What Makes Public Sector Projects Successful Can Work for CRE
Introduction
The pandemic has caused significant challenges and financial stress for the Commercial Real Estate (CRE) industry, with the D.C. region hit particularly hard. At the same time, building owners and operators are under increased pressure, from internal and external forces, to reduce the carbon footprint of their operations. Fortunately, energy efficiency solutions available to CRE have been evolving as well. Project features previously available only to the public sector are making building improvement projects more comprehensive, more impactful, and more forward-looking for the commercial sector. This blog post includes a case study of one of CEG’s public sector projects, and lessons that can be learned from it for CRE.
As a leader in energy engineering and construction, CEG helps building owners and managers reduce the carbon footprint of their buildings. We analyze existing building systems, and design and implement turnkey solutions that increase energy efficiency, enhance resilience and energy security, and reduce operating expenses. We guarantee performance and leverage creative project financing to deliver comprehensive projects that meet sustainability goals and efficiency mandates.
Case Study: Office of Personnel Management
Project Goals
The goals for this federal project included leveraging financing to deliver a complete solution that will help make significant progress toward organizational goals for energy efficiency and water reduction, at no net cost. The cost of the project is to be paid for using guaranteed savings and incentives generated by the project.
Theodore Roosevelt Building, a 10-story office building in Washington, D.C.
Project Approach
In our approach for this project, CEG:
Assessed existing building systems, remaining equipment lifetimes, future expansion or renovation plans, and ongoing capital improvement projects.
Collaborated with OPM to split the project into two phases to capture significant utility savings quickly and align construction with occupant relocation plans.
Gathered and analyzed 200+ data streams from over 50 data loggers and OPM’s BAS system. We tailored our analysis to model the future impacts of OPM’s planned renovations and space configuration changes so that we could incorporate these changes into engineering designs. This enabled us to right-size certain systems to reduce capital expenditures and increase efficiency.
Coordinated with all project stakeholders (i.e. finance team, facilities management, etc.) to finalize financing terms and project performance parameters.
Provided turnkey management of all aspects of project implementation as the General Contractor, to ensure quality and minimal disruption to facility services.
Assured commissioning and ongoing performance.
Highlights
As part of this project, CEG:
Replaced outdated steam infrastructure with a new hot-water boiler plant
Implemented architectural scope to refresh ceilings and modernize lighting layouts
Included a N+1 redundant heating system, a 2N redundant domestic hot water system, and emergency power interconnection to improve resiliency
Modernized air distribution systems to correct fire safety code compliance
Energy Efficiency Measures
| Phase I | Phase II |
| LED lighting retrofits & advanced controls, daylight harvesting | High-efficiency condensing heating and domestic hot water plant |
| Domestic water fixture replacements | LED lighting retrofits & advanced controls |
| Irrigation controls and upgrades | Airside retro-commissioning |
| Cooling tower controls upgrade | High-efficiency AHUs with variable speed fan walls | Kitchen appliance replacement | Air distribution upgrades and VAV conversions | Chiller plant modernization & right-sizing | Variable speed pumping upgrades | Demand-control ventilation | Utility rate adjustments |
Results
This project utilized a “deep energy retrofit” strategy to leverage interactive effects of HVAC, lighting, and envelope upgrades to reduce central plant capacities by 25+% while increasing efficiency. CEG and OPM/GSA’s efforts on this project and other related initiatives resulted in electricity consumption reductions of 52% and energy consumption reductions of 44%. During Phase I, verified annual savings were $400k and 8,951 MMBtu, and during Phase II they were $800k and 10,514 MMBtu. Therefore, the phases combined have verified annual savings of $1.2MM and 19,465 MMBtu. In addition to these energy and cost savings, the project included other benefits such as increased resiliency, ongoing monitoring of performance, improved space utilization, environmental and safety improvements, and operational efficiencies.
Lessons for CRE
Similarities Between the Public and Private Sectors
Project goals in the public and private sectors are often very similar: to bring operational savings and/or to make progress in meeting sustainability goals. In order to implement a comprehensive energy savings project, CRE building owners and managers can leverage third-party expertise to handle energy efficiency improvements, just as public sector clients do. Financing can be used to create a cashflow-neutral or cashflow-positive project, often with no upfront capital. Projects like these incorporate guaranteed performance, and generate many benefits beyond energy savings.
Leveraging Third-Party Expertise
Engaging with a third-party turnkey energy efficiency provider has many benefits:
Expert analysis of existing building systems
Cohesive and comprehensive solution design to maximize energy savings
Turnkey project delivery simplifies procurement, vendor management, and vetting of technologies
Experienced in securing incentives and can work with asset managers to secure the most appropriate form of financing
De-risk comprehensive upgrades with a guaranteed performance (energy savings, CO2 reduction, BEPS compliance, etc.)
Paying for a Project
There are many types of energy efficiency financing options:
Energy Savings Performance Contracting (ESPC)
Energy as a Service (EaaS) or Energy Service Agreement (ESA)
C-PACE financing
Projects funded by utility savings & available incentives
Multi-phase project design can also help move a project forward and synchronize with long-range organizational and capital planning goals
Conclusion
One of the best ways to meet corporate sustainability goals, energy efficiency mandates, and to reduce operating expenses is through energy performance contracting, which combines a whole-building approach with creative project financing and guaranteed performance.
Energy performance contracting is highly successful in the public sector, and can provide a way for commercial building owners to ensure project success, de-risk the investment, and achieve compliance. Turnkey energy performance projects include assessments, engineering, construction management, and ongoing monitoring for performance and compliance, and can utilize special financing vehicles to reduce or eliminate upfront costs. Contact us to learn more about energy performance contracting for the CRE industry!