 Here are 3 reasons Why Energy Efficiency is the Best Investment that a Building Owner can make.
Energy efficiency is quickly becoming the best return on investment that a building owner can make. Here are three reasons why:
Cost Savings
One of the most obvious benefits of energy efficiency is cost savings. By reducing the amount of energy that a building consumes, owners can save a significant amount of money on utility bills. While the initial investment required to make a building more energy-efficient can be high, the long-term savings are substantial and will pay off the initial investment in no time.
Increased Property Value
In addition to cost savings, energy-efficient buildings also tend to have higher property values. This is because energy efficiency is becoming increasingly important to buyers and renters who are looking for properties that align with their environmental values. Buildings that are energy-efficient are more attractive to potential buyers and renters and may even command higher rental or sale prices. This means that the investment in energy efficiency is not only a way to save money on utilities, but it can also increase the value of the property in the long run.
Compliance with NYC Local Laws
With the oncoming NYC Local Law 97 and the existing sustainability laws such as NYC Local Law 84/133 and the NYC Local Law 87, reducing energy consumption is a necessity to comply with these laws. Local Law 97 aims to reduce the GHG Emissions in New York City and Energy Efficiency is one of the most important solution to that objective.
The Long-Term Financial Impact of Energy Efficiency
Aside from the direct savings on utility bills, energy efficiency investment delivers its returns year after year. For example, if a commercial building in NYC cuts energy use by just 20%, it can save tens of thousands of dollars each year. Over the course of 10 years, this translates to six-figure savings. Plus, many energy efficiency improvements – things like LED lights, high-efficiency HVAC systems, or smart building automation – have a pretty long lifespan. This means you will keep reaping benefits for many years after they are installed.
A 2023 report from the Urban Green Council found that buildings that joined energy-efficiency retrofit programs experienced an average 15-30% decrease in energy bills. This is where your investment is not just recouped but multiplied, particularly when you consider that in most instances, there are tax subsidies and rebates involved.
Tax Incentives and Rebates for Energy Efficiency Upgrades
New York State and federal programs have rich financial incentives for building owners who choose energy-efficient upgrades. Programs like NYSERDA (New York State Energy Research and Development Authority) offer grants, financing at below-market interest rates, and technical assistance to cover everything from a building’s envelope to the installation of solar panels. The federal Inflation Reduction Act (IRA) of 2022 establishes additional commercial building tax deductions of up to $5 per square foot.
For instance, a 100,000 sq ft commercial building in NYC could receive $500,000 worth of tax deductions by simply installing energy-efficient systems and hitting certain performance targets. These inducements can substantially lower the initial cost barrier and make energy efficiency even more financially compelling.
Enhanced Tenant Satisfaction and Retention
Energy-efficient buildings are simply more comfortable to both work and live in. Proper insulation, mild temperatures, good air quality, and good lighting all lead to better experiences of living and working in buildings. That means fewer whiney calls to deal with, more months of lease payments from tenants and less turnover; all important when it comes to keeping your cash flow stable.
Marketability and Branding in the Era of Sustainability
As ESG (Environmental, Social, and Governance) metrics take center stage in corporate values and investor scrutiny, owning an energy-efficient building becomes a powerful asset when it comes to branding and public image. Commercial tenants — particularly those in tech, finance and media — are factoring in sustainability when deciding where to work.
Future-Proofing Against Rising Energy Prices
The cost of utilities in cities such as New York is continuously increasing. Investment in energy efficiency today is a buffer against future volatility of energy markets. An example, Con Edison hiked electricity prices by around 12% in NYC in the summer of 2022. Owners with existing smart thermostats, solar panels or variable speed drives experienced much lower increases in operational costs.
Energy-efficient buildings are also better equipped to respond to future technologies and grid enhancements. An optimally designed envelope or integrated energy management system can better integrate emerging mainstream technologies such as solar energy, battery storage, or demand response technologies.
In conclusion, energy efficiency is quickly becoming the best return on investment that a building owner can make. The cost savings, increased property values, and compliance with Local Laws make it an attractive investment for any building owner looking to make a positive impact. By investing in energy efficiency, building owners can not only save money but also comply with all the Local Laws, save on fines and get better value for their money. Reach Out to us today to know more!
If you have more questions, call us at (212) 889-6566
