Commercial real estate companies that bear part or all the cost of tenants’ energy usage have a significant financial incentive to get renters to use less. If U.S. retail, warehouse and office space used 20% less energy overall, it would result in savings of $5 billion, according to the Department of Energy. Plus, doing so would bring the environmental benefits of reducing emissions by the equivalent of 370 billion miles of automobile travel.
But achieving this reduction isn’t always as easy as asking tenants to use less, particularly when it is unclear how to do so. Instead, landlords can turn to technology to increase energy efficiency and to determine specific ways to lower energy bills without disrupting tenants.
Starting with Software
In order to get tenants to use less energy, landlords need to know how energy is used in the first place. By using energy analytics software (EAS), commercial real estate companies can see determine how different loads and processes account for energy usage, thereby making it easier to tailor energy initiatives.
For example, plug and process loads, which come from non-lighting and non-HVAC sources, account for about one-third U.S. commercial building electricity usage, according to National Renewable Energy Laboratory. So, while a building may first think to focus on trying to reduce heating costs, they could be overlooking significant sources of energy consumption that have easy fixes, such as getting office workers to turn off their computers when they leave for the weekend. Asking tenants to take this step could be much easier than trying to persuade them to work in a colder environment.
Also, all energy consumption is not equal in terms of cost. To most effectively reduce energy bills, landlords need to look at the cost of both power supply and delivery.
If utility bills were solely based on supply, then landlords could reduce costs by simply using less energy. Yet the total cost is largely affected by how much utilities charge for delivering energy, as it is more expensive to do so during periods of high demand.
Once companies know what to target, they can then figure out what works in terms of implementation. Some tenants might respond to simply knowing how their actions translate to energy savings, as they want to be environmentally friendly. Others might be motivated by financial rebates for taking energy-saving steps. Either way, landlords can come out ahead by using EAS to know how different energy reduction initiatives affect total costs.
Determining Ideal Energy Efficiency Upgrades
By using software to understand your tenants’ key energy cost drivers, landlords can effectively determine the equipment upgrades that will make the largest impact on energy costs, while being conscious of minimizing tenant disruption. Further, strategies like shifting certain usage from peak to off-peak usage, or reducing idle load can be uncovered. Strategies like this can often reduce energy costs significantly with little to no operational disruptions.
Lighting, for instance, usually accounts for about 30% of total energy consumption in commercial buildings, according to Whole Building Design Guide, a program of the National Institute of Building Sciences. And simply upgrading to LED lighting systems can cut lighting operational costs by up to 60%, while even improving lighting quality and environmental impact.
These types of upgrades could either be made during the turnover period between old and new tenants, or current tenants might be willing to accept the minor inconvenience of changing equipment while they are there, for similar reasons as to why they would accept process changes revealed by EAS.
Rather than purchasing new equipment arbitrarily, it is essential for landlords to use EAS to better understand the energy usage patterns of their tenants and discern the cost reduction strategies that keep tenant disruption at a minimum.
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.