Value Beyond Cost Savings - Green Building Finance Consortium

Value Beyond Cost Savings: How to Underwrite Sustainable Propertiesbook are primarily couched in terms of energy efficiency, it is important to understand thedistinction between energy efficiency and carbon efficiency. While we have chosen to usethe term “energy efficiency” in our book, underwriters need to understand the difference.A simplified example will help to clarify this distinction. A building may derive all of itsenergy needs from onsite solar power. With regard to onsite energy consumption, thebuilding will have a zero carbon contribution. At the same time, it may be equipped withinefficient equipment and be operated inefficiently, resulting in a relatively highconsumption of energy on a per square foot basis. While it is not an energy efficientbuilding, it is a carbon efficient building. This is why various measures of energyefficiency, and the EPA’s ENERGY STAR program in particular; include measures of abuilding’s source energy (the energy used to generate or transport the energy used onsite)and the greenhouse gases associated with that source energy.2. Introduction to Measuring Energy PerformanceFirst of all, what is energy, how is it measured, and what does it cost? Energy is thecapacity to do work and can take a number of forms such as thermal, mechanical,electrical and chemical. Common units of measurement are the British thermal unit (Btu,or in thousands, kBtu) and the watt-hour (Wh, or in thousands, kWh), where 1 kWh =3.413 kBtu.ENERGY STAR has become the most important measure of energy/carbon performancein the United States and is cited in many building environmental certification programs aswell as being an important benchmarking tool in its own right. A summary of two keyENERGY STAR programs is presented below.ENERGY STAR’s Portfolio Manager: Portfolio Manager is the EPA’s energy consumptionbenchmarking tool for existing buildings. It allows users to enter data on a building’s basiccharacteristics and energy consumption, and generates an Energy Performance Rating(EPR) which is essentially a percentile ranking (1 to 100) of the building’s energyperformance in relation to its peers. Buildings with an EPR of 75 or higher are eligible toreceive the ENERGY STAR label.ENERGY STAR generates an Energy Performance Rating on a scale from 1 to 100. AnEPR of 50 implies that the building’s energy performance is equivalent to that of anaverage building. The rating is based on source energy, which includes energy used togenerate and distribute the energy used at the site. The rating is also weather normalized,thereby taking into consideration heating and cooling demands by region.ENERGY STAR also produces a Statement of Energy Performance that providessummary information on energy intensity, energy cost, and CO2 emissions for the currentperiod, a baseline period, and comparisons to the industry average and the minimumENERGY STAR labeling requirements.162