When Investing in Energy Retrofits Makes Sense
Retrofitting buildings for energy savings can save money in the long run, but deciding when and how to invest can be tricky—especially if you own multiple buildings. A new report from the Rocky Mountain Institute (RMI) offers advice on optimizing and prioritizing energy retrofits across the whole building portfolio to achieve maximum returns. RMI is a nonprofit focused on market-based solutions to moving beyond fossil fuels.
First, the report advises, portfolio owners should use the same methodology to analyze each building in the portfolio. That allows owners to compare apples to apples. At the same time, they can’t rely on the kinds of patterns investors often look for, warns Philip Keuhn, manager at RMI. “One strategy is to pilot projects in a couple of locations and then try to deploy that technology more broadly across the portfolio, based on climate or something like that,” he told BuildingGreen. But climate is far from the only factor to consider when determining how much investment makes sense, he said. Utility and regulatory incentives, and even lease structures, can make a big difference. A portfolio-wide analysis method should account for all of these factors.
The report also suggests prioritizing projects based on economics rather than energy savings. “At the end of the day, I think what we’re really trying to do is take the conversation about energy analysis off the table,” said Keuhn. Shifting to a discussion of return on investment means projects are more likely to get support. When you have “rigorous economic analysis backing up the request for funds,” he said, “it can really change how that conversation goes.”
The report also highlights the importance of focusing on long-term cash flow, leveraging economies of scale, and using a centralized database for building project information. The report can be downloaded for free from the RMI website.
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Rocky Mountain Institute
Published June 5, 2018