It’s no secret that the Commercial Real Estate (CRE) sector has long been one of the major sources of GHG emissions and energy consumption in the U.S. According to the United States Energy Information Administration, 41% of total U.S. energy consumption can be directly accounted for by commercial and residential buildings. In fact, if these buildings were aggregated and considered a separate nation, they would demand more energy than all but two other nations worldwide.
While the CRE industry has implemented a variety of practices and tools to minimize this rising level of consumption, most energy load reductions and cost savings remain unrealized. One method of achieving these energy expenditure and cost reduction goals is to install Energy Management Software (EMS), which enables building optimization while simultaneously lowering costs and labor time. If implemented, these kinds of solutions could save the industry up to $160B annually, but more work still needs to be done to increase awareness around how these solutions function and perform.
In the spirit of providing more information and transparency to the industry, as well as pinpointing the best practices in CRE building management, MACH Energy conducted its second annual survey of building professionals, one of the industry’s largest, to answer the following questions:
Is there a clear trend towards sustainability, or is cost reduction the highest priority?
Which factors are most important to each individual in the running of their buildings?
How important is energy management to users, and if installed already, which particular features and tactics are the most useful?
In 2015, MACH’s survey revealed widespread industry confusion over Energy Management Software, with over 70% of respondents indicating that they did not understand the difference between a Building Management System (BMS) that typically involves a high capital commitment and includes control functions, and Energy Management Software (EMS), a tool that is much more cost-effective than BMS and offers data analytics to overlay with a BMS controls system.
In 2016, this number decreased to 43%. This rise in awareness of EMS and its benefits could be partially due to increased activity and movement of EMS companies reaching out to the industry.
In what could be a corollary of increased EMS awareness and utilization, 68% of survey respondents reported that their “duties had increased.” EMS allows for increased operational efficiency and task automation (such as energy budgeting and variance reporting), enabling users to save time and take on additional responsibilities (or “increased duties”) despite reported decreases in building team size. In a perhaps related question, 37% of respondents indicated spending less than 2 hours a month on energy management compared to the 44% from last year’s survey, whereas 27% spent 2-4 hours a month on energy management, nearly the same at 26% in 2015.
In 2015, saving cost was the motivation for reducing energy usage. Similarly, in 2016, 47% of respondents chose energy costs as the main reason for using an EMS to reduce energy use, while 20% cited improving ENERGY STAR scores as the main reason. Additional priorities included sustainability (such as LEED) at 31%, improving tenant metering and cost recovery efforts (15%), and measurement and verification (M&V) of energy projects (11%). Four percent of responses showed that none of the above are priorities, while 3% remarked that they had other priorities not listed. The motivation to improve ENERGY STAR scores may be attributed to local and state regulatory requirements or mandates. Additionally, ENERGY STAR participants are benchmarked against their peers, potentially creating a positive feedback loop that promotes ongoing score improvement. Another interpretation is that LEED may be perceived as an intensive and costly process that results in a one-time gain, whereas ENERGY STAR may be associated with an increasing understanding that operational improvements require long-term monitoring and constant adjustments in a comparative environment.
The shift in priorities could also indicate a focus on operational optimization and cost reduction of existing buildings, compared to sustainability efforts designed to attract tenants, as shown by 35% of respondents that chose “management and ownership pressure,” versus the 4% that chose tenant pressure. Other observations on EMS features:
Increased interest in tenant billing. We presented the question with two different phrasing styles and found an increased affirmative interest in automated tenant billing or its equivalent function. In 2016, 45% of the respondents collectively indicated “yes,” while in 2015 the percentage was 29%.
Respondents seek a “ubiquitous management system” that includes features like energy monitoring, tenant billing, budgeting, ENERGY STAR updates, variance reporting, billing, and more.
“Intuitive to use” is a separate feature mentioned only in 2016. 67% of respondents regard it as their favorite EMS feature, followed by “reducing energy” and “real time monitoring,” each at 59%.
Overall, we were very encouraged by the results of this year’s survey and the progress the CRE sector has made in terms of energy management implementation. Stay tuned for next year’s survey.
Jon Moeller is the CEO of MACH Energy and is currently president of a mixed-use project based in San Francisco, as well as an active member of both the Urban Land Institute National and San Francisco Sustainable Development Councils.