Appendix 5B: Designing 75% office-tower energy savings at the same cost as normal renovation

In 1994, Rocky Mountain Institute led an analysis of what to do with a vacant 13-story, 200,200-square-foot curtainwall office building near Chicago1. (Curtainwall means the walls are non-structural and consist of glass—either clear view glass or opaque, and in this case scarcely insulated, "spandrel" glass—all mounted on a steel frame to form the skin of the building, concealing the concrete-slab-and-steel-frame structure beneath the skin.) Occupants were rather uncomfortable in the winter, because the building's shell insulated only as well as two sheets of glass. On the coldest nights, frost could grow inside the uninsulated concrete corners. Summer comfort wasn't much better. Rebuilding the tower's entire shell would ordinarily have been quite expensive. Because it was 20 years old, it needed renovation. As often happens to buildings of that age, the seals of the glazing system were failing, causing the big glazing units to cloud up. Today's best double-glazed units have a nominal seal life of 23 years, the next-best grade 12, and in the early 1970s, they weren't even that good. Eight percent of the units had already failed, and RMI's testing disclosed that almost all the rest were likely to fail in the next six years. Some of the seals between the glass units, or between them and the aging steel framing system, were also leaking air and water.

Normally, reglazing would use the same sort of glass that was already there: double dark-bronze heat-absorbing glass, coated inside with a gray antiglare film. This combination let in only 9% of the daylight, making occupants feel cut off from their environment. A superwindow replacement was found that could let in nearly six times as much natural light, yet block unwanted heat rays one-tenth better. It would also insulate four times as well, block noise several times as well, and cost nearly the same—only an extra 78 cents per square foot of glass.

This superwindow reglazing could be combined with deep daylighting and a very efficient, daylight-dimmed lighting retrofit. That plus very efficient office equipment would decrease the internal heat gains into the space—other than from the people—by 85%. (With lighting at 0.3 W/ft2 net of control savings and plug loads 0.2 W/ft2 as-used, their internal heat gains would fall from 3.4 to only 0.5 W/ft2. These levels are well within today's best practice.) Then the calculated design-day cooling load would decrease from at least 593 to only 173 tons. (The original HVAC system still in place was sized for 750 tons, partly because the lighting system had already been retrofitted from at least 3.5 to 1.3 W/ft2. Its original power use would have added another 125 tons of cooling load, bringing the building to a calculated 718 or more tons on the design day.)

The existing 750-ton HVAC system was also 20 years old. It needed renovation, both to renew its moving parts and to replace its CFC refrigerant. The existing system used 1.9 kilowatts per ton of cooling for the whole system from the supply fans through the cooling towers, including all pumps and the chiller in between. Dropping in a normal HCFC refrigerant replacement with no other changes would probably have raised that to about 2.0 kW/t. A normal renovation of a 750-ton system would cost about $800/ton, or about $600,000. RMI suggested a replacement system that would be about four times as efficient (0.5 kW/t). It would cost 2.5 times more than the renovation ($2,000) per ton, but could also be downsized to 200 tons because the better windows, lights, daylighting, and office equipment added so much less heat. This quadrupled-efficiency but downsized retrofit would cost $200,000 less than the normal renovation, because the owner would save $200,000 more by making the new cooling system smaller than he'd pay extra to make it more efficient. That saved $200,000 could then be used to pay, almost exactly, for the slight extra cost of the superwindows, and the lighting and daylighting retrofits, that made this downsizing possible. The more efficient office equipment would cost the same or less; it would merely require more careful shopping.

On this basis, RMI and its consultants predicted that the annual energy bill would fall by $1.10 per square foot per year—a 75% reduction—compared to the standard renovation. (The DOE-2 simulation also showed a 76% peak-demand reduction and at least a 72% electric energy saving.) That saving would be at least ten times the competitive rent difference in the local market. Compared with the standard renovation then being planned, the fourfold energy efficiency improvement would pay for itself in between minus five and plus nine months—with far better amenity, esthetics, and rentability. The negative payback—i.e., the efficiency-quadrupling retrofit would cost less than normal renovation—assumed reuse of the old curtainwall framing system, while the nine-month positive payback assumed its replacement.

The building owner chose not to do it—not because the owner was unsophisticated; it was the nation's largest fiduciary owner of commercial real estate. But there were some real-world barriers. The property was controlled by a local leasing agent incentivized on dealflow. The agent was anxious to lease up the property and collect the leasing commissions immediately, without waiting for a retrofit. This project was also a few years too early to have readymade, drop-in solutions to such issues as needing a "lease rider" for fairly sharing the savings between landlord and tenants so they'd both have an incentive to achieve them, or having effective ways to influence the tenants to adopt efficient lighting, air-handling-and office equipment as they finished out their leased spaces. Mainly for these nontechnical and noneconomic reasons, the property manager proceeded with a conventionally inefficient renovation and the building did not lease up. The whole building eventually had to be sold to a bottom-feeder at a distressed price. From RMI's perspective this was a successful failure—as instructive about market failures, and what it takes to overcome them, as about technology. RMI's normal response would be to work with the competitor across the street until the original owner got the idea.

1 Lovins, A.B. 1995: "The Super-Efficient Passive Building Frontier," condensation of Centenary address, ASHRAE J. 37(6):79-81, June, Rocky Mountain Institute Publication #E95-28.

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