Summit Summary Webinar January 23, 2013

Peter Wilcox Director, Mkt Integration

Dave Hewitt Executive Director

Molly McCabe HaydenTanner

Ric Cochrane Preservation Green Lab

A Little about NBI and PGL

NBI is a national technical NGO

working to dramatically improve the

energy performance of commercial

buildings

NBI’s Board of Directors are national

leaders in energy and green building

Sponsors include progressive utilities,

PBAs, market transformation entities

and state governments

Strategic relationships are with leading

organizations such as National Trust for

Historic Preservation’s Preservation

Green Lab (PGL), ACEEE, etc.

PGL functions as a field office of the

National Trust for Historic Preservation

and works closely with local, state and

national partners to develop strategic

partnerships and innovative content

Advances research that explores the

value that older buildings bring to their

communities

Pioneers policy solutions that make it

easier to reuse and green older and

historic buildings

Strategic relationship with NBI on

Mainstreet work

About the Summit

Held October 29-31, 2012 in New Orleans. Convening over 50 national

experts in critical aspects of deep energy savings in existing small-

medium commercial buildings. Focus was on:

Business Case & Other Drivers

Tools & Guidance

Urban Entities & Aggregation

Utility Roles & Opportunities

“The summit was a rare and very useful

opportunity to discuss EE retrofit programs and

strategies used in other areas of the country.”

“The presentations and discussions touched

on unexpected but relevant topics.”

Summit Acknowledgements

NBI gratefully acknowledges the support of NYSERDA, Efficiency

Vermont, National Grid and NEEA’s BetterBricks in helping to fund

this second Deep Savings in Existing Buildings Summit.

Thanks to all of the presenters and participants, who left each day

with well-earned sweat on their brows from their focused, deep &

collaborative work.

Finally, to the brave and generous people of New Orleans for their

courage, grace, and warmth – as well as their amazing food, music

and architecture!

Summit Objectives

Learn from latest case studies & research where significant progress has been made since last summit – what is working and why

Inform and refine efforts underway to develop and pilot innovative business cases, tools, utility opportunities & urban scaling strategies effective with small-medium sized building owners

Identify what’s missing to address market barriers to deep savings and seed partnerships/collaborations to take needed actions

Determine business-utility-urban entities and other alignments that will help fund & accelerate deep efficiency

Keep Deep Savings collaborations growing and, through facilitated backcasting workgroups, develop next and future strategies and tactics among participants, their partners & allies

Why Existing Buildings? At 2011 Summit this was still a real question

It is much clearer now

PGL’s pioneering Life Cycle Analysis study has radically

changed calculus on lowest carbon/energy buildings –

esp. when length of CRE investment cycle is factored in

95% of the more than 70 Billion square feet of existing

commercial space in the US is less than 50,000 square

feet in size – this is the target market

Existing buildings are critical to meeting climate and

energy policy goals, utility efficiency targets, and market

real estate objectives

Need to move beyond building-by-building & widget-

based approaches and integrate profound energy

savings into the urban & community fabrics

A Deep Half-Dozen: Summit Snapshot http://newbuildings.org/sites/default/files/NOSummitHighlights_0.pdf

The Business Case Advances

Molly McCabe of HaydenTanner demonstrated that energy efficiency is commercial

real estate’s and owner-user’s smartest and best investment right now.

The market requires a different business case for small- and medium-sized building

owners, one that not only looks at the total value of going deep and other typical non-

energy and energy benefits, but to economic and community revitalization benefits.

Efficient Emergency Replacements and Better Use of Incentive Data

How can “emergency replacements” become “planned equipment upgrades” that

enable major performance upgrades, right sizing and even system changeovers in

some cases

Mine prior replacement data that utilities often possess to trigger proactive

replacement upgrade planning

A Deep Half-Dozen: Summit Snapshot

Reward Going Deep through Enhanced Incentive Structures

More strategic and generous incentives – potentially including on-bill financing or

recovery - are needed to entice owners to go deep

Ecodistrict/Urban Strategies

Urban strategies are critical to scaling deep integrated retrofits.

Energy is urban economic leakage and efficiency can be effective import replacement,

a means to strengthening urban economies, according to planner Jane Jacobs

Alignment Across Multiple Beneficiaries of Deep Savings

We need to better understand how non-energy sector market and urban beneficiaries

can also provide “skin in the game” to accelerate urban and market transformation

Better Marketing

Marketing for deep savings practices needs to rise to the challenge

Create a vision of constant progress

Completing more deep projects is key to building market confidence

2012 Catalytic Success Stories Learning from Leaders

NBI previously identified over 50 deep savings case studies

with measured performance. This year we sought out the best

current examples and brought some of these to New Orleans:

Rice Fergus Miller’s Office Adaptive Major Renovation

Gerding-Edlens’s Vestas Office Adaptive Major Renovation

Central City Concerns’ Multifamily Mark Hatfield Building

Occupied Renewal

Rocky Mountain Institute’s AT&T Portfolio Challenge

A New Way to Reposition an Asset,

and a Community

Formerly a

Sears in

Bremerton,

WA

Now Fergus-Rice-

Miller Architects

Own Offices

New

Energy

Star

Score:

100

* Next slides/images courtesy of Rice-Fergus-Miller

What’s Possible? Net Zero Energy!

EUI 93 before

EUI of 21 – Zero Net Energy Platinum LEED/$105 PSF

12

Former Meier & Frank

Delivery Depot

Gerding-Edlen’s Vestas Adaptive Reuse

CREDIT: Renee Loveland, Gerding-Edlen

13

Meier & Frank Depot - Vestas Building

Energy Efficiency Economics

Base Bui ld ing

(Cost /s f )

Green Bui ld ing

Premium/sf Tota l Cost /s f

Const ruc t ion Cos t $ 124 .13 $ 9 .30 $ 133 .43

So la r Ar ray $ - $ 4 .38 $ 4 .38

Des ign Cos ts $ 10 .95 $ 1 .10 $ 12 .05

Incent ives $ - $ (5 .89) $ (5 .89)

Subto ta l $ 135 .09 $ 8 .88 $ 143 .97

% Premium 6 .6%

Performance

Annua l Energy Cos t $ 302 ,718 $ (207 ,278) $ 95 ,440

Annua l Water Cos t $ 10 ,593 $ (8 ,972) $ 1 ,621

Annua l Ut i l i t y Cos t /s f $ 1 .72 $ (1 .18) $ 0 .54

% reduct ion 69%

Payback after incentives: 7.5 years

CREDIT: Renee Loveland, Gerding-Edlen

Hatfield Building Passive House

Deep Retrofit Portland, OR

CREDIT: Central City Concern

Portfolio Engagement Successes

16

+

Big progress

in 2012 for

RMI’s portfolio

pilots

Using NBI’s FirstViewTM on AT&T

Key Focus Areas Panel

Four innovative approaches to advancing Deep Savings in

Existing Buildings that help show the way to scale. Each is tied

to a key focus area of the Summit.

Business Case: Total Value AnalysisTM - Molly McCabe

NEEA’s Integrated Measure Packages – John Jennings

RMI’S Turbocharging Efficiency Programs - Mathias Bell

EAI’s Small-Medium Bldg. Certification – Diana Fishchetti

Small-Medium Business Case

Total Value

AnalysisTM

Molly McCabe, HaydenTanner

“Green retrofits are the

single most important measure that corporations and real estate

owners can take to reduce their operating

costs, raise commercial

property values and achieve

important environmental benefits like

reduced carbon dioxide emissions.” Deloitte - http://www.deloitte.com

US Building Stock/Ownership

0

1,000

2,000

3,000

4,000

5,000

6,000

1,001 to 5,000 5,001 to 10,000 10,001 to 25,000 25,001 to 50,000

Millio

ns

of

SF

Building Floorspace

Owner Occupied

Nonowner occupied

Government Owned

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1,001 to5,000

5,001 to10,000

10,001 to25,000

25,001 to50,000

50,001 to100,000

100,001 to200,000

200,001 to500,000

Over500,000

Flo

ors

pac

e (

Mill

ion

s o

f sq

.ft.

)

– Property

– Tenant

– Enterprise

– Community

– NOT simple

payback

Total Value AnalysisTM

©BiomatrixWeb

Future Proof

Reposition

Functional Obsolescence vs. Economic Obsolescence

Increase tenant reach – quality and quantity

Hedge

Durable income stream

Power resiliency

Property and Project Impact Analysis

Baseline Proposed Impact

Energy Cost/sf $1.75/sf $0.73/sf -58.5%

Electricity Use (kWh) 8,124,975 3,196,909 -60.7%

Gas Use (Therms) 174,895 84,476 -51.7%

Energy Use Intensity

(EUI)

100.6 43.4 -56.8%

ENERGY STAR

Rating

56 98 +75%

LEED: EB&OM NA Range: Certified to Gold +

Total Economic Value Added

ROI (10 year, discounted adjusted for inflation)

16%

NPV Cumulative Cash Flow $2,423,000

Energy Cost Savings $458,700

Asset Value Increase $8,987,000

Avoided Costs (lost lease revenue + re-tenanting TI’s, leasing commissions)

$14,307,000

PNC Business Impact

562 branches

– 93 LEED, 469 non-LEED

More Productive and Engaged

+ $461,300 per employee

Source: “The Relationship between Corporate Sustainability and Firm Financial Performance. E. Conlon and A. Glavas, Universty of Notre Dame, March 2012

Community

Jobs

Tax base

Economic vibrancy

Social health and well-being “Though buildings

and land remain

physical assets,

fundamentally they

are framed in the

context of community

and region” What’s Next? Getting Ahead of Change,

Urban Land Institute

Recap: Total Value Analysis

Simple Payback

Discounted Cash Flow

Total Value Analysis

©HaydenTanner, 2012

National Historic Trust’s

Preservation Green Lab

Mainstreet Program

Greenest Building

Life Cycle Analysis

Ric Cochrane, PGL

Credit: Doug Loescher

PGL’s Mainstreet Program

PGL’s Mainstreet Program

30

PGL’s Mainstreet Program

• When is building reuse

environmentally

preferable to demolition

and new construction?

• Are there significant

opportunities to reduce

near term carbon

emissions by reusing

buildings rather than

constructing anew?

The Greenest Building: Guiding Questions

31

Credit: Mark Huppert, PGL

Office: NW Climate Change Midpoint

Average of 60 years for offices!

Credit: Preservation Green Lab

It can take between 10 to 80 years for a new, 30 percent more energy

efficient building to overcome through operations, the climate change

impacts created by its construction.

PGL Findings: Reuse Matters

33

Credit: Mark Huppert, PGL

http://www.preservationnation.org/greenlab

Backcasting Workgroups

Five backcasting workgroups, each with 10 or fewer members & 90 minutes.

Whole systems, synergistic thinking to refine vision, create example market entity,

determine future steps stepping backward, and finally current steps in more detail.

2020 Optimal Deep EE Toolset

2020 Turbocharged Deep EE Utility

2030 Deep EE Ecodistrict

2030 Deep AEC-CRE Integrated Enterprise

2020 Deep EE Market Transformation Ecosystem

Backcasting Process & Advantages

If we begin by imagining a new vision that is far enough into the future, we

silence the internal messages and beliefs that tell us that it is impossible or

deeply improbable, so that we can focus on a strategy & next actions instead

“…backcasting is a suitable approach for designing and planning in complex

systems.” - John Bridger Robinson, credited with first defining Backcasting

“We need a new way of thinking to solve the problems caused by the old way

of thinking.” – You all know who said this…

2020 Turbocharged Deep EE Utility

Key components of a “turbocharged” utility

A clear understanding of how a “turbocharged” utility benefits

the communities it serves, as well as itself

Seamless long-term customer partnerships – knowing the

optimal points for intervention and offering incentives aligned

with integrated bundles of deep measures, operations and

occupant-behavior

Bold goals: Market penetration/year = 2-5% of existing stock

achieve EUI’s under 40 Kbtu’s/SF and targeting ZNE

2020 Vertically-Integrated

CRE Co-Enterprise Model

Vertically-integrated family of companies – a “Town Company”

Design, construction, management, ownership, redevelopment

Operating principles:

Reduce local economic leakage through deep efficiency, scale, and

continuous local investment & procurement

ZNE buildings to create enterprise/community profitability

Kids, company, community, country – quadruple bottom line

Alignments:

Businesses & region: jobs and tax base increases

Lenders & businesses: added cashflow & reduced default risk

Utilities & local investors : on-bill finance using local funds

2025 Deep Savings Ecodistrict

If You Can’t Solve Problem… Enlarge It

Driving retrofits must be a more

holistic approach

Focus on placemaking and not

Efficiency – retrofitting is just a

tool for improving communities

Create a more complete

ecodistrict framework that is not

just focused on buildings

Denver Lodo Living City Block

2025 Deep Savings Ecodistrict

Key Strategies

Run the Numbers: Create a district scale

pro forma to attract institutional investors

Mind the Legal: Create a legal structure that

can spread benefits across property lines

Stimulate Investment: Create a district feed-

in tariff for EE & PNE buildings

Take Care of People: Build professional

local capacity

Build a Strong Market: Retrofitting/District

as a generator – service providers to

compete for work

SERA , Portland Resource Flow

2020 Deep Savings Optimal Toolset

Summit Goal: Envision 2020 and define what the optimum practice for toolsets will be then

Vision: In 2020 all commercial buildings are Net-Zero Energy Capable (60-70% less energy than today).

EE is integrated into a cross set of tools and practices for the Design, Operations and Tenancy of Buildings (“connecting the DOT’s”)

2020 Deep Efficiency

Market Transformation Ecosystem

Motivators

Use bragging rights & competition – e.g. city/mayoral competitions

Spread success stories – especially at local level and by type

Create a vision of constant progress

Change economics models to total value business cases – to better frame

the decision-making metrics

Never let a crisis showing evidence of climate change go to waste

Tactics

Get infrastructure ready for change, working upstream & including financing

Work upstream with owner to address complex buildings

Package deep retrofit measure bundles so owners get multiple

advancements and integration saves more energy at lower costs

Drivers & Catalysts for Next 2-3 Years Recommendations of the Big Progress Workgroups

NBI asked participants to provide observations on

the current state of each of the four Summit focus

areas, and recommend strategies and tactics

needed for big progress in the next 2-3 years.

Small-Medium Business Case

EcoDistricts/Urban Entities

Technical Tools & Guidance

Utility Roles & Opportunities

Credit: John Naar, ETF

Small-Medium Business Case

Owner Business Case Drivers & Catalysts

Current Status:

Underserved: essentially all because owners do not understand value driver

Doing well: low income housing, government, mission-driven enterprise

Future Strategies & Tactics:

Activities that enhance esteem and brand of owner/entity

Communicate early and often re. both energy & non-energy benefits

Create conditions for neutral/positive cashflows for big upgrade replacements

Brokers & appraisers must be able to communicate value proposition:

energy budget is effectively calculating the value of a business

Appraisers required to consider EE, as in Louisiana!

Utility Roles and Opportunities

Current Drivers/Status:

Staff level resistance to change – for example Cost Effectiveness tests

Simply do not know customers well

Utilities do not get rid of programs, run to limit – partially because this

requires regulatory proceedings

In some regions, implementers are driving the agenda

Future Strategies & Tactics:

Utilities:

Marketing: will require “missionary work,” with great packaging

Hire strategic planner charged w/thinking about the future, behavior

change, overall program mix, sunsetting old programs, etc.

“Don’t incent the easy stuff any more”: lighting and HVAC

Customer Engagement

How to incent deep? Think like your customer, building owners!

Figure out how to build relationships & make strategic progress

How to get to both get to know and learn, by sharing new program concepts

Use SEM & RCM’s to give customers early success & build relationship

Architects & Engineers Channel

Need to create value for A/E’s and not just paperwork

Engage preferred A/E network, as with trade allies now

Brownbag program trainings for A/E’s

Earliest design phase is almost too late - ask what’s on the boards next?

Regulatory: Broaden, streamline, innovate Cost Effectiveness and M & V

Utility Roles and Opportunities

EcoDistricts/Urban Entities

Urban & Other Aggregation Strategies

Current state:

Disclosure and benchmarking – ensure accurate measurement

Cities and CRE working together – cities growing in size & energy impact

Policies and codes – making good progress

But are eliminating low-hanging fruit and forcing bundling

First movers are innovating – bringing early benefits & building confidence

Moving forward:

Not just large building case studies, but other iconic & also background

Time to get to not just First, but Second Movers too!

City and neighborhood competitions

NBI’s Simple Energy Tool Preview

NBI’s Simple Energy Tool [name yet TBD]

Leveraging many of the benefits of whole building energy modeling for common variants of small- and medium- sized commercial buildings, including MF

Simple inputs & low cost enables owners and others to see what’s possible upfront: “5 minutes and a nickel”

Output: comprehensive & sequenced EE measure bundles to get to deep to different levels, eg 30-40-50%, or more

How: Uses sensitivity analyses to determine which EEM’s are most relevant for a particular building type & location – a semi-custom approach

Physical

Design

Operations

Code

Weather Model

Results

NBI’s Simple Energy Tool Preview

Characterizing Existing Buildings

PGL Mainstreet Characterization

Identify opportunities for DER based on:

Underserved buildings types

Buildings of interest

Buildings at risk

Market share

Repeatability of simplified guidelines

NBI’s Simple Energy Tool Preview Strategic relationship between PGL & NBI for tool data

Key Takeaway Re-Cap http://newbuildings.org/sites/default/files/NOSummitHighlights_0.pdf

Let market know that EE is CRE’s and owner-user’s smartest & best investment

Ensure emergency & scheduled replacements” are big performance upgrades

Make more strategic and generous incentives to entice owners to go deep

Scale deep EE by employing urban mainstreet & ecodistrict strategies

Leverage non-energy beneficiaries to accelerate urban & mkt. transformation

Create a vision of constant progress & build market confidence with examples

Questions/Discussion

Slides from all presentations, background

material, Summit Snapshot and a link to this

webinar are available at:

http://newbuildings.org/index.php?q=neworleans

For more information contact:

Peter Wilcox, Director of Market Integration:

peter@newbuildings.org

Thank you!