Solving the dilemma of shared incentives in energy retrofits

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A power motor installed on the roof of 550 Montgomery Street. Image courtesy of Gridium

Energy upgrades for commercial buildings are often contradictory: the owner makes most of the investment and the tenant reaps most of the benefits.

A California utility is tackling this problem by deploying an innovative alternative at a historic property in San Francisco’s financial district.

Pacific Gas & Electric Co. has unveiled a new program that tracks efficiency savings through an approach called Standardized Metered Energy Use. Using advanced smart meters, the program measures energy at the meter as a first step to improving energy efficiency.

Because it measures changes in use across the building, the NMEC promotes comprehensive energy upgrade projects that reduce transaction costs for building owners.

The NMEC approach also allows for custom calculations of building baseline usage. This makes it easier to account for unusual events, such as the impact of the pandemic on occupancy levels and the resulting reductions in energy consumption.


READ ALSO: Energy conservation efforts continue, albeit at a slower pace


Iconic building, new approach

Leveraging the NMEC approach, PG & E’s Commercial Whole Building program was deployed for the first time at 550 Montgomery St., a historic 93,000 square foot commercial building in the financial district of San Francisco. From its completion in 1908 to 1921, the building was the headquarters of Bank of Italy, the predecessor of Bank of America. Gridium, based in Menlo Park, Calif., Undertook the energy retrofit on behalf of Downtown Properties.

An energy upgrade to Downtown Properties’ historic 550 Montgomery St. in San Francisco uses bill-based financing to solve the shared incentive problem. Image courtesy of Gridium

The renovation included upgrading interior lighting to high efficiency LED lamps, providing better quality lighting while reducing energy consumption by 60%.

High efficiency motors and controls have been incorporated into a make-up air unit on the roof, allowing reduced fan speeds that precisely match ventilation demands. In addition, a hydronic heat boiler controller allows you to reset the outside air and to sequence the control efforts which lead to energy savings. The project is expected to improve building operations, generate energy savings that exceed project costs in five years, and reduce total energy costs by 15%.

The initiative is part of a performance-based program that rewards PG&E customers for every unit of electricity they save. PG&E’s invoice financing program, rather than the building capital budget, funded the improvements.

Savings are measured over time, allowing incentive payments to be made as energy efficiency is delivered to the grid. In fact, PG&E purchases energy efficiency resources from the building as if it were purchasing renewable energy generated from a wind turbine installed on the roof.


READ ALSO: A closer look at the financing of energy retrofitting


Reward the operator

For Downtown Properties, one of the main benefits of the utility bill financing program is that it helps solve the shared incentive faced by homeowners who pay for energy upgrades that largely benefit their tenants. The NMEC-fueled incentive reimburses operators for their efforts to reduce energy costs.

“Most of the time (owners) want to upgrade their facilities, but they’re stuck with short payback rules,” said Tom Arnold, CEO of Gridium. “Tenants generally benefit from it. This allows third party financing to be obtained and loans to be paid off slowly. »The loan is administered through the utility bill; funding is repaid at zero percent.

An illustration of the impact of Gridium’s invoice financing program on a building’s value over time. Image courtesy of Gridium

The 550 Montgomery St. project is a good example of how “standardized meter energy consumption and bill financing can be optimized for customers,” said Caroline Massad Francis, head of efficiency strategy. energy at PG&E in San Francisco.

“This is the next step in how we measure, track and encourage savings,” noted Monika Jesionek, Program Manager of the Whole Commercial Buildings Program for PG&E.

“NMEC has the potential to capture stranded savings, such as the types of projects that customers might not be able to address if they measure savings other than on the meter. It is a means that allows us to obtain a large number of interventions that we can undertake through energy efficiency that help to improve the quality and reliability of the energy savings planned in existing buildings ”, added Jesionek.

And being able to track savings ensures the investment potential of business customers while supporting their climate goals and action plans.

While 550 Montgomery St. is the first project to receive incentives, PG&E has other projects underway that will receive incentives in the coming months, according to Jesionek.

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