Teaching Old Dogs New Tricks

Can energy efficiency turn a decades-old office building in New York City into a “high-performance” building that helps owners and tenants meet challenging operating budgets? The Trane division of Ingersoll Rand says it can. On May 19, the Trane HVAC unit demonstrated to several hundred industry analysts, customers and the business press how it is replacing conventional heating, ventilation and air conditioning systems at three New York properties with state-of-the-art electric chillers and an ice-storage storage system from Fair Lawn, N.J.-based CALMAC Manufacturing, a leading manufacturer of thermal energy storage systems.

The Manhattan properties showcased were the 1.8-million-sq.-ft. (167,220-sq.-m.) AXA Equitable Building on Seventh Ave., the 578,000-sq.-ft. (53,700-sq.m.) TIAA-CREF headquarters on Third Ave., and Rockefeller Center, with approximately 6.5 million rentable sq. ft. (603,850 sq. m.) in Midtown. 

In related news, on June 16, Con Edison and Rockefeller Group Development Corp., a subsidiary of Rockefeller Group International, Inc., announced that The Rockefeller Group had received a rebate of $557,370 for its Rockefeller Center building 1271 Avenue of the Americas, The Time-Life Building, as part of Con Edison’s Commercial and Industrial (C&I) Energy Efficiency Program. The Rockefeller Group partnered with LVI Energy, based out of Bohemia, N.Y., to install energy efficient equipment, hoping to achieve an estimated annual Con Edison bill savings of close to $1 million.

“We are very proud to be one of the first companies in New York City to receive such a large rebate from Con Edison,” said Kevin R. Hackett, president and CEO of Rockefeller Group International, Inc. “Sustainable development and energy management is a mission of our company not just in Rockefeller Center but in our developments throughout the United States.” The Rockefeller Group will be applying for LEED-EB certification for 1271 Avenue of the Americas and expects the energy savings to help with that process. 

Efficiency Over Cost Control

Prior to its New York event in May, Ingersoll Rand had commissioned a report from The Economist Intelligence Unit, “Unlocking the benefits of energy efficiency,” based on interviews with more than 275 corporate executives worldwide. Among the findings, presented on May 19 by Brian Gardner, editor of business research at The Economist, are these:

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  Forty-nine percent say energy efficiency programs have improved their company’s bottom line; 82 percent say cost savings are the biggest benefit of energy efficiency investment; and 69 percent say cost is the number one driver. 


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  Intangible benefits are harder to quantify than cost savings but can be a significant source of business advantage.


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  Institutional investors are increasingly pushing companies to operate more energy efficiently. 


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  There is a disconnect between the perceptions of the C-suite and of less senior managers about how effective their energy efficiency initiatives are — and should be.

“It should be clear both during the recession and now in the slow-going recovery that handling your costs is critical,” said Gardner. “But it’s even more important, because frequently energy usage is viewed by companies as a fixed cost, and I want to disabuse everyone here of that notion. Reductions in costs can contribute as much to your profitability as the same gain in revenue, and these can be leveraged strategically in your organization.”

Energy efficiency is almost always the most cost-effective way to lower carbon emissions, Gardner noted. “Wind and solar both require frequent subsidies and a higher willingness to pay, whereas energy efficiency pays for itself and earns you a return on your investment.”

Thinking of energy in the context of performance to be achieved rather than as a cost to be contained is the key to thinking of energy consumption strategically, Gardner related. “Performance allows you to harness better [energy productivity] in your building, taking what’s usually an existing asset and leveraging it for more profitability, rather than doing your energy usage as a cost.”

Why is this important in the context of office space, where companies’ energy use is largely predictable and constant?

“Buildings account for 71 percent of U.S. electricity consumption,” said Larry G. Wash, president of global services for Ingersoll Rand’s Climate Solutions business. “Adopting high-performance building concepts can reduce energy and operating expenses by 30 to 50 percent over the course of a building’s life cycle. Just as important, high-performance buildings can improve occupant safety, comfort and productivity and help a business achieve its mission.”

Trane’s approach to recommissioning “poorly run” buildings into high-performance buildings uses a combination of financial and energy analysis, intelligent systems and a holistic view of their life cycles and potential for achieving sustainable operation, Wash explained.

Other speakers at the day-long event included experts from the Department of Energy’s Brookhaven National Lab, the New Jersey Institute of Technology (NJIT), the National Resources Defense Council’s (NRDC) Center for Market Innovation, pension fund TIAA-CREF’s head of security and corporate services, BOMA International and Trane.

Energy performance should matter to all users of real estate, not just owners, noted Deane M. Evans, FAIA, NJIT’s director of the Center for Building Knowledge. “We are very interested in the energy-efficiency opportunities for tenants in leased space. It typically makes the most difference when you’re sub-metered. But I’m in office parks all over the United States. Particularly if you’re on a sub-meter, what can you do to improve your bottom line as a tenant without necessarily moving into the larger capital improvements, and overall systems control improvements you can get at when you’re an owner, especially if you have split incentives between the owner and the tenant?”

Evans says a consortium of utilities has been looking at this, partly in conjunction with his Center at NJIT, and advises owners and tenants to watch those developments carefully.