Kohl's Efficiency Kick: $50 Million in Savings

Kermit the Frog once bemoaned, it's not easy being green. One of the world's largest retailers, Kohl's Department Stores, would disagree with our amphibian childhood friend.

As reported in GreenBiz, Kohl's has reached another milestone in its aggressive sustainability campaign: 500 stores in the retail chain have now earned the Energy Star label. Smart company, smart energy. Here's an encapsulation of the story:

The [Energy Star] designation, now borne by almost half the company's 1,089 stores, recognizes the sites for outstanding energy efficiency and building performance. To obtain the label, buildings must rank in the top 25 percent of the rating system set by the Energy Star program maintained by the U.S. Environmental Protection Agency and the Department of Energy.

In announcing the achievement yesterday, Kohl's said its energy efficiency efforts in the past four years have helped the company avoid $50 million in electricity cost and have boosted efficiency by more than 20 percent.

The firm marked its accomplishment by making a new commitment to green building: Starting next spring all newly constructed stores are to pursue "Designed to Earn the Energy Star" designations.

The recognition means the building has been designed for a level of energy efficiency that would merit an Energy Star label, and "Designed to Earn" sites must perform at that level for a year in order to qualify for an Energy Star label. So far, five Kohl's stores have been deemed "Designed to Earn the Energy Star" this year.

"We are building on our commitment to drive energy efficiency companywide as we continue to near our goal of being carbon neutral," said Ken Bonning, Kohl's executive vice president of store planning and logistics, in a statement yesterday.

In December, Kohl's set a goal of becoming carbon neutral by the end of this year. The target applies to the company's U.S. stores, distribution centers and corporate offices, which are to operate with net-zero greenhouse gas emissions by the close of 2010.

BOMA San Francisco Launches Commercial Property Energy Efficiency Program

A preponderance of activity and attention in the energy efficiency industry focuses on tangible, physical improvements to buildings and their equipment. Rightly so, given the energy savings and returns generated through the implementation of lighting, HVAC and energy management technologies. But, such activities are only part (albeit a primary piece) of the energy efficiency puzzle -- there's much to be learned, and many dollars to be saved, through thoughtful behavioral and operational practices.

Last month, the Building Owners and Managers Association (BOMA) of San Francisco announced they will coordinate delivery throughout California of the BOMA Energy Efficiency Program (BEEP), an innovative series that teaches commercial real estate professionals how to reduce energy consumption -- and related costs -- with proven, no- and low- cost strategies for optimizing equipment, people and practices. From BOMA's press release:

Nationwide, the commercial real estate industry spends approximately $24 billion annually on energy. Yet energy consumption represents the single, largest controllable operating expense for office buildings. BOMA anticipates BEEP will reduce energy consumption by as much as 30 percent in participating commercial properties

"If 2,000 Bay Area buildings adopt BEEP's best practices during the next three years, the resulting savings gained from reduced energy consumption will amount to $400 million," said BOMA SF Executive Vice President Marc Intermaggio. "The fact is a 30 percent reduction in energy consumption in the nation's commercial buildings, which equates to $7.2 billion, is readily achievable simply by improving building operating standards."

Click here to visit BOMA's BEEP site and learn more.

New York City completes energy efficiency benchmarking for all City-owned buildings

You can't manage what you don't measure.

So opined NYC Mayor Michael Bloomberg in announcing the City has benchmarked the energy efficiency of every city-owned building over 10,000 square feet (2,790 total facilities). “Understanding the consumption across the city’s portfolio is a critical component of meeting our goal of reducing city government carbon emissions 30% by 2017," the mayor explained.

The project was undertaken using the US Environmental Protection Agency’s Energy Star Portfolio Manager benchmarking tool, a process analogous to Octus Energy's methodology in developing energy efficiency projects. As summarized in the GlobeSt.com post:

Benchmarking measures the total electricity, natural gas, steam and fuel oil consumed in a property and adjusts for other factors—including building type, year of construction, number of workers and gross square footage–to help determine which facilities operate inefficiently. The idea is to allow the city to prioritize buildings for energy efficiency investments and monitor performance over time, according to a release.

On an annual cash flow basis, the city expects to break even on its energy efficiency investments in 2013, and projects that by fiscal year 2015 it will have saved more on its energy bills than it has spent on all the planned investments to that point.

As Energy Efficiency Booms, Buildings Get a Brain

The Cleantech Group recently released a comprehensive analysis of energy efficiency innovations in commercial office buildings. The findings are promising -- and lucrative -- for commercial building owners, managers and developers, let alone smart energy investors.

“Commercial office buildings consume 40% of the electricity produced in the U.S. and 18% of total U.S. energy,” said Sheeraz Haji, president of the Cleantech Group. “Our analysis shows that energy efficiency is poised to overtake solar as a top investment category in 2010, and commercial buildings represent a prime target. Lower investment costs, financial incentives, and faster payback periods are fueling product competition as data-driven technologies battle over the building’s brain.”

As we opined in a previous post, commercial, industrial and municipal buildings are dumb, inefficient and, above all, wasteful. If you own or manage a building (or a portfolio of buildings), you are unnecessarily wasting money every day. But, if your building has a brain -- if it's intelligent and you are intelligent in your management of your asset -- you, well, get smart. Andrew DeGuire, vice president, strategy and acquisitions with Johnson Controls, explains:

True building efficiency can only be achieved when executives take a more holistic view of their portfolio of buildings. Robust building control systems can be networked within buildings and across a portfolio to integrate security, lighting and HVAC with other enterprise applications, providing real-time data to track performance, decrease operating costs, and set future efficiency goals.

According to the Cleantech report, the focus on performance is driving an information and communication technologies invasion of buildings to enable greater visibility and control as vendors compete to be the gateway to building intelligence. Data-driven energy efficiency products and services look poised to grow, including low-powered Wi-Fi sensors, energy management software, building automation, and smart lighting and windows.

We could not agree more. A decade ago, few computers and information systems were networked; now, it's commonplace. Today, few buildings (and their energy-consuming equipment, specifically lighting and cooling systems) are networked. Ten years from now, we may look back and chortle at the back-then arcane -- boy, they were dumb! -- and wasteful condition of buildings.

Key Lessons: Energy Efficiency Retrofits

Leanne Tobias, author of Retrofitting Office Buildings to be Green and Energy-Efficient (recently published by the Urban Land Institute), shares a high-level summary of readily-available energy efficiency opportunities. Here's a snapshot:

• Energy efficient and sustainable retrofits can be remarkably cost-effective. A number of the case studies profiled in the book achieved payback in a year or less, and an early sample of U.S. LEED-certified retrofits showed average paybacks of approximately 17 months, with an average cost per square foot of just $.21.
• Many of the retrofit approaches with the best paybacks are the simplest. A few of the readily implemented, low-cost ways to reduce building energy use include such approaches as operational changes, lighting retrofits, and replacing constant speed drives with variable speed drives on major mechanical equipment. These types of changes are not technologically advanced, but they are extremely cost-effective.
• There are also some fascinating technological advances being introduced to the building energy-efficiency market. Among them: smart meters and smart grid systems, which use wireless technology to monitor and optimize energy use in real time.
• One of the most intriguing trends is the extensive use of passive heating and cooling to minimize reliance on mechanical systems. Passive heating and cooling approaches include the use of natural ventilation, the uncovering of thermal mass (exposing walls and underfloor slabs), and the use of vents or chimneys to regulate interior temperatures.

Click here to read the entire post published in GreenerBuildings.

Energy Efficiency and Real Estate: Opportunities for Investors

Commercial real estate developers, owners and managers are not adverse to making money. However, many are tentatively uncertain when it comes to energy efficiency -- implementing energy- and cost-savings measures to improve the performance and increase the value of their assets. Until recently, their trepidation made sense; minimal information and benchmarks existed to validate and propel their energy-efficiency investments. Times are changing.

A recent report authored by Mercer and Ceres -- Energy efficiency and real estate: Opportunities for investors -- elaborates how and why fiduciaries responsible for real estate portfolios assume significant risk and overlook substantial opportunities to enhance returns if they fail to factor energy efficiency into their real estate investment decisions. The seminal report lays out the steps investors can take to improve energy efficiency, and presents best practices for different types of investments.

A few metrics validating the business case for energy efficiency:

• A 2008 McGraw-Hill Construction/US Green Building Council survey found that markets for green commercial and institutional buildings in the US have risen from 2 percent in 2005 ($3 billion) to about 10 to 12 percent of construction value ($24 billion – $29 billion) in 2008, with projected growth to 20 to 25 percent ($56 billion – $70 billion) by 2013.
• Current research by RREEF, Deutsche Bank’s real estate investment division, reveals a shortage of energy efficient real estate to meet this growing demand. Price and value premiums observed for green buildings reflect this shortage of such properties on the market.
• A Maastricht University study found an actual rental premium of 3.5 percent on US office properties, a 6 percent increase in occupancy for ENERGY STAR buildings (similar to McGraw-Hill survey results), and a 16 to 17 percent premium on transaction prices (sales price per square foot).
• In a 2008 study, University of Arizona Professor Gary Pivo and Indiana University Professor Jeffrey Fischer found higher income and income growth, lower capitalization rates, higher net operating income per square foot, higher market value, higher rent and lower expenses for ENERGY STAR rated properties, compared to properties with no energy efficiency rating.
• In a 2009 study, researchers at the School of Real Estate and Planning at Henley Business School found commercial building price premiums of 10 percent and 31 percent, respectively, for ENERGY STAR and LEED- certified buildings.

In addition, the report (page 26) sequences -- in plain, make-it-happen language -- technical improvements for energy efficiency upgrades: Retrocommissioning, lighting, supplemental load reductions, air distribution systems, and heating and cooling systems.

Overall, the three most significant drivers for energy-saving retrofits are energy cost reductions, responding to client demand and a desire to create a superior product. Based purely on economic returns, investing in energy efficiency is the single most viable investment a property owner or manager can make.

Building Star: The latest star for energy efficiency?

First there was Energy Star, the long-established energy ratings system. Then came Home Star, an energy-efficiency incentive program for homeowners. Now, the Senate is contemplating creating a Building Star program to provide incentives to commercial buildings related to their energy efficiency. Is the third star a charm?

Rebate and incentive programs are proliferating for commercial building owners, most all regionally managed and delivered by utility companies. Building Star has catalytic potential to nationally incent and reward energy-efficient measures in commercial and multi-family residential buildings. Additional incentives plus low-cost project financing ... there's a potential star in the making.

According to Environmental Leader:

The bill was introduced March 4 by Sen. Jeff Merkley (D-Ore.) and Sen. Mark Pryor (D-Ark.).

The program is expected to save building owners more than $3 billion on their energy bills annually by reducing peak electricity demand. “Buildings represent 40 percent of the energy used in the United States, and many have old equipment that waste energy and money,” Pryor said.

In addition to rebates to reduce the cost of energy-saving measures such as high-efficiency heating and improved insulation, “Building Star” would also extend low-interest financing options to small businesses and other building owners.

Through the umbrella group Rebuilding America, Building Star has the support of the National Electrical Contractors Association, the Energy Future Coalition and the Center for American Progress Action Fund. The American Architectural Manufacturers Association also has pledged its support for the measure.

Among items proposed to be covered by the Building Star incentives are:

- building envelope insulation;

- mechanical insulation;

- windows, window films, and doors;

- low-slope roofing;

- HVAC equipment, water heaters, and boilers;

- duct testing and sealing;

- variable speed motors;

- interior and exterior lighting;

- building energy audits, commissioning, tune-ups, and training; and

- energy management and monitoring systems.