Navigant Research Blog

Greek Construction Booming … In the United States

— May 19, 2015

Today’s outlook for construction in Greece is bleak. A standoff between the country’s Syriza government and its European creditors could spark a default of government debt and potentially lead to an exit from the European Union, and the Greek economy is in shambles after 6 years of recession. Furthermore, the head of one of Greece’s largest construction companies was arrested on charges of tax evasion.

Greek construction activity has fallen more than 95% from its pre-crisis peak and, in all likelihood, has little chance of rebounding any time soon. Across the Atlantic, though, Congress is considering a bill that could have a profound effect on a different type of Greek construction—the Greek-letter fraternity and sorority houses across the country.

Currently, a donation to a college or university Greek organization for housing provides a tax deduction of 30% of the donation amount (and, perhaps, a feeling of giving back). However, the Collegiate Housing and Infrastructure Act would allow donations to Greek groups to be fully tax deductible. The Fraternal Government Relations Coalition, a group representing 100 fraternities and sororities, is urging Congress to pass the bill. The group says that $1 billion in construction and renovation projects could begin if the bill is passed. Some of the buildings date to the 1930s, and some have seen few if any upgrades in the past several decades. The impact of $1 billion toward renovations on aging housing could have huge ramifications on energy consumption.

From Frat House to Green House

Improvements to the building envelope, more efficient HVAC equipment, better lighting, and, importantly, smarter controls could not only reduce operating costs but also improve the comfort of building occupants. Navigant Research’s Energy Efficiency Retrofits for Commercial and Public Buildings provides insight into the major technical and market trends related to these types of projects. Indeed at some universities, fraternities and sororities are already leading on energy improvements. The Kappa Alpha Order chapter house at the University of Maryland installed ceramic film on their windows as part of a sustainability initiative. Also, the Beta Theta Pi fraternity of University of Florida installed solar panels on the roof of its campus fraternity house. Broader Greek construction may have an impact positive enough to counteract all of that other stuff fraternities do.


What the Shaheen-Portman Bill Signals for Building Efficiency

— May 15, 2015

On April 21, the U.S. House of Representatives passed S.535, otherwise known as the Energy Efficiency Improvement Act of 2015, sponsored by the bipartisan Shaheen-Portman team. In light of the congressional standstill on climate change and comprehensive energy policy as my colleague Ben Freas has previously blogged about, does this action suggestion a sea change in energy policy? Likely not. This bill is primarily about studies and voluntary initiatives, with one important distinction: embedded in Title 3, there is an amendment to the 2007 Energy Independence and Security Act (EISA) that requires investment in energy efficiency building upgrades for all non-ENERGY STAR-rated federally leased spaces. This single element of the law holds the potential to incentivize energy efficiency investments in a large portion of the commercial building stock.

This amendment updates the High-Performance Federal Buildings section of EISA and establishes a lease contingency tied to energy efficiency. As the amendment states, “The space is renovated for all energy efficiency and conservation improvements that would be cost effective over the life of the lease, including improvements in lighting, windows, and heating, ventilation, and air conditioning systems.” In addition, the buildings must be benchmarked through the U.S. Environmental Protection Agency’s (EPA’s) ENERGY STAR Portfolio Manager.

Navigant Research published the report Energy Efficient Buildings: Global Outlook in late 2014 and presented the following snapshot on average payback periods for selected energy efficiency measures.

Payback Periods for Select Energy Efficiency Measures: 2014

Casey Blog Chart

 (Source: Navigant Research, Deutsche Bank)

Looking at that menu of retrofit options, this EISA amendment has the potential to drive substantial investment in the commercial building stock. According to the U.S. General Services Administration (GSA), the largest public real estate manager, of the 195,578,680 SF under lease in 2015, the average lease term is 11.5 years. This term suggests the efficiency retrofit clause can enable investment in a broad array of measures, including all of the examples in the figure above.

Window of Opportunity

Despite the contention of climate change and the congressional reluctance for private sector mandates, energy efficiency has proven to generate bipartisan support with the potential to influence the real estate industry. As building owners vie for federal leases, this amendment will force the issue of energy efficiency, and in the longer term, this may be an important policy driver for greater investment across the commercial building stock. If efficiency can become a competitive differentiator in real estate, there will be significant underlying climate change benefits without the hurdles that have faced congressional action.


White or Blue Debate Reveals the Science behind Sight and Lighting

— May 5, 2015

The human brain is exceptionally good at perceiving the true color of an object, regardless of the color or brightness of the light that is illuminating that object. Your mind’s eye can usually tell that the color of your scarf stays the same as you walk from a dimly lit interior room out into broad daylight—even though the actual light bouncing off that scarf and into your eye changes dramatically. That is not, however, always the case. In certain cases, the brain can be tricked into misinterpreting the light and the contextual clues that it is receiving. This was the case with the picture of a dress that recently took the Internet by storm. Viewers could not agree whether the dress was blue and black or white and gold, and the difference hinged on how each person’s brain interpreted the type of light that was shining on the dress. The best detailed explanation I have found for this phenomenon can be found at Wired.

Undesirable Byproduct

While the phenomenon of this dress is fascinating, it is a byproduct of lighting that any retail store hopes to avoid. For many years, that desire has kept retailers from using efficient fluorescent lighting; instead, they have been choosing much less efficient halogen and high-intensity discharge (HID) lighting. No shopkeeper wants a customer to purchase a sweater that looks red under fluorescent lighting, only to discover upon walking outside that it is actually orange. With the advent of LED lights, however, those stores no longer have to choose between accurate color rendering and efficiency. High-quality LEDs have color rendering indexes (CRIs) above 90, approaching the benchmark of 100 given to incandescent lights. In many ways, the light from LEDs is actually superior to that of even incandescents, allowing a lighting designer to highlight and draw out specific colors. LED manufacturers have highlighted this aspect prominently, demonstrating how sample products can look more appealing under well-designed LED lights.

Shed Some Light

Another potential benefit of LEDs in retail stores is color tuning: the ability to change the color temperature of the light produced by the LEDs from a warm yellow to a colder white or, even more dramatically, all the way from red to blue. That could allow retailers to show their customers how a handbag will look under the light of the setting sun, as well as during the glare of the midday sun or under the monochromatic light of high-pressure sodium street lights. Such a system might also be able to shed some revealing light on the Internet’s favorite dress. It would recreate the glare of natural and artificial light shining from different angles and finally allow those of us who simply can’t make our brains see anything but a white and gold dress to accept the reality that it really was blue and black.


Seeking Reliable Power, Hospitals Go Local

— April 21, 2015

A few weeks ago, Hitachi in India announced that it is working on a pilot at the All India Institute of Medical Sciences (AIIMS) hospital in New Delhi that focuses on energy efficiency. The project has three major goals: to upgrade the facilities of AIIMS, install a highly efficiency data center, and incorporate the data from the energy management system (EMS) to optimize the facility’s overall performance. This is the latest example of energy management coming to the fore in healthcare facilities. The drivers and barriers for advanced energy management in healthcare are detailed in Navigant Research’s recent report, Energy Management for Healthcare Markets.

The energy management for healthcare market expected is to grow from $949 million in 2015 to over $2 billion in 2024, driven by government regulation on one hand and corporate strategy on the other, both working to keep costs low for hospitals. According to the U.S. Energy Information Administration, energy conservation measures have been employed by hospitals at high rates, yet our research shows that the integration of these system with digital EMSs is less universal.

Surviving Disaster

Improving the energy posture of hospitals can also help them become more resilient. After events like Hurricane Katrina (when the failure of hospital power systems was citywide and catastrophic, as revealed in Sheri Fink’s devastating account, Five Days at Memorial) and Hurricane Sandy, hospitals are incorporating plans to function without utility-based power in the face of a disaster. At the simplest level, a highly energy efficient hospital running with efficient HVAC and lighting systems would need less power than an inefficient one. But the hospital’s ability to leverage onsite backup power can make the difference, literally, between life and death in a disaster.

One Wisconsin healthcare system has taken the concept of resilience to its logical extreme. Gunderson Health System has endeavored to generate its own power from a myriad of sources. This includes burning biomass from waste wood, employing dairy waste digesters, using methane captured from local landfills, and gathering power from wind turbines on farms in the area. Gunderson claims to be the first energy-independent healthcare system in the world. More significantly, the system presents itself as an example of a locally powered healthcare facility, proving that it’s integrated into the local community.

Going Micro

Unlike Gunderson, most hospitals use diesel generators for power backup. These generators are seldom-used but ready to deliver backup power when needed. And if you’ve ever been near the hospital when they’re running, you know how unpleasant they are to be around. While the price of crude oil has dropped in global markets, electricity prices have not universally fallen. The use of fossil fuel-based generators as backups poses an interesting question: If the price of gas stays low, as forecasted, will hospital facilities shift their use of petroleum generators to essentially become microgrids, to save costs?

Although most facilities are not prepared to do so at present, it’s highly likely that all new healthcare facilities will introduce more flexible backup power, to avoid more Katrinas in the future.


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