On Aug. 27, the Environmental Protection Agency is set to update the metrics of the Energy Star Portfolio Manager tool. Energy Star scores are generated by weather-normalizing data and comparing energy performance to similar building types. A common misconception is that Energy Star compares performance of “your” building to other buildings in the platform. That is inaccurate.
The baseline for performance comes from the Commercial Building Energy Consumption Survey, a survey completed by the Energy Information Administration. According to the EIA, “CBECS is a national sample survey that collects information on the stock of U.S. commercial buildings, including their energy-related building characteristics and energy usage data (consumption and expenditures).”
This survey is supposed to be completed every four years. Unfortunately, there were problems with the 2007 data set, and the 2011 survey was delayed by congressional funding until 2013. Because the data set hasn’t been updated, current Energy Star scores are based on the performance of buildings in 2003. This, in turn, means today’s scores are inflated, as the energy efficiency of the building stock has improved somewhat significantly from 2003 to 2012.
The good news is the most recent data set will lead to more accurate scores, and that our buildings overall have reduced energy consumption and become more efficient. The bad news … your score is likely to drop. As shown in the graphic, office buildings are expected to drop approximately 12 points, but we are telling our clients to anticipate an 8 to 16 point reduction.
What can you do? Any buildings that have never applied for the Energy Star and currently have a score of 75 or higher may apply before the deadline of July 26.
The EPA is allowing all buildings that earned the Energy Star in 2017 to reapply in 2018 before the July 26 deadline. Typically, buildings must wait at least 11 months to apply, but there is a one-time allowance for all buildings to earn the 2018 Energy Star early.
This also means that any buildings that do not apply prior to the July 26 deadline will apply with the new scores based on the 2012 metrics, so long as the adjusted scores remain over 75.
We have a few recommendations. First, we strongly encourage contacting the individual or firm that completes your Energy Star application and applying as soon as possible. Once the energy bill for March-April use is entered into Portfolio Manager, you may submit for the 2018 Energy Star (the 2018 “year-end” date is April 30 for all buildings applying prior to July 26).
Next, the EPA recommends all properties download their Energy Star performance metrics before and after the data update. This will allow you to see the score before and after the change, which will not be possible after Aug. 26 because the tool has no way to view prior score data after the update. When the update is completed, all prior scores also will be updated. According to the EPA, this will allow buildings to compare performance over time. This will not make buildings ineligible from marketing that they earned the Energy Star in prior years.
Make sure everyone involved with your property understands the upcoming update and ramifications: the asset manager, chief engineer, energy manager, interested tenants and your broker.
Finally, it is important to understand what this may mean to other certifications. This may make occupied buildings ineligible for LEED certification using the standard approach. However, this will not change energy scores for buildings using the Arc Performance Path for LEED recertification. The U.S. Green Building Council uses its own metrics to assign scores in that platform. For ownership groups, this likely will affect the number of Energy Star buildings for Global Real Estate Sustainability Benchmark portfolio reporting in 2019 (those that don’t apply before the deadline) and 2020 (when all building scores decrease).
There is more information and communications available on www.energystar.gov/updates, where I researched much of the information shared here.
The next CBECS survey will collect 2018 energy performance data. So long as this survey maintains its funding and is completed, the next Energy Star update shouldn’t see such severe changes in scores as the data set will be six years apart instead of nine years apart. So, the push for ongoing energy-efficiency efforts will continue in order for buildings to maintain a high score. Fortunately, there are numerous incentives available from Xcel Energy, and the Colorado Commercial Property Assessed Clean Energy program provides a fantastic opportunity to implement deep improvements at properties that may otherwise prove too expensive.