Magazine article Journal of Property Management

Power Surge: Fueling Your Bottom Line with Energy Efficiencies

Magazine article Journal of Property Management

Power Surge: Fueling Your Bottom Line with Energy Efficiencies

Article excerpt

Nearly 90 percent of the estimated five million commercial buildings in the United States are more than 15 years old. Consequently, during construction of these buildings, builders could not take advantage of the energy-efficient technologies now standard.

Today, builders, owners and property managers are paying close attention to the kind of value they can obtain by implementing energy-efficient strategies. They're considering everything from water conservation and wind energy to electrical product upgrades and solar panels. The Hines organization is one real estate firm committed to conserving energy in its owned and managed office buildings. Recently, it was recognized by Energy Star [R] for outstanding energy conservation in nine of its Houston-based office buildings and 33 properties in 18 other cities.

"When the Hines organization committed itself to energy conservation, we immediately set out to be a leader," said Jeffrey C. Hines, president of Hines.

Companies like Hines are recognizing that specific strategies must be developed and implemented to combat the growing demand for energy. According to the Energy Information Agency's Annual Outlook for 2002, higher demand for energy and increased production will characterize the United States' future.

The report predicts continued growth in electricity use through 2020. Growth rates are expected to reach 1.7 percent per year in the residential sector. In the commercial and industrial sectors, annual growth rates should reach 2.3 percent and 1.4 percent, respectively, between 2000 and 2020.

Water Conservation

However, electricity isn't the only energy resource at issue. For many owners and managers of residential properties, water conservation has become a top priority. In order to encourage residents to use less water, an increasing number of owners are implementing water billing programs.

Robert Sherman, president of National Water and Power, noted that water usage programs can result in substantial savings. He estimated water consumption is reduced by 5 percent when using the Resident Utility Billing System (RUBS) method, while the sub-metering of individual residential units results in water usage reduction of between 20 and 30 percent.

"Water costs have nearly doubled in the last ten years, Sherman explained. "As the population increases, we need to conserve the water we have and place less pressure on our current water facilities."

Property managers and owners have begun to track increases in water costs and surges of use. "They're checking for leaks under the pool or around the building as they become aware that these are costs that can be reduced or controlled," Sherman said.

Given this emphasis on energy conservation, apartment renters are becoming more accepting of resident-based water billing systems. Sherman noted that "more than 2.5 million apartment units are involved in passing costs on to the resident separately from rent. Billing formulas based on square footage or unit occupancy are more equitable to the resident. Sub-metering allows renters to pay only for their portion of water usage.

In addition to water, energy experts are also pointing to alternative resources such as solar and wind energy. Thanks to rising natural gas prices, there is increasing demand for wind energy. The cost of energy from larger electrical output wind turbines used in utility-interconnected or wind farm applications has dropped from more than $1 per kilowatt-hour (kWh) in 1978 to less than $0.05 per kWh in 1998. Prices are projected to plummet to $0.025 per kWh when new large wind plants come online this year. In the past five years, the hardware costs of these wind turbines have dropped below $800 per installed kilowatt, under pricing the capital costs of almost every other type of power plant.

Examining Energy Efficiencies

Whatever the source of energy, one fact remains. …

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