April 9th Seattle 2030 District Efficiency Finance

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April 9th Seattle 2030 District Efficiency Finance
April 9th Seattle 2030 District Efficiency Finance Workshop
Workshop 2:
Getting Organized Internally – development of a plan for resource improvements
Moderator:
Stan Price, Putnam Price & NEEC
Panelists:
Jeff Myrter, Wright Runstad; David Brugman, Seattle University; Ian McFarland, University Mechanical;
Sarah Hall, NEEA; Perry England, MacDonald Miller
On April 9th, the Seattle 2030 District convened five leaders in building energy efficiency to share thoughts and exchange
ideas with the District’s membership on the value of getting organized to deliver energy efficiency investments, and
strategies to do so. Following a short introduction to current 2030 District building performance progress by Seattle 2030
District’s Executive Director Brian Geller illustrated in the graph below, Stan Price, Executive Director of the Northwest
Energy Efficiency Council moderated the discussion.
Seattle 2030 Performance Targets
S2030D BUILDING ENERGY PERFORMANCE
72
80
70
60
EXCELLENT
(>40% Reduc on)
GOOD
(25-40% Reduc on)
50
NEEDS WORK
(<10% Reduc on)
40
25
30
INSUFFICIENT DATA
17
20
5
10
0
# of BUILDINGS
Stan Price
We have a great panel that has prepared a lot for today and we have had a lot of internal conversations about some of the
things we want to talk about today. We also have a lot of knowledge and experience in the room, with that said we want to
organize todays session by having a really live discussion and allow you to place questions to the panel.
The panel will give a little introduction, answering why they think they have been asked to be here and the one thing they
think is a really important issue to address today.
Ian McFarland
In the energy efficiency field, because we work with these issues every day, we don't always communicate our message in
terms that are meaningful to the client. The challenges I’m working on include how do we communicate with economic
buyers, how we bring Clients into the process earlier, how do we fit their goals with ours, how do we get an investment sign
off from the person that doesn't intuitively understand the value of lighting upgrades. It’s really important to listen. Today,
I’m going to challenge us to focus on the how, not just the why and what.
Sarah Hall
My focus at NEEA is to help accelerate the practice of strategic energy management practices, within the commercial office
market. You guys, I see existing clients JSH & Wright Runstad in the room, are the early adopters. An organizational change
process is critical. I define Strategic Energy Management as a set of business practices. Thinking broadly – it’s a framework of
metrics that you are trying to promote internally, or use to direct investments. We tend to think about process related
projects, system related projects, but building, marketing, financial performance - they all interact. If we think about LEED
only, for example, we may miss financial opportunities, we may lose sight of the big picture. These decisions are complicated,
there's an array of influential factors to consider. A framework helps you to cut across the confusion.
Dave Brugman
At Seattle U, I manage utilities and energy efficiency as one component of campus-wide sustainability goals. It’s a different
culture than the commercial world, with students engaged and adding pressure to do the right thing. That being said, we still
need to make the business case to make investments. Organizationally it's taken a while to get everyone to believe in high
performance buildings [and I use “high performance” over other terms such as ‘green’ because everyone understands it].
The business case needs to sell up to people outside of technical department, so in addition to pure energy savings, I include
a calculation of reduced maintenance costs - it often exceeds the cost savings of Energy Efficiency threefold - so try to keep
it in the discussion, even if it’s soft. The next focus for Seattle U is trying to go beyond the incremental, and get energy and
carbon down at scale. We’re looking at how we make long term investments in the short term, recognizing that without
that approach, we won't get the results we need.
Perry England
Check out those 120 buildings: only 20% achieving 2030 goals, and 72 out of 120 still needing to try harder. This substantial
ratio has been a trend over last 3 years. What are we doing wrong? Energy Efficiency is fun, relevant, rewarding. It makes
buildings financially profitable, it’s better for the tenants, it keep people at work/creates job. Why is it not
understood? To be the highest performing district in the nation requires action, we need to be skewed in the excellent side
of the chart. MacDonald Miller has been actively engaged in Seattle 2030 District, and Seattle’s Community Power Works
initiative for healthcare & commercial buildings, trying to spread that fun, excitement – and significant financial incentive beyond the people that recognize the opportunity and value. It’s challenged us all. But we all have a stake in this game, and
you all have influence on decision making.
Jeff Myrter
While I’m on the property management side of Wright Runstad’s business, development and property management sides of
the business do cross paths. Back in 2008 we took on a pilot project with Betterbricks and Milepost Consulting. It was exciting
to us, motivating a formal adoption of sustainability that expresses who we are internally first – we didn’t do it for marketing
reasons, that's just a plus - it was first for us. We love pilot projects. Our LEED EB King Street Center passed with Gold. What
we realized was that in order for PM groups to have good conversations with their owners, we needed to get them involved.
We started with top down support, and we don’t have too many corporate layers with only 100 employees. What it boils
down to is each individual’s responsibility as an employee, and what that means to their job – integrated within job
descriptions. To us, sustainability is not a program, it's just what we do every day. NEEA got us organized and moving in
the right direction, and we’re pretty proud of all the accomplishments. But one size doesn’t fit all. Look at finance- we work
with a number of different property owners, REITS, smaller companies, each taking a different approach to capital
investments. It all comes down to how long an owner wants to hold a property. And it’s challenging in this region to get a
short payback. But, a large number of owners ARE interested in this topic. Increase your own credibility with your client to
get these projects financed. It all starts with the people, pulling together proposals with partners in the field to get these
things accomplished.
Stan
So, I’ve heard we’re underperforming against the goals of the 2030 District. But, we are also doing some of the best work in
the country. We’ve bright ideas, committed owners. If anyone going to figure this out – it’s going to be us. Us in this rom.
Geez, this makes so much sense – would our life be easier if owners just did what we said! But, market reality has challenged
us to think about these issues in the way that makes decisions, gets it done. Having the right stuff isn't enough. I hesitate to
channel Mitt Romney, but organizations are just like people, with idiosyncrasies and individual culture, how do we
strategically approach the opportunity we see in front of us?
Organizational Change: Organizations are like people. They have similarities, but also unique personalities. They have different
missions, values, language, and decision-making cultures. Energy management best practices are likely not fully embedded in
that organizational culture. How do you work to initiate a change management strategy within an organization to embed energy
efficiency into its culture and practices?
Finance: In almost all organizations, there are a small number of asset related decision makers. The responsibility of this group is
to ensure prudent and productive investment decisions that fulfill the mission critical responsibility of the organization. These
asset decision makers develop specialized language and processes to make investment related decisions. How can energy
efficiency investments be integrated into asset decision making processes that provide the most favorable long-term outcomes for
energy efficiency?
Janice Bowman (Ecova): I’d love to hear how you go about integrating sustainability performance within job descriptions.
Jeff : For current and potential employees to know that sustainability is part of their performance, it needed to be
part of their requirements, and performance evaluation. It provides an opportunity to give credit for cheerleading, and
more often reinforced what we were already doing rather than introducing new. It wasn't controversial in our company,
didn't get resistance. The metrics we use aren’t that numerical, and aggregate into portfolio wide goals. Say a chief engineer,
who's really instrumental in property management, might have a goal set for an energy star rating, or overall building energy
performance. If they met it, it would impact their compensation for the year. We found more resistance from the accounting
department than we did from HR. We wanted to measure budgeted and actual consumption for energy, waste, water, etc.
Duplicate reporting was a concern, but we use quarterly results as an internal property management tool.
Perry: For the operations team at Wright Runstad, sustainability is cultural. It's an expectation that you are drive towards
sustainability, it’s a belief. When MMFS uncovers something, Wright Runstad already knows the decision making process
that needs to take place. Other organizations can be paralyzed by not knowing how to move forward and deal with this kind
of investment opportunity. Who is going to vet this idea through the organizational structure and what happens when it gets
to the decision-makers desk?
Ian: There are little things an organization can do. Take motion sensors. On paper, they are not a very good investment. But
there’s nothing more visible that says you are committed to energy efficiency, so we use them in everything we do.
Brad @Horizon House. These two questions are inextricably tied to goals strategies, mission. It has to be cultural. Seattle
2030 District needs to give people tools to build their confidence and ability to stand up to ask and prove the
investment is worthwhile. The easy stuff yes, it’s getting done. The necessary hard stuff is not being tackled, it always
comes down to dollars. We need a forum to identify what members of Seattle 2030 District can do to get those 72 buildings
on board.
Sarah : Executive buy-in towards the goal is the critical success factor to moving a project forward. Part of our strategy is
building the business case right upfront and build an executive audience. Tactics, success stories, what's moving your
leadership? Top down attention is really what you want. Otherwise you are doing a volunteer management program.
Whether for an overall portfolio or single building, which columns do you need on your business report?
Dave: With the new CFO at Seattle U, all strategic energy management plans were put on hold. However, with our short-term
approach to a long term strategy, we were able to move forward. One out-of-state retro-commissioning consultant has been
working with us annually. The savings always surpass what we expected, and demonstrated that just by tuning up to
maximize the performance of the building, the investment beat Seattle Us endowment return. Once you get the history,
it becomes the case study for the next work, and then you can't stop the momentum.
Top down, bottom up strategy required.
Duncan Griffith @NBBJ One thing we haven’t mentioned yet, is a four letter word: RISK. We tried it out in the 70s, and it
didn't work very well. So we need really good examples and facilities-based allies to overcome the resulting skepticism.
These statistics and case studies need to be activated through person to person contact, and facility involvement.
Ian: Where's the need? Where's the pain? When there’s a crisis, there’s an urgent need. Without that, there’s an
unwillingness to change for change’s sake.
Sarah: People don't like to be surprised.
Commute Seattle: We’ve been tackling psychological roadblocks on a number of fronts. We can provide editable business
plans to customize and send up the ranks. But when we say “here’s what your competitors are doing”. “No else is doing it
anymore”. It's the single most powerful thing: peer pressure.
Stan: Two different/complementary models in terms of breaking through:
1) Tactical – when there’s an emergency, or specific need, people are going to have to make a decision one way or
the other – it creates an opportunity zone to impact in a positive way.
2) Proactive – defining a strategic decision making process, so when that opportunity is created, we have a system to
make the decision.
Dave: Yes, we use both. Together with utility incentives, the business case can be made every time for immediate needs. By
2035 the campus is planning to double its footprint, and energy consumption needs to stay flat. We’re looking at heat
recovery, solar thermal, etc. With only a small incremental cost we can lay a lot of piping now to create a roof system that
provides for future use. If you're planning ahead, only incremental investments required to be new technology-ready.
Jeff: Timing is really critical with building owners. When you are prepared and a crisis comes along you can work that to
your advantage. Know your owner, if you’re lucky they are a long term property holder. Hardest is those that resell in 5
years. Only if it guarantees increase in sales value will it be adopted. Getting tenants on board to demand it from the owners
is also effective.
Perry: Absentee landlords...lots of real estate changing hands in the next few years, international investors, REITs, no
emotional stake in the community. What’s the strategic planning for that investor? Behooves the local asset manager to be
prepared, understand the dynamics of energy efficiency financing. What is the holding criteria/timeline for the property?
Jeff: EE pays for itself, but it does take time. The excitement can be big, but during the time taken to get approved,
excitement diminishes, things move on. New budget cycles come along.
Ian : We can create and provide time savings
Perry: I’ll buy you lunch and pay you to eat it :)
Stan: Sarah and Brian, your role is to diffuse common practice in the marketplace, any reflections?
Sarah: Betterbricks.com website pretty stimulating and useful. I’d echo the value of full organizational adoption, whether it
is your organization or another one to motivate. Equip technical staff with operational resources for regular tune-ups
while working on organizational culture. This dialogue has been fantastic, but there are so many different issues you each
face, it’s tough to generalize.
Brian: This has been really wonderful and informative to 2030, bringing us back to the main purpose for being here. Despite
the digital middle finger of data chasing me down every day, We are here to make you look like heroes. Every building
owner, building manager has joined the group because they have things they want to share and problems they want to
remove.
Audience: How you get people to change. How do they leave comfort zone, the vision needs to be so compelling that it’s
worth leaving the comfort zone to go to.
Duncan Griffith @NBBJ: I love the idea of a spark that changes the priority of doing something. When the balance changes,
things can happen. And it's being ready to adapt when that moment happens. In order to be strategic, you need to be
ready for the spontaneous opportunity.
Jeff: It’s our responsibility to be ready. Build all your recommendations into your plan, (or play book in our case). Specify the
places you need to go with your property, and keep the plan in front of owners for the funding to perform the work.
Perry: EE can be fun, it is real, it can be relevant for your organization. Effective planning, stakeholders aligned, making it part
of your culture, your fabric of your organization.
David: Keep looking forward to avoid costs. New or old you are going to be spending the money down the road, show
investors the middle finger of energy savings.
Sarah: Consider the organizational process of change, how to quantify the biz case, build continuous improvement, and
identify the right players.

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