Rocky Mountain Institute’s Commercial energy+ Initiative aims to develop and scale a new, innovative, and cost-effective retrofit approach to reduce energy use by 20 percent across more than a billion square feet of commercial building space saving 9.2 million metric tons of CO2.
The U.S. commercial buildings sector is incredibly diverse in building types and uses—from luxury hotels to office buildings to distribution centers. But commercial buildings do in fact have one thing in common: They consume an enormous amount of energy, cumulatively accounting for more than 20 percent of total energy by end use, and more than 35 percent of the generated electricity in the U.S.
According to a 2009 McKinsey & Company analysis, efficiency improvements using existing, net-present-value-positive technologies could reduce commercial building sector energy use by 29 percent by 2020. But in spite of this opportunity, the diverse nature of commercial buildings, combined with significant barriers such as availability of capital, split incentives between landlords and tenants, the opaqueness of the savings, and the cost of customer acquisition, have resulted in slow adoption of energy saving measures—a mere 2.2 percent historical annual rate of energy reduction.
While deep energy retrofits are proven to have as much as 50 percent energy savings (as shown by the Empire State Building) when timed in conjunction with building renovation or capital refresh cycles, RMI believes there is an immediate need to rapidly increase the scale of retrofits. To do so, the market requires a new approach to retrofits that moves from individual building custom solutions (which can be time intensive and difficult to scale) to a new platform that can provide immediate, low-cost, and rapidly scalable energy savings.
This scalable approach to commercial building retrofits will provide a package of configurable, ready-to-deploy efficiency measures and technologies that can be procured and deployed at scale to make buildings immediately smarter, more energy efficient, and more interactive with the electricity grid. This approach has the opportunity to more than double the rate of adoption of cost-effective energy efficiency measures by 2020, scaling to achieve a 20 percent energy reduction across a cumulative billion square feet of commercial building space over this period.
The creation of an integrated, mass customization model for commercial energy efficiency fills a unique market need. By bringing cost-optimized components together into configurations that take advantage of economies of scale, building owners can access practical low-cost integrated solutions that deliver consistent results and enhance overall building value and shareholder returns.
Within the first year, RMI is working closely with important market actors including technology providers, building owners, engineers, and electric utilities to develop a team of experts to provide rigorous insight and oversight of the mass customization model. The expert review team will ensure the approach incorporates the best current technologies, future-proofs client investments (or supports future anticipated changes to the industry and evolving customer demands over time), outlines a strong value proposition, and will result in successful market deployment.
The mass customization model is configurable to local market conditions, leveraging location-specific financing vehicles, utility incentives, available tax credits, and energy markets to optimize the offering. Thus, while the approach is broadly applicable, the model is optimally implemented at a city scale to tailor the solution to the local market and maximize cost savings.
CHICAGO: A LIVING LAB AND FIRST MOVER
The City of Chicago will serve as one of a number of testing and proving grounds for RMI’s ambitious new approach. Chicago was selected due to the city’s large commercial buildings portfolio, utility support, and strong partnerships with local government and several local and national non-profits.
By 2016, 50 of Chicago’s commercial buildings will be selected as pilots to demonstrate the first proof of concept, with an eye toward expanding to two large commercial building portfolios. When successfully demonstrated, the Commercial Energy+ Initiative will be further scaled in Chicago with a planned deployment in three additional cities within the next three years.
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