Commercial Buildings Offer Best Energy Savings

Bookmark and Share

A new study that highlights the robust energy savings that owners and tenants of commercial buildings can achieve at relatively modest cost through retrofits comes as little surprise to us at the San Joaquin Valley Clean Energy Organization.

The Fresno-based non-profit is working with cities and counties throughout the Valley in a program that should significantly reduce their power bills. Through recently approved grants, the approximately three dozen local governments will install new energy-efficient lights, replace pumps and make other upgrades.

The result: thousands of dollars cut from their power bills, which is vitally important in this era of slashed budgets and employee layoffs.

Some of those upgrades are the most cost-efficient improvements that building owners in California can make, according to a new study by Collaborative Economics and Next Ten, an independent non-partisian think tank funded by philanthropist F. Noel Perry.

Why is this important? Commercial buildings use more than one third of all the energy in California - and much of it is wasted.

In fact, the report says improving the energy efficiency of commercial structures is a "potential gold mine" that could generate jobs, save money and stimulate economic growth. The report cites the U.S. Department of Energy, which claims commercial buildings could be made 80% more efficient with new and existing technology.

And the investment in that technology comes at a modest price-tag. In new construction, a 2% increase in cost can cut energy use in half. Simply adding insulating window films will yield $3 in savings for every $1 invested.

Boosting insulation to recommended federal levels can cut energy consumption 30%. Using CFL or LED lighting gains an additional 8% to 20%, depending upon which is used.

It sounds simple, but barriers abound.

The report says the upfront cost, though it often can be paid back in a short period of time, is a sticking point for some owners and developers.

In addition, tenants are reluctant to make the outlay either because they don't have the authority or fear relocating before recouping their investment, and lsome andlords won't do it because they see the tenant as receiving the benefit.

"As a result, landlords see little financial incentive to make energy-efficiency investments when their returns seem uncertain," according to the report.

But are those returns really uncertain? The study noted that LEED or Energy Star certified buildings command higher rents and sales prices. A 2008 survey found that 79% of tenants would pay up to 5% more for space rated LEED Silver.

"...The average annual return on investment for energy-efficiency retrofits is over 20% when coupled with savings guarantees through peformance contracting," the report concludes.

Performance contracting uses savings resulting from the efficiency project to pay for the work over a period of time.

The San Joaquin Valley Clean Energy Organization is a nonprofit dedicated to improving our region's quality of life by increasing its production and use of clean and alternative energy. The SJVCEO works with cities and counties and public and private organizations to demonstrate the benefits of energy efficiency and renewable energy throughout the eight-county region of the San Joaquin Valley.