By Mary Velan
Denver recently announced a new program aimed at increasing awareness and driving demand for energy efficiency in the city’s commercial building sector. As part of the Denver City Energy Project, the city’s Department of Environmental Health launched the Lease for Efficiency Challenge designed to encourage private building tenants to be more aware of their buildings’ energy performance.
The Challenge
The Lease for Efficiency Challenge aims to unlock $1.3 billion in energy savings across all commercial buildings in Denver. Under the challenge, tenants commit to ask about the energy efficiency of a building - as quantified by the building’s ENERGY STAR score - during the leasing process. Currently, 44 businesses representing nearly 2.5 million square feet of commercial space in Denver have signed on to the Lease for Efficiency Challenge.
“When a building is efficient, it’s a better investment both in the short and long term,” said Denver Mayor Michael B. Hancock. “We also know that scaling up energy efficiency in Denver has the potential to create new jobs and further drive a green economy.”
The Denver Metro Chamber of Commerce recently undertook a series of energy efficiency upgrades that cut their energy use by 30% and took their ENERGY STAR score from 45 up to 80 out of 100.
“The Chamber is proud of the energy efficiency improvements that we’ve made as part of our building renovation,” says Kelly Brough, CEO of the Denver Metro Chamber of Commerce. “We’re saving money, have increased the value of our building, and are exemplifying the commitment that the business community has toward energy efficiency.”
Benchmarking, or measuring a building’s performance is often the first step toward tracking energy use and evaluating potential improvements as data gathered through benchmarking can help guide improvements, track progress, and establish a continuous cycle of improvements. Research has shown that building owners who benchmarking their buildings are more likely to make energy efficiency improvements.
The Lease for Efficiency Challenge and the Benchmarking Program are designed as complementary program in order to maximize savings across the City and County. “Denver has a unique combination of programs in place that recognize not only buildings that are improving their energy efficiency, but also tenant businesses who do their part to select an energy-efficient space,” says Katrina Managan, Senior Advisor for the Denver City Energy Project in the Department of Environmental Health.
How It Started
Elizabeth Babcock, Manager, Air, Water and Climate at the city and county of Denver, told Gov1 the challenge is designed to promote energy efficiency awareness among three key audiences:
- Tenants
- Real estate brokers
- Property owners and managers
Before launching the campaign, Denver officials were brainstorming on how best to help businesses reduce their costs and improve their bottom line - which would make Denver a top tier, internationally competitive market.
“We know that on average 22 percent of commercial operating expenses come from energy use,” Babcock told Gov1. “By selecting ENERGY STAR buildings - which are 35 percent more efficient than their peers - businesses could save about 50 cents per square foot of leased space.”
So the city started an outreach campaign in the community to gauge stakeholder interest and engagement. During the outreach campaign, Denver officials discovered both tenants and property owners were very interested in making buildings more efficient. While many businesses that have leased ENERGY STAR spaces enjoyed lowered costs and increased competition, many property managers were unaware of the demand for high-efficiency commercial space.
“Property managers wanted to hear from tenants that energy efficiency was a primary interest when looking for space,” Babcock explained. “Likewise, businesses wanted to know what their options were when seeking out energy efficient properties. We wanted to help businesses ask the right questions to drive investments into efficient properties and keep businesses competitive.”
To ensure the challenge appealed to all parties involved, Denver officials made sure to tailor the message of the campaign to a variety of stakeholders - including businesses, property owners and real estate brokers. It was important for the city to:
- Equip businesses with the right questions to ask property managers or real estate brokers when seeking efficient space
- Instruct property managers on how to respond to efficiency questions from tenants and brokers
- Connect businesses and brokers with the right tools and resources to aid in their leasing decision making
One such resource provided on the city’s website is a guide to green lease writing.
“We teach businesses how to write a green lease, which will allow them to capture energy savings from more efficient buildings as part of the lease,” Babcock told Gov1. “The lease also allows businesses to implement energy-saving efforts in their own space to improve performance.”
Babcock explained that talking about energy efficiency was not enough. Businesses, property managers and real estate brokers all wanted to hear testimonials from satisfied tenants and owners, as well as read case studies documenting the long-term savings and benefits associated with high-efficiency space.
What the Participants Learned
Dave Clute, Vice President Head of Workplace Technology for Zurich Intelligent Buildings Program, was introduced to the Denver efficiency project through the collaboration with the Colorado Chapter of CoreNet Global. After entering into the program, Zurich adopted a list of questions to ask landlords when considering a new property.
“When Zurich looks at new space or the renewal of existing leases, we always look for ways to increase energy efficiency, lower our operational costs and support our Corporate Social Responsibility and Environmental Performance Initiatives,” Clute told Gov1. “We use a ‘Green Lease Scorecard’ that takes several efficiency factors into consideration.”
These questions surrounding a green lease include:
- Is the building environmentally certified?
- Does the building have an environmental management plan?
- Does the landlord offer recycling programs at the building?
- Does the landlord use green cleaning programs?
- Does the building have flow-flow faucets, showerheads and toilets?
- Does the building have a building automation system installed to control and monitor the building’s mechanical and electrical systems and optimize and measure energy use?
- Does the building manager maintain a specific temperature range in occupied portions of the building?
- Does the building comply with the most recent ASHRAE or equivalent standard for energy use and indoor air quality?
- Does the building have a VAV (variable air volume) HVAC system?
- Are there any efficiency upgrades planned for the building?
- If the premises are not separately metered for electricity, water and gas, will the landlord allow the tenant to install submeters?
- Is the landlord willing to provide utility bill backup when the tenant is not directly billed by the utility company?
Many companies, such as Zurich, use the efficiency program as a means to take a leadership role within the corporate sector with regards to energy performance.
“Zurich strives to continuously improve corporate policies, procedures and practices in energy performance and to ingrain consciousness and best practices into core business processes,” Clute explained. “Zurich encourages its employees to drive innovations and improvements to processes, tools, products and services which foster good energy performance.”
Zurich, like other global companies, have a comprehensive environmental performance program in place to ensure efficiency in all locations of operation. Clute said the company recognizes the risks that a shortage in energy supply can have on both the corporation and society. The impacts of non-renewable energy sources on the environment and public health pose risks to customers, communities, stakeholders and business performance. Therefore, it is in the best interest of Zurich to invest in energy efficiency.
“Careful use of energy, a commitment to continuously improving energy efficiency and the move away from fossil fuels and atomic energy to renewable energy are integral to sustainable value creation for both Zurich and society,” Clute told Gov1.
Perks of High-Efficiency Buildings
It is easy to understand how a more efficient building will generate lower energy costs for owners and tenants. But many businesses and property managers may not fully grasp the breadth of savings and benefits discovered through investment in building efficiency improvements.
Katie Weeks, Director of Communications for the Institute of Market Transformation, explained that more than $400 billion is spent in the U.S. to power buildings annually, with the poorest performing buildings reportedly using three to seven times the energy of high-performing buildings. This leaves ample opportunity to cut waste and spending in the short and long term. According to Weeks:
- Energy-efficient properties have occupancy levels up to 10% higher than less-efficient properties, rental premiums over 10% higher than less-efficient properties, and sale prices up to 25% higher than less-efficient properties (charts and references here)
- Commercial building projects that are “designed to earn ENERGY STAR” are projected to save more than $75 million (this is part of a larger set of stats about ENERGY STAR here)
- ENERGY STAR buildings use, on average, 35% less energy than their peers, and generate 5% fewer greenhouse gas emissions. In addition, they cost $.054 less per square foot to operate. (EPA stats for reference here)
And the savings don’t end with commercial properties. On the residential side, IMT research has found that nationally ENERGY STAR homes have a 32% lower default risk on their mortgages. Denver is one of 10 cities currently participating in the City Energy Project, a national initiative from IMT and the Natural Resources Defense Council to create healthier and more prosperous American cities by improving the energy efficiency of buildings.