Stefan Preuss

22 November 2011 ­–There is a new pool of funding and improved project economics for efficiency thanks to the Clean Energy Futures Package, the Energy Efficiency Council conference heard this week. Following is a special report,provided by the EEC that points to these and other key highlights covered in the conference.

Bob Dixon, senior vice president and global head, efficiency and sustainability, Building Automation for Siemens Building Technologies feels Australia is poised to be a world leader in energy efficiency.

While he calls the US-based LEED a “great standard”, he sees the NABERS scheme as truly progressive and feels it really stretches the envelope towards the best that buildings can achieve.

Bob Dixon

The newly developing field of Environmental Upgrade Agreements for buildings could indicate that Australia is tackling worldwide the split incentive problem for multiple building tenants, which has not been overcome yet.

The Californian approach to demand management is a profound shift in thinking: that the regulators will pay you for saving energy as much as you are allowed to earn for creating energy.

Dixon’s view is that its greatest strength is that it brings those who make energy and those who use energy together – they are no longer adversaries.

For the building sector this more collegial atmosphere takes away the barriers to new innovations, like solar and cogeneration in the urban environment.

Dixon says one main opportunity for Australia is that subject matter experts are keenly needed, for example in project development, policy and business. Australia is in prime position to educate the workforce and export skills to the Asia Pacific region.

Commercial buildings – good the bad and the ugly

An afternoon session tackled the move from a focus on A Grade commercial building to the B, C and D buildings.

Sustainability Victoria’s Stefan Preuss shared data from an upcoming report by Davis Langdon into the whole of the state’s commercial office stock.

He highlighted that the CBD represents just 46 per cent of office space, and 18 per cent of buildings. In Victoria, over 5 million square metres or 44 per cent of office gross floor areas is in buildings under 2000 sq m, sending a strong message that there is a big pool of smaller buildings in suburbs and regions that could use help to become more efficient.

Mr Preuss outlined that office buildings from 1960 to 1989, which represent 38 per cent of the office stock, are particularly suited for comprehensive retrofits as their mechanical services are reaching their end of life.

The analysis shows that a significant percentage of offices fall outside current government mechanisms as they are too small for mandatory disclosure and being outside of Melbourne CBD they are not eligible for the Sustainable Melbourne Fund. [UPDATE: However these may be eligible for funding an investmEnt program by the fund]

These smaller, metropolitan and rural office buildings, sometimes under heritage register, provide a good opportunity to take a holistic view to upgrades, namely looking at the building fabric in conjunction with doing mechanical upgrades, to provide a more value adding and future proofing step in efficiency.

Cathy Oke

Councillor Cathy Oke spoke for the Melbourne City Council’s 1200 Buildings Program which grew out of Council’s Zero Net Emissions by 2020 plan, to address the increased density and growing population.

Energy used by existing commercial buildings is responsible for 53 per cent of carbon emissions. The program aims to catalyse the retrofit 1200 buildings, which could create 8,000 jobs over 10 years and increase efficiency in some buildings by up to 40 percent.

So far the program has found the biggest opportunities in buildings built between 1950 and 2000, over 5000 square metres. The council led the creation of the Environmental Upgrade Agreements, arguably creating a whole new asset class in green investment.

City of Melbourne’s research shows that about 130 building owners are currently retrofitting. The focus and challenge for the program is engaging with the owners of B and C grade buildings; this challenge was highlighted in a recent study undertaken by Sustainability Victoria.

Council is working on engagement strategies to reach the family and institutional building owners within Melbourne to provide support and resources.

The 1200 Buildings Art Commission, whereby artists depict building performance on building facades, aims to build awareness of what a build retrofit can contribute to a city with eco aspirations.

Craig Ryan of Johnson Controls gave a detailed case study of the Empire State Building upgrade, carried out purely on economic motivation, without any desire to “do the right thing”.

The figures speak for themselves: for a total incremental cost of A$14 million, the building owner made a 38.3 per cent energy savings on a deep energy retrofit. The savings are A$4.68 million a year with payback in just over three years. From 2006 – 2010 rents increased by 180 per cent.

A key take home message from the company’s experience is that while the large entities can work with a 3.5 year payback, smaller and B, C and D grade buildings that are not investing in efficiency, without NABERS ratings, who find it difficult to get capital, typically look for closer to 2.5 years return on investments.

While this has been a barrier in the past, the new EUA model allows them to do projects with up to 10 years payback and with a cash flow straight away because the savings will be greater than the EAU charges over a longer period.

Spotlight on residential – what will it cost to upgrade housing at scale?

The Yarra Energy Foundation provided some data and update on a large-scale roll out of energy efficiency in the residential sector. YEF are tackling 35,000 homes in the City of Yarra. The majority are Victorian and Edwardian solid brick terraces (40 per cent), flats and units (24 per cent), weatherboards (mainly Victorian) (12 per cent), brick veneer townhouses (6 per cent). The remainder are public housing and warehouse conversions.

The foundation undertook detailed modelling of four upgrade areas, in heating and cooling, hot water, lighting and building envelope upgrades (windows, insulation, draft proofing) and found potential for:

  • 75 per cent greenhouse gas savings (about 120,000 tonnes a year)
  • 66 per cent reduction in energy use (about $20 million a year).
Question time

At today’s prices (paying retail prices with no discounts) the cost of upgrades would be $350 million (or $11,800 per home). The Foundation’s challenge now is to develop a commercially viable delivery mechanism. And this is one of the Yarra Energy Foundation’s key areas of work.

The conference was opened by a video address by Prime Minister Julia Gillard, who wasn’t able to attend in person due to the parliamentary address by US President Obama.

She did, however, take time to re-iterate the $100 billion dollar clean energy investment in the next four decades as a transformative moment that will bring in a “new economy, with new jobs and new opportunities”.

The conference certainly showed that there are plenty in the green building sector poised to take up those opportunities.