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Why Real Estate Companies Need Energy Analytics

Commercial real estate companies can use energy analytics to improve their business in a variety of ways, such as to identify smart investment opportunities, increase sustainability performance and improve overall business intelligence.

Energy is no small area to overlook, as it is the single largest operating expense in commercial office buildings, according to Energy Star. By using 10% less energy, commercial real estate companies could improve net operating income by 1.5%, and income increases even more as energy savings grow further.

These savings are attainable for many companies, as Energy Star also finds that the average office buildings wastes 30% of the energy they use.

How Analytics Help

Rather than simply looking at opaque utility bills, energy analytics software (EAS) performs detailed analytics on historical and real-time energy usage data.  This is crucial for commercial real estate companies, as EAS identifies the hidden cost drivers and provides a detailed understanding of how and when energy is used, which is not discernable from looking at a utility bill.

For example, without EAS, a company might institute an initiative encouraging tenants to save energy by turning off lights when not in use, and while that may be a good cause that does result in some energy savings, it may not be as efficient as other strategies that can be employed.

The reality is that energy costs are not just about how much you use, but also when you use it. Utility companies charge more during periods of high demand — up to 50% of most organizations’ energy expenses are dictated by 15 to 30-minute peak usage periods — so it could be more effective to rely on natural light or lowering the air conditioning during these short periods, assuming that’s feasible safety-wise.

Using EAS, companies would be able to see when these periods are likely to occur so they can make adjustments beforehand, rather than trying to guess what to do each month after receiving their utility bills.

The Benefits of Benchmarking

Additionally, EAS also allows commercial real estate companies to easily benchmark their energy usage across their entire portfolio, as well as against like buildings.  Similar to how analytics could reveal that a company is not adjusting its rental rates enough to be competitive in different markets, EAS could reveal that a company is not accounting for the financial impact of seasonal and extreme weather when comparing properties in different regions and climates.

Once a real estate company sees that something is off in certain parts of their portfolio, they can leverage real estate energy analytics to then identify what needs to be changed, such as upgrading to more energy-efficient equipment, instituting more efficient schedules during idle or unoccupied periods or adjusting rental rates.

Ongoing Identification of Energy Investment Opportunities

While using an EAS solution to analyze historical usage data will provide cost savings opportunities, continuous analytics of real-time analytics is needed to identify avoidable costs and inefficiencies.  A Lawrence Berkeley National Laboratory study of 28 sites that implemented EAS found that they saved a median of 17% in energy costs after the first year.  However, after nine years, median annual savings reached nearly 50% using the year before implementation as the control, as ongoing process improvements and equipment investment opportunities were continually identified and mitigated over the nine-year period.

Request a complimentary energy efficiency assessment to find out how Artis Energy’s RTIS® energy analytics platform can provide you with the visibility and insight to transform energy from a fixed cost into a distinct competitive advantage.