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Energy Codes Make Renovations Profitable - Retrofit Magazine

Published in Retrofit Magazine on May 10, 2013

Retrofitting and renovating existing buildings may be a costly endeavor, but these investments can deliver owners thousands in savings. How? By updating buildings to meet the most recent energy codes. Although it may be easy to see how the energy code influences updating or replacing building systems, the relevance of the energy code to renovations is less transparent.

Building owners may renovate for numerous reasons unrelated to energy use but can still increase their energy efficiency because of new code requirements and opportunities to incorporate some energy-conservation measures directly into the renovation.

Energy-code Basics

Energy codes are essentially a part of our building codes, which govern the design and construction of residential and commercial structures. Builders must comply with energy codes in the same way they comply with life, health and safety codes to ensure minimum standards of safety and quality. Buildings constructed to meet the most current model energy codes use less energy, keeping more dollars in the pockets of owners and their tenants.

Major renovations of commercial buildings are likely to trigger mandatory energy-efficiency measures under the International Energy Conservation Code (IECC) or ASHRAE Standard 90.1, the two primary building energy codes for commercial buildings. The current national model codes are the 2012 IECC and ASHRAE Standard 90.1-2010.

While communities often adopt the two codes together, they are not identical. IECC covers residential and commercial buildings; Standard 90.1 covers only commercial. However, IECC accepts demonstrating compliance with Standard 90.1 to comply with IECC commercial requirements.

Most states have the power to adopt these codes, though many also delegate that authority to local jurisdictions. Additionally, many communities adopt codes above the standards set by their state. Before starting any new project, it is important to know what code is required by the community.

The process differs from jurisdiction to jurisdiction, but in most cases codes are adopted through a legislative process, a regulatory process or some combination of both. Every state is unique in how it conducts business and creates policy, and each state requires its own particular strategy for achieving the best possible code for its local governments, citizens and businesses.

Need for Energy Codes

Commercial buildings represent a crucial piece of the energy-consumption picture. With more than 81 billion square feet of existing commercial floor space in the U.S. and nearly three-quarters of that space built before 1989, commercial buildings represent an enormous opportunity to reduce energy use through renovations and retrofits.

On average, 30 percent of the energy consumed in commercial buildings is wasted, mostly because of outdated and inefficient systems and equipment and because most have not been subject to the current (if any) energy requirements. Buildings still operating under the requirements of ASHRAE Standard 90.1-1989 consume about 45 percent more energy than those complying with Standard 90.1-2010. Proper building energy-code application offers one of the most effective ways of reducing this waste.

Every year approximately 5 billion square feet of floor space is renovated in the U.S. By 2035, renovated buildings will make up an estimated 38 percent of all U.S. buildings, and approximately 75 percent will be new (built between now and 2035) or renovated. This is a grand opportunity for energy codes to drastically improve the efficiency of buildings and cut into commercial energy waste.

The Opportunity

With such opportunity to raise the energy bar for so many buildings, it is important to ensure codes are properly applied and meet their potential. In a 2010 Washington, D.C.-based Alliance to Save Energy analysis, assuming average baseline energy intensity (energy consumption) of existing commercial floor space is 143 kBtu of source energy per square foot and the average baseline performance of a major commercial renovation is equal to minimum performance under the 2006 IECC, the potential energy savings resulting from the application of the 2012 IECC on existing commercial buildings is 14 kBtu per renovated square foot. This translates to a 10 percent reduction in energy consumption compared to that of existing commercial floor space with no energy codes applied.

Additional studies project that around 27 billion square feet of commercial floor space will be renovated between 2013 and 2030. If all this commercial floor space could meet just the 2012 IECC, annual energy savings would be more than 0.35 quadrillion Btu by 2030—the equivalent of powering 9 million U.S. homes for a year or the amount of energy generated every year by eight nuclear power plants.

Unfortunately, businesses and households commonly avoid making such energy upgrades because of the seemingly high costs. Although an initial investment is needed, it is clear the resulting profits the building owners see will be worth any risk. Even though many companies often prefer growth investments that expand production and product offerings instead of cost-savings investments, these energy
investments offer greater and more immediate returns.

The Challenge

Although buildings undergoing renovation are likely to trigger mandatory energy-efficiency provisions under the IECC and ASHRAE Standard 90.1, they are often overlooked or ignored because of low awareness about how and when to apply the codes to renovations. There are four major categories that dictate whether a project must meet an adopted energy code: additions, historic buildings, renovations or alterations, and changes in occupancy.

Although all historic buildings are exempt from meeting the code, the other three categories have stipulations that can trigger energy-code requirements.

For additions, all new work must comply with the provision of the IECC as it relates to new construction. This, however, does not require the remaining portions of the building to comply.

When an existing building undergoes renovation, alteration or repair, there are several factors that will determine the scope of how to follow the energy code. As with additions, any new construction must conform to the code. Any unaltered portion of the building does not have to comply.

With occupancy changes, building owners must pay attention to whether the change will result in an increase in demand for energy. If it does, then the building must comply with the adopted code. If the energy demands do not increase, then the change of use will not trigger new requirements.

Continued Improvement

Recent improvements in the stringency of the model energy codes—not to mention the development of the first green construction codes addressing water efficiency, materials use and project location—continue to raise the floor and ceiling for energy-efficient design to levels unimaginable just a few short years ago.

Meanwhile, the American Recovery and Reinvestment Act of 2009 provided states and communities with unprecedented levels of funding and incentives to adopt the model energy codes. The past four years have seen a tremendous surge in code adoptions and upgrades with an
increased focus on code enforcement and compliance.

Going Forward

Despite all their recent progress, energy codes are still falling well short of their potential. Some industry professionals oppose energy-code updates because they believe the additional upfront costs will price some buyers out of the market. Because it is the building owners and operators who see the back-end payback through lower utility bills, there is little incentive for builders to support
the advancement and adoption of energy codes.

Moving forward, the challenges will be to ensure adopted energy codes are applied properly throughout the design, construction and enforcement phases to capture all the potential savings in all building projects, especially renovations. By increasing energy-code awareness and knowledge among all invested parties, this will become the standard and our retrofits will meet their maximum potential.

Millions of dollars and a lot of energy are being wasted every day by buildings not performing to their potential. By enforcing code provisions where they are required and encouraging building owners to incorporate energy-saving measures in all renovations and upgrades, we can begin to realize the magnitude of substantial energy savings that will benefit not only those paying the energy bills but the country as a whole. Let’s do our part.