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FMs managing to lose energy

04 July 2012

Survey finds energy savings and incentives drive investment decisions

Eighty-five percent of building owners and operators globally depend on energy management to drive operational efficiency, according to a survey released by Johnson Controls.

This represents a 34-point increase in the last two years. Energy cost savings and financial incentives are leading this shift, but more than half say they are also looking to improve their public image and increase the value of their buildings. The 2012 Johnson Controls Energy Efficiency Indicator, a global survey of 3,500 building owners and operators, included 944 European respondents concentrated in the United Kingdom (331), Germany (307) and France (296).

“Building owners are investing in energy efficiency because they recognise the financial payback,” said Dave Myers, president of Johnson Controls, Building Efficiency. “This year’s survey demonstrates there’s a change underway. The mantra for commercial real estate owners used to be location, location, location – now it’s becoming location, efficiency, location.”

According to the survey, nearly a third of respondents indicated tax credits, incentives and rebates have the greatest impact on increasing investment in energy efficiency. This finding underscores the role of government policy in the decision making of building owners and operators.

“Nearly 75 percent of commercial buildings in Europe are more than 20 years old and are ready for energy improvements. Building owners and operators are looking to lawmakers to bring down the cost of energy retrofits through incentives and rebates,” said Myers. “In Asia, building codes and equipment standards also are helping ensure new buildings are constructed to high performance levels.”

Developing countries are setting the pace with respect to investment with the highest number of respondents – 81 percent in China and 74 percent in India – planning to increase investments in energy efficiency or renewable energy. Thirty nine percent are planning to increase spending in Europe in the next 12 months, the lowest of any region.

Ninety-six percent of global respondents have implemented at least one building efficiency improvement, led by lighting, heating and air conditioning equipment and controls, and water efficiency. Half of the private sector respondents use the cost savings from energy efficiency upgrades to reduce the company’s overall budget while 40 percent reinvest in further energy efficiency measures.

Green building certifications, or voluntary rating systems, are on the rise with 44 percent planning to certify existing buildings, up from 35 percent the year before. Further, 43 percent plan to certify new construction projects. In Europe, 55 percent of respondents now have at least one certified green building, 50 percent in the United Kingdom. Thirty five percent of respondents in Europe planned to pursue certification in new buildings (compared to 31 percent in 2011) and 44 percent in existing buildings (compared to 36 percent in 2011).

“Tenants are willing to pay more to locate their offices in energy efficient buildings,” said Myers. The survey found nearly a quarter of those who responded are willing to pay a premium for space in a certified green building.

Anthony Malkin, owner of the Empire State Building in New York City, confirmed the survey’s findings during his remarks at the 23rd Annual North American Energy Efficiency Forum in Washington D.C.

“The Empire State Building’s energy efficiency retrofit program has given us a proven model that shows building owners and operators how to integrate energy efficiency into building upgrades, cut costs, and improve the value of their buildings while offering a better environment and occupancy savings for tenants and better profits for the building owner,” said Malkin. One year after an innovative building retrofit project, the Empire State Building has exceeded its first year energy savings guarantee and is on its way to reducing energy costs by 38 percent, saving $4.4 million annually (£2.8 million annually).

Additional highlights from the UK include:

  • 84 percent said energy management was very or extremely important to their organisations (compared to 64 percent in 2011), and 82 percent said they were paying more attention to energy in 2012 than in 2011.
  • Sixty percent of UK respondents had invested in energy efficiency in the past year, the highest percentage in Europe. Thirty-four percent had invested in renewable energy, more closely aligned to the global average. Forty percent of business executives planned to increase spending on efficiency and renewables in the next 12 months while 41 percent expected investment to stay the same.
  • Top carbon reduction strategies in the UK were improving energy efficiency in buildings (25 percent) and implementing behavior programs targeting employees and building occupants (13 percent) (Figure 3).
  • The UK led Europe in behavior-based engagement as an energy savings approach. Energy-focused behavioral or educational programs were undertaken by 46 percent of the organisations. The other measures in the top three for the UK were lighting improvements (64 percent) and HVAC and/or controls improvements (50 percent).
  • The UK had the longest allowable payback among the EU countries surveyed, though payback requirements are tightening in the UK as well: the average allowable payback on efficiency projects averaged 3.5 years, versus 3.7 years in 2011.
  • The top barrier to pursuing energy efficiency in UK was lack of funding to pay for improvements (25 percent), followed by uncertainty regarding savings or performance (18 percent) and insufficient payback or ROI (13 percent).
  • When asked which energy policy would have the greatest impact on improving energy efficiency in buildings, 29 percent of executives selected tax credits/incentives, 21 percent said low interest financing for energy upgrades, and 20 percent chose stricter building codes and equipment standards.

Among UK respondents, 64 percent classified their facilities as commercial, 21 percent as institutional (government buildings, hospitals and schools), and 16 percent as industrial. Thirty-one percent of respondents managed more than 500,000 square feet.


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