Making the Best of Your Benchmark

When the compliance letter shows up on your desk, it’s easy to sigh and wonder what the point of benchmarking is. If the city wants you to install LED lights, why won’t they just offer a tax incentive or a grant?

Although the reasons given by local governments don’t always make a lot of sense, benchmarking is spreading nation-wide. Fortunately, it can be incredibly useful for all types of buildings. 

Here is how benchmarking can work to your benefit:

The most basic part of benchmarking is getting an ENERGY STAR Score. This score compares your building to others like it across the nation, and falls between 1 and 100. 

A score of 75 and above is the goal - to have a high performing-building that beats others like it. However, ENERGY STAR doesn’t give much guidance on what to do with this information - especially if your score is below 75. 

Let’s say you get a score of 60. This means 40% of buildings like yours in the U.S. have lower energy use than you, while 59% consume more. This shows that although you aren’t exactly throwing money away on electricity or natural gas, your building isn’t optimized. However, you are still doing better than a lot of other folks. 

Since you can track how much money you’re spending on energy, this can give you a great idea if that score of 60 can be reasonably improved. 

For instance, if your furnace is 14 years old, this seems like an easy place to find savings. Or if you have 12 stairwells that stay lit 24 hours a day - occupancy sensors could cut those energy costs in half. 

This math becomes even more important when you fall below 50. Any score below the median suggests that equipment is older, and a significant portion of your energy costs are greater than they need to be. In parts of the country where energy is cheap, this may not be an issue, but in California - energy inefficiency can add up quickly. 

At Bay Efficiency, we consider anything below 30 to be “the danger zone.” This means lots of unnecessary money is going out the door to keep the lights on, so to speak. 

We have helped buildings cut their energy use by ⅔ after upgrading critical energy equipment, all with Simple Payback less than two years. We have also helped owners and managers merge incentives, grants, and no-interest financing to upgrade old equipment and pay zero out of pocket - while their energy savings more than covered their loan payments. 

Knowledge is power - and knowing where you stand vis a vis other buildings like yours can give you a quick idea if improvements can be made. 

If you’re preparing to lease or sell, what better advertising than a high ENERGY STAR score? 

Prospective tenants or buyers use more and more sophisticated methods of choosing properties, and offering a space that is already energy efficient can help you stand out from the competition, but also - merit a higher price. 

On the other hand, people might think that getting a low score is bad; however, it is quite the opposite: it is like finding free money. Buildings with low scores tend to have a significant number of upgrade opportunities with very high Return on Investment. This means you can dramatically increase your NOI and asset value with a comparatively low investment, but only if you have the data that tells you that opportunity is available. 

This is a long-term strategy, but benchmarking allows you to see what the market is doing. Is your building’s score rising yearly, because others like it are not getting upgraded? Or is your score falling year after year, because the buildings in your market are installing energy-efficient products? 

Benchmarking is a great way to get a sense of where the trend is headed in your industry, all from the ENERGY STAR Portfolio Manager portal. 

Bay Efficiency is also happy to discuss these trends with you, and to decide if it makes sense to pursue deeper analysis, or if your building is doing great as-is. 

When prioritizing upgrades across a large portfolio, data is your friend. Knowing how much energy is being used per square foot and how much the utilities cost for every building allows for a ranked analysis of where you can invest to see the greatest savings. 

Also, although some benchmarking requirements exclude buildings that are smaller than 50,000 square feet, we highly recommend benchmarking the whole portfolio from the start. 

This is primarily because proceeding with audits or upgrades without benchmarking the whole portfolio is like doing surgery before getting an X-ray: We need the whole picture before making a diagnosis.

Also, most new commercial construction in the US is larger than 50,000 square feet. Larger buildings tend to be newer, with newer equipment, while smaller buildings tend to be older, and therefore, have older, energy-inefficient equipment. 

By benchmarking all the buildings in a portfolio, we have helped our clients find millions of dollars in energy savings - and their smaller buildings were the worst energy hogs of the bunch. 

Many folks complain about benchmarking, but they don’t have an engineer and expert in their corner, telling them what the data means. Our #1 goal is to make the benchmarking process easy, and we want it to be useful in your planning process. 

Whether you have one property, or hundreds, we are certain that proper analysis of the data in your benchmark can help to increase your NOI and asset value. With 18 years of experience in the utility sector, audit, benchmark and retrofit industries, we have seen all the angles and know what it takes to make energy upgrades worth it. 

We firmly believe that consistent benchmarking is the new tool for building owners and managers to keep a pulse on their building, its standing in the market, and whether it makes sense to pursue energy equipment upgrades. 

Reach out today to start the conversation on how we can make benchmarking work for you.