Survey: What will it take to make buildings more efficient?

Elisa WoodBy Elisa Wood
October 18, 2012

In 2010, China built more housing than Spain has homes. That factoid underscores the significance of energy efficiency for buildings in a report released this week by an affiliate of the respected publication, The Economist.

Commissioned by the Global Buildings Performance Network, the report emerged from a survey of real estate and construction executives in the  European Union, India, China and the US.

It offered promising news: The right policy signals could unleash an international boom in energy efficiency.

What motivates these professionals? Not surprisingly, it’s the potential they see to cut costs. They “are ready to go deep and are waiting for the right policy signals that can scale up energy efficiency in the sector,” said GBPN in the report.

Although barriers exist, business leaders in building and real estate already are pursuing a range of efficiency measures. The survey found that:

  • Energy usage is important for most of the companies and is key factor in investment decisions to 63% of those surveyed. Companies that describe themselves as “financially successful” rated energy particularly high.
  • Lighting retrofits scored high among actions companies are taking. About 57 percent are replacing lighting , 50 percent HVAC systems and 50 percent building insulation.
  • Forty percent are reconfiguring building layout to take advantage of natural light.
  • Energy efficiency is a risk management tool for 69 percent, a sign that they have  a sophisticated understanding of energy.

Not all of the news was good, however. Companies are unaware of the actual costs of their energy use. Less than a third have commissioned energy audits for their buildings. Further, two thirds of those surveyed overestimate the cost of energy efficient construction.

A surprising 75 percent saw benefit in energy regulation and described lack of enforcement as a problem. The solution? Not too much carrot and not too much stick, concluded the survey report.

“While the survey shows that most companies prefer carrots, at some point governments also need to wield the stick,” the report said. “Striking the right balance between incentives and restrictions is not easy. Excessive red tape and mixed messages are costly to business and slow the adoption of more efficient technologies. The market needs clear long-term signals, rational expectations and opportunities for a reasonable return on investment.”

The Economist Intelligence Unit surveyed 423 senior executives from the real estate and construction industries in the summer 2012. About 27 percent of those surveyed came from the US, 24 percent from the European Union, 25 percent from China and 24 percent from India. All of those surveyed worked in operations, strategy or finance. More than half were C-level executives or above and nearly half from businesses with more than $500 million in global annual revenue.
The full report, “Energy Efficiency and Energy Savings: A View from the Building Sector,” is available for download at http://www.globalbuildings.org/news/new-report-businesses-are-ready-to-go-deep.

Elisa Wood is a long-time energy writer. See more of her work at RealEnergyWriters.com.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

Comments

  1. Tony Woicekowski says:

    A question for real estate expert readers… what legal barriers exist – if any – to the creation of a micro utility, empowered to bill for “utility services” such as chilled and hot water, light, etc? Companies such as NRG provide these services in the form of central plants in metropolitan areas. It would be useful to know if the concept has worked (or not) on a smaller scale, where distributed inefficiency is rampant.

  2. Interesting question, Tony. It occurs to me that IDEA (districtenergy.org) might have an answer to this.

  3. The potential to save cost is indeed a big driver but it goes to tenant. Factoring those savings better into building valuation would reconcile landlords and tenants but from what I observe in China we’re still far from an alignment.

    The lack of familiarity with innovative ESCO-style financing schemes and the related performance contracts also slows down the expansion of energy efficient buildings.

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