Commercial Building Asset Rating Program Focused CREEA Stakeholder Webinar (text version)

The Pacific Northwest National Laboratory (PNNL) held a Webinar discussing the U.S. Department of Energy's (DOE) Commercial Building Asset Rating Program. Cody Taylor, who works on commercial building energy-efficiency policy at DOE and is managing the development of the program, discussed DOE's recent Request for Information to solicit input on key issues associated with the program's development. This Webinar was recommended for Commercial Real Estate Energy Alliance (CREEA) members.

Below is the text version of the Webinar titled "Commercial Building Asset Rating Program Focused Stakeholder Webinar," originally presented on September 1, 2011. In addition to this text version of the audio, you can view the presentation slides and a recording of the Webinar (WMV 7.7 MB).

Nora Wang:
Hi. This is DOE's Commercial Building Asset Rating Webinar. We're loading the slides now and we'll also give a couple more minutes for people to call in. So the Webinar will start soon. Thanks for your patience.

This is the DOE Commercial Building Asset Rating Webinar. We'll start our Webinar in a couple of minutes. Thanks for your patience.

Unidentified attendee:
(Unintelligible)

Nora Wang:
Welcome everyone. I'm Nora Wang with Pacific Northwest National Lab. I'm glad you could join us for our Webinar today about the Department of Energy's Commercial Building Asset Rating.

Today's Webinar will include a more in-depth discussion of the asset rating program. Through this Webinar, we hope to facilitate a review of the RFI and to address the specific interests and questions you may have as a building owner or investor. I'm very happy to have as our speaker today Cody Taylor. Cody works on commercial building energy-efficiency policy at the U.S. Department of Energy and is managing the development of the Commercial Building Asset Rating Program.

Before we begin, I have a few logistical announcements. First, the phone line is not in broadcast mode today, which means you can make comments and ask questions over the phone. Please mute your phones when you are not actually talking. If you don't have a mute button on your phone, you can use star, 6 to mute your phone.

If you press star, 6 again, your phone will be unmuted. Please do not put a call on hold. If your phone is on hold, everyone will have to listen to your hold music. This is very important. Thanks for your cooperation. I would also like to remind you that today's Webinar is recorded. Please also speak your name first before you ask a question or make a comment. Now I would like to turn the call over to Cody. Cody, please begin.

Cody Taylor:
Thanks Nora, and thank you everyone for joining today. I'm Cody Taylor. As Nora mentioned, I work on commercial building efficiency policy at DOE, and I appreciate you joining today.

The purpose here today while there are slides is to have this be pretty conversational. So my hope is that this will be a chance for me to talk with you and understand from you a little more about what you think the right answers are to some of the big questions that we have before us, as we need to design this program.

And I hope that you have all had the chance to see the RFI that the department put out, and I encourage you to submit comments through the official process to the RFI, because those are the ones that DOE can formally consider. But I think that today will be a good chance for me to get a little more nuance on your opinion.

So I would love to start off by going around with a quick round of introductions for whoever is on the phone. So if you could please just take a turn saying your name and the organization you represent today, please go ahead.

John Scott:
Yes. John Scott with Cushman & Wakefield.

Trista Vaughan:
Trista Vaughan, Oak Ridge National Lab.

Lee Dunfee:
Lee Dunfee with Cassidy Turley.

Anne Wagner:
Anne Wagner with Pacific Northwest National Lab.

Cindy Regnier:
Cindy Regnier, Lawrence Berkeley National Lab.

Steve Baker:
Hi. Steve Baker. I'm a county assessor, Ramsey County in Minnesota.

Evan Tyroler:
Evan Tyroler, Cassidy Turley.

Cody Taylor:
Great. Is there anyone else on the line who hasn't yet introduced themselves? OK. In that case, let's go ahead and get started. So as I mentioned, I do have a few slides and we can just use these to jump start the conversation and then abandon them once we no longer need them.

And feel free to interrupt me at any point to ask questions or make comments, because that's what I want us to do today, is for me to get to hear your thoughts. And so just to start off, we can talk for a moment about the goal of the asset rating program here.

So really this is meant to be an information tool that can add some additional transparency of market so people can better understand buildings. And I realize that there are other information tools out there and that on its own, an information tool does not in fact translate into energy-efficiency increases around the country, which is what my division, the Building Technologies group, in the Department of Energy is working towards, is increasing energy efficiency.

So I know that other things have to happen besides someone simply seeing a rating or a recommendation from a tool like this. But I think that it can actually facilitate movement towards increases in energy efficiency. So the first point I just wanted to address right off the bat was the relationship to ENERGY STAR® Portfolio Manager.

So DOE and EPA both coordinate on the ENERGY STAR program at large and are coordinating on the development of this asset rating tool as well. So while DOE is taking the lead in this case and the two departments are talking, and the intention here is really to create an asset rating program that will be complementary to what we already have in the market today in the form of Portfolio Manager, and that the operational rating that you can get out of Portfolio Manager.

So I want to define what I mean by that a little bit to differentiate the two. So operational rating as you can receive it from Portfolio Manager is measuring the outcomes for a building for its energy bills. And that's useful for tracking ongoing performance over time and for comparison to peers on an outcome basis. But it doesn't really help you unpack what's going on inside the buildings that yields those outcomes.

And there are a whole stack of things that add up to that outcome, and that includes both the physical systems in the building and the occupancy and operations. So the purpose of an asset rating, as we see it, is to actually separate out the operations side so that you can look specifically at the physical infrastructure of the building by controlling for all of those operational factors.

So just to clarify a little further what I mean by that physical infrastructure part, I'm referring to the building energy systems that are actually built into the building. So it's envelope, it's cooling systems, heating, ventilation, lighting systems that are built in. All of these things are one determinant of energy outcomes.

And then there is a whole other set of things that operate on top of that that are the building's schedule, the number of occupants it has, the maintenance regime that's used, other operational characteristics and tools such as a building management system that might be in place, and the raft of unregulated plug loads that are on top of that.

And so what we're trying to do again with asset rating is use some standard assumptions for occupancy behavior, operations, all of that, and apply those standard assumptions across all buildings of a particular building type so that we can just compare them on the basis of their physical infrastructure, and then be able to offer some rating that says this building is a highly efficient building or this building is not a highly efficient building.

And our aim actually is to also be able to get down to the systems level so that someone can look at their building's rating and then dig one level deeper and see that particular systems are highly efficient or not highly efficient. So perhaps in a building the lighting system scores well and the cooling system scores well, but the heating system turns out to be highly inefficient.

And so offering that level of insight for a building owner or other building stakeholder may be something of value as a first pointer toward where the opportunities for capital improvements may be made. So this is not something that is intended as a replacement for an energy audit but may be the low-cost first step that helps direct efforts.

So I want to stop there and ask if there are any questions or comments at this point based on what I've said so far.

Lee Dunfee:
It's Lee Dunfee. I do have a question about the data that is going to be collected for input. How extensive is it, and do you think that a typical property team would be able to collect and input the data?

Cody Taylor:
That's a good question, Lee. So don't have—like most of the things that I'm going to talk about today, there is no final answer yet, which is why we're here to discuss them.

So I think that there is a tradeoff to be made in terms of data collection as to whether we dive deep and collect a lot of information about a building's characteristics, which might require some professional from the outside who is a professional energy auditor come in, vs. collecting less information about the building, which would keep the costs of using this asset rating program much lower, because then building staff themselves could collect that information.

So I recognize that that is an issue and something that we're still working to figure out where that balance point is. I'm curious about your opinion on that in terms of whether you think it's critical that it be only data points that can be collected by your typical building staff or whether it's acceptable to have a system that uses some kind of energy auditor likely to help implement it.

Lee Dunfee:
I would say if I had to throw a sentence at it that it should probably stretch a property team, meaning that it shouldn't be something that can sit at their desk and remember off the top of their head—that they may have to go dig up or meet with the design firm to help figure out.

So it would be great if it would be a little bit of a stretch for them, but they actually wouldn't have to go out and hire someone. And if they could be provided because a lot of tools like this are a little gray because the question always comes up what are they really asking for. So I think training might be a key component of the program.

But I think building team would be best and I think to stretch them a little wouldn't be a bad thing.

Cody Taylor:
Got it. That's helpful to hear. Are there other opinions on that point?

John Scott:
Yes. This is John Scott with Cushman & Wakefield, and just leveraging off that question, if we were to have to go outside and hire someone, then it's probably not in the budgetary constraints of a project to do that.

And then also back to Lee's point about training, I was wondering—I agree with him on the training and how that would be provided, whether through Webinars, and then I guess my final thought is once this information is collected, how far will it be disseminated down when it's released? And I know that may be answered later on in the presentation.

Cody Taylor:
And maybe you could help clarify for me what you mean by how far down it will be disseminated.

John Scott:
Whether you'd be able to pull buildings out. One of the concerns we have in our group obviously is whether it'll have an effect on building sale values.

So say you have buildings that are for sale and one does extremely well on this asset rating tool, and another one is not as high. Will it in the end have an effect on what the value of that building will be? So if you're able to pull each building out and compare it to each other, will it be that granular, I guess, is the question.

Cody Taylor:
So this asset rating program, similar to what you see with ENERGY STAR today, is something we envision as a voluntary program, so that in the same way that a building can choose to get a rating through ENERGY STAR Portfolio Manager and may or may not choose to share that with anyone else, or it may be required to share that with someone else if it's in a particular jurisdiction, the same would be true of this.

John Scott:
Correct.

Cody Taylor:
That this is in fact a voluntary program from the department's perspective.

John Scott:
OK. I appreciate that. In ENERGY STAR, as you know, you can get all the data, but it's aggregated, and everybody can look at that and choose to share it down to the granular level. So that was one of the questions. Thank you for answering that.

Cody Taylor:
Right. Got it. Yes, that's not something that I have an intention of making available without a building owner's doing it themselves essentially, (making that) decision.

John Scott:
Sure. Everyone's trying to protect asset value.

Cody Taylor:
Yes. For good reason.

John Scott:
Thank you.

Cody Taylor:
Certainly. And are there other comments along those lines or questions on this subject? OK. So I just wanted to mention that there are a number of potential uses that we see for this in terms of ways that it can add value along the chain for building owners and potentially other building stakeholders if owners choose to share this information.

And a lot of that may be something that you can gain by using an asset rating tool alone in order to help some of the things we've already talked about, to help direct you to where the best opportunities for investment may be within a portfolio. There are also some values that I think you may see by using an asset rating and operational rating together.

And obviously this is something that would need to be tested out once an asset rating system was available to put next to Portfolio Manager or other operational rating. But in some cases, the sum may be greater than the parts. And I think one of the things in particular that I wanted to draw attention to is the potential use of the asset rating as really a standardized method of comparison across buildings that looks just at their physical infrastructure and controls for those operational characteristics I mentioned.

Because you can have energy audits of buildings today, which go into a lot of detail but don't necessarily give you a standard view into that building's physical infrastructure. So that's something that we hope to be able to offer by this. And I'm curious if anyone on the call has thoughts about the value of that.

OK. So it's also something that we think we can provide through an asset rating tool, not only a recommendation or, pardon me, not only a rating, but also a set of recommendations that may be germane to that building and again, not a replacement for a full investment-grade energy audit because we're not intending to collect the level of detailed data that would be required for that.

But still allowing some sense, as I mentioned earlier, of someone being able to get some initial recommendations that say here is where I should focus my effort, or perhaps even this building is doing just fine and I should focus my efforts on other buildings in my portfolio if I were using an asset rating across a portfolio.

Further, when used with an operational rating, it may let you disaggregate and distinguish between some of the things that are particular to an owner, and some of the aspects that are potentially under tenant control. And thus, to help tell the difference in a way that you can't necessarily with Portfolio Manager's operational rating today between buildings' performance becoming because of tenant actions or because of owner actions in changes to the underlying asset.

Is that something that has any potential business use to anyone who is on the phone today?

Lee Dunfee:
Yes. It's Lee Dunfee. I think anything that would point us in the direction of the most advantageous improvement and sort of where they lay would—I mean, I think that's the question we all ask ourselves is why are some buildings better than others.

Is it the tenant base or how the building was constructed or the type of system? I mean, I think that comes up quite a bit in our industry. So helping weed through that would be helpful.

Cody Taylor:
Great. That's good to hear. So some of the metrics we're considering, a lot of this was in the RFI. But I think that when we think about what kind of output comes from use of an asset rating tool, that's going to include a number of different things.

And some of that may be a site energy use by fuel so that breakdown based on our analysis of the building of an estimated use for different fuels for those systems in the building. There may also be a roll-up to a source energy metric, and there could potentially be an estimated annual or monthly energy cost as a result of that based on some information about the location of the building and what the likely costs are in that area and also potential emissions metrics.

The other thing I don't mention on this page is the potential for also tracking at the building systems level. So that is metrics that would be particular to the lighting system or the cooling system or things of that nature. So across these different potential ways of communicating metrics about a building that we're considering, it's not an either/or necessarily.

We could include or not include many of these. So I'm curious to hear how these might be useful to you or if there are any that are particularly useful that we haven't been thinking about. OK. If there are no comments on metrics, we can move on to talk a little bit about rating scale. So this is something also mentioned in the RFI.

That document points out that there are a whole variety of ways to consider approaching a scale. I put two up here that I think are more likely based on my discussions with people outside the department who have thought through this a lot. One is an option to use something that is like the miles per gallon that you see in a new vehicle.

And that would be just a straight energy use intensity score, so BTUs per square foot per year kind of metric. And then there is also an option, of course, to convert that into some kind of more abstract scale of points, and this is the kind of thing you see with the ENERGY STAR Portfolio Manager tool, which is the 1 to 100 scale. And we could potentially do something of that nature with an asset rating as well.

So of the options, these or others, is there one that speaks more to you and would be a more useful business metric?

Lee Dunfee:
It's Lee again. I think kBtus are definitely a pretty common way to express it. And what would be nice is if it lined up with ENERGY STAR and used 1 to 100. It also would if you rate a building both ways, it would allow you to see how closely the scores were coming in.

Unidentified attendee:
I have a question with the scale of 1 to 100, because it's not going to be a percentile base rating where ENERGY STAR is based on a percentile base.

Cody Taylor:
Right.

Unidentified attendee:
So there might be a lot of confusion between the two.

Cody Taylor:
Yes. And that's something that I would be interested in hearing more about because I agree if it has the same appearance but has a different meaning, it seems like there is a lot of potential for confusion there. And what's your thought on that?

Unidentified attendee:
I mean other than seeing from experience and working at LEEDs and that sort of thing, and seeing the confusion that has come out for the various rating systems for LEEDs, and that sort of thing, this will be a very similar confusion factor, that's sort of like Lee just even said on the phone, he wants to compare kind of the two. But you're not going to be able to compare the two because it's two different things.

Cody Taylor:
Right. It wouldn't be a direct comparison of 80 points on this scale equals 80 points on that scale.

Unidentified attendee:
So that would be a big issue I think, especially if guys are using this for offering memorandums and selling buildings and that sort of thing. If you put as an AR rating of 75 and an ENERGY STAR rating of 75, you know, how—it's going to be a tough thing.

Cody Taylor:
And so do you think that the appropriate response to that is to stick to the ECU metric only? Or to use a different scale that is so different that it's hard to confuse?

Unidentified attendee:
Well, our kBU scale with ENERGY STAR does value the kBtu as well. And at the end of the day, that's going to mean the same thing, because they should be the same theoretically.

Cody Taylor:
Right.

Unidentified attendee:
So that's not going to work very well. And you have some other ideas in there about putting it in bins and that was interesting. It's hard. I don't know if I have any real thought on it, honestly. I understand the problem. I'm just not sure if I have a solution is the thing.

Cody Taylor:
That's a fair answer. Do other folks have opinions on this? I'm interested to hear them. OK. That's fine. Let's take a look at the user experience of the asset rating tool.

So the way we're currently envisioning it, this is something in which a user would experience it in a way that's pretty similar to the way they use Portfolio Manager today. That is, they would go to a Web portal and essentially use a form on the website to fill in a set of characteristics of the building, a set of building information.

And then they would receive back an asset rating from that as well as potentially some opportunities for improvement that were identified, and maybe a potential for what the rating could be if the building were improved in those ways. And so what I want to note in particular is that this while we're talking about the building's physical assets and that actually coming up with the rating would require some kind of analytics, whether that be a detailed energy model or something of that nature, that we'd really be trying to hide all that from the user in the sense that it would be going on behind the scenes and the user would not need to be an energy modeling expert in order to use this.

But they'd simply need to ensure that they collected the required data and could then input that and successfully receive a score. So we're trying to in that way both keep it more standardized and keep the costs lower for users. And then we're also envisioning some links to other applications, the clear first example being Portfolio Manager, so that buildings that have already been input into Portfolio Manager could be easily ported.

And you could then say, all right, well, we know the address and size and those characteristics that have already been input into Portfolio Manager. Push a button and send that to the asset rating tool, or vice versa, so that you wouldn't have to re-enter that information, and your records then, too, can be linked if you want to look at them side by side or in a comparative way.

There may also be the possibility of opening up an API to this or other ability for folks to build third-party applications that reference the asset rating tool. So one example would be, I've discussed this some with the U.S. Green Building Council, that if they chose to integrate the use of an asset rating tool into the LEED system for example.

If it became one way to calculate the points for energy efficiency in LEED new construction, then the asset rating tool could simply output, send its outputs directly to LEED online, reducing the need for someone to separately amass documentation on that and send it over to LEED. So are there any comments on this, the system arrangement here, and user experience of it?

John Scott:
This is John Scott at Cushman again. I think since it's a voluntary program to get more people involved and active, tying them together both with LEED and being able to migrate the Portfolio Manager over is critical in reduction of time spent inputting.

And I think you'll get more people involved and active if you make sure that that's happened. And your thought about having an app or opening to third parties to create apps for this information I think is very interesting and will drive some of the products. So it's just more comments.

Cody Taylor:
Great. That's helpful. Other thoughts from other folks? OK. So as I mentioned before, there is an intent here to use a centralized modeling tool that has implications we hope in reduced modeling costs for users.

That is, no requirement to go out and hire a specialized energy modeler in order to get a rating. Now there are a couple other issues when it comes to the cost and time requirements to use a system like this, and one of those is, as we mentioned earlier—I think Lee, you may have brought it up—the amount of data that is required.

And so obviously going to the higher end with more data requirements puts us with the potential to get greater accuracy in our evaluation of a building. And keeping the data inputs low keeps the costs down. So we're aiming for a sweet spot that we think is reasonable in terms of accuracy but really keeps the costs at a fairly minimal level so that this can actually have substantial market penetration.

Now the other potential impact on cost is that in order to receive an official rating, and we put this in the RFI, a possibility could be requiring signoff from some kind of credentialed professional. So you can see this in the Portfolio Manager system as it stands today with the requirement for a professional engineer signoff in order to get an ENERGY STAR-rated building that is a 75 or greater.

So we could do something similar with this, whether it be PE or opening it up to a variety of credentials. I'm curious to know what you think about that system and whether that's a good idea or imposes too much burden. What's your view on this?

John Scott:
Hi. This is John Scott with Cushman again. Just going to the model you already mentioned, Portfolio Manager, if we wanted true certification, we have to bring in someone who verifies the facts and the ratings.

Or if you want a LEED certification, and you're paying for that value as more or less an audit to show that your figures are correct, is that we feel that that's necessary for this type of component, or is this more for the ownerships of the building to understand their best investment model? I'm trying to see the value of having a certification for the information you provide here. So that's kind of what I'm struggling with.

Lee Dunfee:
This is Lee. I have a comment about that as well. It's a little bit of a struggle. I think it carries more weight if it's certified by someone, and something that I think should be considered is some very specific training on the AR tool for the credential.

Because it may be a little bit difficult to go to the market and look at credentialed folks that may be great at some things but not in the use of the AR tool or what its components are. So I think some specific training in maybe some credential issued specifically for this could be a little bit of a hump and hurdle for everyone to get over to get a few folks trained up. But it could add a lot of value to the overall program as time passes.

Cody Taylor:
That's an interesting thought. So credentialing them specific to being a trained asset rating user.

Lee Dunfee:
Yes. That's a thought.

Cody Taylor:
Yes. And what about the potential for third-party verification? Is that something of course that DOE could say that we're going to do that, for example, on some percentage of projects in there?

That has a clear impact on cost at the DOE side, and it of course, hopefully, gives you a sense that at least at the general broad level, the ratings coming out of the tool would be reasonably true, because no one wants to be audited and found to have submitted inaccurate data. But is it worth it?

Lee Dunfee:
It's Lee, and I think that it is. It's a little bit of heartburn, but I think it just adds to the credential. It's like any other credentials. The ones that are easy to get end up not carrying a whole lot of weight. But the ones that are more difficult to achieve really have a meaningful place in the market.

John Scott:
This is John again. What about an alternative of randomly auditing some of them instead of all of them having to go for certification? I'm just throwing out thoughts, too.

Cody Taylor:
Sure. And that's sort of what I was getting at if DOE were randomly auditing a percentage of or if another entity were doing audits. For example, this is an example of where DOE might make this a voluntary program or will make this a voluntary program but others might choose to require it.

So for example, if a building portfolio owner required it across a number of buildings or if a public jurisdiction required it of a number of buildings, that might be a situation where somebody else could be instituting a random audit policy on some percentage. Is that something that we should be planning for on this, in your opinion, and building in on the DOE side?

Lee Dunfee:
I think so. I mean my vote would be yes. It's Lee.

John Scott:
Yes, I agree—John.

Cody Taylor:
OK. That's interesting to hear, particularly because we need to think about the cost implications of that at DOE if we did include that kind of random audit or third-party verification on some portion of the buildings rated.

So a last issue here would be about links to other programs. We've already talked about the sum with potential links to LEED and ENERGY STAR. There is also the ASHRAE building EQ program and that, as you may know, is another asset rating program under development that ASHRAE has been thinking about for quite a while.

And it is not a finalized program yet, and it is far more in depth than what DOE is considering, that is, at least in the current version that I have seen. It requires a level of data collection about a building that is, I think, a substantially greater burden. And that is characteristic of the approach that ASHRAE is taking in trying to have a highly accurate description of the building.

But I think they may be sacrificing some cost as a result. And so with DOE trying to go in with a version that can reach wide adoption, we're trying to keep the costs down. And I'm curious, we've thought about ensuring that the two systems are compatible so that DOE's asset rating, if you were to get that and then later decide you wanted to spend the effort and money to get a full AEQ rating, perhaps having a DOE rating would put you already at step two or three of an ASHRAE process instead of starting from square one.

Does it—has anyone on the call been involved with AEQ or have an opinion on this? And are there any other programs that you have in mind that you think that an asset rating tool like this could or should be linked to or interacting with? OK. And I have no more slides to cover. I want to ask if there are any other questions or comments on anything we've talked about today related to the asset rating system.

John Scott:
This is John. I don't, but I was wondering if you can email a copy of the presentation out or is there a site I can go get it from?

Cody Taylor:
I believe we will have a copy of today's posted. Nora, can you confirm that that's true?

Nora Wang:
Yes. The presentation will be posted on CBEA's website. We'll give them a Windows Media Player file and then a transcript of the presentation.

John Scott:
OK. So will you send a link out to the attendees or not?

Nora Wang:
I think they will send out a link. I'll make sure that you get a link.

John Scott:
I'd appreciate that. I'm going to share it with other personnel just to get feedback.

Nora Wang:
Sure.

Cody Taylor:
Great. I appreciate that. So we'll make sure that you get a link to it then.

John Scott:
Thank you so much.

Cody Taylor:
So thank you all for your time today. I do encourage you to submit comments to the formal process with the RFI so that we have those on record at DOE, as that makes it helpful for us to make decisions here.

There is a cheat sheet on the schedule below about our aim for pilot testing by next spring. And then if all goes reasonably well with the pilot, translating that into a full market launch in the fall. And so I encourage you to be in touch if you have any questions or thoughts about this in the future and for now, that concludes our Webinar. Thank you for joining.

John Scott:
Thank you.

Lee Dunfee:
Thank you.

[End of audio]