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Lessons Learned

In the process of developing specific project recommendations, the team uncovered several key lessons for the retrofit of large multi-tenant commercial office buildings.

Five of the most important are described below – both to help others take on their own retrofit projects and to encourage further research.

1. Developing robust solutions requires the coordination of several key stakeholders

Developing robust solutions requires the coordination of several key stakeholders. Planning energy efficiency retrofits in large commercial office buildings must address a dynamic environment, which includes changing tenant profiles, varying vacancy rates, and planned building renovations. In the Empire State Building, the project team included engineers, property managers, energy modelers, energy efficiency experts, architects, and building management.

Each of these stakeholders was needed to help build a robust energy model that addressed the building's changing tenant profile and helped the team model the impacts of its energy efficiency strategies. Coordination also included the tenants. Involving tenants and considering their perspective early on is critical because more than half of the energy efficiency measures that will be implemented at the Empire State Building involve working both with tenants and within their spaces.

2. Maximizing Energy Savings Profitably Requires Planning and Coordination

For an energy efficiency retrofit to be cost effective, the retrofit needs to align with the planned replacement or upgrades of multiple building systems and components. For instance, the Empire State Building had plans underway to replace its chillers, fix and reseal some of its windows, change corridor lighting, and install new tenant lighting with each new tenant.

Since these upgrades were already going to be carried out, the team redesigned, eliminated and created projects that cost more than the initial budget but had significantly higher energy savings over a 15-year period. When these energy savings were accounted for along with the added upfront project costs, the net present value of the energy efficient retrofit projects was better than that of the initial retrofit projects. However, the energy savings are not substantial enough to offset the full capital cost. This means that doing energy efficiency projects well before major systems and components are ready for replacement will likely be cost prohibitive, with a poor net present value. The large volume of existing commercial buildings suggests that there is a tremendous opportunity to reduce carbon emissions from existing buildings through energy efficiency; however, capturing these reductions in a profitable manner demands careful planning and coordination to ensure that energy efficiency retrofits align with building replacement cycles.

For many buildings that are not in or approaching major replacements, there may still be a major opportunity to retro-commission the building. Retro-commissioning improves the operation of existing buildings, many of which are typically run to minimize complaints, rather than optimize energy performance and create comfortable working environments. Retro-commissioning can typically reduce energy use between 5 – 15 percent in most existing buildings. Developing a tool or set of tools that can quickly triage a building to determine if the building is a candidate for a whole building retrofit, retro-commissioning or no action until a few years more; will dramatically improve the effectiveness of funds and efforts directed towards energy efficiency retrofits of existing buildings.

3. Tension Between Business Value and Reducing CO2 Emissions

In the Empire State Building, maximizing profitability from the energy efficiency retrofit leaves almost 50 percent of the CO2 reduction opportunity on the table. The building owner, while still selecting an optimal package of measures with a high net present value, sacrificed 30 percent of profit to deliver more CO2 reductions and improve the lighting and tenant comfort within the building. Changes in energy prices and/or the cost of energy efficiency technologies may help to better align profit maximization and CO2 reduction. However, as things stand currently, there is  a gap between the socially desirable amount of CO2 reduction and the financially beneficial amount of CO2 reduction from a building owner's perspective.

4. Creating a Replicable Process for a Whole Building Retrofit

Developing the energy efficiency strategies that will be implemented in the Empire State Building took over nine months of intensive building audits, brainstorming charrettes, energy modeling, documentation, and financial analysis. Although the Empire State Building is a very unique building with unusual challenges, the process used to drive deep energy and carbon savings in the Empire State Building can be made much more efficient. Having completed the recommendations for the Empire State Building, the project team recognizes a number of opportunities for condensing the study period exist, these opportunities include: developing experienced teams, creating tools for rapidly diagnosing and categorizing a building (or a portfolio of buildings), quickly developing a “first-cut answer,” and developing and using tools to quickly iterate between financial and energy modeling to arrive at the optimal package of measures.

5. Carbon Regulation Does Not Significantly Affect the Empire State Building Recommendation

The financial decision-making tool helped the team to undestand that the recommended package of energy efficiency measures would not significantly change even if there were carbon regulation that leads to higher energy prices over time. Carbon regulation that changed energy prices by less than two percent per year had little effect on the financial performance of the modeled packages. However, if energy prices rise by over 8 percent (associated with a carbon price of approximately $30/metric ton of CO2), a package with all of the energy efficiency measures that were analyzed (as opposed to those that were recommended), rises to NPV neutral instead of NPV negative.