ConstructionPro Week, Volume: 1 - Issue: 7 - 06/22/2012

Building Owner, Operator Reliance on Energy Efficiency Skyrockets

By Steve Rizer

 

A virtual perfect storm of factors has spawned an increased reliance on energy efficiency among building owners and operators, according to new research findings from Johnson Controls (JC). The multinational Fortune 500 company believes that a heightened awareness of energy efficiency’s financial payback, a proliferation of government incentives for going green, and the increasingly appealing prospect of bolstering property values and positive publicity all have contributed to the following startling result from a recently conducted JC survey: 85 percent of building owners and operators globally depend on energy management to drive operational efficiency, a 34 percent increase in the last two years.

 

“Energy cost savings and financial incentives are leading this shift, but more than half [of the respondents] say they are also looking to improve their public image and increase the value of their buildings,” JC stated.

 

Added Dave Myers, president of building efficiency for JC: “Building owners are investing in energy efficiency because they recognize the financial payback. This year’s survey demonstrates there’s a change under way. The mantra for commercial real-estate owners used to be location, location, location; now it’s becoming location, efficiency, location.”

 

Nearly one-third of survey respondents indicated that tax credits, incentives, and rebates have the greatest impact on increasing investment in energy efficiency. This finding underscores the role of government policy in the decision making of building owners and operators, according to JC. The figure totaled 42 percent in the United States, where building owners and operators reportedly are addressing aging and inefficient buildings.

 

A new survey question explored respondents’ perceptions of energy policies that would have the most impact on improving energy efficiency in buildings. “Responses differed between developed regions (U.S. and Canada, Europe, Australia) and emerging regions (Brazil, China, India),” according to the report. "In all regions, tax incentives and rebates for energy-efficiency measures were the most favored policy although those in developed regions supported such measures more strongly than those in emerging regions (37 percent versus 22 percent). Respondents in emerging regions felt that tax incentives, stricter building codes and equipment standards, and adoption of green appraisal standards would have a nearly equal likelihood on improving energy efficiency in buildings.”

 

“Nearly 75 percent of commercial buildings in the United States are more than 20 years old and are ready for energy improvements,” Myers said. “Building owners and operators are looking to lawmakers to bring down the cost of energy retrofits through incentives and rebates. In Asia, building codes and equipment standards also are helping to ensure that new buildings are constructed to high-performance levels.”

 

Developing countries are setting the pace when it comes to investment with the highest number of respondents -- 81 percent in China and 74 percent in India -- planning to increase investments in energy efficiency or renewable energy. Globally, 40 percent of energy is consumed by buildings, according to the World Resources Institute.

 

“Respondents reported that their organizations took a wide variety of energy-efficiency actions in the last 12 months,” the report states. “In all, 96 percent of respondents reported undertaking at least one improvement action. The most common actions undertaken were lighting upgrades (69 percent); heating, ventilating, and air-conditioning or controls improvements (61 percent), and water-efficiency actions (50 percent).”

 

Green-building certifications, or voluntary rating systems, are on the rise with 44 percent of respondents planning to certify existing buildings, up from 35 percent the year before. Furthermore, 43 percent of respondents reported that their organizations plan to certify new construction projects.

 

“Tenants are willing to pay more to locate their offices in energy-efficient buildings,” Myers said. Nearly one-quarter of all respondents indicated that they are willing to pay a premium for space in a certified green building.

 

Worldwide, building owners and operators reportedly are measuring and analyzing energy-use data at record rates. Weekly tracking increased 30 percent over last year. Each week, 20 percent of all survey respondents said that they are reviewing and analyzing energy management data.

 

“A new question explored the extent to which respondents were applying or planned to apply a set of recognized energy-management best practices,” JC stated. “The practices respondents most often cited as being applied or planned were regularly tracking and analyzing energy data, measuring and verifying energy savings from projects, and performing energy audits. Approximately 31-41 percent of the global market is planning to implement each of the energy-management practices listed -- suggesting that even though more companies have implemented energy-management practices, there is still significant growth to achieve in energy management.

 

“The survey found that across the board, organizations that had applied any given energy-management best practice had taken roughly three times as many energy-efficiency actions as those that had not implemented that practice. The differences in actions taken were the greatest for the best practices of tracking and analyzing energy data, measuring and verifying energy savings, performing energy audits, and creating action plans to implement projects.

 

“Furthermore, responses indicated that the more energy-management best practices an organization applied, the more energy-efficiency actions it took and the greater its planned increase in investments in energy efficiency and renewable energy over the next 12 months. However, six practices seem to be the point of diminishing returns beyond which there is no shift in planned investment levels.”

 

The 2012 Johnson Controls Energy Efficiency Indicator, a global survey of building owners and operators, was released June 14. The sixth annual survey of 3,479 building owners and operators, including 1,139 from the United States and 944 from Europe, was led by JC’s Institute for Building Efficiency, the International Facility Management Association, and the Urban Land Institute. The survey was conducted anonymously, online, last March and April. To qualify, respondents needed to meet two criteria: they must have had budget responsibility for their organizations’ facilities; and their job duties must have included reviewing or monitoring energy usage and/or proposing or approving initiatives to make their organizations’ facilities more efficient.

 

In an email interview with Clay Nesler, vice president of global energy and sustainability for Johnson Controls’ Building Efficiency Division, provided ConstructionPro Week (CPW) the following additional details:

 

CPW: Regarding the 34 percent increase in respondents indicating that they’re depending on energy management to drive operational efficiency, would you say that’s more a result of increased awareness amongst respondents about the benefits of energy efficiency or a result of increasingly more government incentives being offered? What is the primary reason for the increase?

 

Nesler: This year’s survey shows that organizations are also paying more attention to energy use. Yes, incentives help increase investment, but it takes awareness and commitment to take action.

 

CPW: What are the most common types of energy-efficiency retrofits being implemented by respondents? What are the most common retrofits among those respondents who are in the United States?

 

Nesler: The top three energy efficiency measures adopted in the past 12 months included: lighting improvements (78 percent), HVAC and/or controls improvements (77 percent), and water efficiency improvements (45 percent).

 

CPW: Why aren’t all businesses investing in energy-efficient retrofits? What are some of the drawbacks of such investments for some businesses?

 

Nesler: Finances remained as the major barrier to pursuing energy efficiency for U.S./Canada respondents. The top barrier was a lack of funding to pay for improvements (37 percent), followed by insufficient payback/return on investment (21 percent). The top financial barriers to pursuing energy efficiency were competition for other capital investments (36 percent) and insufficient internal capital budget (30 percent).

 

CPW: What is the average payback for energy-efficient investments? What is the average investment, average return, and average amount of time it takes to get the investment paid off?

 

Nesler: Paybacks vary based on the size and scope of the project and can range from a few months to more than 10 years.

 

CPW: What new trends in energy efficiency does your company foresee occurring and when?

 

Nesler: Forward-thinking organizations are seeing the value and critical importance of data analytics and smart-building technologies. Additionally, in the survey we did ask about technology expectations over the next decade. Different global regions had different expectations about the on-site technologies that will show the greatest increase in market adoption over the next 10 years. Globally, the top three technologies were: lighting technologies (37 percent), smart building technology (29 percent) and advanced building materials (26 percent). Solar photovoltaics or solar thermal appeared in the top three of every region outside of the United States and Canada.

 

CPW: Will the results of the next survey be released one year from now? What other reports on energy efficiency might you be releasing anytime soon?

 

Nesler: Our plans for 2013 are still being determined.

 

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