The Questions We're Asked Each Week About Utility Benchmarking (& How We Respond)
At WegoWise, utility benchmarking is a core part of what we do. Meanwhile, the property owners and managers we serve are busy managing all aspects of their assets, and benchmarking is not something they think about every day. So today we're addressing the questions we've heard most frequently over the years, based on our experience benchmarking thousands of buildings across the country.
1. Why benchmark my portfolio's energy and water usage?
There are three great reasons to benchmark your buildings:
- Benchmarking helps you invest in your properties wisely and determine where you'll see the greatest ROI from efficiency projects. Everyone knows that energy audits, upgrades and retrofits can make a building more efficient and improve net operating income. But before you invest your time and resources in projects, you should first figure out which buildings in your portfolio will benefit the most from these measures and assess the scale of potential savings. That's where benchmarking comes in. It allows you to quickly understand the utility performance of your buildings, identify where savings potential lies, and prioritize action.
- In many cities and states energy benchmarking is now required. Driven by state and citywide efficiency and carbon reduction goals, energy performance reporting requirements are currently taking effect throughout the nation, and will be introduced in many more locales in the months to come.
- And one more reason to benchmark your buildings sooner than later: utility performance is becoming increasingly important in real estate transactions. This is driven by buyers who want to understand this key component of operating expenses, by tenant preferences for efficient buildings, and by benchmarking requirements. When transaction time comes you'll need to know how your building stacks up, and ideally be in a position where your buildings' utility performance works for you, not against you.
2. What are some of the different ways to benchmark a building?
There are several ways to benchmark a building, but the most common are:
- Benchmark relative to other buildings in the portfolio: Benchmarking energy and water usage within your own portfolio, adjusted for square footage, can help you identify the energy and water hogs. When analyzed in conjunction with cost data, these benchmarks can help you figure out which buildings warrant attention and investment.
- Benchmark relative to buildings with similar characteristics: Benchmarking tools allow you to compare your building to buildings with similar characteristics such as building type, heating system type, climate zone, etc. WegoWise has built the leading multifamily benchmarking database of 20,000+ buildings for comparative analysis. This helps you determine how much savings potential a building has, communicate where you stand to stakeholders, and make the case to invest in improvements.
- Benchmark with Energy Star Score: The EPA has developed the Energy Star scoring system to provide numerical "ratings" for a variety of commercial and institutional building types. At this time Energy Star scores are not available for benchmarking multifamily buildings, although this may occur in the future. There are limitations to the EnergyStar scoring method, and it does not provide refined benchmarking comparisons, but it is a common standard among certain building types and some of the disclosure regulations.
3. What does a benchmark tell me?
Benchmarking within your portfolio tells you which buildings are your outliers – in other words, which buildings are likely to be the best candidates for deeper inspections and retrofits. Benchmarking tools will also allow you to determine how your building compares to the median building in its peer group as well as to "efficient" buildings (the top 25th percentile). Over time you can watch your performance change as you invest in upgrading your building. This is a fantastic way to set internal goals and rally action around improvement, which will ultimately improve your property's reputation, operating costs, and asset value.
4. Should I benchmark utility usage or cost?
Both usage and cost benchmarks have value. Energy usage intensity (typically measured in BTUs per square foot) provides an apples-to-apples performance metric. Although reducing costs may be one of your primary goals, utility cost structures will vary across buildings due to different utility supply contracts, utility zones, rate classes, and other factors. These cost differences can distort comparisons, so energy usage intensity provides a better measure of energy efficiency performance. However, total cost is an important part of the equation when determining where investments will improve your bottom line. For this reason, within your own portfolio you should benchmark both the usage intensity and the total utility cost of each building. You can then prioritize your efforts around the buildings that are both inefficient and expensive.
5. I've benchmarked my buildings. Now what?
Your energy and water benchmarks should serve as a roadmap for action. Armed with benchmarks specific to water, electricity, and fuel, you now know where your problems (aka opportunities) lie. In some instances you may be able to improve performance by having your maintenance staff investigate the problem areas and correct operational issues. You can also enlist the help of auditors and commissioning agents for targeted assessments of the specific areas that hold the most savings potential. Let the benchmarks be your guide. For example, your benchmarks may tell you that certain buildings have room for improvement on the water side (toilets, shower heads, etc.) but are stellar performers on gas usage. Other buildings may be well tuned on the water side but be prime candidates for fuel savings upgrades (insulation, windows, boiler) or electricity savings measures (lighting, etc.). Auditors will provide a thorough assessment of your options, and you can then access utility incentive funding to perform upgrades and retrofits. Once you've made improvements you can use an automated tool like WegoWise to track for future leaks and issues, and measure whether improvements are delivering the expected savings.
When it comes to tackling energy efficiency across a portfolio, your goal should be to maximize total savings while minimizing the time and cost to get from point A to point B. Benchmarking is an inexpensive starting point and a critical prioritization tool which will help you achieve just that.