Operational vs. Asset – Starting to Understand Building Energy Ratings

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By Paul Gromer, CEO and Founder, Peregrine Energy Group

Building energy rating systems seem to be proliferating, don’t they? National governments, local governments, even private organizations are getting in on the action. Each system is accompanied by informational colored graphs and numbers, earnest explanations, and always great fanfare. It’s an offshoot of growing concerns about making the reality of building energy use more transparent to non-experts and making its value more concrete in the marketplace.

Massachusetts is a perfect example.

  • We have two new high-profile efforts: The Massachusetts Department of Energy Resources (DOER) is currently piloting a Building Asset Rating program statewide. At the same time, the city of Boston recently passed the Building Energy Reporting and Disclosure Ordinance, which specifics a different set of metrics for comparing building energy performance.
  • In the background, we already work with the EPA’s Portfolio Manager ratings, and we are watching the federal government’s pilot of their Commercial Building Energy Asset Rating Program.
  • And then there are private organizations like LEED and ASHRAE, which have their own rating systems that increasingly loom large on the commercial building landscape.

It’s chaos!

How do you make sense and make use of these different systems? The way to begin is to understand whether a rating is an operational rating or an asset rating. These two types of ratings represent the two fundamental approaches to evaluating the energy performance of a building. Each has a unique purpose. If you understand whether a rating is an operational or an asset rating, you will know what it can tell you about a building and how to use that information.

Operational rating

The traditional approach to rating a building’s energy performance is known as operational rating. This is the approach used by EPA’s Portfolio Manager, which has been around a long time, and by newer building disclosure ordinances such as Boston’s new Building Energy Reporting and Disclosure Ordinance.

An operational rating evaluates a building’s energy performance based not on how it is designed, but on how it is operating, meaning based on its actual energy use.

An operational rating normalizes that energy use by basic factors such as building size, weather, and building type so that the energy use of very different buildings can be compared accurately. Because of the normalization, operational ratings make it easy to compare the performance of different buildings throughout a large portfolio of buildings.

But, and this is key, an operational rating does not normalize for occupant behavior – for example, whether lights are left on, or whether the heating and cooling systems run too long every day, or even whether they run at the same time. This is because occupant behavior is a key factor in establishing how efficiently a building is operating. If the occupants of one building use more energy than the occupants of another, the operational rating for the first building will be worse/lower. To use a driving analogy, an operational approach to building rating tells us the actual gas mileage, not the “standard” mileage on the EPA sticker.

Because the focus of an operational rating is the actual energy used by a building, this kind of rating can be used to show the impact of energy efficiency investments. And because operational ratings are concerned less with how a building ought to be performing and more with how a building is really doing compared to its peers, they can help to identify which buildings within a portfolio have room for real improvement.

Asset Rating

A newer approach to rating a building’s energy performance is known as an asset rating. This is the approach used by the US Department of Energy’s Commercial Building Energy Asset Rating Score pilot and the Massachusetts Department of Energy Resources (DOER)’s Building Asset Rating pilot.

A building asset rating evaluates how efficiently a building is designed, not how efficiently it is operating.

Rather than focusing on energy use by occupants, as with an operational rating, an asset rating evaluates the building itself based on physical characteristics. Those characteristics include the building envelope and electrical and mechanical systems. By focusing on these built-in characteristics, an asset rating reveals a building’s intrinsic energy performance, separate from how it is operated. It judges how the building should perform, not how it actually performs. Put another way, an asset rating is the building equivalent of the EPA mileage sticker. The Massachusetts DOER even refers to it that way in the title of the document that explains their Building Asset Rating Pilot: An MPG Rating for Commercial Buildings.

Asset ratings were developed to enable the real estate market to put a financial value on the energy performance of a building. A strong asset rating enables a building owner who invests in energy efficiency to get a return on that investment when they sell the building. In this way, an asset rating creates create an incentive for energy efficiency investments in buildings.

The US Green Building Council’s (USGBC) LEED rating, which is commonly used in commercial buildings, is an example of a high-profile asset rating system. While a LEED rating addresses more than just energy performance, its energy performance modeling uses an asset rating approach. As a result, a LEED rating tells us something about how a building is designed, but not how it is operating. Some LEED-certified buildings are very energy efficient, but others use quite a lot of energy. Because LEED is an asset rating and does not evaluate actual energy use, the LEED plaque is not a guarantee that the building is operating efficiently, only a sign of whether it was designed that way.

For more information on building ratings, check out the list of links below. It includes all the initiatives mentioned above as well as links to more general information on building energy rating from the Northeast Energy Efficiency Partnerships (NEEP) and BuildingRating.org:

Paul Gromer is President of Peregrine Energy Group.  Founded in 1992, Peregrine helps public and private organizations make sense of complex energy data and reduce their energy costs and emissions.  Peregrine provides utility information management, benchmarking, program and project management, and monitoring and verification of energy savings. Before founding Peregrine, Paul was the Massachusetts Commissioner of Energy Resources and Chairman of the Massachusetts Energy Facilities Siting Council. He is a graduate of Middlebury College and Harvard Law School.

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About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than three 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.


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