Economics of energy efficiency for existing buildings

A research report and a webcast empower and encourage engineers and building owners to collaborate on energy efficiency.


Engineers have long been wondering why owners would rather spend money on marble floors and gold-plated plumbing fixtures than on high-performing HVAC systems.

A research report published by Danfoss North America in October 2010 offers a few clues as to why, and a webcast hosted by Consulting-Specifying Engineer provides resources for addressing this phenomenon.

Based on one-on-one interviews of more than 50 building owners, architects, consulting engineers, contractors, and HVAC manufacturers, the research shows that owners want lowest first cost and shortest payback periods on their investments. No surprise there. But, given that many building owners are business owners or managers, why is it so hard to get them to bite on the (eventual) returns on investment?

The report states that owners perceive high performance as higher cost and higher risk. Invest in marble and it stays marble. Invest in energy efficiency, but to what end? Will the equipment work? Will staff be able to operate and maintain it? Interviewees were much less articulate about the benefits of high-performance buildings than the risks, indicating more documentation and communication of success stories and benefits needs to happen. Accordingly, education and documentation scored as highly as financial incentives for owners to invest in high-performance buildings.

Consulting-Specifying Engineer hosted a webcast on March 17, 2011, called “Economics of Energy Efficiency for Existing Buildings.” The purpose of the webcast was to create a package of educational information that addressed some of the chief findings in the study. Three presenters were:

  • Mark Hydeman, PE, FASHRAE, principal, Taylor Engineering, who provided 10 tips for saving energy in commercial HVAC and controls systems
  • Jay Enck, LEED AP, principal, CxGBS, who discussed how to make energy-efficiency fixes and upgrades persist after being installed
  • Cynthia Lucas, sales director, Engineered Tax Services, who instructed on federal energy-efficiency tax credits, utility rebates, and other financial incentives.

Hydeman’s “top 10” list of energy-saving measures encouraged engineers to specify controls and sequences of operation with greater detail, and to enforce these specifications throughout the duration of the project. He also provided detailed instruction on dynamic building control schemes, such as demand-based resets and variable flow chilled water systems.

Enck used case studies to demonstrate how the performance of efficiency fixes and upgrades will begin to drop unless engineers, owners, and operators collaborate on the development and implementation of persistence measures. Persistence measures include proper documentation and training; monitoring/trending and alarms; and giving operators authority and rewards/recognition for keeping energy performance high. 

Lucas outlined Energy Policy Act (EPAct) federal tax deductions for HVAC, lighting, and envelope improvements for existing buildings and new construction. Although the application process is intricate, tax savings can be substantial, with deductions up to $1.80/sq ft if the whole building qualifies (deductions are worth about 30% of the value of tax credits). Lucas said less than 3% of taxpayers go after the deduction and that designers of record (architects and engineers) can be eligible for the deductions stemming from public projects.

The webcast and report have practical and timely information for today’s market.

Ivanovich is the president of The Ivanovich Group LLC, which provides research, analysis, and consulting services to the buildings industry. Read his blog at

Heard on the street

View the webcast on demand at It was sponsored by Lennox, ITT RCW, and UVR Resources, and is approved by AIA for 1.5 learning units (PDHs).

Danfoss North America partnered with The Ivanovich Group and Accountability Information Network to conduct the research. The report can be downloaded online.

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