommissioning only for public buildings (based on 7-year payback period). While some of these laws may not be effective for a few years, it is crucial to factor them into any projects you are currently planning. Reiterating his comment on taking a holistic view, Ragozine said “the low hanging fruit also includes “not wasting” energy and not looking for opportunities to save energy given the deregulated markets.”