In early August, New York City released its first benchmarking report on Local Law 84 (LL84), which requires all privately-owned properties with individual buildings over 50,000 square feet (or with multiple buildings with a combined square footage over 100,000 sq ft) to annually measure and report their energy and water usage. According to the New York Times, even though just 2% of the city’s one million buildings are covered by the law, they account for 45% of the energy used by all NY buildings. This landmark report (the first and largest to begin utilizing information about how energy is used in existing buildings) is based on data representing nearly 1.7 billion square feet of built space, which is equal to the built areas of Boston and San Francisco combined, and constitutes the largest collection of benchmarking data from a single jurisdiction. The report on LL84 also has great implications for environmental professionals doing energy audits on commercial properties.
Benchmarking submissions were required under the 2009 LL84, as part of New York’s Greener, Greater Buildings Plan (GGBP), a program which is designed to ensure that decision-makers are provided with necessary energy information and that the most cost-effective energy efficiency measures are pursued. New York’s GGBP required all building owners to annually enter energy and water use data and other related information about their buildings (square footage, hours of operation, etc) into the U.S. Environmental Protection Agency’s (EPA) free online benchmarking tool, Portfolio Manager. From the information, Portfolio Manager calculates benchmarking results including energy and water usage (per square foot), carbon emissions, and a 1 to 100 rating (for some building types), comparing the building’s relative energy performance with other similar buildings. Overall, 2,065 benchmarked properties were covered. The metrics for calculating usage output include:
- the Site Energy Use Intensity (EUI) – a measure of the energy used at the site on a per square foot basis,
- the Weather-normalized Source EUI – takes into account generation and distribution losses,
- greenhouse gas emissions,
- the water use per square foot, and
- ENERGY STAR scores for buildings where such a rating is applicable.
The report has three main key findings that support the significance of the impact of LL84:
- Property owners in the city could achieve significant reductions in energy and greenhouse gas emissions by making cost effective improvements to the most energy intensive buildings. With a wide range of building types (multifamily, office, industrial, etc) and varying levels of energy use, there is potential to save more money by bringing poor building performers to median levels in their category.
- The buildings in NYC are in line with other Northeast averages, yet use less energy on average than buildings nationally. Performance above the national average is mostly attributed to the age of the city’s building stock, which is similar to the rest of the Northeast region. For the first time, benchmarking data enabled the city to analyze how building energy use varies with building age, location, size, fuel mix, and other assorted factors. For example, multifamily buildings make up the largest portion of square feet covered by the law, and are also responsible for the largest portion of GHG emissions (see graph). However, the office building and other properties categories emerge as particularly compelling targets for energy efficiency.
Benchmarking results still require interpretation, particularly with older buildings since they tend to have higher ENERGY STAR ratings due to factors like less extensive ventilation systems, better thermal envelopes, and so on. There are also reasons a building may have high energy intensity, with occasional instances of inefficient operations, high occupant density, longer hours of operation, or outmoded equipment. Benchmarking data provided in the report can best be used to assess where improvements can be made and to allow the market to find those opportunities.
- The compliance with LL84 was relatively high, particularly for a new program. Roughly 75% of covered properties complied with the benchmarking requirement deadline, December 31, 2011, proving that outreach and education were successful in increasing the awareness of the law. However, there are still 25% of non-compliant building owners who need to comply with LL84 moving forward.
Environmental consultants should be aware of the opportunities in contributing data and information to this and other reports. This report is the preamble to assigning scores for buildings on their energy use and publicizing them to further encourage property owners to make necessary improvements. According to Adam Freed, the deputy director of the sustainability office, scoring would give the city a road map for understanding the characteristics that drive energy use and allow buildings to “make informed decisions” about spending priorities. This scoring could drive demand for consulting services geared toward helping owners make decisions about retrofits and where to focus limited dollars and resources to get the most bang for their buck. According to Brian Burstiner, Director of Sales at Sustainable Real Estate Solutions, Inc. (SRS), “Environmental professionals who consult stakeholders in commercial real estate transactions should anticipate that publicly disclosed building performance information will start to impact commercial real estate transactions – and prepare to consult on the implications and opportunities that may come as a result.”
Nate Gillette, Vice President and Director of Energy Finance Analytics, weighed in stating that “the New York LL84 benchmarking law is part of a nationwide trend that we’ve seen for disclosure of energy use in buildings. The implication will be that energy efficient buildings will continue to become more valuable in the real estate market than their energy glutton counterparts.” Concerning the commercial real estate market in New York City, Burstiner believes that this report and its subsequent release of data will have broad implications. “Undoubtedly, the data will be leveraged by commercial real estate investors and stakeholders during commercial real estate transactions. Savvy real estate investors will leverage this information, similar to the way that they leverage the findings of a property condition assessment (PCA) during the course of a routine commercial real estate transaction”, says Burstiner.
Documenting and publicly disclosing the current rate of energy consumption and performance in large buildings in NYC will help consultants identify opportunities for improvements in energy standards for larger buildings moving forward. As well, understanding the metrics used in the Portfolio Manager (listed above) gives consultants the opportunity to offer services that will help with data disparity and provide more thorough data solutions in the future. “Moreover, NYC is just the beginning. Other cities and states have similar benchmarking regulations – like California’s AB 1103. Clearly, building energy performance assessment due diligence is finding its way into the commercial real estate transaction as one more factor to evaluate”, mentioned Burstiner. Environmental consultants interested in work in this space should keep their eyes and ears open as more cities look to following New York’s example.
This report is part of a continued effort by the city of New York to track trends and ask questions over time about the energy and water usage in city buildings. The information gained through this benchmarking report will be merged with information about building energy systems and with other database information regarding predicted and actual performance of retrofits. This information will ultimately enable the private sector to apply the findings of this, and other reports, when determining how to gain more efficiencies. Moving forward, the posting of benchmarking results will be an annual occurrence for all large buildings, with large residential, commercial, and municipal buildings being posted for the first time next fall.
Check out the New York City Local Law 84 Benchmarking Report in its entirety for a more in depth look at key findings, recommendations, compliance and more. As well, check out New York City’s just-published, publicly posted Non-Residential Disclosure List for energy and water benchmarking results.
NOTE TO READERS: EDR Insight wishes to thank Brian Burstiner, Director of Sales at Sustainable Real Estate Solutions, Inc (SRS), and Nate Gillette, VP and Director at Energy Finance Analytics, for contributing to, and peer reviewing, this Strategic Brief.