This is a presentation for the 2011 EUEC meeting in Phoenix. It contrasts the New York City's PlaNYC, building energy disclosure rules with the Energy Performance Certificates used in London, the UK and most of the European Union.

1. Building Ratings
Do the Europeans or Americans
Have It Right?
12th Annual
Energy, Utility and Environment Conference
EUEC 2011
Elton B. Sherwin
Sr. Managing Director
Ridgewood Capital
Palo Alto, CA
ESherwin@RidgewoodCapital.com

2. Two Illustrative Case Studies
London vs. New York

3. Why is VC Worried about
Building Ratings?
Researched the book:
•Buildings:
– Light empty rooms
– Air condition empty offices
– Heat and cool the same air
•Projects with strong ROI not done:
– Millions of offices with 30-year-old lighting
– Millions of wasteful pumps
– Millions of inefficient motors

4. Building Inefficiency
Destroys Jobs
Destroys Wealth
Prevents me from investing in interesting start-ups.

5. Could
Labels, Ratings
and Disclosure
Motivate Change?
D+ C+
B- D- C+
D-
D- C+ B-
D- B A-
Houston skyline, grades for illustration only, not based on real measurements

6. “If other property managers start
to put “A” and “B” energy grades
on their best buildings,
I will have to do it.”
Silicon Valley Property Manger

7. Analyzed 16 Systems
EU Energy Performance Certificates
UK Display Energy Certificates
LEED – New Construction
LEED – Health Care
ENERGY STAR – Commercial buildings
ENERGY STAR homes
PlaNYC (New York City)
Australia’s Greenhouse Rating
HERS
ASHRE EQ
CALGreen level 2
California AB 1103
California AB 758
DOE home energy scoring pilot
Passive Home Certification
City of Seattle
OPOWER

8. Focus on Existing Building Ratings
Two broad categories
Computer Models Utility Data
Asset Rating Operational Rating
EU Energy Performance Certificates
LEED – New Construction
LEED – Health Care ENERGY STAR – Commercial buildings
ENERGY STAR homes PlaNYC (New York City)
HERS Australia’s Greenhouse Rating
ASHRE EQ ASHRE EQ
CALGreen level 2 California AB 1103
DOE home energy scoring pilot City of Seattle
Passive Home Certification OPOWER
California AB 758

9. London New York City
Computer Models Utility Data
Asset Rating Operational Rating
EU Energy Performance Certificates
LEED – New Construction
LEED – Health Care ENERGY STAR – Commercial buildings
ENERGY STAR homes PlaNYC (New York City)
HERS Australia’s Greenhouse Rating
ASHRE EQ ASHRE EQ
CALGreen level 2 California AB 1103
DOE home energy scoring pilot City of Seattle
Passive Home Certification OPOWER
California AB 758

10. London New York City
vs.
Computer Model Utility Data
EU Energy Performance ENERGY STAR – Commercial
Certificates buildings
PlaNYC

11. UK System
Energy Performance Certificates

12. UK Label
Energy Performance
Certificate
• Valid for 10 years
– Commercial
– Residential

13. Seems Useful

14. You Are a D today
Best You Will Ever Be Is a C

15. You Are a G today
Best You Will Ever Be Is a F

16. Numbers Are
Not Right
• Looks real
• Numbers made up

17. Model
Generated
Inputs are
inadequate and
models are
inaccurate

18. European Union
Energy Performance Certificates
“The projections are very inaccurate.”
Dutch Researcher

19. Fantasy Football
• Looks real
• Actual energy
consumption not
used in calculation
• Utility data is not
used

20. Can employees,
renters or family
members do
anything to
improve their
grades?
No

21. UK Energy System
“Next to useless.”
Jeff Howell, The Telegraph
“All old buildings do poorly. Don’t worry
about it. Everyone just ignores it.”
London Estate Agent (Realtor)

22. Would Better Computer Models
Help?
Let’s Look at a Case Using Much
Better Models

23. I Believe in Computer Models
• Ridgewood and its portfolio companies use
simulation and modeling software
• Semiconductors
• Circuits
• Antennas
• Sensors
• 3-d seismic
• Wealth of Silicon Valley is based on
computer modeling

24. Problems Using Computer Models to
Predict Building Energy Consumption
First generation LEED buildings actual versus modeled
From Energy performance of LEED Buildings, NBI and USGBC
Excluding 20 worst performing buildings

25. Buildings Use More Energy Than
Modeled
First generation LEED buildings actual versus modeled
From Energy performance of LEED Buildings, NBI and USGBC
Excluding 20 worst performing buildings

26. Architect, Owner or Employees
Performed Better Than Modeled
First generation LEED buildings actual versus modeled
From Energy performance of LEED Buildings, NBI and USGBC
Excluding 20 worst performing buildings

27. Computer Models Wrong on
Half of Very Best Performing Buildings
Computer models were wrong in 5 of 8
top performing buildings

28. Should Not Use Models for Rankings
Models Reverse Reality
C- student gets an A
B student gets a D
Which is worse?
First generation LEED buildings actual versus modeled
From Energy performance of LEED Buildings, NBI and USGBC
Excluding 20 worst performing buildings

29. Model Before You Build
Measure After You Build
Semiconductors
Circuits
Antennas
Sensors
3-D seismic
and Buildings

30. New York City’s New Rules
PlaNYC

31. PlaNYC: Uses Real Data
Scores:
• Energy Use Intensity, EUI*
– kWh/ sq. foot
– Data from the utility bill
• ENERGY STAR score
– Data from the utility
– Zero to 100 score (100 high)
– Compares similar buildings
• Offices to offices, hospitals to hospitals, etc.
*Source energy from the DOE’s Portfolio Manager

32. PlaNYC
Public Disclosure
• City-owned buildings first
• Followed by:
– Large commercial
– Small commercial
– Multi-family residences*
• Public disclosure on Internet
– On the tax assessor’s And
website
– Updated annually EUI
* EUI only

33. PlaNYC
New York’s Powerful Strategy
• Public disclosure
• Actual energy used
– Captures everything:
• Architect
• HVAC contractor And
• Building manager
•
•
Employee behavior
Plug loads
EUI

34. Analysis of Effectiveness
Rating Existing Buildings to Lower Energy Consumption
Data
Somewhat Effective Most Effective
2 1
3 4
Mixed, Probably
Undocumented Counterproductive
Model
Private Public

35. Analysis of Effectiveness
Rating Existing Buildings
Data
City of Seattle
PlaNYC (New York City)
ENERGY STAR
Commercial California
AB 1103
OPOWER
2 1 Australia’s Greenhouse Rating
ASHRE EQ
3 4
HERS CA AB 758
LEED – NC
ENERGY STAR
homes DOE home scoring pilot
EU & UK EPCs
Model
Private Public

36. New York vs. London
New York’s PlaNYC will “outperform”
• Have greater impact
• Be more cost effective
• Create more highly skilled auditors
• Create more highly skilled tradesmen
• Better market for advanced,
semiconductor-based products

37. Elton Sherwin’s
Current Projects
• Encourage cities to follow NYC model
• Encourage California to follow NYC model
– Add grades and window stickers
• Million Building Initiative
– Looking for partners/sponsors
• Open source buildings
• Smart buildings
• Genius buildings
• Large on-bill financing deployments
• Invest in cleantech startups

38. Recommendations for
Policymakers
1. Use real data
– Start with energy per sq. ft., then add
energy per occupant
2. Publicly disclose the data on the web
– Create competition and accountability
3. Assign letter grades
– Top 40%: A and B; Bottom 40%:D and D-
– Print window stickers for As and Bs
• Use pluses and minuses

39. Questions?
1. Use real data
– Start with energy per sq. ft., then add
energy per occupant
2. Publicly disclose the data on the web
– Create competition and accountability
3. Assign letter grades
– Top 40%: A and B; Bottom 40%:D and D-
– Print window stickers for As and Bs
• Use pluses and minuses
ESherwin@RidgewoodCapital.com

40. Appendix
Outtakes and provocative slides
Common technical questions

41. Good Features of the UK System
Useful
F 37, F 31 grades
Not accurate

42. Should Not Use Models to Publicly
Rank and Compare Older Buildings
• The models are not accurate enough
• The rankings are wrong

43. At Time of Sale
• Effective laws disclose:
– Actual energy consumption, or
– Energy per sq. ft. and energy per person, or
– Energy Star scores, or
– Actual energy costs
– May include an energy audit of the building
• Ineffective and counterproductive laws
– Disclose a score, grade, rating or comparison
of the whole structure based on a computer
model or checklist

44. Models Are Great for Many
Things
But not ranking and rating older
buildings

45. Best Rating Systems
1. Monthly feedback
2. Window and door stickers for the top 40%
– Public disclosure strategy
– Awards and PR for the best performers
3. Measures everything
– All employees and family members contribute
• Can start with small changes, becomes addictive.
4. EUI based
– Energy per sq. ft., energy per person
5. All existing buildings can do well affordably
– If brilliantly retrofitted by talented people
– “A” and “B” grades are within reach of all

46. Gold Standard
Energy used ÷ size of building
Energy used ÷ number of occupants

47. Questions
Technical Q&A

48. LEED for New Construction
Q: Why include LEED for
New Construction when
discussing excising
buildings?
A: LEED-NC is used by owners and
realtors as a rating of building efficiency for
the life of the building.*
*If LEED-NC were automatically converted to LEED-EB on the 1-year
anniversary of occupancy, then this would be less of an issue.

49. Empty or Crowed Buildings
Q: What about buildings that are empty,
partially occupied or crowded?
Isn’t a computer model the best way to
evaluate their efficiency?
A: No, the best way to solve occupancy
problems is to calculate energy per
occupant.
• Energy per occupant works for hotels,
hospitals, offices and homes.

50. Energy per Occupant in Homes
Q: Should homeowners be forced to
disclose how many people are living in their
home?
A: No.
You do want to enable the homeowner to see
how they score per person. If they are doing
well, then allow them to disclose their good
performance and get a window sticker.

51. Seattle vs.
New York and California
Q: Why in the quadrant analysis is Seattle
less effective than New York City, but more
effective than California?
A: New York City requires public disclosure,
Seattle does not. However Seattle requires
disclosure to city officials, which California
does not.

52. California AB 1103 vs.
California AB 758
Q: Why in the quadrant analysis is California
AB 1103 in a different, more effective
quadrant than AB 758?
A: California AB 1103 uses real data. The
regulatory details of California AB 758 are
not finalized, but it is likely to use modeled
data for existing buildings instead actual
measured data.

53. McMansions
Q: Won’t people just build larger homes to
improve their energy per square foot grade?
A: When building a new home, it is cheaper
to make the new construction energy
efficient than to make the building larger.

54. Fantasy Football?
Q: Isn’t comparing the European system to
“Fantasy Football” harsh?
A: Maybe, however:
• EPC models inaccurately forecast energy
consumption
• EPC models inaccurately rank buildings.
At least with fantasy football, players know it
is a fantasy.

55. London’s Public Buildings
Q: Doesn’t London use real data for publicly
owned buildings
A: Yes, London uses modeled data for
privately owned buildings, real data for
public buildings
• The labels look almost identical
• Creates complete confusion
• A warning to ASHRE EQ
– Mixing model grades with real data is
confusing and stifles innovation.

56. Outtakes
And provocative slides

57. Worldwide Leaders
in Disclosure
• Commercial
– New York City’s PlaNYC
• Uses Commercial Energy Star
– Australia (ABGR - NABERS)
• Multifamily
– PlaNYC
• Single family
– Australian Greenhouse Rating
• Government buildings
– Government of South Australia

58. Where Will NY Run Into Problems?
• Predictions
– Need more submeters
• Garages, restaurants and data centers will need to
be measured separately
– Need more categories
• Hotels – do their own laundry
• Hotels – send out their laundry
– Need a per person measurement

59. Missing Pieces in NY City
• Window stickers: top performing buildings
• No single family home scoring system
– Existing homes
– Tied to utility bill
– Need Energy Star residential
• Grades A to D-
– With pluses and minus
• More sophisticated tools owners/occupants

60. Carrot and the Stick
• ENERGY STAR score of 70 or above
– Exempt form various requirements
• ENERGY STAR score of 35 or less
– Require improvements
• Signage Laws
– Require disclosure of actual
energy consumption on
buildings making efficiency
or green claims

61. Measure and Disclose
• Measure real data.
– Frequent updates.
– System that every family member and every
employee can contribute to.
• Disclosure real data.

62. Fantasy vs. Reality
• Don’t confuse fantasy football scores with
real football scores
– Computer simulations are helpful
– At the end of season, the real scores matter
– Look at the score of the real game
– Disclose real scores, not simulation scores
Professionals use simulators to plan
Measure success with real scores

63. Should You Mandate Disclosure of
Modeled Data on Existing Buildings?
No.
There is something very disturbing about
laws that require public disclosure of
simulated data, when real data is available.

64. Fine Line Between
Effective and Ineffective Disclosure
• Real data always has utility bill data on top
– Kwh/sq ft.
– Kwh/person
• Simulated data uses:
– Points
– Checklists
– Equipment ratings
– Descriptions and R values, etc.

65. NYC has it right
• Use real data
– Energy Star rating
– EUI
• Disclose it on the web

66. Foundational Truth
• Model frequently, but in private
• Measure in public

67. Great Buildings
• Great architect
• Great mechanicals
• Perform well empty
• Perform well when used as designed
• Perform well when over-crowded
• Perform well when misused

68. Is This Fair?
Imagine a system that tested your child for
their IQ when they were 4 and then said:
• An IQ of 117
• Give this child a B- in math for the next 10
years.

69. Everything on the following page
is measured using energy per sq.
foot and energy per person
Most models and rating systems
miss at least 50% of these items.
Some models miss 80% of them.

70. Top Faults Causing Energy
Inefficiencies in Commercial Buildings
Building Commissioning - A Golden Opportunity for Reducing Energy Costs and Greenhouse Gas Emissions
Evan Mills, Ph.D., Lawrence Berkeley National Laboratory, 2009

71. “When performance is measured,
performance improves.
When performance is measured
and reported back,
the rate of improvement accelerates.”
Thomas S. Monson
Emphasis added

72. Contact information
Elton B. Sherwin
Sr. Managing Director
Ridgewood Capital
540 Cowper St., Suite 201
Palo Alto, CA 94301
ESherwin@RidgewoodCapital.com
www.EltonSherwin.com