Show me the Money
Asset Management SymposiumMarch 21, 2012
David Unger, US Energy GroupJohn Klein, JDM Associates
Manage Buildings Proactively To Reduce Energy Use and Save Money
Agenda
1. Energy Use in NYC
2. Energy Use Index and Benchmarking
3. Who pays the bills?
4. Types of Energy Use
5. Short- and Long-Term Strategies for Energy Efficiency
6. Awareness and Education
2
Energy Use in NYC Most recent data
Total = 725 million MMBTU
Large buildings (<50ksf)
Small buildings (<=50k sf)
Source: nyc.gov
3
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
4
Resident Survey
>200 communities, >50,000 units surveyed
Various markets across the USA
I would be more likely to renew my lease if I were living in a community that is implementing green practices
It is important to me to live in an apartment community that is reducing its environmental or "carbon" footprint
Agree
Neutral
Disagree
80%
16%
68%
25%
4% 7%
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
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
7
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
8
Multifamily EUI Averages
Source: Architecture 2030
9
Statement of Energy Performance
10
Types of Energy UsageType of Energy Usage Description Calculation
Non-Seasonal Electric Use All Electric use less cooling
Electric use less increase during cooling season
Cooling Electric Use Electric use for cooling
Electric use less non-seasonal electric use
Domestic Hot Water Production Fuel use for hot water
Fuel use less increase during heating season
Heating Fuel use for heat Fuel use less domestic hot water use.
11
Who covers cost
Type of Use Who Pays DescriptionCommon Area Electric
Owner Separate meter paid by owner
Tenant Electric Tenant / Owner
Normally sub-metered or direct metered by Con Ed. Still many master metered Multi-Family buildings in NYC
Water Tenant/Owner Typically covered by owner or ratio utility billing system (RUB)
Heating Owner Normally covered by owner in all centrally heated buildings
Cooling Tenant / Owner
Normally handled by window units in smaller buildings. Larger buildings may have chiller plants.
12
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
13
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
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
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
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
17
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
18
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
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
20
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
21
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
Building Intuition Within Your Portfolio
Questions?
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