August 4, 2021

Devil is in the Details: A Technology-Enabled Solution to Accelerate the Conduct of Cost-Effective Building Energy Audits

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Today, energy professionals are routinely challenged by clients to do more for less, while still providing technically sound information to facilitate informed decision-making. This is particularly true for energy audits on existing buildings. In an ideal world, an energy professional would be given sufficient time and budget to perform a comprehensive energy audit such as an ASHRAE Level 2 or Level 3 analysis. While this may be appropriate in certain situations such as in support of guaranteed energy savings performance contracts, for many situations today the time and budget to perform a comprehensive audit is simply unavailable. Such scenarios include, for example, building energy performance evaluations conducted as part of:

• Preacquisition due diligence in real estate transactions.
• Proposal preparation for HVAC equipment replacement.
• Building electrification-decarbonization scenario analysis.
• Building greenhouse gas (GHG) emissions reduction impact determinations.  
• Portfolio screening to identify and prioritize building energy efficiency projects.
• Support for utility incentive programs.

Fortunately, technology-enabled software tools have emerged that empower energy professionals to conduct audits more time and cost-effectively, while still being able to provide technically sound analysis to support a building owner’s investment decision-making.

Energy Audits

A conventional energy audit for an existing building typically includes the following technical tasks:

• Identification of general building information, e.g., building type, size, age, dates and descriptions of major building renovations and improvements, etc.
• Walk-through survey of equipment (HVAC, interior and exterior lighting, etc.) and building characteristics (envelope, operation, settings, etc.).
• Review, if available, of existing design/as-built drawings and/or equipment specifications.
• Collection of whole building energy consumption and utility rate schedule(s).
• Estimation of building end-use energy consumption.
• Establishing existing equipment age, energy efficiency performance metrics and baseline energy consumption.
• Identification of potential energy conservation measures (ECMs).
• Estimation of ECM(s) energy consumption and cost savings.
• Estimation of ECM(s) installed cost.
• Estimation of lifecycle financial metrics, e.g., savings-to-investment ratio.
• Evaluation of the economic impact of alternative ECM(s) scenarios.
• Recommendation of the most cost-effective ECM package.

The principal difference between the various levels of energy audit, i.e., ASHRAE Level 1, 2 or 3 analyses, is the amount of time and the resources allocated to each of these tasks.

Some conventional energy audits for existing buildings may include building energy simulation modeling. Such modeling requires the collection of a comprehensive set of data elements by an experienced auditor to populate the model. This scope of work can add considerable time and cost to an existing building ECM analysis effort. However, energy simulation modeling is not the typical use case for existing building ECM analysis and is more often employed in the design phase for new buildings or buildings undergoing a major retrofit, e.g., change of use.

There are several tasks in the conventional energy audit process that can consume a considerable amount of time and cost, for example:

• Estimation of building end-use energy consumption, e.g., the allocation of energy consumption associated with space heating, cooling, lighting, ventilation, etc.
• Establishing baseline energy efficiency performance metrics for existing equipment.
• Incorporating interactive effects introduced by ECMs.
• Developing ECM installed cost estimates.
• Developing GHG (carbon) emissions reduction estimates for ECMs.
• Calculating lifecycle financial metrics.

Common Time-Consuming Tasks

End-use Energy Consumption

Collecting whole building energy consumption data is not usually time intensive. However, estimating end-use energy consumption, e.g., cooling, space heating, ventilation, lighting, etc., can present a challenge. Many auditors rely on the U.S Energy Information Administration’s Commercial Building Energy Consumption Survey (CBECS) data to support this analysis. Unfortunately, these data require time-consuming adjustment because end-use data are presented either by property type or by geographic area (or climate zone) for a specific year. It is not presented by both property type and geographic area (or climate zone). As such, time-consuming adjustments must be made to estimate weather-normalized end-use energy consumption for a specific property type located in a specific geographic area (or climate zone). These end-use allocations are critical because they serve as the basis to estimate the energy savings of potential ECMs and calibrate these estimates. Utilizing unadjusted CBECS data for end-use energy consumption values may result in significant error when estimating energy savings.

Baseline Equipment Energy Efficiency Performance Metrics

When collecting information about existing energy-consuming equipment in a building, it is necessary to know the existing equipment’s baseline energy efficiency performance metrics to estimate the energy savings of potential ECMs. If not readily available from the equipment’s nameplate specifications or an Internet search of the manufacturer’s model number, this may require an estimate based on the assumption that the equipment complied with the local building energy code in effect at the time it was installed. In addition, the equipment’s performance will likely have degraded over time and this degradation will need to be estimated to adjust the baseline energy efficiency performance metric. The time required to obtain accurate baseline energy efficiency performance metrics for existing energy-consuming equipment can be considerable. However, if baseline performance metrics are not representative, error will be introduced into the energy savings calculations.

Interactive Effects

Identifying potential ECMs is a routine task in an energy audit. If existing equipment is near, at, or beyond its estimated useful life, replacement with high efficiency equipment is an obvious recommendation. Other potential ECMs may be identified based on the auditor’s experience. Notwithstanding, many auditors fail to consider the impact of interactive effects in the evaluation of ECM energy savings. Taking such effects into account requires additional time to adjust the baseline energy consumption of the impacted end-uses. For example, if an LED lighting upgrade is recommended, both the baseline cooling and space heating end-use energy consumption values would need to be adjusted. The baseline cooling end-use energy consumption would decrease while the baseline space heating energy consumption would increase (due to LED lighting systems emitting less heat than fluorescent lighting). These effects on heating and cooling loads would also potentially impact the energy savings associated with other improvements, such as the installation of new HVAC equipment. Not including the impact of interactive effects in energy savings calculations is another source of error in estimating ECM energy savings.

Estimating Replacement Equipment Installed Cost

Many auditors rely on equipment cost estimating guides, e.g., RS Means, to establish the installed cost of potential ECMs. Such estimates, while relatively quick to develop, may be highly inaccurate. Energy professionals typically spend a significant portion of their analysis time estimating ECM(s) energy and cost savings, rather than on installation costs associated with the improvements. However, both the ECM(s) savings and installed cost are equally important in the financial evaluation needed to support the building owner’s investment decision. Utilizing experience with past ECM installation(s) may be helpful, however, the availability of truly comparative cost data is often limited. Obtaining quotes from contractors for specific ECM(s) installation is another alternative. Although this can take considerable time, it will typically provide more realistic installation cost estimates. Unfortunately, at the time the energy audit is conducted, it often is premature to engage contractors to request equipment installation cost estimates.

GHG (Carbon) Emissions Reduction Estimates

Global warming has placed significant emphasis on GHG emissions, e.g., carbon dioxide, methane, nitrous oxide, etc., and their reduction. With energy audits identifying potential measures that can reduce building electricity and fuel consumption, these measures will also reduce GHG emissions. While GHG emissions reduction calculations have not typically been included in energy audits, a growing number of building owners today are requesting this information. Moreover, many utility- and government-sponsored building energy efficiency programs are required to publicly report their program’s GHG emissions reduction impact. To provide these GHG emissions reduction estimates for a building served by a specific utility requires additional research and time in the energy audit process.

Lifecycle Financial Metrics

While many auditors still utilize simple payback period, calculated as the installation cost divided by first year energy cost savings, as the basis for ECM(s) recommendations, this can adversely affect the building owner’s decision-making process. Payback period ignores the time value of  money and fails to account for the costs associated with financing a project over time (interest costs) or other factors affecting future energy cost savings, such as equipment performance degradation, utility cost escalation rates, etc., over the estimated lifetime of the replacement equipment. Although payback period is easy to calculate, there are many limitations associated with the method that fail to provide building owners and managers with the information they need to make informed ECM lifecycle investment decisions.

A much better financial metric, which takes additional time to calculate, is the savings-to-investment ratio (SIR). The SIR represents the present value of future energy savings over the estimated lifetime of the ECMs using an appropriate discount rate, divided by the total installed cost. Evaluating future energy savings requires researching how local utility rates have escalated over time and how equipment performance degrades over time.

A Technology-Enabled Solution to Provide Timely, Cost-Effective Energy Audits

If time and budget do not prohibit, most energy professionals prefer to conduct a conventional energy audit to support their recommended ECMs, the associated energy cost savings, and the required investment. However, building owners often are unwilling to budget for a relatively expensive and time-consuming conventional energy audit as the “first look” analysis of potential ECMs for their building. For example, the time and budget may simply be unavailable to incorporate a conventional audit into the preacquisition due diligence process associated with a real estate transaction. From the potential acquirer’s perspective, investing in a conventional audit with uncertainty around whether the transaction will close makes little sense. The same may be true when an HVAC equipment manufacturer, distributor or contractor is preparing a proposal for equipment that will generate significant energy savings over its lifetime. Such HVAC equipment replacement proposal scenarios are often highly competitive with multiple firms competing for the building owner’s project. For this reason, the equipment providers typically have neither the time nor the budget to support a conventional energy audit. However, such firms can differentiate their proposal by providing the building owner with an estimate of the energy savings, GHG emissions reduction, and financial impact over the lifetime of the replacement equipment. This analysis can also provide the case for an owner’s potential investment in higher efficiency equipment (going beyond the requirements in the local building energy code) that may present higher first cost but result in greater energy cost savings over time and potentially attractive utility incentives.

Conducting an inexpensive, quick turnaround (preliminary) energy audit may also serve as a “first look” analysis to make the business case to the building owner for the conduct of a more costly energy audit as a next step. For example, a building owner may be reluctant to authorize a relatively expensive conventional energy audit without at least a preliminary estimate of the potential savings and investment.

Fortunately, state-of-the-art software, data and analytic solutions have emerged that can meet the increasing demand from building owners for a time and cost effective “first look” energy audit. For example, Sustainable Real Estate Solutions’ (SRS) Energy Performance Improvement Calculator (EPIC^TM) has been increasingly adopted by energy professionals as an inexpensive tool that, with minimal input of data, quickly estimates potential energy savings, GHG emissions reduction, ECM(s) investment cost and financial impacts. These energy professionals have successfully incorporated the EPIC–generated business case in their audit and proposal processes and have proven to meet the building owners’ demand for a streamlined, time and cost-effective analysis of potential energy improvements.

To support conventional energy audits, EPIC can in real time:

• Make the necessary adjustments to CBECS data for weather-normalized end-use energy consumption.
• Provide an estimate of the existing equipment’s baseline energy efficiency performance metrics reflecting equipment age and performance degradation.
• Incorporate interactive effects between recommended ECMs.
• Estimate energy consumption and cost savings.
• Provide ECM installed costs relying on a proprietary ECM installation cost database developed from actual energy efficiency projects across the country.
• Estimate GHG emissions reduction.
• Include lifecycle costing including cash-flow analysis and SIR under different ECM(s) and financing scenarios.

EPIC also enables the real time evaluation of different ECM scenarios to facilitate comparisons, e.g., comparing key financial impacts of code-compliant versus above-code high efficiency equipment options to support more informed decision-making.

Conclusion

Building owners are increasingly demanding time and cost-effective analysis of potential ECMs for their buildings, including energy savings, GHG emissions reduction, and financial impacts. In response, technology-enabled solutions have emerged to enable energy professionals to conduct timely and cost-effective energy audits. Moreover, state-of-the-art advancements in software, data and analytics empowers energy professionals, in real time with minimal data input, to create a technically sound business case to support a building owner’s decision-making. The result is energy professionals can now deliver cost-effective energy audits in short timeframes without sacrificing accuracy in their preliminary analysis.

To learn more about how SRS’s Energy Performance Improvement Calculator (EPIC^TM) can accelerate the conduct of your existing energy auditing process, visit SRSworx.com.