Calculating the Value of Deep Energy Retrofits
Originally published by: Retrofit Magazine — January 16, 2014
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Rocky Mountain Institute has released a report, “How to Calculate and Present Deep Retrofit Value: A Guide for Owner-Occupants”, that defines the non-energy costs and benefits, risk reductions and overall value of deep energy retrofits.
Deep-energy retrofits provide substantially greater energy savings—often reducing a building’s energy consumption by up to 50 percent—than traditional retrofits and other building-efficiency upgrades.
While deep energy retrofits in the United States and around the world are attractive investments, they still receive far less attention and capital than they deserve. This is partly due to a narrow definition of their value, typically focused on energy cost savings alone, as well as the confusion and uncertainty around how to calculate, present and justify such additional value streams as part of a retrofit capital request.
“Deep energy retrofits create obvious value in the form of energy cost savings, but equally compelling are the other value streams embedded in the retrofit process,” says RMI Managing Director Robert Hutchinson. “This report provides a structured and evidence-based methodology for determining the costs and savings of many other value streams, from additional operating cost savings categories to revenue drivers like employee comfort, health and productivity, and even market and reputation risk mitigation.”
When planned and executed properly, a deep retrofit can decrease company and property operating costs, help manage enterprise risk, and enable bigger and more sustainable company revenues, all of which lead to higher property and company value. The guide reviews a set of value elements to illustrate how the economics of investing in building energy efficiency can dramatically improve when all value that is created is recognized. Nearly all retrofit stakeholders can tap into these value streams, including corporate real estate managers, building owners, occupants, lenders, developers, corporate sustainability offices, energy managers, government entities, and the full range of sustainability and real estate service providers.
“By systematically assessing the additional value streams in the deep energy retrofit process, building or facility managers can make a strong case for deep energy retrofits in a way that unlocks value for the entire building or portfolio of buildings, instead of just doing tiny, short term projects capturing ‘low-hanging’ energy savings with very short payback periods but not improving the employee environment or reducing risks,” adds Scott Muldavin, an RMI senior advisor.
The report is the latest installment of resources RMI has provided for driving the greater adoption of deep retrofits, and accelerating overall retrofit activity. RMI is seeking partners who will use this report to refine their retrofit decision making, test enhanced retrofit strategies, and drive energy efficiency even deeper on new projects. In addition, RMI is currently working with CoreNet Global— the world’s leading association for corporate real estate professionals, service providers, and economic developers—to identify more examples and best practices for getting to deeper levels of energy savings.