COMMERCIAL BUILDINGS: How can we unlock investment in energy efficient buildings and make sure it pays off ?

2. COMMERCIAL BUILDINGS: How can we unlock investment in energy efficient buildings and make sure it pays off? Prof Andy Gouldson, author of mini-stern report for Leeds City Region, Centre for Low Carbon Futures Karen Williamson, senior analyst, Jones Lang Lasalle Richard Byers, associate director, Skanska Andre Collier, principal engineer, JBA Consulting Patrick Brown, assistant director, British Property Federation

3. Richard Byers Associate DirectorSkanska

4. The Greening of Maple Cross House

5. Johan’s message “We are determined to be the leading green project developer...” Johan Karlström, President and CEOSkanska AB

6. Fuel prices

7. Update 18.03.11 For large PV installations: >50kW - ≤150kW: 19p/kWh >150kW - ≤250kW: 15p/kWh >250kW - ≤5MW: 8.5p/kWh Feed in Tariffs Systems must be signed up before 8th December 2011 Final assessment must achieve DEC rating C or better

8. Renewable Heat Incentives

9. Carbon Reduction Commitment £30/Tonne £16/Tonne £12/Tonne 2020 2012 2014

10. Process

11. Overall approach – guarantee & time….

12. Maple Cross House overall energy baseline Annual utility cost £218,741 Annual CO2 emission 1,572,517 KgCO2p/a Electrical consumption p/a 1,412,515 Kwh p/a Thermal consumption p/a 2,168,272 Kwh p/a

13. All Energy Conservation measuresECM’s 1-8 Annual saving/revenue £ 75,523/£ 25,628 CO2 saving 465,277KgCO2/pa Payback time 11 years Capital expenditure £1,243,858

14. Payback graph

15. Display Energy Certificates

17. Energy and Water Technology Optimisation Services(Ewtops) Energy use and optimisation in commercial buildings and how investment decisions can be assisted

18. My background • Aerospace degree specialising in fluid and thermo dynamics • 5 years working for Michelin Tyre PLC • Fluid design engineer typically designing building services • Started to do more and more energy efficiency work after identifying numerous opportunities • 5 years working for JBA Consulting carrying out work for: • Councils • Commercial organisations

19. Presentation content • Common problems leading to poor efficiency • Optimisation of energy usage • Assessing investment decisions

20. Energy use in commercial buildings • Having assessed the energy use of numerous buildings / processes: • Manufacturing sites • Offices • Community use buildings • Common problems: • Building managers / users not understanding their installed equipment • Oversized equipment from poor specification or reduced loads. • Building or equipment users that are able to override settings and many other bad practices – all leading to poor efficiency

21. Well designed but not re-commissioned or understood High Efficiency Conditions are maintained but at a cost! Low

22. Re-commission and understood High Efficiency Low

23. There are things you can do • Optimising (reducing) energy usage and considering alternative technologies or fuels can lead to significant cost and carbon savings. • It is vital that we look beyond simple payback when considering these options as viable solutions may well be dismissed otherwise. • However, alternative technologies are not always required. • Careful sizing of equipment through accurate design • Considering a duty / assist approach, and • Automated management systems which optimise and prioritise Can also lead to significant savings.

24. Investment decisions By considering whole life cycle costs and presenting other financial indicators to decision makers, projects are likely to be looked on more favourably.

25. Energy use in commercial buildings • Designers need a new approach to specifying and sizing equipment. • Focusing more on whole life costs, less on initial capital costs. • The proposed options should be shown to be financially viable. • In a way that is comparable to other investment options • Buildings need to be more intelligent, self-sufficient and sustainable. • This includes being less easy to impact by staff / members of the public • In the future the energy performance of a building will have a direct impact on the resale value and rental income of a building.

26. Energy and Water Technology Optimisation Services(EWTOPS) www.jbaenergy.com

28. Unlocking Investment in Energy Efficiency – Base Cities Leeds Patrick Brown, Assistant Director (Sustainability), British Property Federation 11th September 2012

29. What is the BPF? • ‘Representative organisation for those who own and invest in property in the UK.’ • ‘We aim to create the conditions in which the commercial property industry can grow and thrive, for the benefit of our members and of the economy as a whole.’

30. Traditional Barriers to Energy Efficiency Investment • Path dependency • Operational issues • Information related issues • Commercial issues • Legal issues

31. So… • Whilst unlocking investment in energy efficiency is important, there are other barriers we need to negotiate in parallel to ensure a) we are able to invest and b) reap just rewards.

32. Overcoming Path Dependency • Question mark over requirements for consequential improvements within Part L 2013 on major renovation • Green Deal launched in October 2012, but loan rates unattractive for larger owners and non-financial barriers remain (operational issues, legal issues) which have been left to industry to solve • Non-invasive retrofit solutions?

33. What if we made performance more visible? • Traditionally, energy performance has remained hidden because of complex energy procurement use and control patterns. However, efforts are underway to encourage greater release of information: • Display of energy performance certificates (likely theoretical ratings) in commercial properties visited by the public >500m2 where one has previously been issued • Article 7 of the Energy Efficiency Directive requiring energy efficiency audits for ‘large organisations’ and roll-out of smart metering • Still potential for a roll-out of operational ratings to non-public sector occupied commercial buildings • Proposals for mandatory emissions reporting for listed companies (possibility of extension to non-listed large companies from 2015) • CRCEES League Table

34. What if sustainable buildings performed better financially? • Valuation Information Paper 13: valuation practice may begin to suggest that sustainability performance is a facet of prime real estate, and that a failure to mitigate environmental risk may lead to fiduciary risk • ECOPAS • Energy Act 2011 may specify that poorer performing buildings are unlettable pending upgrade

35. Retrofit During Building Occupation? • Disruption caused by retrofit can act as a disincentive • Leads to landlords and tenants preferring to undertake retrofit when buildings are vacant • But non-invasive retrofit is possible. Potentially to be explored via Institute for Sustainability Climate KIC (e.g. abseiling rather than scaffolding, LED replacement lamps for fittings)

36. Can we green the lease? • The lease’s approach toward retrofit (is it an improvement or a replacement? Cost implications) • Green Leases: sign in haste, repent at leisure. MOUs more popular but non-binding and time limited. BBP experiments showing some successes and no need to wait for leases to come up for renewal • More fundamental reform of L&T Act? Not there yet but unpalatable truth may be dawning

37. Patrick Brown, Asst Director T: 0207 802 0108 E: pbrown@bpf.org.uk W: www.bpf.org.uk Thank You