Commercial Tenants Join the Energy Efficiency Revolution
ccayten News

People Talking Buildings are responsible for nearly half (46%) of the country’s carbon footprint and consume 75% of the country’s electricity. Since the 1970’s environmental and energy efficiency industries and groups like NRDC, EDF, IMT, DOE, EPA and ACEEE have worked tirelessly with the real estate sector to reduce energy use, save money and improve the environment. And it has worked. Since 2000, commercial buildings nationwide have reduced energy intensity by over 20% and buildings in New York City have lowered energy intensity by 5% since 2010. The bulk of these reductions, however, come from investments made by landlords and owner-occupied buildings who have in-house operations teams dedicated to reducing energy and saving their organizations money. Most commercial tenants, however, have largely been absent from this energy efficiency renaissance. That is finally changing, and landlords are beginning to engage with tenants to reduce energy use with mutually beneficial results.

Commercial tenants consume on average 40-60% of the total energy used in large office buildings. Tenant equipment, operations, and behavioral patterns have a significant impact on the overall performance, energy use and carbon footprint of the buildings they occupy. As a result, they represent a significant opportunity to reduce building-wide energy use, prolong equipment life and improve a building’s overall performance in rankings like EPA’s Energy Star Score that is published in many cities across the country. And these energy reductions translate into substantial carbon footprint reductions that align with an organization's broader corporate sustainability goals.

Over the past 25 years, with the rapid expansion of technology, the amount of energy-consuming devices in commercial tenant spaces has ballooned with powerful PCs, impressive AV equipment, and even data centers within their offices that require 24x7 cooling. Many tenants have also installed dedicated HVAC systems to heat and cool their spaces without having to rely on landlord systems. As a result, tenants now consume a substantial portion of whole-building energy, and some even operate like a “building within a building”. In addition, recent advances in energy metering technology and the simultaneous drop in the cost of sensors have shed more light on this issue as more tenants are able to accurately measure the energy that they consume separately from the energy consumed by their landlords.

For many tenants, energy efficiency is a relatively new topic, and there are number of reasons for this, most stemming from a mere lack of information. For most organizations that lease their office space, operations and energy management are not a priority. They are focused, understandably, on running their primary business. As a result, most tenants do not have specialized in-house energy and operations staff to measure, manage and improve the efficiency of systems like lighting, HVAC and plug loads. Organizations typically have someone responsible for paying the utility bill if there is one, but they may not know or have time to evaluate it or to know if they are using more or less energy than they could be. In addition, many tenants, even large ones, do not have a meter that measures the energy used by their space or receive their energy usage in a clear format on a regular basis.

Once clear data on energy use is collected, there is huge potential to find and eliminate energy waste. Some metering systems can measure not just monthly energy use, but energy use down to every minute and separate the energy used by lighting, cooling and plug loads to further identify savings opportunities. By comparing this data to historical trends or industry standards, or even other tenants in the same building, tenants can benchmark their performance and implement savings measures to equipment, controls and even staff behavior that can reduce energy use, save money and improve the environment.

For tenants who focus on energy efficiency, there are huge savings to be found. The financial leader BlackRock, working with CodeGreen, was able to reduce energy consumption by over 35% in just 4 years, saving over $300,000 per year at their New York City headquarters through upgrades to lighting, controls, motors, PC settings and data center upgrades. CodeGreen continues to identify energy saving opportunities by reviewing their monthly and 15-minute energy use. For more details on BlackRock’s energy reductions, see the case study HERE.

In the past 12-18 months numerous programs at the local and national levels have been developed to facilitate a market transformation in tenant energy efficiency and to support collaboration between tenants and landlords to improve the energy efficiency of new and existing tenant spaces. These programs include voluntary resources as well as mandatory requirements in some areas. Below are a few of key programs helping to drive this effort.

ENERGY STAR “Tenant Space” Pilot

ENERGY STAR, the federal program that manages the free online tool Portfolio Manager, that buildings in dozens of cities across the country use to track and submit their energy use data for local law compliance, has created a new pilot program called “ENERGY STAR Tenant Space” to increase awareness of energy use in tenant spaces with the eventual goal of giving tenants an ENERGY STAR score much like total buildings receive. The scores are still a few years away, but tenants are able to use the current Portfolio Manager tool to record energy use, set goals and track progress over time. Contact us to learn more about using Portfolio Manager for tenant spaces.

US DOE Green Lease Leaders

Many of you are familiar with the term “split incentive” which refers to the scenario in many buildings where the entity who must pay for an energy upgrade may not be the entity that will save as a result, if the tenant pays and landlord saves, or vice versa. This obstacle is typically a result of old boilerplate language in most commercial leases. To overcome this issue, industry groups led by the US Department of Energy developed what is called a “Green Lease” or “Energy Aligned Lease” which allows a landlord to recover portions of the cost of energy upgrades from the tenants, who will ultimately save as a result. The DOE has created a program around this initiative called the Green Lease Leaders, that supports landlords and tenants with sample lease language and highlights organizations that are implementing these leases as well as other collaboration with tenants around energy efficiency.

ULI Tenant Energy Optimization Program

Urban Land Institute has developed a step-by step program to help tenants successfully incorporate sustainability and energy efficiency into the planning, development and design of new office spaces. CodeGreen worked with program participant Global Brands on their new office space in the Empire State Building, managing the energy efficiency financial incentives. See the case study HERE.

IFMA Sustainability How-To Guides

IFMA, the International Facility Managers Association supports facility managers with resources that span the entire industry, but one of their greatest resources for managers at all levels who are interested in operating sustainable facilities is their How-To Guides. These in-depth guides across a number of sustainability topics from recycling to energy reduction provide insight into the benefits of sustainability in the workplace and nuts and bolts steps to implement a successful program. IFMA's ESUS (Environmental Stewardship Utilities and Sustainability) Committee is further expanding its role to become the "voice of the tenant" with regards to sustainability and energy efficiency. CodeGreen is a member of this great committee.

NYC Carbon Challenge

In early 2017 the New York City Mayor’s Office of Sustainability launched the NYC Carbon Challenge for Commercial Owners and Tenants that challenged participants to reduce the carbon footprint of tenant and landlord spaces by 30% in 10 years. Over 58 million square feet of landlords and tenants signed up for the challenge. The group meets quarterly to discuss current barriers to tenant/landlord collaboration on energy efficiency and best practices for accelerating energy efficiency improvements in tenant and landlord spaces. CodeGreen is proud to support the City on this program and to be working with many of the participating landlords and tenants to identify opportunities to work together to save energy.

New York City Tenant Sub-Metering Law

In New York City, in order to increase transparency and accelerate the discussion of tenant energy use in commercial buildings, the City passed a law in 2009 that goes into effect in 2025 that requires owners of buildings over 25,000sf to install electric sub-meters for all tenants over 5,000sf. The law also requires building owners to issue monthly statements to these tenants showing them monthly energy consumption. This law should dramatically increase tenants’ awareness of energy use. Some specifics of the law are still in development and we are hopeful that the final details will encourage energy efficiency collaboration between landlords and tenants. But putting energy use information into the hands of tenants is only the first piece of the puzzle. Helping tenants to decipher the information and use it to take action to improve efficiency is critical to reducing the impact that buildings have on our environment. Monthly energy statements will allow tenants to see large changes in usage from month to month and season to season. The statements will also help tenants evaluate the effectiveness of energy saving initiatives like replacing lighting, controlling PC sleep modes, etc.