The EVE® Before Poland’s White Certificates

Warsaw 26th March 2013

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The Polish government again endorsed its intention today to introduce White Certificates  before the end of 2013. “This is a real chance for owners and operators to get their house in order to make measured energy saving, reduce CO₂ and make a significant amount of money” Says Steve Walker head of SOLIDEA Groups Advisory Service EVE®. “EVE® established clients already represent more than 10% of retail centre space in Poland all of whom are keen to reduce overheads to their retail tenants. EVE® client base is not only expanding rapidly in Retail, the Office, Hotels and Industrial sector is also looking for savings”

The introduction and proper administration of White Certification by the commercial, industrial, public and transport sectors will have as significant impact on bottom line profitability as it will on the environment and reducing CO₂. It also allows the Polish grid to raise commercial energy prices and tax those companies who waste energy; it is a great step forward for Poland.

Nothing surprising then that there is far less potential economic impact saving energy on existing buildings right now in Poland rather than installing energy producing devices. As EVE® demonstrates more energy can be saved and far less CO₂ will be produced as this approach is far less costly it will be far more popular with the majority of energy users. White Certification will require businesses to get their house in order so energy prices can rise according to market needs.

Many new buildings simply do not perform in some cases they indiacte poorer performance data than many older buildings. So far Polish energy performance legislation was related only to heat loss setting an easy target of around 100kWh/m2/year consumption limit. No performance requirements have been set so far for overall energy consumption.

There are many common design defects air tightness and inadequate solar shading for example. Without proper sun protection and shading devices, many buildings are unnecessarily wasting as much as 40% of their energy even making much of the floor plan uninhabitable or unusable much energy is wasted. A typical example of wasted energy is the mechanical air handling system under a horizontal skylight as it is usually working only to remove the heat gains even as the ancients were aware there is very little value to direct sunlight only high cost full life cycle.

How will the White Certificate Process be managed?

First step in managing the Energy Value Engineering Process [EVE®] is to sign up with a renewable energy consultant with a track record. SOLIDEA Group for example has an established energy value engineering service called EVE®. The initial survey benchmarks the premises giving an insight into the efficiency of a building in comparison to others in the same classification. This is a very valued added low cost service.

“The Book of Benchmarks” identifies many classes of building to make a comparison with these benchmarks are based on average utility energy bills month by month. The initial EVE® survey and report sets achievable targets for energy reduction and establishes the road map to total reduction and even predicts the possibility of Zero Net Energy in future.

The road map is critical to define the four steps of the EVE® process. “The commercial and public sector get the White Certificate Process very quickly” says Steve Walker “a lot of energy is being wasted and supply will not always keep pace. Someone has to pay the price, not managing energy consumption below the average benchmark will be a very high risk in future, buildings which are not able to keep pace will see lower rent demand and risk becoming off yield or even early redundancy.

How is EVE® Managed [the Energy Value Engineering Process]?

SOLIDEA Group EVE® identifies the four critical steps to low energy benchmark converting it into a program which building operators and owners can embark on to achieve their goals

EVE® Stage ONE – Getting your house in order is always the first step, for many new buildings still under warranty a building conditional survey and audit will always uncover defects and generally the warranty pays for this proving the initial contract was properly managed. The EVE® survey identifies building defects causing energy loss and the building contractor is required to go back to site and make good these defects.

Benchmarking at EVE® stage ONE gives quantities of energy loss which the building owner may or may not wish to recover in a claim against the contractor. Claims for energy loss can be open and shut cases. “EVE® team is most able to identify design and construction defects for 20% or more in stage ONE in practically all buildings however it is not always possible to make good on these defects” Says Steve Walker “EVE® team call these defects unfixables and its for this reason EVE® is very popular with buyers due diligence as unfixables are negotiated off the sale price at purchase”

EVE® Stage TWO – Monitoring and Metering industry is developing so rapidly new low cost devices enable each plant to be monitored from anywhere. Metering and monitoring need to be upgraded because if energy is not properly metered it is not properly managed. Stage two is all about information and awareness, this combined with good Meter management can save between 5% and 10% of energy costs if properly administered.

EVE® Stage THREE – Energy Saving by introducing energy saving devices, the devices can include LED lighting for example to make a great start. During EVE® at community level LED street lighting demonstrates huge cost savings. As LED produces far less heat than conventional lighting, so cooling loads are reduced. Side by side shop units with all LED demonstrate to require 25% less conditioned air than their neighbors even with simple systems, this represents a huge cost saving but will be the source of many disputes as upgrading is at the discretion of the tenant.

There are many other energy saving devices which are often overlooked, all full life cycle costs are critical. When comparing the performance of key equipment we can even start with calibrating the energy meters. Most common in Poland out dated transformers and lift motors are specified because it is the building contractor not the operator that chooses equipment, the final decision is Capital Cost not full life cycle. There are many types of electrical devices that need to be audited to see where energy use is can be reduced. Often unexpected energy saving occur and many other unforeseen costs can be reduced.

Without doubt low energy and low heat emitting devices like LED have terrific impact on energy savings but LED can prove terribly expensive if not properly value engineered there are very many advantages in engaging the right consultants and advisers.

EVE Stage FOUR – After saving as much as we can we look to offset as much of the rest of the energy as we can this. EVE® stage FOUR is offsetting all the energy to achieve Zero Net Energy status and this can be done in many ways. Waste to Energy in small gasification is the most popular solution for most commercial applications. SOLIDEA Group are developing small scale gasification such as the PowerCan® 200 it significantly reduces net electricity consumption, can provide all the heat needed and cuts all landfill costs.

Can our regular Project and Cost Consultants offer our Energy Value Engineering?

The Project Management and Inspectors used to build in the first place are definitely not the consultants to audit their own work.

What Are The Financial Benefits of White Certificates?

The financial benefits of White Certificates are simple, White Certificates are a traded commodity they are generally the same price as Green certificates because they do the same thing. The value of a white or green certificate is linked to the cost of CO₂.

But it does not stop there in achieving White Certificates the building owner operator and user embarks on an energy saving journey and one which will protect his project from the risk of rising energy. It will be the owners of high benchmarked buildings who will pick up the cost for energy price hikes in future. White Certificates are issued to protect those who are energy conservative however it paves the way to dramatically increase energy costs for those who are not conservative.

What Risks Can Be Mitigated Earning White Certificates?

The main risks with future energy costs already impacted the actual building yield for many buildings. Having White Certificates to spend means your business is efficient and your building really performs better than others in its class and not just the opinion of the Commercial Estate Agent.

How are Benchmarks Calculated?

Building are benchmarked in kWh/m2/year performance we state the consumption of electricity and gas and provide other audit statements for example 90% occupancy. This is very easy to administer because historically energy bills are issued by utilities and retrievable by authority or overseers consumption is measured by sealed meters and standard units which appear on utility bills. The performance data then for benchmarking is accurately measured and not opinion based. Official Benchmarks are set as industry standards by government but generally the data is well known to the utilities or common knowledge.

Simple audit of gross built area divided by kilo watts energy consumption per year gives the benchmark there can be anomalies because of use or attraction but these features are easy to discount. Every building is in a classification and compared like by like and side by side.

What Are The Guidelines for Benchmarks?

SOLIDEA Group EVE® program publishes a “Book of Benchmarks”, the book gives a reliable insight into the typical energy consumption of a project in any class for example a Retail Centre, an Office Tower or Office Park, Public Swimming Pools and even Railway Stations. There are two books one for facilities and one for tenants

The “Book of Benchmarks” is rather critical to tenants who are billed every month, usually for very different amounts per kWh/m2 across large roll-outs and right across Poland. Tenants with many stores need to make side by side analysis to see which stores least perform [its usually related to building operator performance] The “Book of Tenants Benchmarks” will soon be on line service where retail and office tenants can compare and negotiate costs data before and during entering into lease agreements. The “Book of Tenants Benchmarks” will better prepare landlords for tenants who upgrade to LED to achieve White Certification because they will be reducing their impact on cooling systems and looking for a discount in the very near future.

What Is A Typical Energy Benchmark and What Are The Savings?

A typical benchmark for example a standalone DIY big box retail outlet in Poland would be below 180kWh/m2/year [before EVE®] if the gross retail area is 5,000m2 this means that the building consumes approximately  900,000kWh per year.  Typical cost of energy in Poland is Euro 10c kWh so the energy bills are in the region of 90,000 Euro per year. Benchmark savings are usually targeted at 20% or more so the DIY store would hopefully make savings of 18,000 Euro per year in energy bills. DIY stores are far less complicated than most other retail and office environments and this would be a very conservative estimate after EVE® program.

How Are White Certificates Calculated?

White Certificates as rather like Green Certificates where the value of the Certificate is directly linked to the amount of CO₂ saved. Typical value of CO₂ in Poland is 1 ton of CO₂  =0.9 MWh in the case of our DIY store 900,000 kWh per year = 900MWh x 0.9 MWh = 810 tons of CO₂  production per year. Saving 20% = 162 Tons

What Are White Certificates Worth?

There is nothing agreed for Poland today but the value of White Certificates would logically be the same value as Green Certificates simply because it does the same thing it saves CO₂  and the market has a trading price for this. In the case of our 5,000m2 DIY store the value of Green Certificates in Poland is around 17 Euro so we would expect the same for White Certificates. If one ton of CO₂  saved is equal to one green/white certificate is 17 Euro x 162 tons = 2754 Euro would be the value of the White Certificates for 20% saving.

How much can we really save in White Certificates?

Large real estate owners and operators can save a lot of money a DIY chain with 25 or more stores can easily gain total combination of benefits of 20,000 Euro per store for larger chains with 25 or more stores the benefits are easily 500,000 Euro or more per year. Where EVE® costs are recoverable because of warranty 100% or more of these benefits can be taken for savings at face value.

How do White Certificates impact building performance?

There are always two sides to the story and poor performing buildings will be not be provided a rebate under the White Certification system. From experience in the Polish market SOLIDEA Group can verify many building are very poor energy performers, poor design performance, bad construction, lack of maintenance it all adds up. But it is never too late and energy savings can be engineered and that is why EVE® was invented.

Some office projects can save more than 40% of energy because of air tightness or lack of solar protection. The two a related as solar impact creates loss of air tightness through dilatation surprisingly many buildings are too well insulated and can’t keep cool.

The Polish technical dictionary lacks the word “isolation” and insulation and isolation are regularly misunderstood. For office and retail operators with more than a hundred thousand m2 of real estate savings and benefits of many millions of EURO is available through implementing EVE® and making savings not to mention mitigating risk through White Certification

What Is The Difference Between LEED, BREAAM and White Certificates?

They have almost nothing in common LEED and BREAAM is an opinion or an assessment measured by a professional against good practice [and there is nothing wrong with that] whilst White Certificates are issued against an actual energy audit and fact they are a merit for reduction in actual energy consumption under a baseline against a real life class benchmark and in real time.

Many LEED certified buildings do not have as good baselines benchmarks as some ordinary buildings, nor do they perform when tested as the LEED and BREAAM movement would have us believe. That does not mean we are negative towards these certificates as they are part of the process which gets the building built properly in the first place.

LEED and BREAAM do good work and we do not deny that LEED and BREAAM are nice to have but most developers do not aim for LEED and BREAAM to achieve energy efficient buildings. At the end of the day it is the audited energy consumption based on actual energy bills and the benchmark not the opinion which gives the design development and construction credibility

Do White Certificates Affect My Yields?

The benchmark efficiency of a building is critical to yield value because the yield is based on actual income and where less cost is passed on to the building users we find better businesses bottom line and therefore better yields. Building owners with White Certificates and with baselines lower than their class benchmark are at lower risk from discounts.

Are White Certificates Really Worth The Bother?

At the end of the day its all about society incentive for reducing CO₂ emissions and reward for those who participate. Everything was fine for as long as building tenants and users were happy to pay the extra cost of wasted energy and the building owner was not being held responsible for wasting energy; unfortunately those days are long gone. The benefit of direct financial reward under the White Certification system would seem small at face value but the risk of not being within a safe benchmark will prove a costly financial disaster for some in the near future.