Building owners don’t always have the capital to just go ahead and replace inefficient chillers or upgrade air conditioning systems to improve energy efficiency.
It’s a challenge that City of Sydney Council is addressing by arranging financing agreements with commercial
building owners.
In late July, the City of Sydney signed an Environmental Upgrade Agreement (EUA) to assist with the financing of an energy efficiency upgrade to St James’ Hall at 169-171 Phillip Street, Sydney.
An EUA is a voluntary tripartite agreement between a building owner, a finance provider and a local council to encourage building upgrades.
The $700,000 agreement will fund energy-efficient lighting, air conditioning and building management system upgrades to the building, which is owned by the Anglican Church Property Trust Diocese of Sydney on behalf of the Parish of St James.
The energy efficiency upgrade is expected to reduce base building energy use and outgoings by approximately 30 per cent. Once the EUA is paid off, the tenants and the building owner will continue to benefit from reduced utility bills.
Lord Mayor Clover Moore said EUAs help building owners take advantage of affordable, long-term financing options to install up-to-date quality technology and improve building performance.
She said many building owners are taking advantage of these innovative financing mechanisms, enabling them to improve building performance, reduce emissions, and make their buildings more energy efficient.
Under the EUA, the financier provides the building owner with funds for the upgrade, and the owner repays the loan by paying an additional charge on their rates notice, called an environmental upgrade charge. Tenants provide contributions equal to or less than the savings they make in their utility bills as a result of the works, with the building owner using the contributions to service the loan repayments.
Work on St James’ Hall will be completed next month. Because the existing building stock dwarfs the amount of building space that is added on an annual basis, retrofits are a critical pathway to greening the world’s commercial buildings.
Regulations and policy measures, technological advances, and cost reductions are all driving increased investment in energy efficiency retrofits.
According to Navigant Research, cumulative investment in commercial building energy efficiency retrofits will total US$959 billion from 2014 through 2023.
“Led by the Asia Pacific region, the global market for energy efficiency commercial building retrofits is expected to grow at more than seven per cent a year through 2023,” according to Eric Bloom, principal research analyst with Navigant Research.
“While government mandates play an important part in driving this growth, many retrofit projects are being undertaken on a voluntary basis, as corporate sustainability initiatives spread.”
The payback periods for energy efficiency retrofit projects are slowly decreasing, but they remain a critical factor for most building owners and managers.
Tolerance for longer payback periods varies both by region and by building owner category. Only 15 per cent of all energy efficiency retrofits are initiated with increased energy efficiency as the primary motivator, the firm added.
Full story in CCN's chiller feature in the September edition of the magazine.