The Building Advisor

Shell Ridge Property Management Co., Inc. maintains approximately 300,000 square feet of commercial space in the San Francisco Bay Area. Since 1980, Shell Ridge has specialized in asset management strategies for small medical offices. Its 15 buildings range from 40,000 to 100,000 square feet.

Shell Ridge’s medical office properties represent a desirable portfolio for mechanical contractors. Marina Mechanical, a 50-year-old company headquartered in San Leandro, Calif., began maintenance for a Pleasanton, Calif. Shell Ridge property five years ago. In the ensuing years of service, energy conservation was rarely discussed.

But when Marina began feeling heat from its competitors in the middle of a down market, it turned to its best customers to expand relationships.

Marina had obtained training on the BuildingAdvice energy services diagnostic platform in November of 2009, and began the process of leveraging its action-oriented reports as a differentiator.

Gamechanging Energy Services Offering

“We offered to show both the property manager and owner at Shell Ridge, some sample energy benchmarking and assessment reports,” says Denny Mann, Vice President of Service with Marina Mechanical, when explaining how he got the energy conversation started. “The property manager was actually very educated on energy benchmarking, and as a result, very interested. Once she saw the type of information the BuildingAdvice reports gave, she was extremely interested.”

“BuildingAdvice differentiated Marina from other mechanical contractors waiting to get their foot in the door,” says Denny.

Denny offered to do complimentary energy assessments on two Shell Ridge buildings. Shell Ridge has several buildings where Peak Day Pricing, a program of local utility Pacific Gas & Electric (PG&E), would come into play.

Peak Day Pricing (PDP) is PG&E’s demand response program, which acts as an incentive for business owners to curtail their facility’s energy use during times of peak usage. During the summer, PDP substantially raises energy prices on “event days” (above 98 degrees); businesses have a 24 hour notice when there will be an event to lower their energy usage for that day.  By charging a very high rate on event days, PG&E motivates customers to invest in strategies that will lower their consumption overall, and especially on the peak days.

Peak day pricing is specialized to the PGE territory, but not a unique phenomenon.

“Peak day pricing is definitely acting as a market stimulator for energy services and spurs client interest,” Denny said. “I think soon people will be lined up to get involved with energy reduction conversations.”

Taking Action

In going over the results of the assessment reports, conversations began about what Marina could do to help Shell Ridge avoid demand charges across the company’s property portfolio.

Which led to a second meeting with the owner, and an agreement to generate Energy Benchmarking Reports on all of the Shell Ridge properties to determine Energy Star scores.

“BuildingAdvice reports marked our transition from just being their mechanical contractor to forming a partnership. It completely transformed the relationship,” says Denny.

With portfolio-wide benchmarks on the docket, Marina took recommendations from the first two properties’ energy assessments to Shell Ridge ownership.

“BuildingAdvice helped us identify that the building was running when it didn’t need to be,” said Denny. Supply and reset strategies were created, so that the building was not not pouring 55 degree air into the interior when clients were not there, all of which were identified in the report.

Two low- and no-cost recommendations were approved and completed April of this year. Shell Ridge made the decision to complete the service based on the return on investment outlined in BuildingAdvice’s Energy Assessment Report. In addition to revisions to lighting and HVAC schedules based on peak day pricing, the report showed a seven-year payback on a demand control vent.

“We’re letting those changes take effect,” said Denny. After a 12-month period, savings achieved will be tabulated.

Next Steps and the Advent of Mandatory Energy Disclosure

As of late June, Marina wrapped up the energy benchmarking process on all of the Shell Ridge portfolio. Based on buildings’ Energy Star scores, Marina will make recommendations on which properties need energy assessments.

Looking ahead, the mandates of California’s Assembly Bill 1103 (AB 1103) state that non-residential business owners or their agents are required to input energy consumption and other building data into the Environmental Protection Agency’s Energy Star Portfolio Manager system, which generates an energy efficiency rating for the building.

As of January 1, 2010, AB 1103 mandated disclosure of a building’s energy data and rating of the previous year to prospective buyers and lessees of the entire building or lenders financing the entire building. That deadline has since been pushed back, and the task of devising a disclosure schedule has fallen to the California Energy Commission (CEC). The CEC is in the process of drafting a new compliance schedule; January 1, 2011 is speculated to be the new required disclosure date.

New York City, Washington DC and other regions have adopted similar required energy data disclosure. Smart owners and managers are on the move to meet deadlines.

Net Impact

The ability to offer energy services differentiates providers. Marina knew a competitor was making an aggressive play for service agreements in Shell Ridge’s multiple locations. Yet, in the same timeframe Marina stayed in discussions with Shell Ridge by centering their meetings around energy services through BuildingAdvice.

“After going through BuildingAdvice training, we quickly realized that being able to offer our customers a systematic, low-cost / no-cost approach to reducing their energy consumption would change the way we were viewed.”

BuildingAdvice has “helped us retain current business and significantly raised the bar on the services we offer.”

Buildings use about $200 billion worth of electricity and natural gas each year.  What if we could cut just 10% of commercial buildings’ energy consumption?  Very reasonable, wouldn’t you agree?  That would be $20 billion in savings!

That’s what’s at stake in the new ENERGY STAR Challenge:  Building owners, managers, and service providers working to achieve just a 10% drop in energy use.

Here is what we’re encouraged to do:

• Measure and track energy use.  (Energy benchmarking…the easy way to get started.  We can help you.)
• Develop a plan for energy improvements.
• Make energy efficiency upgrades.
• Help spread the energy efficiency word to others.

A toolkit is available at ENERGY STAR’s website, which provides all sorts of collateral and resources, including sample text for communications, a presentation, certificates, web banners, posters, and more.

What’s great about this goal is its attainability.  10% is nothing.  Seriously.  Through low & no cost measures alone, you should be able to save MORE than 10%.  So, join the challenge.  If you are a contractor, this is a great way to elevate your position with clients and prospects – tell them that you can knock off at least 10% of their energy bill and get them recognized through ENERGY STAR in the process.

Quick, what do these three articles have in common?

All these buildings will need to report their energy efficiency ratings.

Commercial property owners must prepare for new regulations (smartcompany.com)

Australia prepares for its Commercial Building Disclosure scheme, dictating that owners and lessors of commercial office space of 2,000 m2 or more must disclose the energy efficiency rating to prespective buyers and tenants when the space is sold, leased or subleased (similar to California’s laws passed January 1, 2010).

Taking Energy Star Challenge

Health Care REIT, Inc. Partners with EPA’s ENERGY STAR Program (Financial Post)

The aptly named Health Care REIT has got on the EPA’s Energy Star Challenge bandwagon, planing to improve its overall energy efficiency by 10% or more through energy benchmarking, following a resulting plan consistent with Energy Star guidelines, and spreading the gospel.

HVAC Awareness: Is Your HVAC System Energy Efficient? (greenexitsigns.com)

Chiller maintenance in action.

Blog underdog GreenExitSigns.com came out of nowhere with a very concise post on how supersized chillers / fans and inefficient oil, electric and gas boilers “lead to a building incurring thousands of unnecessary dollars in annual utility costs.”

Thousands of unnecessary dollars, the man says.

Ok, the answer to “What do these three articles have in common?” is: not a lot, in some ways, which is kind of the point.

Energy efficiency should be topping your radar BECAUSE the forces behind it are coming from such disparate places. These articles represent reasons to increase energy efficiency for reasons of legality, corporate leadership, and cost savings.

Also check out greenexitsigns.com’s excellent post, “Four Reasons Not to Avoid Scheduling an Energy Audit of Your Building.”

But only if you’re ready to face your fears.

"No! Not an energy audit! I'm afraid of what I'll find!"

Images courtesy ChinatownConnection, NYSE.com, Just Venting, Goodway’s HVAC industry blog (best blog name ever), and norway.com.

Energy. It’s what AirAdvice is all about: how buildings can most efficiently use this natural resource to operate, and how a focus on energy services can improve the bottom line of the businesses of our contractor channel partners while helping the building owners and managers they serve.

Starting July 22, we’ll be walking our talk in our next free webinar series, “Energize Your Service and Retrofit Sales.” This three-part series offers HVAC contractors concise sales strategy on using BuildingAdvice to build business. Topics include:

Part 1: Use Energy Services to Ensure Maintenance Agreement Renewals

Thursday, July 22, 2010 1:00pm Eastern (10:00am Pacific)

Understanding your service business metrics. What are energy services and how do they fit into a planned maintenance program? What to do in advance of your service renewal date. Meeting with your client prior to next service date anniversary. Qualifying your customers’ interest with automated ENERGY STAR™ benchmarking. Adding energy services to existing service agreements.

Part 2: Winning New Service Business With Energy as the Differentiator

Thursday, July 29, 2010 1:00pm Eastern (10:00am Pacific)

Sales management: getting your team ready. Targeting prospects who you can help with your energy services. Getting a meeting with the right person. Successful prospect meetings. Qualifying prospects up-front with energy benchmarking. Selling an energy assessment. Writing winning proposals.

Part 3: Use Energy Services to Drive Project Revenue

Thursday, August 5, 2010 1:00pm Eastern (10:00am Pacific)

Targeting the right accounts and the discovery meeting. How to ensure retrofits continue to drive savings. Monitoring and verification. Selling an energy audit, closing retrofits using the audit report and partnering with your local utility.

If you’re considering adding energy management to your company’s service offerings or are looking to improve an existing energy service offering, start with this educational series on starting an energy management conversation and building valuable client relationships through a focus on energy cost savings. Register for free here.

How has BuildingAdvice helped other contractors? Read MacDonald-Miller Finds BuildingAdvice Perfect Fit for Energy Efficiency in Small to Midsize Buildings.

Image by Whitney for Congress.

Greg Galusha, Senior Account Manager at MacDonald Miller in Bellevue, WA

Greg Galusha, Senior Account Manager of MacDonald-Miller Facility Solutions, started using the BuildingAdvice platform of energy diagnostics for commercial buildings after attending a webinar last October.

MacDonald-Miller Facility Solutions is a 45-year-old company with six regional offices throughout the Pacific Northwest and corporate offices in Seattle, Wash. With a staff that includes 21 LEED accredited professionals, 4 Certified Energy Managers, a Utility Incentives/Rebates Coordinator, and over 9 million square feet of LEED projects under its belt and in‐house energy modeling services, MacDonald-Miller’s Green Team is formidable.

When Galusha was looking to beef up MacDonald-Miller’s maintenance division, he sought a tool that would give the company a competitive edge. Growing from a base in mechanical design since 1965, the company has evolved to help its clients manage energy consumption as an offshoot of mechanical, but in the last few years sought to up its game in energy services offerings with a team of engineers (see above Green Team). The Green Team is well suited to the larger buildings MacDonald-Miller services, but smaller properties needed to be serviced differently to be economically viable for both parties.

Speaking by phone from the Seattle office, Galusha realized that for small to midsize properties, “I didn’t have a comprehensive tool for my maintenance customers.” Adding that BuildingAdvice’s target property size – under 200,000 sf – comprised roughly 80% of the business for his maintenance department, Galusha was looking for the right diagnostic. “A bigger contractor like us has a lot of tools in the toolbelt,” Galusha explained, “but BuildingAdvice dovetails nicely with the others, especially for maintenance.”

With energy engineers at his disposal, how does Galusha find the science behind BuildingAdvice? He’s found BuildingAdvice to be a scientifically accurate tool he can trust with a holistic perspective into building intelligence, and the right-sized solution for small to midsized buildings.

Galusha shares BuildingAdvice’s straightforward, action-oriented reports directly with the facility manager. Building staff respond well to the reports, finding them easy to interpret and setting the stage for “a more fun conversation” than just “What’s your price?” From there, the way is paved for recommending adjustments, upgrades and improvements.

The Hyatt Regency Bellevue expansion by MacDonald Miller

“The customer sees the need because the tool shows we’re right. Customers are very receptive to the reports, especially when they realize its going to save them money on their bottom line,” said Galusha.

One example was a 10-year-old, 25,000 sf building in Kirkland, WA, where a tenant renewal prompted the owners to check out the building’s energy performance. They were right to be worried: the building had an EnergyStar score of 17. There was definitely room for improvement.

After running the Energy Benchmark Report and sharing it with the owners, Galusha proposed a maintenance and energy services agreement totaling approximately $4,900. He provided additional options for test and balance work ($12,000). Confirmation and verification options were discussed. MacDonald Miller will complete the first assessment, then come back and revisit the test and balance work.

“In a similar building, we put extra time into the Energy Savings Assessment and made minor control changes. Now we’re up two EnergyStar points in one month,” Galusha reports.

Is it normal to see savings that quickly? “Typically we do see savings. Lots of underqualified shops make shortsighted decisions, and when we take over their contracts, we’re able to realize energy reduction quickly. BuildingAdvice gives us a way to quantify savings.”

Galusha explains that he could be using Portfolio Manager, the Department of Energy’s free tool to benchmark energy performance, but “by itself, it would be of no benefit to customer. The BuildingAdvice Energy Assessment is a high value report, and it gives us the opportunity to monitor that building’s energy for our clients.”

“In the right places, BuildingAdvice can be very profitable for us.”

Energy efficient lights in GS classroom

Recently the EPA announced it would host a class designed to teach companies how to make their buildings more energy efficient, KETV-TV reported. Though it’s not up on the EPA Web site, KETV reported that the class – the first of its kind in the nation – is called “Energy Star for Commercial Buildings” and is being taught at Omaha, Nebraska’s Metropolitan Community College March 11 through May 20 – meaning class is now in session.

The college has partnered with Omaha Public Power District to offer the course, which is open to local businesses who want to learn how to measure energy use in their buildings and identify places to save on utilities, lowering operating costs and reducing energy consumption.

Here at AirAdvice, we eat, breathe and sleep this stuff.  We work with mechanical contractors nationwide who can and should help their clients to improve the energy efficiency of their buildings.  Using our BuildingAdvice product, service providers quickly provide energy benchmarks that are integrated with the EPA’s ENERGY STAR system.  After establishing a “score” for the building, the service provider and building owner can move on to the next step of identifying specific opportunities to reduce energy consumption.

One question this class represents for us is, who is asking for energy efficiency upgrades? Is it building owners? Business owners? Or is it the facilities managers and building engineers?  Has the need for energy efficiency services reached a “top-down” awareness?

In the best news possible, Energy Star is out in the real world talking about the launch of its new program for rating Data Centers inside of Portfolio Manager coming this June (2010).  The only thing better could be if they announced the addition of manufacturing space types also.

They have been working heavily in the Data Center sector of commercial buildings over the last few years and have some good programs for people to utilize.  This announcement allows for Portfolio Manager to finally rate Data Centers as full buildings and not just as secondary space type with ridiculous square footage restrictions.  The rating will rely on the PUE (Power Utilization Efficiency) of a Data Center, which is the ratio of the total power supplied versus the amount delivered to the IT equipment.  As you will read, there are some strong thoughts about the PUE but in all of Energy Star’s efforts they will follow up with the right tweaks as needed.

http://www.pcworld.com/article/188658/energy_star_for_data_centers_coming_in_june.html