Anyone who has visited Washington, D.C. in the 1990s and returned recently will confirm: the city has changed. More people are moving in, and more people means more buildings, at a time when many city planners, engineers and entrepreneurs are rethinking the very concept of a building.
At a meeting of forward-thinking energy entrepreneurs in DC last week, everyone was asking the million-dollar question: how many new square feet were brought online in Washington, D.C. in the past ten years?* But a more pertinent question might be: does the new building stock even matter?
The answer, at least for most entrepreneurs, is no. And the answer is no for most of the United States as well. New construction still only accounts for about 1% of building stock. Most of the new business opportunities in buildings lie in the existing stock — making existing buildings more sustainable, more efficient and more intelligent overall.
I’ve identified three key areas where entrepreneurs and start-ups can add value and create viable ventures in the building sector.
(1) Three words: Deep Energy Retrofit (DER)
Retrofitting existing buildings for energy and water efficiency is where the bulk of market opportunity lies for sustainability-focused entrepreneurs. Utilities represent the largest non-fixed expense for DC building owners. And buildings are DC’s largest source of greenhouse gas emissions. The average U.S. household spends more than $2,200 a year on energy bills, with almost 50% of energy bills used to pay heating and cooling.
Deep energy retrofits go beyond the low-hanging fruit of switching to more efficient lighting and HVAC motors. GSA, the largest landlord in the United States, performed a DER on a 1992 IRS building that included installing 11,000 LED lights, 1MW of on-site solar and geothermal, and a parking lot solar canopy; GSA achieved a 62% reduction in energy consumption as a result.
Word of wisdom for 2016: DER entrepreneurs should focus on the building shell, otherwise known as the envelope. The success of the entire energy retrofit will depend on what is happening with the external-facing structure of the building. Think windows and the building skeleton. The Rocky Mountain Institute has assembled 7 opportunities that trigger DERs, from planned roof, window and siding replacements to refinancing at historically low interest rates. Savvy entrepreneurs can capture the DER market by addressing the envelope.
(2) Don’t Chill on Chillers
Chiller refrigerants are notoriously toxic and harmful to the environment. The search for better alternatives has engendered phase-outs and phase-ins of new products. The refrigerant phase-out story started with the complete phase out of CFCs. HCFCs (HCFC-22 and HCFC-123) were introduced as a transitional remedy towards HFCs.
But even with incremental improvements, toxic chiller refrigerants replacements, such as propane and ammonia, come with another set of problems. The start-up that figures this one out — an eco-friendly refrigerant — would have a $21 billion global market to address.
(3) Schedule the Building
Although people in the United States reportedly spend up to 90% of their time in buildings, these buildings are not all the same. They include homes, recreational spaces, and workplaces. Scheduling the building thus presents opportunities to save energy and money. Kevin Kampschroer, Chief Sustainability Officer and Director of the US GSA’s Office of Federal High-Performance Green Buildings highlighted, “One of the first things I do when speaking with building operators is ask, have you scheduled the building?”
Scheduling the building is focused on planning the schedule and associated settings of key building components. Entrepreneurs can create software and integrated systems that help schedule buildings, including slowing down systems during unoccupied hours and implementing an HVAC system at night setback schedule. NREL provides a great checklist for saving energy in commercial buildings that can be used as inspiration for scheduling buildings.
This article is based on a March 30, 2016 panel event on operating efficient buildings in the DC, Maryland, and Virginia area hosted by Potential Energy DC. The panel featured John Morrill (Energy Manager, Arlington Initiative to Rethink Energy), Kevin Kampschroer (Chief Sustainability Officer and Director of the US GSA’s Office of Federal High-Performance Green Buildings), Adam Guzzo (Policy Advisor, US Department of Energy’s Weatherization and Intergovernmental Programs Office), and Kim Pexton (Director, Paladino and Company).
*And just in case you really want to know the answer to the new building stock question: in Washington, D.C., there were 62 million new square feet of building stock added in the past ten years.