Using OBSEM to Drive Energy Reduction Post-Covid

The COVID-19 Pandemic caused a massive shift in how buildings and homes were utilized, occupied, and consumed energy. From the earliest work-from-home (WFH) orders that came out in March 2022, all facilities were now being utilized more (our homes) or less (our in-person offices), depending on the use type. While all sectors experienced massive shifts in occupancy and usage, few sectors experienced the same across-the-board shift in occupancy as the commercial office sector.  

Within the commercial sector, the retail office sector experienced incredible changes in occupancy due to the COVID-19 Pandemic and ensuing WFH mandates. The result was a massive decrease in occupancy within the commercial office sector. Nationally, commercial office occupancy dropped from 91% to 21%. However, energy consumption only fell 15% (Q4 2019 to Q4 2021). As the US Workforce has adjusted to a new normal that includes hybrid work, office occupancy has leveled off by around 50%. However, during and after the Pandemic, buildings often failed to decrease energy consumption commensurately with occupancy (as seen by only a 15% decrease in usage) for many reasons, including lease structure, lack of knowledge, and ventilation guidance from the industry.

With commercial buildings responsible for a significant portion of energy consumption and emissions, as much as 40%, this shift in occupancy represented a significant opportunity to reduce energy use and curb emissions due to changes in building occupancy and use. Together, these factors presented a first-of-its-kind opportunity to address occupancy within commercial buildings to drive reductions in energy consumption. As a result, Waypoint developed the Occupancy-Based Strategic Energy Management (OB SEM) Program to address this energy savings opportunity.

To do this, Waypoint built off of the core components of a traditional SEM Program and added CRE-specific factors that increase the program uptake, drive greater energy savings, and specifically address occupancy. In a post-COVID world, we must deepen SEM engagement if we hope to truly flex the potential of commercial buildings in energy management. Figure 1 below presents an overview of the OB SEM Program.

Since most in our industry are familiar with the traditional Strategic Energy Management (SEM) components, we won’t explore those. Still, we’ll look at the commercial real estate (CRE) -specific OB SEM Program components that differentiate this approach. In addition to the traditional SEM Components, the OB SEM Program includes the following:

Employ a Portfolio Approach

Look at creating portfolios of buildings owned and managed by the same entity as we do at Waypoint Energy. The advantage of utilizing a portfolio approach for enrollment is that all the portfolio’s buildings operate under the same management, decision-making, and policies. This approach provides greater consistency of decision-making and increased uptake of measures as management is bought in for the entire portfolio, which replaces the cohort.

Occupancy & Vacancy Assessment

The occupancy and vacancy assessment includes a review of the lease schedule and a lease-by-lease review of each tenant and their space occupancy. This process typically uncovers a lack of understanding by building management of how each tenant uses the space. This analysis helps inform occupancy-based operating energy conservation measures (ECMs)

Portfolio Energy Benchmarking

In addition to a building-level energy benchmark, the OB SEM Program conducts a portfolio-level benchmark to compare buildings within an ownership or management portfolio against one another. This provides multiple benefits compared to single-building benchmarking. By providing senior management a bird’s eye view of how their buildings perform compared to one another, they are more likely to participate in a utility program and direct their staff to do so. 

CRE Lever Analysis

By leveraging the single-entity nature of a portfolio, you can prioritizes buildings for engagement based not just on their energy performance (as determined during the portfolio benchmark) but also on CRE levers that affect the decision to pursue or not pursue an ECM. This allows for greater accuracy in targeting buildings implementing ECMs at their site.

Targeted Building Energy Assessment

In addition to identifying the operational and behavioral measures sought in a traditional SEM Program, you should also identifies, quantifies, and builds a business case for capital expenditure (CapEx) projects as Waypoint does in the OB SEM platform. CapEx projects can be complementary or stand-alone from operational measures. By building off the operational measures found in traditional SEM Programs and adding CapEx projects, you can drive more significant savings and maximize the value of a single customer engagement, improving cost-effectiveness.

A utility in Michigan enrolled 58 buildings representing 4.2M square feet of commercial space to date. Persistent annual energy savings for year 1 are 2.2M kWH, representing 183% of the year 1 goal – illustrating the importance of deepening engagement with building owners and finding new ways of benchmarking performance.