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by Phoenix Energy Technologies on Feb 3, 2020
New York City started their roll out of new building energy grades on January 1st this year. Commercial buildings in the city now have to display a letter grade that corresponds to an energy rating as part of the city’s ongoing commitment to lower energy usage.
Since 2009, NYC has been gathering data on energy usage on commercial buildings as part of Local Laws 84 and 87 (LL84 & LL87). In an effort to reduce greenhouse gasses and increase efficiency, LL84 would require building owners to submit yearly data reporting energy usage and water consumption. LL87 is a companion law that would require energy efficiency reports every ten years to be able to gauge usage over time. Both laws seek to make noticeable improvements to the air quality and water consumption in one of the country’s most densely populated areas.
In a nod to transparency and informing the public, all buildings in NYC over 25,000 square feet are mandated to post their energy consumption grade in a conspicuous place. The grades will be similar to what is already used in restaurants. But what do these grades mean? The breakdown of the letter grades will be as follows:
- A – score is equal to or greater than 85;
- B – score is equal to or greater than 70 but less than 85;
- C – score is equal to or greater than 55 but less than 70;
- D – score is less than 55;
- F – for buildings that didn’t submit required benchmarking information;
- N – for buildings exempted from benchmarking or not covered by the Energy Star program.
Tenants seeking rental space for their business will now have additional data to make their decisions based on the energy rating and not just a loose monthly estimation from a real estate agent or building manager. So, the effect will be cyclical. Savvy business owners looking to get the most ROI on their office location will factor in energy costs.
This new information will encourage building owners to upgrade their energy systems to be as efficient as possible to attract discerning business owners, and the residents of the city will benefit from cleaner air and reduced water consumption.
According to the city government, these benchmarking laws are extensions of existing laws that move the city to a place of transparency and efficiency by holding building owners accountable for the rating of their real estate holdings. The energy grades, as well as efficiency scores, will be readily available to the public and be a part of the EPA’s Energy Star Portfolio Manager, which is available to building owners to track energy usage throughout their entire portfolio. It will also compare energy performance and consumption to that of similarly sized buildings in comparable climates.
NYC is taking a real stance on making its most prized asset, commercial real estate, as efficient as possible with the threat of low occupancy due to poor grades, as well as fines to buildings that do not post their scores. By holding building owners accountable to these new laws, city officials are enforcing one component of the Climate Mobilization Act, which was a complex package of laws geared to lowering greenhouse gasses by 40 percent by 2030.
Building owners will be given somewhat of a grace period till 2024 to clean up their act before receiving any fines or penalties. But the court of public opinion will be leading the charge as to what buildings are offering energy efficiency incentives to rent space in, versus which building owners are dragging their heels.
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