Commercial and multifamily buildings are responsible for 57% of Denver’s greenhouse gas emissions. Investing an estimated $340 million in improving building energy efficiency could result in 4,000 local jobs and $1.3 billion in energy savings over 10 years. Building energy efficiency is a key component of the City’s efforts to reduce greenhouse gas emissions 80 percent by 2050 and to meet our 2020 Sustainability Goals.
To begin the process of unlocking the economic and emission reduction benefits of energy efficiency, in January of 2016 Denver set the interim goals of reducing the energy consumption of large buildings by 10 percent by 2020 and 30 percent by 2030. That means buildings need to reduce their energy consumption by 2-3% each year through 2030.
What follows is the story of the process we went through to put policies and programs in place that put us on track to meet those targets. Very early results are in, and our strategies appear to be working. Denver’s large buildings cut weather normalized energy usage by 4.5% from 2016 to 2017, which saved building owners $13.5 million dollars in energy costs in 2017!
Finding the path to achieve our goals:
To figure out how to reach our goals we formed the Energize Denver Task Force of stakeholders from our real estate and energy efficiency communities. The Energize Denver Task force met every three weeks from January through June of 2016 and at the end of that process they arrived at a consensus recommendation. The task force was made up of diverse stakeholders including brokers, building owners, building managers, our local utility, affordable housing experts, energy efficiency advocates and service firms.
The task force recommendations aimed to help Denver’s buildings overcome market barriers currently impeding cost-effective investments in energy efficiency by providing information that will better align the interests of different actors in the market. The task force proposed that all buildings over 25,000 square feet would be required to benchmark their energy performance annually using the free ENERGY STAR Portfolio Manager tool. Benchmarking the energy performance of buildings is the first step to understanding and reducing energy consumption, because you can’t manage what you don’t measure. It is similar to the fuel economy ratings for cars or nutrition labels on food.
The task force also proposed that buildings that have not achieved a level of efficiency that puts them in the top quartile would be required to make periodic cost-effective, quick-payback, incremental improvements to their energy efficiency.
The Energize Denver benchmarking ordinance was passed by Denver City Council in December of 2016. The ordinance requires all large commercial and multifamily buildings to annually assess and report their energy performance using the free ENERGY STAR Portfolio Manager tool. This tool results in a 1-100 performance score (where 1 is the worst, 100 is the best, and 50 is the national average). The large real estate associations that typically might oppose such a policy, such as NAIOP Colorado, Building Owners and Managers Association (BOMA) and the Apartment Association of Metro Denver, were neutral or in support of benchmarking after their extensive involvement in the process.
The improvement requirements suggested by the task force did not move forward into law at that time, but two years later in late 2018 some similar requirements were put in place as part of Denver’s new Green Building Policy. More on that later in the article.
Benchmarking is the foundation of the City’s work to improve building energy efficiency, because as noted above you can’t manage what you don’t measure. The Denver Department of Public Health and Environment hired Overlay Consulting to help implement the new ordinance. In 2017, all buildings 50,000 square feet or larger in Denver were required to benchmark. With several rounds of mailed compliance notices, ten training sessions for building owners, and thousands of calls and emails, the Energize Denver team saw a 90% compliance rate in the first year, which is best in class among other cities of similar size with benchmarking requirements. In 2018, all buildings 25,000 to 50,000 square feet were phased into the requirement. Due to the continued outreach and excellent customer service of the Energize Denver team, the compliance rate for the newly added buildings was 86% percent while the compliance rate of previously benchmarked buildings (50,000 square feet or larger) increased to 94% percent.
Helping 3000 building owners learn how to use the free Portfolio Manager tool to find out their building’s ENREGY STAR score, and then report it to the City, was no small task. Generally, people were open to learning and found the tool useful, but teaching an entire sector to learn a new skill required outstanding trainings, call and email support, and data management systems enabling all of that support to be provided in a timely manner. Overlay Consulting ran our benchmarking help center, giving building owners easy access to benchmarking support.
About 25 US cities have required benchmarking, but Denver’s implementation strategy is cutting edge and innovative. Other cities with benchmarking and transparency requirements have seen 2-3 percent energy savings each year by covered buildings. Denver’s new way of implementing the ordinance was inspired by the successes and difficulties of these cities. Our data quality checks, data management system, scorecards, map, awards, case studies and tenant education programs are all improvements upon the very best ideas previously in place in other cities.
Denver, with Overlay Consulting’s help, automated the import, data quality checks, and compliance tracking for over 200 data points on each of 3000 buildings in the City. Every benchmarking report must pass over 40 data quality checks, which is critical for self-reported data to be reliable. Over half of the report submitters received a follow-up call checking on possible data errors within 48 hours of submitting their report. Buildings were not passed into compliance until they passed all data quality checks.
Once buildings are in compliance, Denver sends building owners scorecards and publishes all the data in real time on an interactive map at www.energizedenver.com. As buildings pass into compliance, Denver tells great stories about buildings saving energy to build competition with their peers, gives awards to those who save the most energy, and runs programs to help educate building tenants and brokers about the energy performance scores.
Our map of benchmarking data at www.energizedenver.org includes energy performance information for each building that was required to benchmark. The map compares each building to similar buildings and allows building owners and property managers to view the energy performance of their peers. The benchmarking map has an average of 300 users per month with a typical time on the site of nearly 5 minutes. We had 1800 users of the map in its first two months. They had 3700 sessions total, with an average duration of 5 minutes per session.
Building owners and property managers receive individualized scorecards after complying. The scorecards include visual representations of their energy performance, comparisons to similar buildings, and estimated cost savings for implementing energy efficiency measures. The 1300 scorecard emails were opened over 5,000 times. Many were forwarded and re-opened. The scorecards saw over 20% of the respondents clicking through from the email scorecard to see how their building compared to other similar buildings. All these stats indicate that they are a valuable tool for building owners and managers.
Energize Denver has also used the connections it has built with building owners and property managers through the benchmarking ordinance to share information about energy efficiency, the benefits it can bring to building owners and property managers, and the tools that can be used to become more energy efficient. Energize Denver has written case studies featuring buildings that have made significant energy improvements. For example, Prado Condominiums improved their ENERGY STAR® score from 27 to 67 and saw a 38 percent reduction in energy costs! These case studies also highlight the energy efficiency measures that were implemented and their actual return on investment to allow other building owners and property managers to learn more about energy efficiency and how it can be applied to a building.
Finally, Energize Denver hosts events that highlight programs and incentives that can make energy efficiency more financially appealing for building owners and property managers. One event, hosted in 1720 S. Bellaire St., featured the building owner talking about how property assessed clean energy (PACE) is a great tool to finance energy efficiency projects. In 2016, 1720 S Bellaire St. already had an ENERGY STAR score of 91. However, the owners/ operators realized more energy savings could be achieved, and undertook an energy savings project using PACE financing that cut energy consumption by 30 percent.
To further recognize building owners and property managers that are taking steps towards energy efficiency, Energize Denver is comparing the energy benchmarking reports of buildings year over year to identify buildings that have realized the largest energy efficiency improvements. In 2018, Energize Denver is recognizing the top three buildings in Denver’s largest building categories: offices, apartments, and hotels.
Here are the winners that improved their energy efficiency the most from 2016 to 2017.
- 1st Place: Tamarac Plaza, 1, 7555 E Hampden Ave. Cut energy use by 35 percent.
- 2nd Place: Havana Gold, 4880 Havana St. ENERGY STAR score jumped from 26 to 43.
- 3rd Place: Market Center, 1624 Market St. ENERGY STAR score jumped from 78 to 96.
- 1st Place: The Lodge, 4710 E. Mississippi Ave. Cut energy use by 31 percent.
- 2nd Place: 1000 South Broadway, 1000 S. Broadway, ENERGY STAR score jumped from 77 to 99.
- 3rd Place: The Denver House, 1055 Logan St. ENERGY STAR score jumped from 86 to 96.
- 1st Place: Hampton Inn and Suites, 1845 Sherman St. ENERGY STAR score jumped from 52 to 98.
- 2nd Place: Doubletree by Hilton, 3203 Quebec St. Increased ENERGY STAR score from 67 to 71.
- 3rd Place: Crown Plaza Denver, 1450 Glenarm Place. Cut electric use by 8 percent and natural gas by 13 percent.
For more details about how they won, visit www.denvergov.org/EnergizeDenver > Resource Center.
What we’re learning and next steps:
ENERGY STAR Scores and energy use intensity (EUI) data provided by building owners will be used to measure city-wide energy efficiency improvements over time. Energize Denver released a 2018 annual report summarizing the benchmarking ordinance’s second year. The largest building types, as measured by total square footage and number of buildings, are offices, apartments and condominiums. Denver buildings had an average ENERGY STAR® score of 66, 50 is the national average, 1 is the worst, and 100 is the best.
The annual report also analyzed what is necessary to achieve our goal to reduce energy consumption by commercial and multifamily buildings by 30 percent by 2030. Achieving the overall 30 percent reduction goal in energy consumption by 2030 is possible if all buildings become as efficient as those currently performing at the 81st percentile (as determined by Energy Use Intensity, or EUI) of the building type. The 81st percentile is an important metric, as it is the minimum percentile all buildings have to reach to save 30 percent. Improving building energy efficiency will allow the building sector to help Denver meet its 80×50 climate goal to reduce community GHG emissions 80% below the 2005 level, by 2050. In addition, Denver also would see an annual energy cost savings of about $88 million, measured in today’s energy prices. These energy cost savings can be achieved with energy efficiency measures that provide a remarkable return on investment for owners and tenants.
The City’s new Energy Smart Leasing program kicks off in January of 2019 and aims to make Energy Smart Leasing the standard practice in Denver by the end of 3 years. Energy Smart Leasing makes benchmarking data actionable in leased space by encouraging tenants to ask about the ENERGY STAR score of a building before leasing space, to add energy efficient clauses to their leases, and to do energy efficient tenant fit outs. The owner gets an improved asset that rents at a premium. The tenant sees a portion of the reduced energy costs and increased productivity and sales – sufficient to cover any rent increase.
Denver also passed a new Green Building Policy in October of 2018. Under this new policy when existing buildings over 25,000 square feet replace their roof they have to select from one of five compliance options:
- A small green roof or green space anywhere on the site.
- An on-site solar array.
- LEED Silver or equivalent certification.
- A financial contribution for off-site green space.
- Enrollment in a flexible Energy Program to achieve emission reductions similar to those achieved by the on-site solar option.
When buildings enroll in the Energy Program they will then have 5 years to comply. Compliance options include achieving an ENERGY STAR score of 85, improving EUI (energy use intensity) by 15% or achieving LEED Silver Certification. For more details about Denver’s new Green Building Policy see the separate article on that subject in this issue.
Through an innovative combination of policies and programs Energize Denver has put Denver’s buildings on track to do their part to help Denver achieve an 80% reduction in greenhouse gas emissions. Denver hopes its experience can provide a useful roadmap to cities seeking similar results.
Go to www.denvergov.org/energizedenver for the latest Energize Denver annual report, details on benchmarking, energy smart leasing, the new energy program and our resource center full of case studies.