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Energy Economics: Energy Management in Commercial Real Estate

  • March 28, 2017

In the energy economics of an average commercial real estate building, energy use is by far the largest operating expense, using roughly one-third of the entire operating budget. Furthermore, this usage accounts for about 20% of the nation’s annual greenhouse gas emissions.

Related Article: How Utility Expense Management Helps Control Operation Expenses for Buildings
To cut costs and reduce the size of the building’s carbon footprint, commercial real estate businesses can seek ways to become more energy efficient. Certain methods to reduce energy use will not have any effect on tenant’s comfort. Additionally, reducing energy consumption can increase property asset value while decreasing operating expenses. All of these benefits are reasons to seek energy efficiency, with the significant added value of reducing greenhouse gas emissions.

Investing in Energy Management Technology

Moving towards a more energy efficient building begins with energy management. Commercial real estate companies can use updated technology to better measure, track, and adjust energy consumption. Having this information allows commercial real estate companies to have a futuristic outlook on energy use.

 Download the Energy Consumption Guide for Commercial Facilities

Energy management technology begins with the use of data.

Using real-time data, commercial real estate companies can have a better understanding of energy use in the building. And that information can be utilized for a predictive analysis of how energy will be used throughout the year and beyond. Understanding where the most energy is used can help building managers understand where consumption needs to be reduced.

It’s important that commercial real estate employees understand how to analyze and use the data given. Because the collection of information is only one part, using the data is the real solution.

The financial case for energy economics efficiency.

Energy economics can become complicated, but the financial benefits are clear. According to the US Green Building Council, investments in energy efficiency drive an average 4% increase in property value. What’s more is that owners of green buildings report their return-on-investment (ROI) improved by 19.2% on existing green building projects.
Commercial real estate companies seeking energy efficiency in their buildings should begin with finding a technical solution that can help better measure and track energy use. From there, assessments can be made about how to best reduce energy consumption, which will result in significant savings and a reduction in greenhouse gas emissions.

 

Sources

https://www.energystar.gov/sites/default/files/buildings/tools/CommercialRealEstate.pdf

http://www.usgbc.org/articles/business-case-green-building