Energy-audit law is an aid to landlords

Posted on April 22, 2013

Technological advances, as well as the protracted recession born out of the 2008 financial crisis, have cast sustainability in a new light. Going green, once regarded as the environmentally friendly thing to do, is now seen as an economic choice. Moreover, a new city law gives property owners a push to save energy costs while cutting their carbon footprints.

For private buildings covering 50,000 square feet or more, Local Law 87 requires that energy audits be performed to identify potential improvements, after which they are required to perform retro-commissioning for restoring -energy-consuming systems to their original performance levels. This year, and every 10 years thereafter, owners of qualifying buildings must submit an energy-efficiency report documenting the findings and actions taken.

Business people generally dislike government mandates, but this one should help them.

Buildings with large-enough heating needs to justify co-generation or CHP (combined heat and power) systems during retro-commissioning can gain the benefit of uninterrupted power. When Sandy left most of lower Manhattan without heat and electricity, New York University’s co-gen plant, fired by natural gas, kept 22 campus buildings warm and bright.

New York City has taken other big steps to improve energy efficiency in old and new buildings. Mayor Michael Bloomberg’s sustainability agenda, PlaNYC, includes comprehensive measures to reduce -greenhouse-gas emissions by 5% over the next 10 years. Its Greener, Greater Buildings Plan targets large buildings, which account for almost 75% of the city’s emissions. New city laws will make it difficult to burn dirty fuels in large buildings, paving the way for efficient, sustainable technologies and job creation in the clean-energy sector. Buildings will be able to save $700 million in annual energy costs using these basic measures.

Local Law 87 may seem like an undue imposition on building owners, but energy audits and retro-commissioning by certified professionals can cut energy costs by 40%. Owners who act early will have more access to incentives, grants and rebates that can help reduce the cost of the audits and upgrades identified in them.

Energy-efficiency incentives are a finite commodity—a limited pie to be divided among qualified buildings. Those who comply soonest will take home a bigger piece, while those who wait may be left with little or nothing. Furthermore, late adopters of energy efficiency will find themselves struggling with underperforming buildings in a marketplace with rising costs. Buildings audited early can remain a sound investment instead of a financial black hole.

The cost trend of fossil fuels suggests a long-term increase in the price of heating oil, coal and gasoline. Perhaps that is why the commercial and retail sectors view energy efficiency as a “new fuel” source. Macy’s has cut its energy bill by 30% since 2002 by installing sensors that turn off stockroom lights, turning off signs at night and installing 1 million LED lights.

Fossil fuels may have sustained the economy in the past, but the future demand for energy will need to be met largely through renewables, alternative-energy sources and conservation.

Hansika Shergill, Crain’s New York.