Chapter 7
Investing in Energy Efficiency and Onsite Renewables
10 High-Impact Moves to Reduce Total Cost of Occupancy
5 Minute Read
Explore electrification of fossil-fuel HVAC and aged lighting systems to decrease costs and energy consumption, capture utility incentives, reduce exposure to community pricing and lower technical labor requirements.
As Corporate Real Estate & Facilities (CRE&F) leaders seek to reduce operating expenses and carbon emissions, replacing older equipment is a proven strategy. Generally, HVAC equipment with less than 5-8 years of remaining useful life are prime candidates for replacement, given the high maintenance spend required and significant energy efficiency degradation. Similarly, buildings with lighting and controls systems older than 10 years provide a prime opportunity to explore the quantitative and qualitative benefits of retrofitting.
Being proactive with HVAC and lighting replacement programs requires expedited due diligence, business case development and implementation—ultimately achieving sustainability and cost-reduction targets. CBRE Institute believes these electrification programs are typically useful for packaged roof top and split-system HVAC equipment, LED lighting and refrigeration systems.
CRE&F leaders who use proactive HVAC replacement programs achieve project cost savings of 20%-30%, while also meeting their operational savings goals.
How to Begin?
- Asset Data: Assessing viability requires reliable asset inventories, asset condition reports, remaining useful life and approximate cost of replacement estimates.
- Building Information: Be aware of any other improvements that may be planned for these properties (e.g., roof replacements, TI upgrades) to minimize business disruptions.
- Communications: These are capital-intensive projects, so having open communications with lines of business and site leaders is important.
- Capital investment: Decide whether the organization is prepared to invest capital now or whether energy as a service (EaaS) options using third-party capital might be an attractive alternative.
Why Now?
There are many reasons why CRE&F should invest in proactive HVAC replacements and onsite renewables sooner rather than later:
- With a growing number of corporations committing to carbon-neutral targets, CRE&F will be expected to identify strategies to support these goals. Portfolio-wide HVAC and lighting replacements are “low-hanging fruit” initiatives that can generate 20%-40% energy, operating expense and carbon emission reductions.
- In addition, governments are beginning to require further regulations and more in-depth reporting (e.g., municipal-level carbon emission taxes, proposed U.S. SEC disclosure rules).
- Many countries are making policies at the federal level (e.g., the U.S. Inflation Reduction Act) to mitigate climate change, which give corporations and individuals incentives to invest in sustainability measures.
- More efficient equipment reduces maintenance expenses and also improved the working environment and well-being of building.
- Proactively replacing equipment supports efficiency goals while avoiding costly emergency and unplanned HVAC replacement and and lessens reliance on expensive and outdated refrigerants (e.g., R-22).
High-Impact Example:
Financial Services Corporation: CBRE’s partnership with this Financial Services client is strongly focused on the reduction of the bank’s environmental impact and energy consumption:
- Installation of LED lighting and controls in more than 1,450 administrative and retail locations producing an annual run-rate reduction of $11.5 million associated with reduced energy costs and additional Operations & Maintenance savings.
- The investments to date have reduced 59K metric tons of emissions and have saved 83.4M KWH.
- Replacement of 1,400 HVAC units, with an investment of $13 million and R&M savings of $2.4 million.
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