Affinius Capital encourages, but does not require, managers to use the calculator when developing energy efficiency project proposals, and to include the generated narrative summary in the final project recommendation package. In addition, Affinius Capital includes energy efficiency, sustainability, and retrofit assessments as part of normal underwriting when making investments in properties.
The Energy Team at Affinius Capital needed to develop a better process for evaluating and communicating the financial benefits of capital investments in energy efficiency projects. An Excel-based tool was developed to help engineers and property managers analyze and communicate the financial implications of efficiency measures in terms that resonate with the real estate decision makers approving capital projects. In collaboration with EPA, this tool was further refined to become the publicly-available Building Upgrade Value Calculator.
Users enter basic project information, including: building square footage; anticipated project cost; expected energy and cost savings; as well as information on interest rates and available rebates and incentives.
Sample screenshot of the BUVC data input page
The BUVC tool then generates a report outlining key financial metrics for the projects including: operating cost savings per square foot; return on investment (ROI); internal rate of return (IRR); net present value (NPV); potential impact on net operating income (NOI); and potential impact on asset value.
Sample screenshot of the BUVC results output page
Finally, the tool allows users to generate a letter that is automatically populated with the calculator results, allowing the user to create a high-level overview of the financial and other benefits of the proposed energy efficiency upgrade. The letter can be included in project recommendations or other communications in support of a project, and can be edited to create a tailored message.
Internally, the Affinius Capital Energy Team promotes the BUVC to property and asset managers, and regularly works with them to tailor the tool to meet specific company or investment criteria.
Externally, Affinius Capital saw the value this tool could have to justify energy efficiency projects across the greater real estate community. The partnership with EPA took the tool from its original, proprietary format to a public version hosted on the ENERGY STAR website. The EPA also improved the tool to include key financial metrics such as return on investment (ROI), internal rate of return (IRR) and net present value (NPV), as well as the ability to estimate the impact of proposed retrofits on a property’s ENERGY STAR rating. The partnership with BOMA International further raised awareness about the tool in the commercial building community. BOMA maintains a link to the calculator on its website, and information on the BUVC is included in BOMA training offerings, such as the BOMA Energy Efficiency Program (BEEP).
Thanks to perspective provided by the Building Upgrade Value Calculator, financial decision makers at Affinius Capital can better understand all of the financial and sustainability benefits of a proposed project, rather than simply looking at energy efficiency retrofits as a capital cost that will only benefit tenants via lower energy bills.
With support from the tool to get more projects approved, Affinius Capital has steadily improved its energy efficiency as measured by the following:
- Asset Level ENERGY STAR Rating
- Asset Level Energy Consumption
- Portfolio Level ENERGY STAR Rating
- Portfolio Level Energy Consumption
- Quantity of ENERGY STAR Labels
Sample building upgrade calculation
An example letter using outputs from the Building Upgrade Value Calculator.
