Torchlight

You Can Lead A Horse To Data…

By: Nancy Anderson, Ph.D.

August 14, 2018

Turning Data Into Action is a report on a mission. That mission is turning data about building energy use — submitted to New York City government by owners of large properties to comply with green building laws — into actions resulting in significant building energy savings. The report, issued by the Building Energy Exchange (BE-Ex), focuses on large multifamily buildings. It predicts, "Implementing recommended efficiency retrofits would immediately reduce multifamily energy use in NYC by 11% and have a simple payback of less than 6 years." and its target readership consists of, "Building decision makers, operators, contractors and policy makers."

Sounds good — save energy, with a return on investment of just six years and then enjoy the future savings resulting from lower fuel bills. But the problem, as policy makers and experts have learned, is that just spelling out the benefits of energy efficiency retrofitting has not produced a plethora of adopters in existing buildings. Here's where Turning Data Into Action seeks to make its mark. How? By, "Organizing energy auditor evaluations of building efficiency upgrade opportunities into complimentary 'packages' of energy conservation measures (ECMs), that are matched to key touchpoints in a building's financial lifecycle."

These touchpoints are: 'anytime anywhere' low cost measures; 'mid-cycle retrofits' that may require some financial planning; 'refinance retrofits', more capital-intensive measures with longer paybacks but also big savings; 'tenant turnover', which are opportunities specific to tenant-controlled spaces and systems; and 'equipment replacement', opportunities that arise when a piece of major equipment reaches the end of its useful life.

The ECMs and touchpoints are assembled into "tearsheets". These are easy-to-digest, two-page retrofit pathways tailored to building age, size and fuel currently used for heat and domestic hot water. In keeping with the report's mission of making data the springboard for action, the intent of these two-pagers is to, "Enable building decision makers to better understand their options at critical milestones … designed to guide and inspire building owners and managers in their pursuit of energy efficiency retrofits."

Here's an example. One tearsheet, specifies the options and payback period in a pre-1947 residential building, eight stories or higher, that currently uses natural gas or, if needed heating oil for heating and domestic hot water are specified. Typically, at the low end of the touchpoint range, "Anytime/Anywhere" actions would cost $13,720, provide savings of $4,900 and an ROI of 2.8 years. At the high end, at the time of building refinance, long term investments for deep energy retrofits would cost $391,500, provide savings of $29,000 and have an ROI of 13.5 years.

But what if the intended readership of decision makers has other things on its mind? What if an ROI of more than three years for a retrofit is not deemed an attractive business option by an owner? Or a co-op board votes to spend money on modernizing the building lobby, something visible to everyone entering and leaving the premises, instead of doing an energy retrofit that might be invisible to most? What about tenants who worry that retrofit costs that fall into the category of a major capital improvement lead to rent increases or even deregulation, thus putting their apartments into the stratosphere of New York City "market rate" dwellings? There are nearly 1,000,000 rent stabilized apartments here, so that could add up to a lot of anxious tenants who won't be lending their support to building energy retrofits.

This list of hypotheticals is certainly not inclusive, but it is illustrative of obstacles dampening down the uptake on retrofit opportunities in multifamily buildings. Should a report like Turning Data Into Action, when concern about climate change risks are on the rise, help building decision makers commit to energy retrofits? Absolutely. How about the incentive to save on operating expenses when most building operating costs are on a permanent upward curve? Of course, that should and does drive some retrofit action but it's not making energy efficient building the 'new normal' at a speed and scale needed to meet New York's climate action goals.

Let's acknowledge that we have a problem here. We can lead the horse (building owner) to water (benchmarking and energy audit data, going back six years and 'tearsheets' to make retrofit decisions easy) but what if we can't make that horse drink (retrofit) enough to cut the NYC's carbon footprint 80% by 2050? Given the modest scale of energy retrofitting to date, more encouragement is called for and some of it needs to be done differently to get it done bigger and better.

Here's my suggestion for deploying Turning Data Into Action to meet its valid and valorous aims: marketing. New York City is replete with experts who market real estate. Let's put some of those best creative minds to work on promoting energy efficiency and retrofitting.

Marketing? What happened to mandates? One indelible lesson of from the history of environmental protection is that the force of law and enforcement are necessary to shift otherwise recalcitrant habits. Another lesson, however, is that enacting and executing laws require stakeholders and advocates who are able to overcome opposition. That doesn't always happen, or it may take several rounds of legislative action or produce watered down standards. Here's where marketing comes in.

Marketing energy retrofits needs more than one target audience and more than one message. The first audience consists of those "building decision makers, operators, contractors and policy makers" who are the primary audience for Turning Data Into Action. Here, data presented by experts and peers acknowledged in the real estate, construction and lending industries is the best path to persuasion and action. Get them on board and the chances for retrofit legislation soar. But aspirational marketing to tenants, prospective tenants and a larger public is also essential. Like promoting a new beverage product, people have to want to live in a building that's energy efficient, healthier and cooler than the rest. And let's admit it will take more than data to get all that retrofit action. That's our challenge. Drink up!

One more thing, don't forget to vote.