Energy Benchmarking: A Comprehensive Guide to Benefits, Process and Tools

March 5, 2024

In this article, we explore the concept of energy benchmarking, its benefits, and how it can help commercial property owners improve their energy efficiency. We delve into the key steps involved in energy benchmarking, discuss its impact on energy efficiency investments, and highlight the role of building analytics software in simplifying the process. Whether you're new to energy benchmarking or looking to enhance your understanding, this article will provide valuable insights to help you optimize energy consumption in your buildings.

What is energy benchmarking?

Energy benchmarking is a process of evaluating and comparing the energy performance of commercial buildings using standardized metrics. It involves measuring a building's energy consumption and comparing it to similar buildings or established energy efficiency standards. Oftentimes real-time measurement of common benchmarking metrics is performed by a building energy management system (BEMS).

The purpose of energy benchmarking is to identify opportunities for energy savings, track performance over time, and encourage energy efficiency improvements in buildings. It often involves the use of software tools and platforms to collect, analyze, and report energy data.

An example of benchmarking legally required by the UK government is the commercial EPC (Energy Performance Certificate) ratings system. All commercial buildings are required to have a score between 'A' and 'F' ensuring they all have a standardized grade showing their energy performance.

What are the benefits of benchmarking energy consumption?

Benchmarking energy consumption is a critical step in managing and improving the energy efficiency of buildings, especially in the commercial real estate sector. By comparing energy usage against established standards or similar buildings, property managers, owners, and stakeholders can gain valuable insights and make informed decisions to enhance operational efficiency, reduce environmental impact, and improve financial performance. Here are the key benefits of benchmarking energy consumption:

1. Identifies Performance Gaps

Benchmarking provides a clear picture of how a building's energy consumption compares to similar buildings or industry standards. This process helps identify performance gaps and areas where energy efficiency can be improved, guiding property managers in prioritizing investments in energy-saving measures. For example an HVAC monitoring system, a system focused solely on HVAC optimization, might pick up a faulty Air Handling Unit that is using 30% more power than intended.

2. Drives Energy Efficiency Improvements

By understanding where a building stands in terms of energy consumption, stakeholders are motivated to implement strategies to reduce energy use and carbon emissions. This could include upgrading to more energy-efficient systems, optimizing existing operations, or adopting renewable energy sources. Implementing these improvements can significantly reduce energy costs and contribute to a building's sustainability goals.

3. Enhances Financial Performance

Reducing energy consumption directly impacts the bottom line by lowering operational costs. For commercial properties, this can lead to increased net operating income (NOI) and potentially higher property values. Additionally, buildings with proven energy efficiency may attract more tenants, reduce vacancy rates, and command higher rents, further enhancing financial performance.

4. Supports Regulatory Compliance and Sustainability Reporting

Many regions have introduced regulations requiring energy benchmarking and disclosure for commercial buildings. By regularly benchmarking energy consumption, buildings not only comply with these regulations but can also highlight their energy efficiency achievements in sustainability reports, enhancing their marketability and demonstrating commitment to environmental stewardship.

5. Facilitates Goal Setting and Progress Tracking

Benchmarking sets a baseline for energy consumption, allowing property managers to set realistic and achievable energy reduction goals. Continuous benchmarking helps track progress over time, ensuring that energy efficiency strategies are effective and adjustments can be made as needed.

6. Encourages Industry Best Practices

Participating in benchmarking programs fosters a culture of continuous improvement and innovation within the commercial real estate sector. It encourages the adoption of industry best practices and technologies, leading to broader impacts on energy conservation and sustainability across the industry.

7. Improves Tenant Satisfaction and Engagement

Efficient buildings often provide a more comfortable and healthier environment for occupants. By engaging tenants in energy-saving initiatives and demonstrating a commitment to sustainability, property owners can improve tenant satisfaction, retention, and attract environmentally conscious tenants.

8. Access to Green Finance

Benchmarking energy consumption not only showcases a building's commitment to sustainability but also opens doors to green finance opportunities. Financial institutions increasingly offer favorable financing options, such as green loans or bonds, to projects that demonstrate strong environmental performance, including energy efficiency. By providing data that highlights a building's energy performance relative to peers or standards, owners can qualify for these financial products, which often come with lower interest rates or beneficial terms.

How to benchmark energy use?

Energy benchmarking involves several key steps and processes. Here's an overview of the steps energy benchmarking typically involves:

Data collection: Energy benchmarking begins with gathering relevant data on energy consumption and other building characteristics. This can include utility bills, submetering data, occupancy information, building size, and operating hours.

Data normalization: Once the data is collected, it needs to be normalized to account for variations in factors such as weather, occupancy, or operating hours. Normalization allows for fair comparisons between buildings and accounts for external factors that may influence energy consumption.

Selection of benchmarking tool: There are various benchmarking tools available, with the EPA’s ENERGY STAR Portfolio Manager being the most widely used tool in the United States.

Data analysis and comparison: The benchmarking tool or software is used to input the collected and normalized data. The tool then calculates energy performance indicators and provides a comparison of the building's energy performance against similar buildings or established benchmarks. This analysis helps identify areas where the building is underperforming or has opportunities for improvement.

Reporting and disclosure: In jurisdictions with energy benchmarking regulations, there is often a requirement to report and disclose the benchmarking results. This can involve submitting the data to regulatory agencies, making the results publicly available, or providing reports to stakeholders such as tenants, investors, or building owners.

Performance tracking and improvement: Energy benchmarking is not a one-time activity but an ongoing process. To track energy performance over time, organizations continue to collect and benchmark data periodically, enabling them to measure the impact of energy efficiency initiatives, identify trends, and make informed decisions on further improvements.

What is an energy benchmarking report?

An Energy Benchmarking Report serves as a comprehensive evaluation of a building's energy consumption compared to similar structures, offering invaluable insights into performance and opportunities for improvement.

An Energy Benchmarking Report typically encompasses several key components:

Energy Usage Data: Detailed information on the building's total energy consumption, often broken down by type (electricity, gas, water, etc.), providing a clear picture of where and how energy is used within the property.
Comparison Metrics: The report compares the building's energy performance against a set of benchmarks, which could be industry averages, historical data of the building itself, or performance metrics from buildings of similar size, type, and geographical location.
Performance Ratings: Many benchmarking tools offer ratings or scores that summarize the building's energy efficiency. These ratings can help property managers understand their building's performance at a glance and compare it against peers or standards, such as the ENERGY STAR score in the United States.
Recommendations for Improvement: Perhaps the most actionable component, this section outlines specific recommendations for energy-saving measures. These could range from simple behavioral changes to major equipment upgrades or retrofitting projects.
Financial Analysis: The report may also include a financial analysis, estimating the potential cost savings from implementing the recommended energy efficiency measures, along with payback periods and return on investment (ROI) calculations.

Does energy benchmarking lead to more energy efficiency investments?

Yes, energy benchmarking often leads to more energy efficiency investments. Here's how energy benchmarking promotes and facilitates energy efficiency investments:

Energy benchmarking provides organizations with valuable data on their energy performance, which allows them to pinpoint specific opportunities for improvement. This information serves as a catalyst for implementing energy efficiency measures. Similarly, by quantifying the energy savings and estimating the ROI from data gathered in benchmarking, commercial property owners can make a stronger case for allocating funds towards energy efficiency projects.

Property owners can then measure the impact of their energy efficiency investments by continuously benchmarking energy performance. Measuring the impact of investments provides valuable feedback and accountability, and provides motivation to invest in further energy efficiency for future savings.

Finally, many jurisdictions and utility programs offer financial incentives, grants, or financing options to encourage energy efficiency investments. Energy benchmarking is often a requirement to access these programs. By benchmarking their energy performance, organizations become eligible for these incentives and financing opportunities, making energy efficiency investments more financially feasible and attractive.

How many energy benchmarking ordinances are there in the USA?

Energy benchmarking rules are determined at both the state and local levels. A significant number of jurisdictions have implemented energy benchmarking and disclosure regulations to promote energy efficiency, such as New York’s Local Law 84 and the Los Angeles EBEWE program. To find out exactly which states and localities have energy benchmarking rules, check out our state-by-state guide to energy benchmarking ordinances.

How much does energy benchmarking cost?

The use of ENERGY STAR Portfolio Manager to benchmark energy usage and comply with energy benchmarking ordinances is completely free, providing no barriers for property owners to begin benchmarking their energy usage and implementing energy efficiency measures as soon as possible.

However, gathering energy consumption data for benchmarking purposes may involve costs, such as the installation or maintenance of energy monitoring systems, meters or submeters. Additionally, if the building does not have automated data collection systems, manual data collection through energy bills or on-site meter readings may be necessary, which can require additional labor, time and costs.

How can building analytics help owners with energy benchmarking?

Building analytics software, such as CIM’s PEAK Platform, plays a crucial role in supporting building owners with energy benchmarking by providing advanced data analysis, automation, and reporting capabilities. Here's how building analytics software can assist building owners in energy benchmarking:

Data collection and integration: Building analytics software can integrate with various data sources within a building, such as energy management systems, smart meters, and utility billing systems. It streamlines the process of data collection by automatically gathering energy consumption data and other relevant building performance metrics, eliminating the need for manual data entry.

Energy performance tracking: Building analytics software enables continuous monitoring and tracking of energy performance over time. It can generate automated reports and dashboards that display key performance metrics, trends, and comparisons. This helps building owners track the impact of energy efficiency initiatives, evaluate the effectiveness of implemented measures, and set targets for further improvements.

Fault detection and diagnostics: Advanced building analytics software employs machine learning and artificial intelligence algorithms to identify abnormal energy consumption patterns or equipment malfunctions. By flagging potential energy inefficiencies or faults, it helps building owners prioritize maintenance and optimization efforts, leading to improved energy performance.

Energy management and optimization: Building analytics software goes beyond benchmarking by offering comprehensive energy management features. It allows building owners to monitor real-time energy usage, set energy targets, track performance against goals, and implement energy-saving strategies for ongoing operational efficiency.