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Event Takeaways: Funding Clean Energy DC- Innovative Financing Solutions for Building Retrofits

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Event date: March 10, 2021

Event Recording

Event Summary

As part of the Green Building Professional Seminar Series, “Ramping up to a Clean Energy DC,” the Building Innovation Hub, DC Department of Energy & Environment (DOEE), Urban Land Institute, DC Green Bank, and BlocPower presented a webinar exploring innovative financing options and strategies aimed at helping the Real Estate industry understand and meet DC’s climate vision through compliance with new energy performance codes such as the Building Energy Performance Standards (BEPS). The webinar also highlighted examples of successful projects, new resources, and what’s to come, with a focus on financing challenges and gaps for affordable housing and class B/C office buildings. You can watch the full event recording on YouTube.

Speakers included:

  • Jamie Donovan, Program Analyst, Department of Energy & Environment
  • Marta Schantz, Senior Vice President, ULI Greenprint Center for Building Performance
  • Cullen Kasunic, Head of Finance, BlocPower
  • Donald Walker, Former Director of Operations, DC Green Bank
  • Shyrah Kum, Equal Access Advocate, DC Green Bank
  • Theresa Backhus, Associate Director of Outreach and Engagement, Building Innovation Hub

Below are major takeaways from that discussion.

 

1. Energy efficiency improvements make good business sense

All speakers emphasized that building energy efficiency improvements not only reduce greenhouse gas emissions, but make good business sense overall. As Kasunic said, “the economic and health costs of inefficient buildings are significant.” Inefficient buildings consume 40% – 75% more energy and result in 30% more people experiencing sick building symptoms like asthma, headaches, prolonged colds, etc. The implications of sick building syndrome could include lower employee productivity, an increase in liability, and a decrease in residents’ overall well-being. Thus, the basics of energy efficiency are incredibly important and impactful. ULI’s data demonstrates that implementing a bundled energy efficiency improvement package with a 3-year payback:

  • Reduces operating costs by $0.26 – $0.60c per square foot.
  • Increases net operating income by 2.4% – 5.6% per year.
  • Boosts property value by $5 – $11 per square foot.

In addition to having increased asset value, buildings with energy efficiency improvements lease tenant spaces more quickly than less sustainable competitors, and retain more tenants during lease renewals, reducing tenant turnover.

While you do need to plan for and be committed to change, speakers emphasized that you don’t always have to be innovative to achieve energy savings. Often, the efficiency achievements noted above are attainable with building analyses, retrofit planning, and a commitment to finding financing

 

2. There are many financing options available in DC for a wide variety of projects

A common hurdle to making efficiency improvements is the belief that they will be too costly up front. However, there are many options in DC, both public and private, to help finance your project with less initial cost. Creative, flexible solutions now exist, such as no money down, low interest rates, flexible timelines, payments matched to savings, and more.

Kum and Walker presented an innovative new financing option called “Navigator”: a pre-development loan to help owners with engineering, charrettes, energy audits, energy benchmarking, bidding work, etc to establish a building’s (or portfolio’s) energy use baseline, and opportunities for improvement. Programs like this help projects get off the ground affordably. They can be used to assess performance in relation to the Building Energy Performance Standard (BEPS), for example, and plan pathways to compliance if it is found that the building does not currently comply.

Other strategies that building owners can use to lower the cost of energy-efficiency retrofits include:

  • Bundle energy efficiency into broader renovations to save money up front.
  • Include cost-recovery provisions for energy efficiency upgrades in standard lease forms to partner with tenants towards shared energy goals.
  • Look for utility incentives and rebates, including on-bill financing.
  • Engage in energy service contracts where owners set their financial and performance criteria for a project and a service provider provides turnkey solutions that result in guarantees based on professional analyses. Some of these turnkey solutions, like those presented by BlocPower, include guarantees of functions, maintenance, and repairs. Others include performance and compliance guarantees.

There are also custom financing solutions. One such program is DC Green Bank’s Community Engagement Pilot, which collaborates with community-based organizations to develop tailored financial support. Many financers, such as DC Green Bank, welcome ideas for proposals to help create additional financing solutions for unique situations.

 

3. Start now

Inefficiencies hurt your bottom line every time the heat or A/C goes on, so it’s best to take action proactively, rather than being compelled to do so by backwards analysis or unexpected circumstances. The three key actions to get started are 1) benchmark existing energy use and 2) validate that data and 3) identify opportunities for improvement.

Whether you’re trying to determine if your building complies with BEPS, simply understand how to tweak performance, or want to demonstrate market leadership in energy efficiency and greenhouse gas reduction, energy benchmarking is the first place to start. As Schantz explained: “you can’t manage what you don’t measure”. Benchmarking is low-cost and requires little time commitment in return for very useful information that will tell you what you need to know about your building and what needs to change, if anything.

Ensuring that your building’s energy benchmarking data is accurate is the second – and most critical – step to track performance and be able to identify improvement opportunities. All buildings 10,000 sf or greater in DC that are required to benchmark their energy data must comply with BEPS at some point, according to the building size-based timeframes outlined on the DOEE website. The most immediate deadline is April 1, when all buildings must update their 2020 consumption data. Therefore, getting up to speed on energy efficiency now is important. This is not just critical for class A office buildings, but also class B/C office buildings, affordable housing, co-ops, historic buildings, schools, hospitals, etc.

Ask your property manager to help you understand how your building currently functions and where there are opportunities for retrofits. Schantz and Kasunic recommended focusing first on the building improvements that have the largest impact, such as air source heat pumps, insulation, air sealing, LED lighting, and monitoring/ control systems. However, an energy audit can pinpoint site-specific measures that will result in an increase in energy efficiency and, thus, an increase in your ENERGY STAR score.

Lastly, take advantage of local industry groups and nonprofits like the Building Innovation Hub to learn more about benchmarking and BEPS, find resources on retrofit options, make peer-to-peer connections, find qualified vendors, and improve your procurement process. The hub has a wealth of information to help you no matter what your level of building efficiency expertise.

 

Learn more and take action

For more resources, visit the following links:

 

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