Transcript Slide 1

COMMERCIAL BUILDINGS: How can
we unlock investment in energy efficient
buildings and make sure it pays off?
Prof Andy Gouldson, author of mini-stern report for
Leeds City Region, Centre for Low Carbon Futures
Karen Williamson, senior analyst, Jones Lang Lasalle
Richard Byers, associate director, Skanska
Andre Collier, principal engineer, JBA Consulting
Patrick Brown, assistant director, British Property
Federation
Offices 2020:
Obsolescence and
shortening building
lifecycles
Karen Williamson
September, 2012
REMEMBER THE DAYS OF CUBICLES,
CELLULAR OFFICES, AND BEING ABLE TO
SMOKE AT THE DESK?
THE WORKSPACE HAS CHANGED
DRAMATICALLY OVER THE LAST
DECADE – WHAT WILL IMPACT THE
OFFICE SECTOR IN 2020?
4
How will building life-cycles change and
what does this mean for sustainable refurbishment and asset
management?
Property
Life Cycle
Rising threat of obsolescence in UK office real estate
5
The UK’s Low Carbon Pathway to Meet 2o Goal
Carbon Emissions (MtC)
Landlord’s face a black hole of refurbishment obligations
The age of non-domestic
building stock in UK
200
180
160
2000s
140
25%
Pre 1960
22%
1960s
120
5%
1970s
100
1990s
80
23%
1980s
5%
20%
60
40
20
0
2000
2010
2020
2030
2040
2050
Source: The Tyndall Centre, Living Within a Carbon Budget, 2006
6
Obsolescence: The Implications
01
This implies enormous disruption
02
The financial burden will fall on the private sector
03
Green obligations will accelerate demolition and
shorten building lifecycles
04
Paradoxically, pressure to evaluate the whole
lifecycle will lead to an opposing pressure to
recycle buildings
7
Identifying the risk?
How old will an old office building be in 2020?
Green legislation
02
Technology
Sustainable
Value
01
Sustainability
Risk
Non-Sustainable
03
Work practice and
preference
Time
“95% of unlisted UK and continental European real estate fund managers believe there is a
relationship between environmental performance and financial returns…..the majority felt this
was difficult to quantify at the current time.”
Aviva Investors and the Environment Agency Pension Fund (2009)
8
Sustainability legislation. One of the three key change
factors: UK
2016 - Energy Act
2018 - Energy Act
Illegal to rent out residential or
Requires private landlords to
accept reasonable requests business premises below minimum
for efficiency improvements energy efficiency rating (EPC ‘E’)
2010
Energy Act
2008
Climate
Change Act
2010
Changes to Building
Regulations Part L
2011
Energy Act
2010
Recast of EU Energy
Performance of
Buildings Directive
2011
Renewable
Heat Incentive
(delayed)
2010
Introduction of feed in
tariffs (reviewed 2011)
2010
Flood and Water
Management Act
2010
Introduction of the CRC
Energy Efficiency
Scheme
Adaptation planning
policy e.g. PPS 25, PPS 1
supplement (Due to be
updated)
2013
Changes to Building
Regulations Part L
2015
Water Framework Directive –
environmental objectives for river
2013
2013
All new
homes mustofcomply
Implementation
EU
with Code
for Change
Sustainable
Climate
Homes Level 4
2011 – National Planning
Policy Framework proposed.
Includes presumption in favour
of sustainable development.
2011 – National Planning
Anticipated smart meters
mandate for all new
buildings
2020
EU requires new buildings
to be “nearly zero energy ”
(UK has 2019 “zero
carbon” requirement for
commercial buildings)
2012
reviewed
2050
80% reduction in UK CO 2
emissions
2020
2
34% reduction in UK CO
emissions
2020
15% of energy to come
from renewable resources
2050
Emissions from all
buildings to be as near to
zero as possible
Climate Change Mitigation
9
Workplace technology
Electricity: 12V technology rather than 240V
01
Green Technology
02
- Could eliminate raised floors and could bring many older buildings back into play
- Photovoltaic rooftop generation, high efficiency heating,
cooling, water usage, waste energy recovery
03
Cloud Computing
- Can empty offices of almost everything apart from people. Engenders flexibility and fluidity in
location
Collaborative Technology
04
Mobile technologies
05
- The ratio could shift to 70% social and 30% individual
- Where, when and how we work and how we think about work and the office
“Technology is as much about flexible REAL ESTATE as it is about flexible workers”
10
Changing corporate requirements
Not just about sustainability
2010
• CSR and ethical business
• Sustainability as a management lever
2007
Occupiers are more willing to
pay up to a 10% premium
rent for sustainable space
48
37
• Operational costs
• Environmental ranking
• Property for recruitment and retention
• Branding
• Intensification of use
• Consolidation
• Location vs Quality
92
Sustainability is considered a
factor in location decisions
76
These issues should be fully
embedded into the strategy
and operations of a company
96
72
Companies should embed
these issues through their
global supply chain
88
59
0
50
100
%
11
What happens now?
Outcomes
Enablers
Blockers
DCF models
Limited capex
Energy Act: 2018
Limited finance
2020: "Zero Carbon"
Landlord and tenant act
Corporate demand
Short term focus
12
Richard Byers
Associate Director
Skanska
The Greening of Maple Cross House
Johan’s message
“We are determined to be the leading
green project developer...”
Johan Karlström,
President and CEO
Skanska AB
Fuel prices
Feed in Tariffs
Update 18.03.11
For large PV installations:
>50kW - ≤150kW: 19p/kWh
>150kW - ≤250kW: 15p/kWh
>250kW - ≤5MW: 8.5p/kWh
Update 31.10.11
Systems must be signed up before
8th December 2011
Final assessment must achieve
DEC rating C or better
Renewable Heat Incentives
Carbon Reduction Commitment
£30/Tonne
£16/Tonne
£12/Tonne
2012
2014
2020
Process
Overall approach – guarantee & time….
Maple Cross House overall energy
baseline
Annual utility cost
£218,741
Annual CO2 emission
1,572,517 KgCO p/a
2
Electrical consumption p/a
1,412,515 Kwh p/a
Thermal consumption p/a
2,168,272 Kwh p/a
All Energy Conservation measures
ECM’s 1-8
Annual saving/revenue
£ 75,523/£ 25,628
CO2 saving
465,277 KgCO /pa
2
Payback time
11 years
Capital expenditure
£1,243,858
Payback graph
Display Energy Certificates
Energy and Water
Technology Optimisation Services
(Ewtops)
2012 finalists
Royal Academy of Engineering
Energy use and optimisation in commercial
buildings and how investment decisions can
be assisted
My background
• Aerospace degree specialising in fluid and thermo dynamics
• 5 years working for Michelin Tyre PLC
– Fluid design engineer typically designing building services
– Started to do more and more energy efficiency work after identifying
numerous opportunities
• 5 years working for JBA Consulting carrying out work for:
– Councils
– Commercial organisations
29
Presentation content
• Common problems leading to poor efficiency
• Optimisation of energy usage
• Assessing investment decisions
30
Energy use in commercial buildings
• Having assessed the energy use of numerous buildings / processes:
– Manufacturing sites
– Offices
– Community use buildings
• Common problems:
– Building managers / users not understanding their installed equipment
– Oversized equipment from poor specification or reduced loads.
– Building or equipment users that are able to override settings and many
other bad practices – all leading to poor efficiency
31
Well designed but not re-commissioned or
understood
Efficiency
High
Conditions
are
maintained
but at a
cost!
Low
32
Re-commission and understood
Efficiency
High
Low
33
There are things you can do
• Optimising (reducing) energy usage and considering alternative
technologies or fuels can lead to significant cost and carbon savings.
– It is vital that we look beyond simple payback when considering these
options as viable solutions may well be dismissed otherwise.
• However, alternative technologies are not always required.
•
Careful sizing of equipment through accurate design
•
Considering a duty / assist approach, and
•
Automated management systems which optimise and prioritise
Can also lead to significant savings.
34
Investment decisions
By considering whole life cycle costs
and presenting other financial
indicators to decision makers, projects
are likely to be looked on more
favourably.
35
Energy use in commercial buildings
• Designers need a new approach to specifying and sizing equipment.
– Focusing more on whole life costs, less on initial capital costs.
– The proposed options should be shown to be financially viable.
» In a way that is comparable to other investment options
• Buildings need to be more intelligent, self-sufficient and sustainable.
– This includes being less easy to impact by staff / members of the public
• In the future the energy performance of a building will have a direct
impact on the resale value and rental income of a building.
36
Energy and Water
Technology Optimisation Services
(EWTOPS)
www.jbaenergy.com
2012 finalists
Royal Academy of Engineering
Unlocking Investment in
Energy Efficiency – Base
Cities Leeds
Patrick Brown, Assistant
Director (Sustainability),
British Property Federation
11th September 2012
What is the BPF?
> ‘Representative organisation for those
who own and invest in property in the
UK.’
> ‘We aim to create the conditions in which
the commercial property industry can
grow and thrive, for the benefit of our
members and of the economy as a
whole.’
The voice of property
Traditional Barriers to Energy
Efficiency Investment
> Path dependency
> Operational issues
> Information related issues
> Commercial issues
> Legal issues
The voice of property
So…
> Whilst unlocking investment in energy
efficiency is important, there are other
barriers we need to negotiate in
parallel to ensure a) we are able to
invest and b) reap just rewards.
The voice of property
Overcoming Path
Dependency
> Question mark over requirements for
consequential improvements within Part L 2013
on major renovation
> Green Deal launched in October 2012, but loan
rates unattractive for larger owners and nonfinancial barriers remain (operational issues,
legal issues) which have been left to industry to
solve
> Non-invasive retrofit solutions?
The voice of property
What if we made
performance more visible?
> Traditionally, energy performance has remained hidden because of complex
energy procurement use and control patterns. However, efforts are
underway to encourage greater release of information:
> Display of energy performance certificates (likely theoretical ratings) in
commercial properties visited by the public >500m2 where one has
previously been issued
> Article 7 of the Energy Efficiency Directive requiring energy efficiency
audits for ‘large organisations’ and roll-out of smart metering
> Still potential for a roll-out of operational ratings to non-public sector
occupied commercial buildings
> Proposals for mandatory emissions reporting for listed companies
(possibility of extension to non-listed large companies from 2015)
> CRCEES League Table
The voice of property
What if sustainable buildings
performed better financially?
> Valuation Information Paper 13: valuation
practice may begin to suggest that sustainability
performance is a facet of prime real estate, and
that a failure to mitigate environmental risk may
lead to fiduciary risk
> ECOPAS
> Energy Act 2011 may specify that poorer
performing buildings are unlettable pending
upgrade
The voice of property
Retrofit During Building
Occupation?
> Disruption caused by retrofit can act as a
disincentive
> Leads to landlords and tenants preferring to
undertake retrofit when buildings are vacant
> But non-invasive retrofit is possible. Potentially
to be explored via Institute for Sustainability
Climate KIC (e.g. abseiling rather than
scaffolding, LED replacement lamps for fittings)
The voice of property
Can we green the lease?
> The lease’s approach toward retrofit (is it an
improvement or a replacement? Cost implications)
> Green Leases: sign in haste, repent at leisure.
MOUs more popular but non-binding and time
limited. BBP experiments showing some successes
and no need to wait for leases to come up for
renewal
> More fundamental reform of L&T Act? Not there yet
but unpalatable truth may be dawning
The voice of property
THANK YOU
Patrick Brown, Asst Director
T: 0207 802 0108
E: [email protected] W: www.bpf.org.uk
The voice of property