Challenges to Overcome to Boost Energy Efficiency for Nonresidential New Construction
Today, 30 states and the District of Columbia have adopted an energy efficiency policy designed to reduce energy consumption and promote more efficient use of electricity, according to the U.S. Energy Information Administration. Many of these states have developed state utility commission-supported Energy Efficiency Resource Standards to drive forward momentum on these energy efficiency goals. While most utilities have made progress in moving toward their goals, there remains much to be done in making energy efficiency a standard practice for the architectural and engineering (A&E) firms that shape commercial building energy use.
For more than a decade, utilities have encouraged A&E firms to boost energy efficiency for construction projects, yet success remains somewhat limited. This lack of progress indicates a need to change the conversations around energy efficiency to truly transform the nonresidential new construction market and reach a net-zero future.
Changing the financial conversation
Utilities can see that new nonresidential construction energy efficiency measures provide a high benefit-cost ratio. Yet, despite the significant cost savings energy efficiency measures offer, budgeting the capital and operational cost of incorporating energy efficiency for construction measures remains one of the significant barriers to greater adoption of energy efficiency for opportunities in nonresidential construction. In fact, the perceived high first-cost was the single biggest concern of survey respondents in the 2018 Dodge Data Analytics report World Green Building Trends, cited by more than 49% of survey respondents.
Some of this challenge may stem from misused metrics. Design decision-makers have long used the Return on Investment (ROI) metric to justify an investment. However, this can be misleading. By not considering operational costs in ROI calculations, or considering a simple payback period, decision-makers do not get accurate data on the whole-life savings energy efficiency measures provide. Popularizing more accurate metrics, such as Life Cycle Costs (LCC) or Total Resource Cost (TRC), could change the conversation around energy efficiency investments.
An additional challenge comes from an as-yet unaddressed expense. Over the last decade, there has been significant progress made in developing the financial mechanisms necessary to fund implementation of energy efficiency measures into most any project. The remaining hindrance is the funding of integrated design costs. Activities involved in these processes include design charrettes, detailed building information modeling, building energy modeling and holding stakeholder meetings. Project owners or developers typically cover these costs. Providing incentives that cover these costs may prove crucial for increasing adoption of energy efficiency measures, particularly among smaller A&E firms, during project development.
Those smaller A&E firms offer an often-overlooked value. Utility programs focused on the energy savings to be achieved during their program’s budgetary cycle are opt to think only larger construction projects provide the energy savings goals they target. Expanding this focus, and involving these smaller firms in conversations around energy efficiency for construction, expands the possibility of greater financial savings.
Trimming the design timeline
Funding may be a significant hurdle toward transforming the A&E market’s approach to energy efficiency, but it’s not the only hurdle. Timing is also a challenge.
Consulting firm Guidehouse has found that one of the main reasons A&E design give for lesser acceptance of energy efficiency incentives program among the community is a lack of early identification of project goals. Setting goals for energy efficiency measures becomes much more cost-effective when incorporated in the earliest stages of conceptual design. By the time most energy efficiency consultants are sought for advice, when design is 50% to 75% complete, it becomes much more difficult to go back and make impactful investment decisions.
Performing this work early on also gives energy efficiency experts time to navigate the challenges of working on several alternate design solutions within a short timeframe and competing with significant project concerns beyond energy efficiency.
Utilities’ program requirements occasionally present a roadblock in this process by slowing the process of approving designs for energy efficiency incentives. The turnaround time for design-bid construction can be incredibly brief, particularly in market sectors where speed to market is a critical differentiator. Minimizing interaction between the A&E firm, developer and utility is vital. To boost energy efficiency levels in nonresidential new construction, it may help for utilities to offer energy efficiency program managers pre-assessed design alternatives. This could also help small A&E firms that do not have the bandwidth to invest in an integrated design approach move toward energy efficiency measures.
Moving beyond green certification
While certifications such as the U.S. Green Building Council’s popular LEED program and other green building certifications have driven much of the energy efficiency conversation in recent years, that focus could be holding back some progress. Rather than reaching for a certification plaque, A&E firms could be helping developers and building owners reach for a lower operational bottom-line toward a net-zero facility, a far more valuable goal.
Prioritizing energy efficiency benefits has potential to serve as a stepping stone for pushing the nonresidential new construction sector towards greater rates of net-zero energy construction. It pushes well beyond LEED by moving project stakeholders toward more aggressive energy efficiency savings targets.
By shifting the conversation and addressing these hurdles, utilities and A&E firms together can better prioritize energy efficiency early in the design stage and move closer to realizing an energy transformation in nonresidential new construction.
Talk to our experts to learn more about the benefits of changing this conversation.