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Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations (2013)

Chapter: Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements

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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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C

Consultant’s Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements

This appendix reproduces substantially (with minor reformatting) as submitted, a study prepared by Sarah Slaughter for the Committee to Evaluate Energy-Efficiency and Sustainability Standards Used by the Department of Defense for Military Construction and Repair, dated September 10, 2012. Note that in the reproduced report’s table of contents, the page numbers reflect the pagination that applies for inclusion in the current report, rather than the page numbers of the submitted report.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

 

COST EFFECTIVENESS STUDY OF VARIOUS SUSTAINABLE BUILDING
STANDARDS IN RESPONSE TO NDAA 2012
SECTION 2830 REQUIREMENTS

PREPARED BY:
Dr. Sarah Slaughter

DATE:
September 10, 2012

PURPOSE:
National Research Council
Committee to Evaluate Energy-Efficiency and Sustainability Standards Used
by the Department of Defense for Military Construction and Repair

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

TABLE OF CONTENTS

OVERVIEW

Summary of Results

Input for DOD Comprehensive Strategy

SCOPE AND BACKGROUND

Department of Defense Policy on Sustainable Facilities

Definition of Task

METHODOLOGY FOR ECONOMIC EVALUATION OF SPECIFIED RATING SYSTEMS AND STANDARDS AND DEVELOPMENT OF ANALYTICAL TOOLS

Economic Efficiency Analysis

Study Methodology for Economic Efficiency Analysis

Sensitivity Analysis on Study Period

Sensitivity Analysis on Discount Rate

Sensitivity Analysis on Factor Price Escalation

Study Methodology Using Prototype Buildings and Climate Zones

Study Methodology for Benefit and Cost Categories

Study Methodology for Data Collection for Prototype Buildings

Study Methodology for Data Collection for Standards and Ratings Systems

ASHRAE Standards Data: Building Models

LEED Data: Certified Buildings from US Green Building Council (USGBC)

Green Globes Data: Certified Buildings from Green Building Initiative (GBI)

RESULTS OF ECONOMIC EFFICIENCY EVALUATION OF SPECIFIED BUILDING STANDARDS AND RATING SYSTEMS

ASHRAE 90.1-2010—Economic Efficiency Results Across Building Types and Locations

Long-Term Cost-Benefit

Rate of Return on Investment

Payback

Summary Results for ASHRAE 90.1-2010

ASHRAE 189.1-2011—Economic Efficiency Results Across Building Types and Locations

Long-Term Cost-Benefit

Rate of Return on Investment

Payback

Summary Results for ASHRAE 189.1-2011

LEED—Economic Efficiency Results Across Building Types and Locations

Long-Term Cost-Benefit

Rate of Return on Investment

Payback

Summary Results for LEED

Green Globes—Economic Efficiency Results Across Building Types and Locations

Long-Term Cost-Benefit

Rate of Return on Investment

Payback

Summary Results for Green Globes

Summary of Results of Economic Efficiency Evaluation

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

OVERVIEW

In the NDAA 2012 Section 2830(a), Congress required the Department of Defense to submit a report that includes a cost-benefit analysis, return on investment, and long-term payback for specific building standards and rating systems (ASHRAE 189.1 and 90.1, LEED Silver, Gold, and Platinum, and other ANSI accredited standards such as Green Globes). It also required the DOD to provide a policy prescribing a comprehensive strategy for the cost-effective pursuit of design and building standards that include specific energy-efficient standards and sustainable design attributes based on those findings.

At the request of the Office of the Secretary of Defense for Installations and Environment, the National Research Council (NRC) appointed an ad hoc committee to review the literature on the state-of-the-knowledge about the economic efficiency of sustainable buildings, to evaluate a consultant-generated methodology and analysis of the economic efficiency of the specified building design standards, and to identify potential factors and approaches that the DOD should consider in developing a comprehensive strategy for its entire portfolio of facilities that includes standards for energy-efficiency and sustainable design.

This report outlines the methodology and findings by the consultant to analyze the cost-benefit, return on investment, and long-term payback for the specified building design standards and ratings systems. The second part of the study tested the applicability of the analytical tools to DOD facilities going forward, as input to the DOD comprehensive strategy.

The consultant developed and applied the methodology for this study building on existing research, methods, best practices, and tools to analyze the economic efficiency of the specified building standards and rating systems and to provide input into the development of the DOD comprehensive strategy. The methodology was developed to address robustness, validity, and replicability of the analysis of the specific building design standards and rating systems, and to ensure applicability to DOD facilities. The methodology (described in the Methodology section of this report) consists of the following elements:

1. Economic Efficiency Analysis: This study follows standard economic analysis methodologies and data collection approaches to calculate long-term cost-benefits (Present Value Net Savings), return on investment, and payback, as required in the NDAA 2012 Section 2830. The study developed an analytical approach to assess the long-term cost-benefits of alternatives for a range of scenarios that represent uncertain future conditions. This approach was applied using a set of tools developed specifically for this study to provide sensitivity analyses of the results under different scenarios, specifically for variations in the discount rate, time period, and price escalation rates for energy and water costs.

This study also utilized the NIST Building Life-Cycle Cost (BLCC) software to calculate present value net savings, (adjusted) rate of return on investment, and payback.

2. Prototype Buildings and Locations: This study established a common basis on which to calculate the long-term cost-benefits, return on investment, and payback using prototype buildings and selected locations to represent the heating and cooling loads and local factor prices that influence the economic efficiency calculations. Specifically, this study utilized the results and characteristics of two building prototype models from the Department of Energy (DOE) Pacific Northwest National Laboratory (PNNL) study that are most applicable to DOD facilities, specifically the “medium office” and “small hotel” models (corresponding to administrative buildings and barracks, respectively). This study also utilized a subset of five locations from the DOE PNNL set of 15 locations that reflect the diversity of geographic regions across the continental US to create the baseline prototype buildings.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

3. Benefit and Cost Categories: This study includes existing reporting categories for DOD under the Annual Energy Management Report to Congress and other reports for the analysis of costs and benefits for high performance buildings. The benefit-cost categories are: Investment (initial investment and major repair/replacement costs); Operations, Maintenance, and Repair (OM&R) costs, including: Energy use (building and supporting/site facilities); Water use (building and supporting/site facilities); Solid waste (municipal and hazardous); and Building/site O&M (general, cleaning, and landscaping).

The strategy for data collection addressed the issues of validity and accuracy of the results. In discussions with staff from ASHRAE, Green Building Initiative, and the US Green Building Council, the cost and benefit data for the analysis of the specified building rating systems (Green Globes and LEED) was developed using data from actual certified commercial/private projects that are similar to (and brought into conformance with) the characteristics of the selected prototype buildings (i.e., medium office and small hotel) and selected locations. The ASHRAE standards data were generated using the PNNL building models for the two prototype buildings in the selected locations.

Separately, and in parallel with the analysis of the specified standards and rating systems, the consultant worked with DOD installation, HQ, construction agent and OSD teams to test the applicability of the analytical approach, process, and tools to DOD military construction and renovation.

SUMMARY OF RESULTS

In direct response to the NDAA 2012 Section 2830, to provide a cost-benefit analysis, return on investment and long-term payback for the specified design standards, this study analyzed the (Present Value) Net Savings, (Adjusted) Rate of Return on Investment, and Payback in accordance with the Office of Management and Budget (OMB) Circular A-94 Revised (1992). These potential Net Savings can also be viewed as the potential future additional costs that may be incurred for these building types and locations under these scenarios.

The Results section of this report provides the Net Savings for the Long-Term Cost-Benefit with the sensitivity analysis, as well as the Rate of Return on Investment and Payback, for each specified standard and rating systems using the two building types (i.e., residential and office) and five locations that represent the variety of climate conditions and markets across the continental U.S. Specifically, this study analyzed the economic efficiency of buildings built under the guidance of: ASHRAE Standards 90.1-2010 and 189.1-2011; LEED Silver, Gold and Platinum Certifications; and Green Globes One, Two, Three and Four Certifications.

The results of the analysis in this study indicate that the building standards and rating systems provide buildings that are economically efficient depending on building type and location. Specifically, the Long-term Cost-Benefit analysis of ASHRAE Standard 90.1-2010 provided significant Net Savings in energy reductions for both building types and in all 5 locations. ASHRAE Standard 189.1-2011 provided greater Net Savings than 90.1-2010 across all locations for both building types in both energy and water cost reductions. In particular, the water cost reductions equaled approximately 50% of the Annual Savings across the building types and locations. ASHRAE 189.1-2011 also includes the requirement for on-site energy generation, and these incremental initial construction costs were included, and the on-site energy was used to offset the building energy used, so the overall building energy reductions were greater for 189.1-2011 than for 90.1-2010.

Buildings built under the guidance of the LEED rating system (Silver, Gold and Platinum Certification levels) and the Green Globes rating system (One, Two, Three and Four Globes certification levels) are economically efficient depending on building type and location, and are

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

highly sensitive to the incremental initial construction cost. The LEED Volume Certification program could further increase cost-effectiveness through pre-approval of standardized designs and management procedures, and coordinated procurement programs. In addition, the recent DOD guidance (2010) specifying that 40% of all points in those rating systems must be in energy and water categories will increase the economic efficiency (as measured in this study) of DOD buildings using these rating systems. It must be noted, however, that these results are highly dependent on the data provided for these data samples, particularly the reported initial construction costs.

The sensitivity analysis incorporated variations in energy and water price escalations, as well as the cost of capital (represented by the discount rate). The results indicate that Net Savings for the specified buildings standards and rating systems would increase significantly with annual price escalations of 2% for energy and 4% for water and wastewater, which has been experienced in some locations of the US. The building standards and rating systems could reduce the vulnerability of DOD installations to price shocks—and increase cost-effectiveness—by reducing the use of these resources. The sensitivity analysis results also indicate that, even if the prices for energy and water decrease and the cost of capital increases (represented by a discount rate of 3%), most facilities built under the guidance of the standards and rating systems remain economically efficient.

INPUT FOR DOD COMPREHENSIVE STRATEGY

This study recognizes that the core purpose of military construction and renovation is to provide high performance facilities that are effective and efficient. Specifically, the results of this study and the application of the analytical approach can be used to identify opportunities to improve effectiveness and efficiency, such as to reduce the resource usage (and the related burden on neighboring communities), reduce vulnerabilities to price increases, and increase overall resiliency by reducing the “baseload” resource requirements under normal and extreme conditions. The primary objective of this study is to ensure the usefulness of the analytical approach and results to aid decision-making for strategic investments in DOD capital facility assets.

The results of the economic evaluation of the building standards and rating systems presented in this report have direct applicability to the development of the DOD comprehensive strategy for cost-effective military construction and renovation. This study highlighted opportunities for cost-effective high performance buildings built under the guidance of the specified standards and rating systems for different building types, specifically for a residential facility and an office building, in both energy and water usage. It also examined the potential economic value in different locations that represent the variety of climate zones and urban/rural markets across the U.S., incorporating local factor unit prices and conditions that affect cost-efficiency. The sensitivity analysis provides insight into the variability of cost-effectiveness, in particular, potential escalation of energy and water prices and changes in the cost of money (as represented by the discount rate).

The implication of the results of the economic evaluation of the specified building standard and rating systems for the DOD comprehensive strategy for cost-effective military construction is that ASHRAE 189.1-2011 (which includes ASHRAE 90.1-2010 by reference) would likely provide economically efficient high performance military facilities. The voluntary ratings systems of LEED and Green Globes can provide important guidance for overall high performance facilities (including attributes not measured in this study) as well as third party verification, and buildings certified under these rating systems would be cost-efficient if the incremental initial investment costs are within a margin (in these samples, if the incremental initial investment cost is less than 20% of the baseline investment cost) and the annual savings are sufficient to offset that incremental cost.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

It must be noted, however, that those results are highly sensitive to the heating and cooling loads for different climate zones and to the local factor unit prices. Consideration of specific choices associated with the application of those standards for design development and implementation should be evaluated grounded in the specific local context.

The second portion of this study tested the applicability of the analytical approach, process and tools developed for this research to military construction and renovation projects going forward, as further input for the DOD comprehensive strategy. The results from example applications of the analytical approach using empirical data from actual DOD buildings were reviewed with staff from the selected installations, HQ, construction agents, and the Office of the Secretary of Defense. The exercise provided important feedback for the potential application of the economic efficiency evaluation process for DOD military and construction going forward.

In particular, the discussion raised certain challenges and opportunities associated with economic efficiency evaluations. First, the analytical approach of economic efficiency analysis would be most effectively applied across a portfolio of projects—with respect to the overall installation requirements—that increase mission effectiveness and economic efficiency. Second, the application of an economic efficiency analysis requires access to credible and verifiable data on the initial investment costs, major repair/replacement costs, and operations, maintenance and repair costs over the expected life of the facility. The DOD components, installations and construction agents are initiating specific programs to collect information on energy and sustainability performance for capital facility assets, including both the expected and actual performance of the facilities. The effective use of an economic efficiency analysis approach may require additional data collection to aid decision-making. Finally, further research is needed to determine the extent to which industry development as a whole may increase the cost-effectiveness of military construction and repair.

The Department of Defense has incorporated life cycle cost analysis into all military construction and renovation projects, and the DOD components have launched several initiatives to incorporate economic assessment into decision making for military construction and renovation. This study provides the results of the economic evaluation of the specified building standards and rating systems, and the applicability of the analytical approach, as input into the development of the DOD comprehensive strategy going forward.

SCOPE AND BACKGROUND

DEPARTMENT OF DEFENSE POLICY ON SUSTAINABLE FACILITIES

Recognizing the significant role of buildings in solving national issues such as energy independence and security, and the opportunity for federal leadership, Congress and two Presidential administrations have enacted laws and issued Executive Orders directing federal agencies to develop high-performance, energy efficient, and sustainable federal buildings. To implement these mandates, federal departments and agencies have issued policies for sustainable building design.

The Department of Defense (DOD) and its components manage more than 500,000 buildings and structures worldwide, containing more than 2.1 billion total square feet of space. The annual energy budget for these facilities is more than $4 billion. The DOD’s Sustainable Building Policy includes supplementary information (October 2010) that specifies that:

  1. All new building design and construction shall conform to the Guiding Principles in the High Performance and Sustainable Buildings Memorandum of Understanding.
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×
  1. DOD components will design, build, and certify as appropriate, all new construction projects, at a minimum, to the Silver level of the Leadership in Energy and Environmental Design (LEED) green building rating system (or equal). Beginning in FY12 for projects in the planning stage, the sum of energy and water efficiency credits shall equal or exceed 40 percent of the points required for a LEED Silver (or equal) rating; this highlights the importance of pursuing additional energy- and water-related credits in areas such as cool roofs and day lighting.
  2. All repair/renovation projects in existing buildings shall also conform to the Guiding Principles where they apply. The DOD components will design, execute and certify major repair/renovation projects to be LEED Silver, at a minimum, where appropriate.
  3. Reducing total cost of ownership is intrinsic to sustainable buildings. The DOD components shall incorporate life cycle and cost/benefit analysis into design decisions for new construction and renovation/repair projects.1

Concerns have been raised in Congress that DOD buildings conforming to this policy may not be cost effective or achieving federal mandates for energy efficiency. In response to these concerns, the National Defense Authorization Act (NDAA) for Fiscal Year 2012, Section 2830, requires the Department of Defense (DOD) to submit a report to the congressional defense committees on energy efficiency and sustainability standards used by the DOD for military construction and repair. The report must include a cost-benefit analysis, return on investment, and long-term payback for the following building design standards:

  • American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 189.1-2011 for the Design of High-Performance, Green Buildings Except Low-Rise Residential Buildings
  • ASHRAE Energy Standard 90.1-2010 for Buildings Except Low-Rise Residential
  • Leadership in Energy and Environmental Design (LEED) Silver, Gold, Platinum, and Volume Certifications
  • Other American National Standards Institute (ANSI) accredited standards, such as Green Globes.

The report must also include a copy of the DOD policy prescribing a comprehensive strategy for the pursuit of design and building standards that include specific energy-efficient standards and sustainable design attributes based on the cost-benefit analysis, return on investment, and demonstrated payback for the aforementioned building design standards.

DEFINITION OF TASK

At the request of the Office of the Secretary of Defense for Installations and Environment, an ad hoc committee was appointed by the National Research Council (NRC) to: (1) evaluate the completeness, accuracy, and relevance of a literature review that synthesizes the state-of-the-knowledge about the costs and benefits, return on investment, and long-term payback of specified design standards related to sustainable buildings; (2) evaluate a consultant-generated methodology and analysis of the cost-benefit, return on investment, and long-term payback for the specified building standards and rating systems in NDAA 2012 Section 2830, and the test for the potential applicability of the analytical approach to military construction and renovation using empirical data

_________________

1 Dorothy Robyn (2010). “Department of Defense Sustainable Buildings Policy.” Office of the Secretary of Defense, Deputy Under Secretary of Defense (Installations & Environment).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

from DOD buildings; and (3) identify potential factors and approaches that the DOD should consider in developing a comprehensive strategy for its entire portfolio of facilities that includes standards for energy-efficiency and sustainable design.

The consultant, working with the Office of the Secretary of Defense and the military components, and in conjunction with representatives of the organizations for the specified standards and rating systems organizations, developed a methodology for: 1) analyzing the cost-benefit, return on investment, and long-term payback achievable using sustainable building standards specified in the NDAA 2012 Section 2830 using an example building; and 2) gathering and analyzing empirical data from DOD buildings to evaluate the cost benefit, return on investment, and long-term payback achievable using sustainable building standards specified in the NDAA 2012 Section 2830.

The consultant then gathered and analyzed example building data to calculate the cost-benefit, return on investment, and long-term payback achievable using sustainable building standards specified in the NDAA 2012 Section 2830. The methodology for this study is described in the following section, followed by the results of the analysis for the specified building standards and rating systems.

The consultant also worked with the DOD installation, HQ, and construction agent teams to gather and analyze empirical data from selected DOD buildings to demonstrate the methodology to determine the cost-benefit, return on investment, and long-term payback achievable using the referenced sustainability standards. The final chapter provides potential factors and approaches that the DOD should consider in developing a comprehensive strategy for military construction and renovation that includes standards for energy efficiency and sustainable design.

METHODOLOGY FOR ECONOMIC EVALUATION OF SPECIFIED RATING SYSTEMS AND STANDARDS AND DEVELOPMENT OF ANALYTICAL TOOLS

The consultant developed and applied the methodology building on existing research, methods, best practices, and existing tools to analyze the economic efficiency of the specified building standards and rating systems and to provide input into the development of the DOD comprehensive strategy. The methodology was developed to address robustness, validity, and replicability of the analysis of the specific building design standards and rating systems, and to ensure applicability to DOD facilities. The methodology consists of the following elements:

1)    Economic Efficiency Analysis: This study follows standard economic analysis methodologies and data collection approaches to calculate long-term cost-benefits (Present Value Net Savings), return on investment, and payback, as required in the NDAA 2012 Section 2830. The study developed an analytical approach to assess the long-term cost-benefits of alternatives for a range of scenarios that represent uncertain future conditions. This approach was applied using a set of tools developed specifically for this study to provide sensitivity analyses of the results under different scenarios, specifically for variations in the discount rate, time period, and price escalation rates for energy and water costs. This study also utilized the NIST Building Life-Cycle Cost (BLCC) software to calculate present value net savings, (adjusted) rate of return on investment, and payback.

2)    Prototype Buildings and Locations: This study established a common basis on which to calculate the long-term cost-benefits, return on investment, and payback using prototype buildings and selected locations to represent the heating and cooling loads and local factor prices that influence the economic efficiency calculations. Specifically,

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

this study utilized the results and characteristics of two building prototype models from the Department of Energy (DOE) Pacific Northwest National Laboratory (PNNL) study that are most applicable to DOD facilities, specifically the “medium office” and “small hotel” models (i.e., corresponding to administrative buildings and barracks, respectively). This study also utilized a subset of five locations from the DOE PNNL set of 15 locations that reflect the diversity of geographic regions across the continental US to create the baseline prototype buildings.

3)    Benefit and Cost Categories: This study includes existing reporting categories for DOD under the Annual Energy Management Report to Congress and other reports for the analysis of costs and benefits for high performance buildings. The benefit-cost categories are:

a.   Investment (initial investment and major repair/replacement costs;

b.   Operations, Maintenance, and Repair (OM&R) costs, including:

i.   Energy use (facility and supporting/site facilities);

ii.  Water use (facility and supporting/site facilities);

iii. Solid waste (municipal and hazardous); and

iv. Building/site O&M (general, cleaning, and landscaping).

The strategy for data collection addressed the issues of validity and accuracy of the results. In discussions with staff from ASHRAE, the Green Building Initiative, and the US Green Building Council, the data for the analysis of the specified building rating systems (Green Globes and LEED) were provided based on actual certified commercial/private projects that are similar to (and brought into conformance with) the characteristics of the selected prototype buildings (i.e., medium office and small hotel) and locations. In discussions with the staff from ASHRAE, the data for the analysis of the specific building standards were generated using the PNNL building models for the two prototype buildings in the selected locations.

ECONOMIC EFFICIENCY ANALYSIS

This study analyzed the economic efficiency of the specified building standards and rating systems in accordance with the Office of Management and Budget (OMB) Circular A-94 Revised (1992), which provides “general guidance for conducting benefit-cost and cost-effectiveness analyses.” (Appendix E refers to legislative requirements for life cycle cost analysis.) OMB Circular A-94 provides the following definitions:

  • Benefit-Cost Analysis—A systematic quantitative method of assessing the desirability of government projects or policies when it is important to take a long view of future effects and a broad view of possible side-effects.
  • Cost-Effectiveness—A systematic quantitative method for comparing the costs of alternative means of achieving the same stream of benefits or a given objective.2

National Institute of Standards and Technology (NIST) Life-Cycle Costing Manual for the Federal Energy Management Program (1996) defines life cycle cost analysis (LCCA) as

An economic method of project evaluation in which all costs arising from owning, operating, maintaining, and ultimately disposing of a project are considered to be potentially important in that decision. LCCA is particularly suitable for the evaluation of building design

_________________

2 Office of Management and Budget (1992). Circular A-94 Appendix A, Definitions of Terms, Revised.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

alternatives that satisfy a required level of building performance (including occupant comfort, safety, adherence to building codes and engineering standards, system reliability, and even aesthetic considerations), but that may have different initial investment costs; different operating, maintenance, and repair (OM&R) costs (including energy and water usage); and possibly difference lives. However, LCCA can be applied to any capital investment decision in which higher initial costs are traded for reduced future cost obligations. LCCA provides a significantly better assessment of the long-term cost effectiveness of a project than alternative economic methods that focus only on first costs or on operating-related costs in the short run.3

The NDAA 2012 Section 2830(b) required a report that includes a cost-benefit analysis, return on investment, and long-term payback, which are calculated in this study using (Present Value) Net Savings, (Adjusted) Rate of Return on Investment, and Payback. The Net Savings method can be used when benefits occur primarily from future operational benefits (such as energy and water cost savings), relative to a specific base case. The National Institute of Standards and Technology (NIST) guidance states:

It is not necessary to include all project-related costs in a life-cycle costing analysis of project alternatives. Only those costs that are relevant to the decision [for the alternatives] and significant in amount are needed to make a valid investment decision. Costs are relevant to the decision when they change from alternative to alternative. 4 (Emphasis in original)

The economic efficiency analysis of Net Savings requires a specific base case against which to compare the relative incremental costs and benefits of alternatives. The Net Savings are calculated as the differences in costs between the base case and the alternative(s). The objective of these calculations is to bring future costs and benefits into current year values for direct comparison.

The definitions and equations used for this analysis are:

•   (Present Value) Net Savings: Comparison of the total costs of ownership, operation, and maintenance over the defined study period (N) among two or more alternatives. The time-adjusted costs are subtracted from the time-adjusted savings, where the discount rate (d) represents foregone opportunities in the market for investment If the Net Savings are greater than zero, the investment is economically efficient and higher Net Savings indicates better economic efficiency.

image   General Equation: NS = Σ(Bt- Ct)/(1 + d)t

image   Variables:

•   NS = Net Savings

•   Bt, Ct = Benefits, Costs at time t

•   t = 0 to N

•   N = Study Period

•   d = Discount rate

image   For Annual Savings with expected price escalation: NS = A0*[(1 + e)/(d - e)][1 - ((1 + e)/(1 + d))N]

_________________

3 National Institute of Standards and Technology (1996). Life-Cycle Costing Manual for the Federal Energy Management Program, NIST Handbook 135, Washington, DC, p. 4-1.

4 National Institute of Standards and Technology (1996). Life-Cycle Costing Manual for the Federal Energy Management Program, NIST Handbook 135, Washington, DC, p. 4-1.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

image   Variables

•   NS = Net Savings

•   A0 = annually recurring cost at base-date price

•   d = discount rate

•   e = escalation rate

•   N = Study Period

•   (Adjusted) Rate of Return on Investment: Annual yield from a project over the study period (N), taking into account the reinvestment of interim savings at the discount rate (d). If the ARROI is greater than the discount rate (d), the investment is economically efficient and higher ARROI (relative to the same discount rate) indicates better economic efficiency for independent projects.

image   ARROI=((1 + d)*SIR1/N) - 1

image   Variables:

•   SIR (Savings-to-Investment Ratio)=(NS - I)/I

•   I = Incremental Investment associated with alternative

•   d = discount rate

•   N = Study Period

•   Payback: Time period at which initial investment is recovered, as a measure of capital liquidity. Simple payback does not include time-adjusted costs or benefits, and is the time when the summation of the expected annual savings equals the original investment; discounted payback includes time-adjusted annual savings, and is the time when the summation of the time-adjusted savings equals the original investment. While payback does indicate how quickly the original investment is recovered through annual savings, it cannot be used to compare the economic efficiency for projects, since it does not include all of the savings expected over the study period. The alternative with the shortest Payback period is not necessarily the alternative with the highest Net Savings or ARROI.

image   Simple PB = t = (I/A0)

image   Variables:

•   t = 0 to N

•   N = Study Period

•   I = Incremental Investment associated with alternative

•   A0 = annually recurring cost at base-date price

image   Discounted PB = t when ∑(Bt - Ct)/(1 + d)t = I

image   Variables:

•   t = 0 to N

•   N = Study Period

•   I = Incremental Investment associated with alternative

•   Bt, Ct = Benefits, Costs at time t

•   d = Discount rate

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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STUDY METHODOLOGY FOR ECONOMIC EFFICIENCY ANALYSIS

This study analyzed the economic efficiency in accord with federal legislation and guidance. As required under OMB Circular A-94 Appendix C, the study utilized the current real discount rates for FY2013,5 which are based on Treasury Notes and Bonds of specified maturities. The real discount rate excludes the inflation premium. (Please see Appendix A for recent OMB real discount rates from 2007-2012.) This study also utilized the Study Period of 40 years, in conformance with the requirement in the Energy Independence and Security Act (EISA) for the maximum study period.

Energy and water price escalation is a critical factor in long-term cost-benefit analysis, and is particularly relevant to this analysis of the specified building standards and rating systems. The US Energy Information Administration (EIA) annually provides projected energy prices for a thirty year time period in conformance with the Federal Energy Management Program (FEMP), which is incorporated by reference in federal government guidance for life cycle cost analysis. While EIA provides energy escalation rates for each year, this study uses the annual equivalent escalation rate of 0.5%.

The water price escalation rate used in this analysis is based on an analysis of the Consumer Price Index, which reports price increases using 1982-1984 as the base year (Appendix A). The CPI national average annual increase for water and sewer prices has been almost 5% between 1982 and 2012. These price increases are often due to increased operating costs, required investments in system upgrades, or local shortages. The CPI includes the effects of inflation, which is estimated to have averaged approximately 1% between 1982 and 2012.6 This study uses an annual water escalation rate of 2% as a conservative estimate of expected water price increases.

For this study, the Long-term cost-benefit used throughout this report is defined as:

Discount rate: 2.0%

Study Period: 40 years

Price escalation rates:

       Energy price escalation (eE): 0.5%

       Water price escalation (eW): 2%

This study developed an analytical approach to assess the long-term cost-benefits of alternatives for a range of scenarios that represent uncertain future conditions. This approach was applied using a set of tools specifically developed for this study to analyze the sensitivity of the results to different scenarios.

The analytical approach provides additional insight to aid decision-making under uncertainty. Traditional calculations of Net Savings provide a single “point estimate” given specific input variables (i.e., Study Period, discount rate, and escalation rate). The analytical approach developed in this study provides the context for that “point estimate” by calculating the feasible range of Net Savings outcomes given the unknowns for external factors (for instance, capital markets and energy or water price escalation). The sensitivity analysis in this study calculates the upper and lower bounds of the values for Net Savings for an alternative under different conditions, creating a region of feasible outcomes (Table 1).

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5 Office of Management and Budget, Memorandum M-12-06, “2012 Discount Rates for OMB Circular No. A-94,” January 3, 2012. (http://www.whitehouse.gov/sites/default/files/omb/memoranda/2012/m-12-06.pdf).

6 U.S. Department of Commerce, Consumer Price Index, Inflation Calculator, 2012.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Table 1: Sensitivity Analysis Scenarios

Scenarios Real Discount Rates Study Period Energy Annual Escalation Rates (eE) Water Annual Escalation Rates (eW)
Long-term Cost-Benefit 2.0%1 40 0.5%2 2%
Short-Term Cost-Benefit 1.7%1 20 0.5%2 2%
“Economic High Growth” 3% 20, 40 0.5%2 0%
“Economic Slow Growth” 1.5% 20, 40 2% 4%

1 OMB Real Discount Rates FY2013.
2Annual equivalent of EIA/FEMP energy price escalations
eE = Energy (Annual) Escalation Rates, excluding inflation
eW = Water (Annual) Escalation Rates, excluding inflation.

Sensitivity Analysis on Study Period

The Study Period selected for any life cycle cost analysis reflects the expected useful life of the investment (i.e., capital facility asset), the investor’s time horizon, or other factors.7 Since the average building lifespan is the U.S. is over 50 years,8 the EISA increase of the Study Period to 40 years reflects the federal government’s long time horizon for capital facility assets.

The sensitivity analysis in this study includes the range from 20 to 40 years to reflect relatively recent changes in federal legislation related to life cycle cost analysis. Specifically, the Energy Independence and Security Act (EISA, 2007) extended the maximum study period for economic efficiency analysis to 40 years from the previous 25-year study period (Section 441). Therefore, the Long Term Cost-Benefit analysis in this study uses the 40-year Study Period, and the sensitivity analysis includes the 20-year Study Period (related to the OMB real discount rate for 20 years).

Longer study periods extend the time period over which benefits and costs are calculated. As a result, the Net Savings for 40 years is greater than the Net Savings for 20 years when there are net savings that accumulate over the longer time period. Alternatives that were not economically efficient at 20 years may be economically efficient at 40 years if the future benefits continue to accumulate at a sufficient rate. However, facilities with short expected lifespans (e.g., temporary facilities) should use a Study Period related to the expected usage period.

Sensitivity Analysis on Discount Rate

A second area of uncertainty in future conditions is the “opportunity cost of capital,” represented by the discount rate. The Office of Management and Budget (OMB) annually updates the real and nominal discount rates to be used for cost-effectiveness studies of federal capital investments, which are based on the interest rates for Treasury Notes of different maturity dates.

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7 National Institute of Standards and Technology (1996). Life-Cycle Costing Manual for the Federal Energy Management Program, NIST Handbook 135, Washington, DC, p. 2-8, 2-9.

8 US Department of Energy, Energy Efficiency and Renewable Energy, Building Technologies Program, 2008 Buildings Energy Data Book, pages 3-12.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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The OMB real discount rates have declined from a high of 8% in 1982 to 2% in 2012 (Appendix A). When the economy is growing slowly, there are fewer opportunities for capital investment and the discount rate declines. When the economy is growing more quickly, more opportunities for higher yields for capital investment increase the discount rate. Therefore, the “Economic High Growth” scenario in this study includes a discount rate of 3%, which is equal to the OMB real discount rate in 2007 and which could be expected to occur within the Study Period of 40 years. The “Economic Slow Growth” scenario includes a discount rate of 1.5%, which could occur in the future if economic activity (and opportunities for investment) limits the alternatives for higher yield investments.

The higher discount rate, which represents more opportunity in the market for higher returns, means that an alternative has to perform better to be economically efficient. The lower discount rate, which represents less opportunity in the capital market, reduces the economic efficiency boundary—that is, an alternative that was not economically efficient at 8% (in 1982) may be economically efficient at 2% (in 2012). In the example below (Figure 1), the Net Savings in the Long-term Cost-Benefit scenario is great than 0 and therefore economically efficient, but is not economically efficient when the discount rate is 3% or when the Study Period is 20 years. It is, however, economically efficient when the discount rate is 1.5% and the Study Period is 30 to 40 years.

Figure 1: Example of Sensitivity Analysis for Time Period and Discount Rate

image

Sensitivity Analysis on Factor Price Escalation

Another major area of uncertainty related to this study is future prices for municipal utilities (such as electricity, natural gas, water and sewage) over the next 20-40 years. Analysis of the Consumer Price Index (Appendix A) indicates that the average annual increase for energy costs has increased by approximately 2-4% between 1982 and 2012 (depending on energy fuel source) and the CPI average annual increase for water and sewer prices has been almost 5% over that time period.

Therefore, the estimated 2% annual price escalation for water included in the scenario analysis could be considered a conservative estimate of the future value of water cost reductions, and the 4% annual price escalation in the “Economic Slow Growth” scenario could better represent rate of increase in the future of water and wastewater prices. The DOE EIA FEMP estimated energy price escalation is approximately 0.5% over 40 years (varying annually based on the energy price model), and the 2% annual price escalation for energy in the “Economic Slow Growth” scenario represents potential significant future energy price increases. In the sample below (Figure 2), the

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Net Savings (representing avoided future costs) increase significantly with the higher energy and water/wastewater escalation rates. Even with the lower energy and water prices, the alternative is economically efficient for a Study Period of just over 30 to 40 years.

Figure 2: Example of Sensitivity Analysis for Price Escalation

image

For this report, the variations in both the discount rates and prices escalations are combined in the scenarios and represented as the feasible range of Net Savings for a specific alternative under a range of conditions (Figure 3).

The analytical approach, to calculate a feasible range of values for Net Savings given uncertain future conditions, is applied using a set of tools developed specifically for this study (Figure 4). The tools provide a standardized approach to collect and organize data and to automate the calculation of the measures of economic efficiency. Since the scope of this study required comparing the results of the analysis of the specified building standards and rating systems across two building types and five locations, the set of tools also provides a means to view and compare the results across the portfolio of alternatives.

This study also used the latest version of Building Life Cycle Cost (BLCC) software program from the National Institute of Standards and Technology (NIST) to calculate Net Savings, (Adjusted) Rate of Return on Investment, and Payback for the specified building standards and rating systems.9 The BLCC software is updated annually by NIST to incorporate the current OMB discount rates and the annual energy price escalations provided by the Department of Energy (DOE) Energy Information Administration (EIA) in accord with the Federal Energy Management Program (FEMP). BLCC also includes the default values for calculating values for MILCON projects (specifically the mid-year discount approach). The program also computes projected energy savings and projected emissions reductions.

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9 The BLCC software is available for download through http://www1.eere.energy.gov/femp/information/download_blcc.html#blcc.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Figure 3: Net Savings—Boundary Area from Sensitivity Analysis

image

Figure 4: Analytical Approach and Tools Developed for This Study

image

STUDY METHODOLOGY USING PROTOTYPE BUILDINGS AND CLIMATE ZONES

This study established a common basis on which to calculate the long-term cost-benefits, return on investment, and payback using prototype buildings and selected locations to represent the heating and cooling loads and local factor prices that influence the economic efficiency calculations for different locations across the continental U.S.

Specifically, this study utilized the results and characteristics of the selected prototype building models developed by Pacific Northwest National Lab (PNNL) as part of the Department Energy (DOE) Commercial Building Initiative. The selected reference buildings are the “medium office” prototype (which corresponds to military administrative buildings) and the “small hotel” prototype (which corresponds to barracks and military dormitories). These models are publicly available and incorporate the versions of ASHRAE 90.1 (specifically 90.1-2004, 90.1-2007, and 90.1-2010), and the EnergyPlus results are publicly available for these building prototypes and locations. Use of the existing PNNL models builds upon previous research to improve replicability and robustness of the results, and to expedite this study.

The ASHRAE 90.1-2004 version of the two prototype building models was used as the baseline for this study because it is specified as the basis for improved building performance in the Energy Policy Act (2005) and the Energy Independence and Security Act (EISA) (Table 2).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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(Appendix B provides the descriptions of the “medium office” and “small hotel” prototype building characteristics.)

The locations were selected to represent the diversity of conditions that drive cost effectiveness for high performance buildings across the US, including heating/cooling loads and local design and construction market characteristics. The locations were selected to represent regions of the US, climate zones and conditions, and size of the design/construction market (Table 3 and Figure 5).

Table 2: Selected PNNL Prototype Buildings and Climate Zones

    Prototype building type (2) Locations/ Climate Zones (5)

  Medium Office (similar to administration buildings)

Small Hotel (similar to barracks)

1A Miami
2B Phoenix
3A Memphis
4A Baltimore
6B Helena

Table 3: Selected Locations by Characteristics

Location Climate Zone Region Climate Temp Humidity Market Type
Miami 1 Southeast Hot Wet Large urban
Phoenix 2 Southwest Hot Dry Medium urban
Memphis 3 Central Medium Medium Medium urban
Baltimore 4 Northeast/Mid-Atlantic Medium Wet Large urban
Helena 6 Northwest Cool Dry Small urban/rural

Figure 5: Locations for the Study

image

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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STUDY METHODOLOGY FOR BENEFIT AND COST CATEGORIES

The study focused on benefit-cost categories that directly relate to financial outcomes. The primary focus of the benefit-cost categories are the measures on which the Department of Defense is required to report annually in the DOD Annual Energy Management Report (Appendix F).

DoD provides an annual facilities energy management report detailing its energy goals, plans to meet those goals, and progress to date. This report, directed by DoD instruction 4170.11, meets the requirements of multiple statutes and executive orders. Annual contents may vary depending on adjustments made by the interested congressional committees in appropriations and authorization language. DoD transmits this report to the Congress, the Executive Office of the President, and to the Department of Energy.10

These categories include energy use, water use, and reduction of solid waste (including municipal and hazardous waste). In addition, the categories include measures of operations and maintenance (O&M) costs that could be expected to be affected by high performance building attributes (Table 4). (See Appendix C for definitions.)

Table 4: Benefit-Cost Categories

Investment Costs Operations, Maintenance, and Repair (OM&R) Costs
  • Initial Investment
  • Major Repair and Replacement Costs
Current Reporting Requirements
  • Building energy
  • Supporting Facilities/Site energy
  • Building water supply
  • Building waste water (disposal)
  • Supporting Facilities/Site water
  • Municipal (nonhazardous) solid waste
  • Hazardous waste
Expected Sustainable Outcomes
  • Building/site operations and maintenance (O&M)
  • Building cleaning
  • Landscaping

 

The benefit-cost categories under “Expected Sustainable Outcomes” have been mentioned in the literature that examines the expected outcomes from high performance buildings approaches.11 For instance, “Building and site operations and maintenance (O&M)” would include general labor, material and equipment for the operations and maintenance of the building and grounds, which may increase with the addition of complex equipment or may decrease with continuous monitoring equipment. Improved durability of materials may reduce cleaning costs (i.e., labor, equipment and materials) or special materials may require special cleaning activities and thereby increase costs. Specific landscaping approaches, such as low-water landscaping, could eliminate mowing and other related landscaping costs or may require additional plant maintenance for protection of indigenous plantings.

Other potential benefits associated with high performance facilities may include measures of occupant health, safety, and well-being; however, there is currently insufficient evidence to

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10 See http://www.acq.osd.mil/ie/energy/energymgmt_report/main.shtml.

11 National Research Council (2011). Achieving High Performance Federal Facilities: Strategies and Approaches for Transformational Change. The National Academies Press, Washington, DC.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

calculate explicit financial outcomes from these attributes, and so they were not included in this study.

STUDY METHODOLOGY FOR DATA COLLECTION FOR PROTOTYPE BUILDINGS

The Net Savings approach requires a baseline against which to compare the alternatives to calculate the financial value of the costs and benefits of the alternatives. In this study, the baseline prototype buildings use the characteristics of the PNNL building prototypes (“Medium office” and “Small hotel”) and specific locations on which to compile data for the benefit-cost categories (see Table 5) for each location using public data sources and local unit prices.

The initial investment costs for each prototype building in each location was calculated using R.S. Means Square Foot Cost Estimator in that location with April 2012 cost data, modified to reflect the specific technical characteristics of the prototype buildings. The R.S. Means cost-estimating system is an industry standard, and is often viewed as generally over-estimating construction costs. However, given the generalized description of the prototype buildings (from the PNNL building prototypes), it was not feasible to generate more detailed cost-estimates.

Table 5: Construction Cost Estimates (Cost/square foot) for Prototype Buildings in Each Location

Location Office ($/sf) Hotel ($/sf)
Miami $112.91 $116.90
Phoenix $111.39 $115.23
Memphis $107.36 $111.70
Baltimore $117.03 $115.53
Helena $110.90 $119.74

 

The unit quantities for each OM&R category for each baseline prototype building were generated to represent standard current building performance related to the ASHRAE 90.1-2004 levels as established in the Energy Policy Act (2005) and the Energy Independence and Security Act (2007). Specifically, the energy use for each building prototype in each location for both building and site (exterior) energy were generated from the PNNL building models (using EnergyPlus) following ASHRAE 90.1-2004.

Water use for each building type was calculated using current usage rates as reported by industry sources. Likewise, municipal solid waste and hazardous waste quantities were estimated based on current industry reported rates. It must be noted, however, that the definitions of “hazardous waste” for office and hotel buildings are usually categorized under “household hazardous waste” (rather than industrial hazardous waste) and include such items as paints, cleaning materials, batteries, hydraulic fluids, oils, and pesticides.12 (Appendix D includes the quantity and cost data for the Baseline Office and Baseline Small Hotel for all five locations.)

Total costs for the energy, water, and solid waste categories for each prototype building in each location were calculated using the quantities (as defined above) multiplied by the local factor unit prices. Energy prices for electricity and natural gas were established using the U.S. Energy Information Administration (EIA) monthly statistics, based on current prices.13 Energy prices fluctuate significantly by month and by year, and these prices should be taken as representative of

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12 Environmental Protection Agency, Household Hazardous Wastes, http://www.epa.gov/osw/conserve/materials/hhw.htm.

13 U.S. Energy Information Administration, Form EIA-826, “Monthly Electric Sales and Revenue Report with State Distributions Report” and “Monthly Natural Gas Prices” for April 2012.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

current market conditions. Local water prices for water supply (potable water) and wastewater (water disposal) were determined through public data sources, including municipal agencies and publications. Local municipal solid waste and hazardous waste costs were determined through municipal agency publications and published rates (Table 6 and Appendix D, with data source references).

Table 6: Factor Unit Prices in Each Location

Location Electricity ($/kwh) Natural Gas ($/ft3) Water ($/gal) Wastewater ($/gal) Municipal Solid Waste ($/ton) Hazardous Waste ($/ton) Renewable Energy Credit ($/kwh)
Miami $0.0980 $10.28 $0.0041 $0.0059 $62.59 $114.18 $0.09
Phoenix $0.0921 $9.68 $0.0018 $0.0017 $38.25 $10.00 $0.09
Memphis $0.0989 $8.66 $0.0027 $0.0020 $22.00 $15.00 $0.09
Baltimore $0.1060 $11.11 $0.0032 $0.0041 $80.00 $80.00 $0.09
Helena $0.0906 $7.99 $0.0035 $0.0028 $70.75 $75.00 $0.09

Building operations and maintenance (O&M) costs (general labor, materials and equipment) were estimated based on cost per building area (i.e., square foot) using industry averages for similar building types (i.e., office and small hotel). These estimates provide a general approximate range of costs; however, actual O&M costs would be directly related to the condition, complexity, and specific requirements for an actual building.

Cleaning and landscaping costs were also estimated based on cost per building area (i.e., square foot) using industry averages for similar building types. Data sources for these costs most often focus on a specific market segment (such as education buildings) and may not capture the full range of costs associated with these activities for other market segments.

The consultant provided the benefit-cost data for the baseline buildings to the participating organizations (ASHRAE, Green Building Initiative, and the U.S. Green Building Council) for each building type and location. In several instances, the professional staff and professionals associated with those organizations offered suggestions for improvement and refinement (such as recent empirical studies and data sources). Where applicable, the data from these references were included in the revised baselines.

STUDY METHODOLOGY FOR DATA COLLECTION FOR STANDARDS AND RATINGS SYSTEMS

The strategy for data collection addressed the issues of validity and accuracy of the results. To ensure comparability across the standards and rating systems, this study used the characteristics of the prototype buildings (i.e., “medium office” and “small hotel”) in the 5 selected locations.

In discussions with the staff of ASHRAE, Green Building Initiative, and the US Green Building Council, those organizations agreed to provide detailed cost and benefit data for the prototype buildings in locations that were similar to or near the selected locations. (As noted earlier, the selected locations represent 5 climate zones, and a range of urban and non-urban markets.)

  • ASHRAE agreed to provide energy and water usage data generated using building models, since the recent release of these standards precludes the possibility of obtaining
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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  • data from a sufficiently large sample of actual buildings to provide valid results. The building models utilized the PNNL prototype buildings (i.e., “medium office” and “small hotel”).

  • The Green Building Initiative (GBI) and the US Green Building Council (USGBC) agreed to provide energy and/or water usage data based on actual buildings certified under their (respective) rating systems. The actual buildings selected by GBI and USGBC were similar to the selected prototype buildings (i.e. office and hotel/dormitory) and are commercially or privately owned facilities.

The advantages of this approach are:

1)    Certification submissions for the rating programs require reporting in the benefit and cost categories (particularly for expected energy and water usage);

2)    The reported data is assumed to be valid and accurate, and is verified by a third party affiliated with each organization; and

3)    The selected certified building projects represent current capabilities of “expert users” of the rating system.

Data Requirements

The organizations were provided with a data template for each building type for each location, in which to provide the initial investment costs (i.e., construction costs), and quantities of expected energy and water use, generation of solid waste, and other related amounts. The requested materials included, for each building type (small hotel and medium office), location, and standard or sustainable building rating level, specification of:

  • Differences in components, systems, and materials (compared to the ASHRAE 90.1 2004 baseline);
  • Associated differences in initial investment and major repair/replacement costs (compared to the provided baseline prototype buildings);
  • Associated differences in operations, maintenance and repair (OM&R) costs, including energy, water, solid waste, and O&M costs for each location (compared to the provided baseline prototype buildings).

ASHRAE Standards Data: Building Models

The data for the ASHRAE Standards 189.1-2011 and 90.1-2010 for each location and each building type were generated using the PNNL building models for “small hotel” and “medium office” for compared to the ASHRAE 90.1-2004 baseline (Table 7). (The recent release of these standards precludes the possibility of obtaining data from a sufficiently large sample of actual buildings to provide valid results.) The building characteristics for the Std. 90.1 and 189.1 buildings are the same as the 90.1-2004 baseline buildings. The characteristics that do change by climate zone would be the thermal performance of the envelope measures (R-values) and the HVAC equipment efficiencies. (Appendix G provides a detailed description of the ASHRAE methodology for generating the data for each building type in each location.)

ASHRAE provided energy performance data for each building type in each location for Standard 90.1-2010, and energy and water performance data for each building type in each location for Standard 189.1-2011 (Table 8). No data was provided for expected solid waste (municipal or

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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hazardous) or operations and maintenance (general, cleaning or landscaping) quantities or costs, so these costs were not included in this analysis. ASHRAE 189.1-2011 also includes a requirement for on-site energy generation. The initial investment costs for these energy generation units were included in the construction cost, and the on-site energy was used to offset the energy used by the building.

Table 7: ASHRAE Data Sample

Building Types Locations Standards
Office 5 90.1-2010, 189.1-2011
Small Hotel 5 90.1-2010, 189.1-2011

Table 8: ASHRAE Data: Energy and Water Performance by Building Type and Standard

Building Type Standard Average Building Energy1 Reduction Average Site Energy Reduction Average Building Water Reduction Average Site Water Reduction Number with On-site Energy Total Buildings
Hotel 90.1-2010 11% 31% 0% 0% 0 5
189.1- 24% 35% 48% 97% 5 5
Office 90.1-2010 21% 64% 0% 0% 0 5
189.1- 26% 63% 88% 91% 5 5

1 Average Building Energy Reduction calculated as percentage of energy cost savings.

LEED Data: Certified Buildings from US Green Building Council (USGBC)

The US Green Building Council (USGBC) provided energy and water performance data for 72 LEED-certified office buildings and 55 LEED-certified hotels, dormitories, or multi-unit residential buildings that were certified under the LEED rating system for new construction. The LEED certification system requires certain levels of energy and water performance as prerequisites and specifically provides points for improved performance levels, which are included in the submitted certification materials. The LEED reporting requirements do not include investment costs (i.e., construction costs). No data was provided for projected solid waste (municipal or hazardous) or operations and maintenance (general, cleaning or landscaping) quantities or costs, so these costs were not included in this analysis.

The data provided by USGBC did not include building construction cost, but subsequent communications with the staff at USGBC provided construction cost data on 20 projects; public data sources (including press releases, articles, and other public data sources) provided construction cost data for the other five projects in this sample.

The resulting sample is 25 LEED-certified buildings (defined by available construction cost data, and energy and/or water performance data) (Table 9), which are similar to the characteristics of the prototype buildings. USGBC provided the location for each building, which was then used to map it to its relevant climate zone. The climate zone for each sample building was then used to assign each building to the selected relevant location for this study. (Buildings in climate zones 5 and higher were assigned to the Helena location, which is in climate zone 6.)

The LEED certification submission materials include expected energy and water performance (for instance, percentage of energy use reduction compared to ASHRAE 90.1-2004), and these data were provided for the 25 buildings in the sample, which were then used to adjust the relevant quantities in comparison to the baseline prototype building for that location (Table

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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10). The resulting energy and water quantities for each building in the LEED sample were then used with the local factor unit costs for each location to calculate the projected savings compared to the baseline prototype building.

Table 9: USGBC LEED Sample by Location, Building Type, and Certification Level

Location Hotel Office Total
Baltimore 2 Silver
1 Gold
1 Silver
3 Gold
1 Platinum
8
Helena 1 Platinum 1 Silver
3 Gold
1 Platinum
6
Memphis 2 Gold
1 Platinum
3 Silver
1 Gold
1 Platinum
8
Miami 1 Silver 0 1
Phoenix 1 Silver 1 Silver 2
Total 9 16 25

Table 10: LEED Data: Energy and Water Performance Data by Building Type and Certification Level

Building Type Certification Level Average Energy Reduction Average Building Water Reduction Average Site Water Reduction Number with Onsite Energy Total
Hotel Silver -24% -31% -100% 2 4
Gold -21% -27% -83% 1 3
Platinum -42% -30% -75% 1 2
Office Silver -30% -28% -46% 6
Gold -31% -30% -79% 7
Platinum -37% -30% -100% 2 3
Total Sample -30% -29% -78% 6 25

 

The “investment costs” of the sample of LEED buildings (that is, the construction costs as identified through USGBC communications and public sources) were in many cases assumed to include all project costs, specifically construction costs plus related architect, engineering, and construction management fees (but excluding land purchase costs). According to R.S. Means and other industry sources, these fees often average 35% of the total project costs. Therefore, the total project costs in those cases were reduced by 35% to exclude these fees and to focus on actual construction costs.

Unfortunately, insufficient data was provided to identify any particular technical cost drivers for the LEED sample of projects (such as unusual site conditions, structural requirements, or special equipment) or other factors that influence construction costs (such as local market conditions) independent of expected performance levels. As a result, there is a high degree of variation among the reported construction costs for the LEED buildings (Table 11). Therefore, the

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

initial investment costs for some of the LEED projects were over 2 times the investment costs for the baseline prototype buildings.

Notably, in three cases (2 hotels, 1 office), the LEED construction cost was less than the specific baseline prototype building’s construction cost in that location. In these cases, the analysis of economic efficiency is clear, since these high performance buildings are obtained at no incremental initial cost—that is, all of the benefits are captured without requiring additional investments.

It is not possible in this study, given the relatively small size of the sample and the short time frame, to draw conclusions on relative trends in construction cost for LEED buildings, but previous studies have likewise found high variation in construction costs independent of expected building performance.14

Therefore, this study will use the construction costs provided for these LEED projects, with the caveat that this data has not been independently verified and may include costs related to specific technical or special function requirements that are not related to this study.

Table 11: LEED Silver, Gold, Platinum Buildings: Construction Cost Variation

Building Type Minimum Cost per square foot Maximum Cost per square foot Standard Deviation of Cost per square foot Average Cost per square foot Sample Size
Hotel $96.01 $259.68 $48.36 $134.65 9
Office $97.47 $279.64 $62.47 $179.54 16
Total Sample $96.01 $279.64 $60.85 $163.38 25

Green Globes Data: Certified Buildings from Green Building Initiative (GBI)

The Green Building Initiative (GBI) provided data on expected energy and/or water performance for 13 Green Globes-certified buildings that were certified under the Green Globes rating system for new construction. The Green Globes certification does not require specific energy or water performance as a prerequisite, and does not have specific reporting requirements for expected energy or water savings or other benefits. The Green Globes reporting requirements do not include investment cost (i.e., construction cost). No data was provided for projected solid waste (municipal or hazardous) or operations and maintenance (general, cleaning or landscaping) quantities or costs. Therefore, these costs were not included in this analysis.

The data provided by GBI did not include building construction cost for any of the 13 Green Globes-certified buildings. Public data sources (including press releases, articles, and other public data sources) provided construction cost data for 11 projects.

The resulting sample is 11 Green Globes-certified buildings (defined by available construction cost data, and energy and/or water performance data) (Table 12), which are similar to the characteristics of the prototype buildings. GBI provided the location for each building, which was then use to map it to its relevant climate zone. The climate zone for each sample building was then used to assign each building to the selected relevant location for this study. (Buildings in climate zones 5 and higher were assigned to the Helena location, which is in climate zone 6.)

GBI provided expected energy and water performance data for the buildings in the sample (such as expected energy use reduction), which were then used to adjust the relevant quantities in

_________________

14 David Langdon (2004). Costing Green: A Comprehensive Cost Database and Budgeting Methodology, pp. 18-23, which found a “large variation in costs of buildings, even within the same building program category.”

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

comparison to the baseline prototype building for that location (Table 13). The resulting energy and water quantities for each building in the Green Globes sample were then used with the local factor unit costs for each location to calculate the projected savings compared to the baseline prototype building.

The “investment costs” of the sample buildings (as identified through public sources) in many cases was assumed to include all project costs, specifically construction costs plus related architect, engineering, and construction management fees (excluding land purchase costs). According to R.S. Means and other industry sources, these fees often average 35% of the total project costs. Therefore, the total projects costs in those cases were reduced by 35% to exclude these fees and to focus on projected actual construction costs.

Table 12: GBI Green Globes Sample by Location, Building Type, and Certification Level

Location Hotel Office Total
Baltimore 1 One Globe 1 Two Globes 1 Two Globes 1 Four Globes 4
Helena 1 One Globe 0 2
1 Two Globes
Memphis 1 One Globe 2 Three Globes 4
1 Four Globes
Miami 0 0 0
Phoenix 0 1 Two Globes 1
Total 5 6 11

Table 13: Green Globes Data: Energy and Water Performance Data by Building Type and Certification Level

Building Type Certification Level Average Energy Reduction Average Building Water Reduction Total
Hotel One 4% 25% 3
Two 25% 43% 2
Office Two 12% 38% 2
Three 35% 84% 2
Four 40% 62% 2
Total Sample 21% 48% 11

 

Unfortunately, insufficient data was provided to identify any particular technical cost drivers for the projects (such as unusual site conditions, structural requirements, or special equipment) or other factors that influence construction costs (such as local market conditions) independent of expected performance levels. As a result, there is a high degree of variation among the reported construction costs for this sample of 11 actual buildings that received Green Globes certification (Table 14). Therefore, the initial investment costs for some of the Green Globes projects was over 2 times the investment costs for the baseline prototype buildings.

It is not possible in this study, given the relatively small size of the sample and the short time frame, to draw conclusions on relative trends in construction cost for Green Globes buildings.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Therefore, this study will use the construction costs provided for these Green Globes projects, with the caveat that this data has not been independently verified and may include costs related to specific technical or special function requirements that are not related to this study.

Table 14: Green Globes One, Two, Three and Four Globes: Construction Cost Variation

Building Type Minimum Cost per square foot Maximum Cost per square foot Standard Deviation of Cost per square foot Average Cost per square foot Sample Size
Hotel $127.00 $244.00 $49.43 $163.80 5
Office $109.00 $235.00 $47.85 $149.17 6
Total Sample $109.00 $244.00 $46.70 $155.82 11

RESULTS OF ECONOMIC EFFICIENCY EVALUATION OF SPECIFIED BUILDING STANDARDS AND RATING SYSTEMS

In the NDAA 2012 Section 2830(a), Congress required the Department of Defense to submit a report that includes a cost-benefit analysis, return on investment, and long-term payback for specific building standards and rating systems (ASHRAE 189.1 and 90.1, LEED Silver, Gold, and Platinum, and other ANSI accredited standards such as Green Globes). The objective is to determine if buildings built under the guidance of these building standards and rating systems are economically efficient.

The analysis results include Net Savings, (Adjusted) Rate of Return on Investment, and Payback for the recent “green” buildings compared to the baseline (e.g., ASHRAE 90.1-2004) to calculate Long-term Cost-Benefit as well as the results of the sensitivity analysis for study period, discount rates, and price escalation rates (Table 15).

Table 15: Summary Definitions of Terms

Measure Definition
Net Savings Time-adjusted costs are subtracted from the time-adjusted savings, where the discount rate (d) represents foregone opportunities in the market for investment. If the Net Savings are greater than zero, the investment is economically efficient and higher Net Savings indicates better economic efficiency.
(Adjusted) Rate of Return on Investment Annual yield from a project over the study period (N), taking into account the reinvestment of interim savings at the discount rate (d). If the ARROI is greater than the discount rate (d), the investment is economically efficient and higher ARROI (relative to the same discount rate) indicates better economic efficiency for independent projects.
Payback Payback is the time period in which initial investment is recovered, as a measure of capital liquidity. Simple Payback is the time when the summation of the expected annual savings equals the original investment; Discounted payback is the time when the summation of the time-adjusted annual savings equals the original investment.
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

ASHRAE 90.1-2010—ECONOMIC EFFICIENCY RESULTS ACROSS BUILDING TYPES AND LOCATIONS

The stated purpose of ASHRAE 90.1-2010 Energy Standards for Buildings Except Low-Rise Residential Buildings is:

To provide minimum requirements for the energy-efficient design of buildings except low-rise residential buildings, for:

  • Design, construction, and a plan for operation and maintenance, and
  • Utilization of on-site, renewable energy resources.15

The Pacific Northwest National Laboratory (PNNL) worked with ASHRAE during the development of Standard 90.1-2010, providing technical and analytical support under the Department of Energy (DOE) Building Energy Codes Program (BECP).

In 2007, as part of its Advanced Codes Initiative, DOE signed a memorandum of understanding (MOU) with ASHRAE to develop advanced commercial standards and included an agreement that 90.1-2010 would result in 30% energy savings relative to 90.1-2004. This MOU initiated the effort by BECP and ASHRAE which culminated in the release of 90.1-2010 in October 2010. This signed MOU introduced a new element and significant challenges for developing 90.1-2010. For the first time in the history of Standard 90.1, an energy goal was established for developing the new edition, 90.1-2010.16

The PNNL technical and analytical support included modeling building energy performance using EnergyPlus models and parameterized cost curves to incorporate cost efficiency considerations.

For this study, the economic efficiency analysis for Standard 90.1-2010 focused on the energy performance in the five specific locations, for the two building types (which are a subset of the PNNL locations and building types), using actual local energy costs rather than national energy cost curves (as used in the PNNL study). This analysis calculated the Net Savings and other economic efficiency measures using the energy cost savings relative to the incremental construction costs (i.e., incremental initial investment costs) compared to the baseline prototype buildings.

As noted in the Methodology Section of this report, ASHRAE provided the benefit-cost data, specifically investment costs and projected energy usage (building and site), based on building models (not actual buildings), since the standard was only recently passed and has not been accepted by many jurisdictions or applied to actual projects. No data was provided for ASHRAE 90.1-2010 related to quantities of water, solid waste or O&M expected usage, which were therefore excluded from this analysis.

Long-Term Cost-Benefit

The Net Savings for both building types in all five locations are greater than zero, indicating that 90.1-2010 provides economically efficient results (Figure 6, with NS>0 denoted as red line at x-axis). There are differences in the Net Savings between the building types; for instance, the Net

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15 American Society for Heating, Refrigeration, and Air-conditioning Engineers (ASHRAE), Standards— titles and scopes (http://www.ashrae.org/standards-research-technology/standards-guidelines/titles-purposes-and-scopes#90-1).

16 Thornton, BA et al., Achieving the 30% Goal: Energy and Cost Savings Analysis of ASHRAE Standard 90.1-201, Pacific Northwest National Laboratory, May 2011, p. iii.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Savings for Offices in all locations are higher than those for the Hotels. There are also differences by location; for example, the Net Savings are the highest in Baltimore (for both building types), which has the highest energy costs for both electricity and natural gas.

The Net Savings results for the hotel buildings tend to cluster together at approximately $200,000, driven by the energy loads associated with the laundry facilities (electricity and natural gas). Baltimore Hotel had the highest Net Savings, followed by Miami, Memphis, Phoenix and Helena Hotels. For office buildings, while Baltimore Office has the highest Net Savings, the second highest Net Savings is the Helena Office, which has the second highest reduction in annual energy use under ASHRAE 90.1-2010.

Figure 6: ASHRAE 90.1-2010 Long-term Cost-Benefit: Net Savings for All Building Types, All Locations

image

NOTE: Long-term Cost-Benefit when N=40, d=2%, eE=0.5%, eW=2%.

 

The ASHRAE 90.1-2010 Net Savings differential between offices and hotels is driven by the fact that the Annual Net Savings, specifically energy use, for the office buildings decreases more, proportionately, than the energy use in the hotels decreases (Figure 7). Specifically, the energy loads modeled in EnergyPlus include the plug loads of the laundry equipment, which includes Energy Star-rated equipment, but does not decrease as much as the overall Office energy loads (which also include expected plug loads). Therefore, the Annual Net Savings for Offices are greater than the Annual Net Savings for Hotels.

The differences in Annual Net Savings by building type and location also indicate the relative importance of both heating/cooling loads (as indicated by the climate zone) and local factor prices for electricity and natural gas. As mentioned in the Methodology section of this report, the energy prices (i.e., electricity and natural gas) were the highest in Baltimore, followed by Helena. The Annual Net Savings, then reflect the energy quantity reductions as well as the total value of those reductions based on the local market price. The summation of those annual savings over the 40-year Study Period (discounted to present value) leads to higher Net Savings.

The sensitivity analysis on Net Savings provides additional insight into the potential savings associated with buildings built under the guidance of ASHRAE 90.1-2010 in different climate conditions and local markets. The Long-term Cost-Benefit for the 40-year Study Period (Figure 6

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

and Table 16, middle column) represents the expected Net Savings with the current OMB discount rate of 2% and the energy price escalation as per the EIA/FEMP energy price models. The maximum potential Net Savings (for the Economic Slow Growth scenario) range across locations from approximately $600,000 to $800,000 for offices and approximately $270,000 to $370,000 for hotels.

Figure 7: ASHRAE 90.1-2010 Annual Net Savings for All Building Types, All Locations

image

The sensitivity analysis represents the potential benefits that could be captured by buildings built under the guidance of ASHRAE 90.1-2010 under different conditions. That is, if energy prices escalate at 2%, the Net Savings over the 40 years would increase by over 50%. These potential future Net Savings under this scenario could also be viewed as the potential future additional costs that will be incurred if a building does not follow ASHRAE 90.1-2010. For instance, if energy prices increase in future years, an office building may see its additional energy costs (which could have been avoided under ASHRAE 90.1-2010) almost double in some locations.

The minimum potential Net Savings (presented in the Economic High Growth scenario) is still well above the threshold of Net Savings=0, ranging across locations from approximately $280,000 to $390,000 for offices and from $127,000 to $185,000 for hotels. Therefore, even if energy prices stay constant (in real dollars, which is less than the EIA/FEMP energy price projections) and if the cost of money increases (represented as the discount rate, d, increasing to 3%), these buildings built under the guidance of 90.1-2010 will still be economically efficient.

These potential future opportunities for Net Savings under different conditions can be graphically represented with the example of the Baltimore Office and Hotel (Figure 8). Within the Study Period range of 20 to 40 years, the Net Savings > 0 for both building types, indicating that ASHRAE 90.1-2010 is economically efficient for the scenarios under consideration. The potential Net Savings for the Baltimore office is approximately twice as high as the potential Net Savings for the Baltimore hotel. In addition, the Net Savings increase significantly from 20 years to 40 years as the savings accumulate. The other selected locations show similar patterns for the sensitivity analysis for Net Savings for both building types.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 16: ASHRAE 90.1-2010 Sensitivity Analysis for Net Savings: 40-Year Study Period

Office

Economic High Growth Long-term Cost Benefit Economic Slow Growth
Baltimore $388,067 $492,480 $804,844
Helena $384,661 $469,281 $722,430
Phoenix $309,485 $385,025 $611,009
Memphis $282,272 $363,154 $605,119
Miami $286,924 $363,064 $590,841

 

Hotel

Economic High Growth Long-term Cost Benefit Economic Slow Growth
Baltimore $184,755 $230,370 $366,831
Miami $162,691 $202,848 $322,984
Memphis $157,803 $198,650 $320,848
Phoenix $162,691 $165,060 $280,885
Helena $127,401 $163,839 $272,846

Figure 8: ASHRAE 90.1-2010 Sensitivity Analysis for Net Savings: Baltimore

image

Rate of Return on Investment

The (Adjusted) Rate of Return on Investment (ARROI) for the ASHRAE 90.1-2010 buildings in all locations and all building types is greater than the discount rate (2%), indicating that ASHRAE 90.1-2010 is economically efficient (Figure 9). The ARROI ranges from approximately 5% to 8% across the building types and locations, which is 2-4 times higher than the current investment returns (that is, the current returns on long-term US Treasury Notes, as denoted by the OMB real discount rate of 2%). Therefore, investments in buildings following the guidance of ASHRAE 90.1-2010 would be better than most investments currently available to the US federal government on the market.

ARROI is particularly appropriate for ranking independent projects to evaluate the relative return on specific levels of investment. The ranking of the office projects indicates that Helena has a higher return on investment (at almost 8%) than Baltimore (at 5.7%), which is driven by the relatively lower investment required in Helena than in Baltimore with approximately similar overall Net Savings. Therefore, the Helena Office would be a better investment than the Baltimore Office, but both investments perform better than the current default option (that is, US Treasury Notes at 2%).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

In contrast, the Baltimore and Miami Hotels have higher ARROIs than the hotels in the other locations, and indeed better than the offices in Baltimore, Miami and Memphis. The savings achieved in these cases, relative to the investments required, provides a better overall return.

Figure 9: ASHRAE 90.1-2010 Long-term Cost-Benefit: Adjusted Rate of Return on Investment (ROI) for All Building Types, All Locations

image

Note: Long-term Cost-Benefit when N=40, d=2%, eE=0.5%, eW=2%.

Payback

The Simple Payback for ASHRAE 90.1-2010 buildings range between 3 and just over 9 years, indicating that the liquidity of the investment is fairly high, since that time period is less than a quarter of the total Study Period of 40 years. The Cumulative Annual Net Savings for each building in each location indicates the time at which the accumulating savings equal the initial investment (that is, when the lines cross the x-axis) (Figure 10). It should be noted that the majority of the savings accumulate after the payback period, and the building with the shortest payback does not have the highest Net Savings.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure 10: ASHRAE 90.1-2010 Simple Payback through Cumulative Annual Savings: All Building Types, All Locations

image

Summary Results for ASHRAE 90.1-2010

For the two building types (Medium Office and Small Hotel) and five locations considered in this analysis, buildings built under the guidance of ASHRAE 90.1-2010 would yield cost-efficient results under a range of conditions. For the Long-term Cost-Benefit analysis, the Net Savings for all buildings and all locations is greater than the threshold of NS=0 (Table 17). In addition, the Adjusted Rate of Return on Investment (ARROI) is greater than the threshold of 2% (current return on long-term US Treasury Notes, as reported by OMB for FY13). These investments recoup the incremental initial investment amount in less than a quarter of the total Study Period of 40 years (i.e., Simple Payback), indicating relatively high liquidity.

The sensitivity analysis of Net Savings addresses the robustness of these results under different conditions, specifically changes in the discount rate (from 1.5% to 3%) and changes in factor price escalation (specifically energy price escalation from 0.5% to 2%). In those conditions, considering the Long-term Cost-Benefit, all building types and all locations analyzed in this study would be economically efficient investments.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 17: ASHRAE 90.1-2010 Long-term Cost-Benefit Analysis: Summary of Net Savings, ROI and Payback for All Building Types, All Locations

ASHRAE 90.1
Location Building Type Net Savings ARROI Simple Payback Discounted Payback
Miami Hotel $202,848 6.32% 5.7 6
Baltimore Hotel $230,370 6.32% 5.7 6
Memphis Hotel $198,650 5.93% 6.6 7
Helena Hotel $163,839 5.30% 8.4 10
Phoenix Hotel $165,060 4.97% 9.5 11
Helena Office $469,281 7.76% 3.3 4
Phoenix Office $385,025 6.42% 5.5 6
Miami Office $363,064 5.75% 7.1 8
Baltimore Office $492,480 5.66% 7.3 8
Memphis Office $363,154 5.29% 8.4 9

ASHRAE 189.1-2011—ECONOMIC EFFICIENCY RESULTS ACROSS BUILDING TYPES AND LOCATIONS

ASHRAE 189.1-2011 Standard for the Design of High Performance Green Buildings Except Low-Rise Residential Buildings was developed through a collaborative effort with ASHRAE, the US Green Building Council (USGBC), and the Illuminating Engineering Society of North America (IES). It explicitly references the current version of 90.1-2010 (Energy Standards for Buildings Except Low-Rise Residential Buildings) and is accepted as a compliance option of the International Green Construction Code. ASHRAE Standard 189.1-2011 is “written in code-intended (mandatory and enforceable) language so that it may be readily referenced or adopted by enforcement authorities to provide the minimum acceptable level of design criteria specifically for high performance green buildings within their jurisdiction.”17

The ASHRAE stated purpose of Standard 189.1-2011 is:

To provide minimum requirements for the siting, design, construction and plan for operation of high-performance green buildings to:

(a)  Balance environmental responsibility, resource efficiency, occupant comfort and well being, and community sensitivity, and

(b)  Support the goal of development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

2.   SCOPE:

2.1  This standard provides minimum criteria that:

(a) Apply to the following elements of building projects:

New buildings and their systems.

New portions of buildings and their systems.

New systems and equipment in existing buildings.

(b) Address site sustainability, water use efficiency, energy efficiency, indoor environmental quality (IEQ), and the building’s impact on the atmosphere, materials and resources.”18

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17 ASHRAE/ANSI/USGBC/IES Standard 189.1-2011, Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings, 2011, p. 2.

18 American Society for Heating, Refrigeration, and Air-conditioning Engineers (ASHRAE), Standards— titles and scopes (http://www.ashrae.org/standards-research-technology/standards-guidelines/titles-purposes-and-scopes#189-1).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

The analysis of economic efficiency of ASHRAE 189.1-2011 for this study focused on the energy and water performance in the five specific locations for the building types, using actual local energy, water, and wastewater unit costs for each location. This analysis calculated the Net Savings, Adjusted Rate of Return on Investment, and Payback using the energy, water and wastewater cost savings relative to the incremental construction costs (i.e., incremental initial investment costs) compared to the baseline prototype buildings.

As noted in the Methodology section of this report, ASHRAE provided the benefit-cost data, specifically the investment costs and projected energy usage (building and site), water usage (building and site) and waste water disposal based on building models (not actual buildings), since the standard was only recently passed and has not been accepted by many jurisdictions or applied to actual projects. No data was provided for quantities related to solid waste or O&M costs, which were therefore excluded from this analysis.

Long-Term Cost-Benefit

The Net Savings for both building types in all five locations are greater than zero, indicating that ASHRAE 189.1-2011 provides economically efficient results (Figure 11). There are differences in the Net Savings between the building types; for instance, the Net Savings for Hotels in each location is higher than the Net Savings for the Offices. There are also differences by location; for example, the Net Savings are the highest in Miami (for both building types), which has the highest water and wastewater disposal costs compared to all other locations. Baltimore, which has the second highest water and wastewater disposal costs, had the second highest Net Savings for both Office and Hotel.

The Net Savings results for the building types follow a similar sequence by location. For the hotels, the improvements in both energy and water performance for the building, particularly the laundry facilities (i.e., electricity, natural gas, water and wastewater disposal), provide significant savings, which is slightly higher than the savings for the office buildings, with the combination of energy performance improvements and water efficiency improvements (for both the building and the site).

The ASHRAE 189.1-2011 Net Savings are driven by both the reduction in quantities of resource usage (i.e., energy and water) and local factor unit prices, as seen in the Annual Net Savings by building type and location (Figure 12). As can be clearly seen, the water savings in many locations is more than half of the total Annual Net Savings. The differences in local prices and heating/cooling loads determine the relative savings in each location; for instance, Miami water unit costs are approximately 2 times higher than water unit costs in Phoenix, and Miami wastewater disposal costs are approximately 3 times higher than Phoenix wastewater disposal costs, which is reflected in the differential in expected savings in the two locations. The reduction in water usage was higher for Hotels than Offices because of the laundry facilities included in the Hotels. The Annual Net Savings, then, reflect the energy and water reductions as well as the total value of those reductions based on the local market price. The summation of those annual savings over the 40-year Study Period (discounted to present value) leads to higher Net Savings.

ASHRAE 189.1-2011 also includes a requirement for on-site energy generation. As noted in the Methodology section of this report, the initial investment costs for these energy generation units were included in the construction costs, and the on-site energy was used to offset the energy used by the building. The resulting overall energy usage for the building, therefore, is less than the energy usage under ASHRAE 90.1-2010, and the savings are greater compared to the baseline prototype building.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure 11: ASHRAE 189.1-2011 Long-term Cost-Benefit: Net Savings for All Buildings, All Locations

image

Figure 12: ASHRAE 189.1-2011 Annual Net Savings: All Building Types, All Locations

image

The sensitivity analysis on Net Savings provides additional insight into the potential savings associated with buildings built under the guidance of ASHRAE 189.1-2011 in different climate conditions and local markets. The Long-term Cost-Benefit for the 40-year Study Period (Figure 11 and Table 18, middle column) represents the expected Net Savings with the current OMB discount rate of 2% and energy price escalation as per the EIA/FEMP energy price models, with water escalation at 2%. The maximum potential Net Savings (for the Economic Slow Growth scenario) range across locations from approximately $1.6 million to $3 million for the offices and hotels.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

The sensitivity analysis represents the potential benefits that could be captured by buildings built under the guidance of ASHRAE 189.1-2011 under different conditions. That is, if energy prices escalate at 2% and water prices escalate at 4%, the Net Savings over the 40 years would increase by over 60%. These potential future Net Savings under this scenario could also be viewed as the potential future additional costs that will be incurred if a building does not follow ASHRAE 189.1-2011. For instance, if energy and water prices increase in future years, an office building may see its additional energy and water costs (which could have been avoided under ASHRAE 189.1-2011) almost double in some locations.

The minimum potential Net Savings (presented in the Economic High Growth scenario) is well above the threshold of Net Savings=0, ranging from approximately $600,000 to over $1 million for all building types in all locations. Therefore, even if energy prices stay constant (in real dollars, which is less than the EIA/FEMP energy price projections) and if water prices remain constant (in real prices, which is well below the current rate of 4% calculated from the Consumer Price Index and excluding inflation) and if the cost of money increases (represented by the discount rate, d, at 3%), these buildings built under the guidance of ASHRAE 189.1-2011 would still be economically efficient.

Both energy and water price escalation rates are included in the sensitivity analysis, and the potential future opportunities for Net Savings under different conditions can be graphically represented with the example of the Miami Office and Hotel (Figure 13). Within the Study Period range of 20 to 40 years, the Net Savings > 0 for both building types, indicating that ASHRAE 189.1-2011 is economically efficient for the scenarios under consideration. The potential Net Savings for the Miami Hotel is approximately $1 million greater than for the Miami Office in the Economic Slow Growth scenario, which is particularly affected by the higher water savings for the hotels (associated with the laundry facilities) coupled with the 4% water price escalation. In addition, the Net Savings increase significantly from 20 years to 40 years as the savings accumulate. The other locations show similar patterns for the sensitivity analysis for Net Savings for both building types.

Table 18: ASHRAE 189.1-2011 Sensitivity Analysis for Net Savings: 40-Year Study Period

Office

Economic High Growth Long-term Cost Benefit Economic Slow Growth
Baltimore $1,011,139 $1,575,111 $2,678,681
Helena $868,552 $1,372,045 $2,355,767
Memphis $675,239 $1,072,111 $1,869,869
Miami $1,130,615 $1,816,753 $3,094,444
Phoenix $616,903 $929,611 $1,585,968

 

Hotel

Economic High Growth Long-term Cost Benefit Economic Slow Growth
Baltimore $1,060,558 $1,708,479 $2,921,874
Helena $956,131 $1,541,898 $2,632,495
Memphis $801,719 $1,261,566 $2,143,359
Miami $1,286,096 $2,111,338 $3,615,835
Phoenix $606,956 $955,630 $1,640,788

Economic High Growth when d=3%, eE=0.5%, eW=0%
Long-term Cost Benefit when d=2%, eE=0.5%, eW=2%
Economic Slow Growth when d=1.5%, eE=2%, eW=4%

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure 13: ASHRAE 189.1-2011 Sensitivity Analysis for Net Savings: Miami

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Rate of Return on Investment

The (Adjusted) Rate of Return on Investment (ARROI) for the ASHRAE 189.1-2011 buildings in all locations and all building types is greater than the discount rate (2%), indicating that ASHRAE 90.1-2010 is economically efficient (Figure 14). The ARROI ranges from approximately 6% to 9% across the building types and locations, which is 3-4 times higher than the current investment returns (that is, the current returns on long-term US Treasury Notes, as denoted by the OMB real discount rate of 2%). Therefore, investments in buildings following the guidance of ASHRAE 189.1-2011 would be better than most investments currently available to the US federal government on the market.

ARROI is particularly appropriate for ranking independent projects to evaluate the relative return on specific levels of investment. The ranking of the office projects indicates that Miami Hotel and Miami Office have the highest returns on investments (over 8%), which are greater than the returns for the Phoenix Office and Hotel at approximately 7%, which are driven by the much lower water/wastewater costs in Phoenix. While the Baltimore Hotel had a higher Net Savings than Helena, the lower relative investment costs for the Helena Hotel gave it a higher ARROI. Therefore, the Helena Hotel would be a better investment than the Baltimore Hotel, but both investments perform better than the current default option (that is, US Treasury Notes at 2%).

Payback

The Simple Payback for ASHRAE 189.1-2011 buildings range between 3 and 7.5 years, indicating that the liquidity of the investment is fairly high, since that time period is less than a quarter of the total Study Period of 40 years (Figure 15). The Cumulative Annual Net Savings for each building in each location indicates the time at which the accumulating savings equal the initial investment (that is, the lines cross the x-axis). In general, the payback is shorter for the hotels than the offices in each location, but the payback time periods differ significantly across locations, based on local factor prices and relative energy and water savings. For instance, the Miami Office and Miami Hotel have a Simple Payback time of just over 3 years and have the highest Net Savings, while the Helena Hotel has a Simple Payback time of 3.4 years but a lower overall Net Savings.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure 14: ASHRAE 189.1-2011 Long-term Cost-Benefit: Adjusted Rate of Return on Investment (ROI) for All Building Types, All Locations

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Figure 15: ASHRAE 189.1-2011 Simple Payback through Cumulative Annual Net Savings: All Building Types, All Locations

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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Summary Results for ASHRAE 189.1-2011

For the two building types (Medium Office and Small Hotel) and five locations considered in this analysis, buildings built under the guidance of ASHRAE 189.1-2011 would yield cost-efficient results under a range of conditions. For the Long-term Cost-Benefit analysis, the Net Savings for all buildings and all locations is greater than the threshold of NS=0 (Table 19).

In addition, the Adjusted Rate of Return on Investment (ARROI) is greater than the threshold of 2% (current return on long-term US Treasury Notes, as reported by OMB for FY13). These investments recoup the initial investment amount in less than a quarter of the total Study Period of 40 years, indicating relatively high liquidity.

The sensitivity analysis of Net Savings addresses the robustness of these results under different conditions, specifically changes in the discount rate (from 1.5% to 3%) and changes in factor price escalation (specifically energy price escalation from 0.5% to 2%). In those conditions, considering the Long-term Cost-Benefit, all building types and all locations are economically efficient investments.

Table 19: ASHRAE 189.1-2011 Net Savings, ROI and Payback: All Building Types, All Locations (Long-term Cost-Benefit)

ASHRAE 189.1
Location Building Type Net Savings ARROI Simple Payback Payback Discounted
Miami Hotel $2,111,338 8.7% 2,9 3
Helena Hotel $ 541,895 8.4% 3.2 4
Baltimore Hotel $1,708,479 8.1% 3.5 4
Memphis Hotel $1,261,566 8.0% 3.6 4
Phoenix Hotel $955,630 7.1% 5.0 6
Miami Office $1,816,753 8.5% 3.0 4
Baltimore office 51,575,111 7.6% 4.2 5
Helena Office $1,372,04S 7.2% 4.9 6
Phoenix Office $929,611 6.6% 5.8 7
Memphis Office $1,072,111 6.3% 6.5 7

Long-term Cost Benefit when N=40, d=2%, eE=0.5%, eW-2%

LEED—ECONOMIC EFFICIENCY RESULTS ACROSS BUILDING TYPES AND LOCATIONS

The U.S. Green Building Council developed the Leadership in Energy and Environmental Design (LEED) in 2000. LEED is a voluntary rating system that uses credits that are weighted to reflect potential environmental impacts and responsiveness to regional issues. Each project must meet the prerequisites for certain levels of performance and obtain sufficient credit points to be certified at the different levels (i.e., Certified, Silver, Gold, and Platinum).

LEED certification provides independent, third-party verification that a building or community was designed and built using strategies aimed at achieving high performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality…. LEED-certified buildings are designed to:

•   Lower operating costs and increase asset value

•   Reduce waste sent to landfills

•   Conserve energy and water

•   Be healthier and safer for occupants

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

•   Reduce harmful greenhouse gas emissions

•   Qualify for tax rebates, zoning allowances and other incentives in hundreds of cities Moreover, an organization’s participation in the voluntary and technically rigorous LEED process demonstrates leadership, innovation, environmental stewardship and social responsibility.19

The analysis of the economic efficiency of LEED Silver, Gold and Platinum certification levels (as specified in the NDAA 2012) used the five selected locations and two building types (medium office and small hotel) to establish the baseline against which to compare the actual building data received from USGBC.

As noted in the Methodology section of this report, USGBC provided the expected energy savings, building water savings, site (landscape) water savings, and on-site renewable energy generation reported by 25 projects in the LEED submission materials for certification. No data is currently collected in the LEED certification process related to expected reductions in solid waste (municipal or hazardous) or operations and maintenance (general labor and equipment, cleaning, and landscaping), and therefore no data was provided, so these measures were then excluded from the analysis.

This analysis calculated the Net Savings and other economic efficiency measures using the energy and water costs relative to the incremental construction costs (incremental initial investment costs) compared to the baseline prototype buildings. The investment cost data (i.e., construction costs) were obtained by USGBC from communications with the project team and/or from public data sources. Unfortunately, insufficient data was provided to identify any particular technical cost drivers for the projects (such as unusual site conditions, structural requirements, or special equipment) or other factors that influence construction costs (such as local market conditions) independent of expected performance levels.

As a result, there is a high degree of variation among the reported construction costs for the LEED buildings (Table 20). [Note: Construction cost per square foot for the baseline prototype buildings, as estimated from RS Means, ranged from $111 to 120/sf for the hotels and $110 to 117/sf for the offices.] Therefore, the initial investment costs for some of the LEED projects was over 2 times the investment costs for the baseline prototype buildings.

Notably, in three cases (2 hotels, 1 office), the LEED construction cost was less than the specific baseline prototype building’s construction cost in that location. In these cases, the analysis of economic efficiency is clear, since these high performance buildings are obtained at no incremental initial cost—that is, all of the benefits are captured without requiring additional investments.

It is not possible in this study, given the relatively small size of the sample and the short time frame, to draw conclusions on relative trends in construction cost for LEED buildings, but previous studies have likewise found high variation in construction costs independent of expected building performance.20

Therefore, this study will use the construction costs provided for these LEED projects, with the caveat that this data has not been independently verified and may include costs related to specific technical or special function requirements that are not related to this study.

_________________

19 USGBC, “What LEED Delivers” (http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1990).

20 David Langdon (2004). Costing Green: A Comprehensive Cost Database and Budgeting Methodology, pp. 18-23, which found a “large variation in costs of buildings, even within the same building program category.”

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 20: LEED Silver, Gold, Platinum Buildings: Construction Cost Variation

Building Type Minimum Cost per square foot Maximum Cost per square foot Standard Deviation of Cost per square foot Average Cost per square foot Sample Size
Hotel $96.01 $259.68 $48.36 $134.65 9
Office $97.47 $279.64 $62.47 $179.54 16
Total Sample $96.01 $279.64 $60.85 $163.38 25

Long-Term Cost-Benefit

The Net Savings for the 89% of hotel buildings and 25% of the office buildings (48% of the total sample) across the five locations are greater than zero, indicating that LEED provides economically efficient results (Figure 16). There are differences in the Net Savings between the building types; for instance, the Net Savings for the Hotels in this sample generally tend to be higher than the Net Savings for the Offices in this sample. There are also differences by location; the office buildings in climate zones 4-7 (represented by Baltimore, MD and Helena, MT) were more likely to have extremely high construction costs that overshadowed the benefits from energy and water savings for those buildings.

Figure 16: LEED Long-term Cost-Benefit: Net Savings for All Buildings, All Certification Levels, and All Locations

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The LEED Net Savings are driven by the high initial investment costs (discussed above). The Net Savings are calculated using the reduction in the quantities of resources (i.e., energy and water) together with the local factor prices, as can be seen in the Annual Net Savings (Figure 17). In this sample, the water savings for the hotels is often more than half of the Annual Net Savings.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

The differences in local prices determine the relative savings in each location; for instance, Miami has highest water and wastewater disposal costs, and Baltimore has the highest energy costs, and these relative factor unit prices increase the value of those reductions for those locations. The reduction in water usage was higher for the Hotels than for Offices, possibly influenced by changes in related facilities (such as laundry facilities).

Six LEED buildings included on-site renewable energy generation, ranging from 3-12% renewable energy (measured as an offset of energy costs in LEED certification materials). As noted in the Methodology section of this report, it is assumed that the initial investment costs for these energy generation units were included in the construction costs, and the on-site energy was used to offset the energy used by the building. The resulting lower overall energy usage for those building, therefore, provided greater energy savings compared to the baseline prototype buildings.

Figure 17: LEED Annual Net Savings: All Buildings, All Certification, Levels, and All Locations

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It must be noted that, with this range of Annual Net Savings (between approximately $20,000 to $50,000 a year), it would be expected that the LEED projects would be economically efficient. From this limited sample of 25 LEED projects, it appears that buildings with incremental initial investment costs less than 20% of the baseline prototype buildings have Net Savings greater than the threshold (NS>0). If the incremental initial investments cost is equal to or greater than 20% of the baseline prototype building’s investment cost, it is difficult—but not impossible—for the Net Savings to be positive (Table 21). For example, the Memphis Hotel-Platinum’s incremental initial investment cost is 25% greater than the baseline investment, but the expected Annual Net Savings provide sufficient value over the 40-year Study Period for positive Net Savings. In all other cases where the costs are greater than 20%, however, the additional initial investment costs lead to negative Net Savings—and therefore an inefficient economic investment.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 21: LEED Incremental Investment Cost to Net Savings Comparison

Location Building Type Certification %increase S/sf from Baseline Net Savings
Baltimore Hotel Gold 80% $2,389,476
Memphis Office Silver 91% $1,360,692
Baltimore Hotel Silver 94% $1,677,037
Helena Office Gold 100% $1,229,819
Helena Hotel Platinum 100% $1,653,282
Phoenix Hotel Silver 101% $1,037,229
Miami Hotel Silver 104% $1,814,791
Phoenix Office Silver 104% $496,401
Baltimore Hotel Silver 107% $1,196,059
Memphis Office Gold 111% $552,849
Memphis Hotel Gold 111% $575,051
Memphis Office Stiver 120% ($247,195)
Memphis Hotel Platinum 125% $279,066
Baltimore Office Silver 126% ($899,960)
Baltimore Office Gold 134% ($975,804)
Helena Office Gold 138% ($1,144,800)
Memphis Office Silver 149% ($2,059,962)
Baltimore Office Gold 168% ($3,405,806)
Memphis Office Platinum 170% ($2,733,037)
Helena Office Platinum 215% ($5,678,077)
Baltimore Office Platinum 217% ($6,077,130)
Baltimore Office Gold 229% ($7,248,508)
Memphis Hotel Gold 232% ($5,426,645)
Helena Office Silver 237% ($6,968,371)
Helena Office Gold 252% ($8,229,571)

Note: Net Savings for Long-term Cost-Benefit when N=40, d=2%, eE=0.5%, eW=2%.

The sensitivity analysis on Net Savings provides additional insight into the potential savings associated with LEED buildings in different climate conditions and market conditions. The Long-term Cost-Benefit for the 40-year Study Period (Figure 16 and Table 22, middle column) represents the expected Net Savings with the current OMB discount rate of 2% and the energy price escalation as per the EIA/FEMP energy price models, with water/wastewater price escalation at 2%.

The maximum potential Net Savings (for the Economic Slow Growth scenario) yields positive Net Savings for 52% of the LEED buildings, indicating that even if some of these buildings are not currently economically efficient, they may yield positive Net Savings if energy and/or water prices increase significantly (Table 22).

The sensitivity analysis represents the potential benefits that could be captured by LEED-certified buildings under different conditions. That is, if energy and water prices escalate at 2% and 4% respectively, the Net Savings over the 40 years for some buildings could increase by over 50%. These potential future Net Savings under this scenario could also be viewed as the potential future additional costs that will be incurred if a building does not implement energy and/or water savings options.

The sensitivity analysis provides additional insight into the potential future benefits under different conditions. For the Phoenix Office and Hotel (Figure 18), the Net Savings >0 within the Study Period range of 20 to 40 years for both building types, indicating that they are economically efficient investments for the scenarios under consideration. The potential Net Savings for the Hotel is more than twice the Net Savings for the Office, and these savings increase rapidly over the time period as the savings accumulate.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 22: LEED Silver, Gold and Platinum Sensitivity Analysis for Net Savings: 40-Year Study Period

Office

Certification Economic High Growth Long-term Cost Benefit Economic Slow Growth
Helena Gold 5906,930 51,229,819 $1,932,998
Memphis Silver $1,172,613 $1,360,692 51,807,745
Memphis Gold $271,553 $552,849 51,197,664
Phoenix Silver $324,822 $496,401 $900,244
Memphis Silver $461,313 -5247,195 5243,827
Baltimore Gold $1,297,010 -$975,804 -5290,360
Baltimore Silver -$1,096,446 -5899,960 -5474,253
Helena Gold -$1,420,797 $1,144,800 $532,064
Memphis Silver -52,252,494 -52,059,962 -51,633,805
Memphis Platinum -53,033,246 $2,733,037 -$2,031,640
Baltimore Gold -53,678,943 $3,405,806 -$2,864,316
Helena Platinum -$5,995,463 $5,678,077 -$5,003,881
Baltimore Platinum -56,408,657 -56,077,130 -$5,360,807
Helena Silver -$7,292,151 -56,968,371 -$6,275,045
Baltimore Gold -57,488,512 -57,248,508 -$6,749,437
Helena Gold -$8,455,474 $3,229,571 -$7,754,162

 

Hotel

Certification Economic High Growth Long-term Cost Benefit Economic Slow Growth
Baltimore Gold $1,918,456 $2,389,476 $3,267,553
Miami Silver $1,145,054 $1,814,791 $3,066,637
Helena Platinum $1,148,340 $1,653,282 $2,665,954
Baltimore Silver $1,205,997 $1,577,037 $2,555,172
Baltimore Sliver $694,750 $1,196,059 $2,164,747
Phoenix Silver 5737,235 $1,037,229 $1,664,572
Memphis Gold 5222,152 $575,051 $1,258,564
Memphis Platinum $100,635 $279,066 $1,113,906
Memphis Gold -55,687,539 -$5,426,645 -$4,869,220

Economic High Growth when d=3%, eE=0.5%, eW=0%
Long-term Cost Benefit when d=2%, eE=0.5%, eW=2%
Economic Slow Growth when d=1.5%, eE=2%, eW=4%

Figure 18: LEED Sensitivity Analysis for Net Savings: Phoenix

image

The potential future opportunities for Net Savings under different conditions can be graphically represented with the example of the Memphis Office–Silver (Figure 19). In this example, it can be noted that even though the Net Savings are less than 0 for the Long-term Cost-Benefit, a portion of the boundary area that represents the feasible range of Net Savings is above the threshold, indicating that the investment could provide economically efficient results in the future under certain conditions—specifically, with energy and water price escalation at 2% and 4% respectively, and decreasing cost of money (represented by the discount rate, d, at 1.5%).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure 19: LEED Sensitivity Analysis for Net Savings: Memphis Office–Silver

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Rate of Return on Investment

The (Adjusted) Rate of Return on Investment (ARROI) is particularly appropriate for ranking independent projects that have Net Savings greater than 0 to evaluate the relative return on specific levels of investment. (ARROI cannot be calculated for projects with Net Savings<0.) For the three (3) LEED buildings that have initial investment costs less than the baseline prototype buildings’ initial investment costs (i.e., the Baltimore Hotel-Gold, Baltimore Hotel-Silver, and Memphis Office-Silver), the ARROI is essentially infinite—that is, there is no incremental investment cost, and investments in these projects would be the strongest investment options.

For the other nine (9) LEED projects with positive Net Savings, the ARROI is greater than the discount rate (2%), indicating economically efficient investments (Figure 20). The ARROI ranges from approximately 3% to 17%, which is 1.5 to 8 times higher than the current investment returns (that is, the current returns on long-term US Treasury Notes, as denoted by the OMB real discount rate of 2%). Therefore, investments in these buildings would be better than most investments currently available to the US federal government on the market.

The Helena Office–Gold has the highest return on investment, and also had the highest Net Savings. The Phoenix Office–Silver had a slightly lower Net Savings than the Memphis Office–Gold, but required a lower incremental initial investment, and is therefore a better investment given the return on investment. For the Hotels, the Helena Hotel–Platinum has the highest return on investment, even though it had a slightly lower Net Savings than Miami Hotel–Silver, which is driven by the relatively lower investment required for the benefits obtained. (As noted above, the Baltimore Hotel–Gold, Baltimore Hotel–Silver, and Memphis Office–Silver with high Net Savings had no incremental initial investment cost and therefore do not appear on this chart.) Therefore, the Helena Hotel–Platinum would be a better investment than the Miami Hotel–Silver, but both investments would perform significantly better than the current default option (i.e., Treasury Notes at 2%).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Payback

Simple Payback provides a measure of relative liquidity of an investment, and for the 3 LEED projects with initial investment costs less than the baseline prototype buildings’ initial investment costs, the liquidity is immediate—that is, the Cumulative Annual Net Savings are greater than 0 as soon as these buildings are occupied. (Note: For projects with Net Savings <0, the Payback Period is greater than the Study Period, and is not presented here.) The Cumulative Annual Net Savings for each of these buildings indicates the time at which the accumulating savings equal the incremental initial investment (that is, when the line crosses the x-axis) (Figure 21). For the remaining nine (9) LEED projects with Net Savings >0, the Simple Payback time periods range between less than a year to just over 25 years, indicating that while the liquidity for some investments are fairly high (being significantly less than the Study Period of 40 years), other investments provide significant overall Net Savings but the liquidity is not high.

Figure 20: LEED Long-term Cost-Benefit: Adjusted Rate of Return on Investment (ROI) for All Building Types, All Certification Levels, and All Locations

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Summary Results for LEED

For this sample of 25 buildings that have been certified by the USGBC at the level of Silver, Gold and Platinum, which represent the two building types (Office and Hotel), the majority of these buildings (52%) provide economically efficient investment opportunities under certain conditions, examined within the context of the five selected locations for this study. Three projects have initial investment costs that are less than the baseline prototype buildings, and therefore provide benefits without additional costs (Table 23).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure 21: LEED Simple Payback through Cumulative Net Savings: All Building Types for All Locations

image

Nine additional buildings provide positive Net Savings in the Long-Term Cost-Benefit scenario, and an additional project (Memphis Office–Silver) provides positive Net Savings under the Economic Slow Growth scenario (Study Period of 40 years, with energy escalation at 2%, water escalation at 4%, and the discount rate at 1.5%). For these buildings, the Adjusted Rate of Return on Investment (ARROI) is greater than the threshold of 2% (current return on long-term US Treasury Notes, as reported by OMB for FY13). Six of these projects recoup the incremental initial investment amount in less than one quarter of the total Study Period of 40 years (i.e., Simple Payback), indicating relatively high liquidity.

The sensitivity analysis of Net Savings addresses the robustness of these results under different conditions, specifically changes in the discount rate (from 1.5% to 3%) and changes in factor price escalation (specifically, energy price escalation from FEMP estimates (~0.5%) to 2%, and water price escalation from 0% to 4%). In those conditions, considering the long-term benefit at 40 years, 52% of the buildings would be economically efficient investments.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 23: LEED Long-term Cost-Benefit Analysis: Summary of Net Savings, ROI, and Payback for All Building Types, All Certification Levels, and All Locations

LEED Projects
Location Building Type Certification Net Savings ARROI Simple Payback Discounted Payback
Baltimore Hotel Gold $2,389,476 NA NA NA
Baltimore Hotel Silver $1,677,037 NA NA NA
Helena Hotel Platinum $1,653,282 13.9% 0.4 1
Phoenix Hotel Silver $1,037,229 11.2% 1.1 2
Miami Hotel Silver $1,814,791 8.7% 2.9 3
Baltimore Hotel Silver $1,196,059 5.8% 8.2 9
Memphis Hotel Gold $575,051 3.9% 16.9 18
Memphis Hotel Platinum $279,066 2.5% 26.8 28
Memphis Hotel Gold ($5,426,645) ROIcO PB>40 PB>40
Memphis Office Silver $1,360,692 NA NA NA
Helena Office Gold $1,229,819 16.9% 0.1 1
Memphis Office Gold $552,849 3.6% 17.1 19
Phoenix Office Silver $496,401 4.8% 10.7 12
Memphis Office Silver ($247,195) 1.4% PB>40 PB>40
Baltimore Office Silver ($899,960) 0.0% PB>40 PB>40
Baltimore Office Gold ($975,804) 0.5% PB>40 PB>40
Helena Office Gold ($1,144,800) 0.2% PB>40 PB>40
Memphis Office Silver ($2,059,962) ROIcO PB>40 PB>40
Memphis Office Platinum ($2,733,037) ROIcO PB>40 PB>40
Baltimore Office Gold ($3,405,806) ROKO PB>40 PB>40
Helena Office Platinum ($5,678,077) ROIcO PB>40 PB>40
Baltimore Office Platinum ($6,077,130) ROKO PB>40 PB>40
Helena Office Silver ($6,968,371) ROKO PB>40 PB>40
Baltimore Office Gold ($7,248,508) ROKO PB>40 PB>40
Helena Office Gold ($8,229,571) ROKO PB>40 PB>40

Long-term Cost Benefit when N=40, d=2%, eE=0.5%, eW=2%

NA = Not applicable, since no incremental initial investment cost

GREEN GLOBES—ECONOMIC EFFICIENCY RESULTS ACROSS BUILDING TYPES AND LOCATIONS

The Green Building Initiative (GBI) launched the Green Globes certification program in 2004 under a licensing agreement with the Canadian Green Globes® program. That program was based on the BREEAM Canada program for existing buildings that was developed by the Canada Standards Association, which in turn was based on the BREEAM program developed in the UK in 1990 by the Building Research Establishment (BRE). For the U.S. program, GBI modified the Canadian Green Globes, including adding a third-party assessment process.

The Green Globes certification is a voluntary rating system that uses credits that are weighted to reflect potential environmental impacts.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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The Green Globes software tools and ratings/certification system use a recognized and proven assessment protocol to comprehensively assess environmental impacts on a 1,000 point scale in multiple categories [including energy, water, resources, emissions, indoor environment, project management, and site]… Those buildings that achieve 35% or more of the 1,000 points possible in the Green Globes rating system are eligible candidates for a certification of one, two, three, or four Green Globes.

    The Green Globes system provides higher levels of achievement based on the number of points a building acquires…. After achieving a minimum threshold of 35% of the 1,000 total points in the preliminary self-evaluation, new and existing buildings are eligible to seek a Green Globes certification and rating for their environmental sustainability and achievements. The process utilizes third-party assessors with expertise in green building design, engineering, construction and facility operations. These professionals interface with project teams and building owners to review documentation and conduct onsite building tours. Green Globes rating and certification is attainable for a wide range of commercial and government buildings, and enables building owners to credibly market their environmental responsibility to shareholders, tenants, and their community.”21

The analysis of the economic efficiency of the Green Globes certification levels (One, Two, Three and Four Globes) used the five selected locations and two building types (medium office and small hotel) to establish the baseline prototype buildings against which to compare the actual building data received from GBI.

As noted in the Methodology section of this report, GBI provided the expected energy and water savings for 11 projects based on communications with project teams, since these expected savings are not required as part of the Green Globes reporting requirements. No data is currently collected in the Green Globes certification process related to expected reductions in solid waste (municipal or hazardous) or operations and maintenance costs (general labor and equipment, cleaning, or landscaping), and therefore no data was provided by GBI for this study, so those benefit-cost categories were excluded from this analysis.

This analysis calculated the Net Savings and other economic efficiency measures using the energy and water costs relative to the incremental construction costs (initial investment costs) compared to the baseline prototype buildings. The investment cost data (i.e., construction costs) were obtained from public data sources.

Unfortunately, insufficient data was provided to identify any particular technical cost drivers for the projects (such as unusual site conditions, structural requirements, or special equipment) or other factors that influence construction costs (such as local market conditions) independent of expected performance levels.

As a result, there is a high degree of variation among the reported construction costs for this sample of 11 actual buildings that received Green Globes certification (Table 24). [Note: Construction cost per square foot for the baseline prototype buildings, as estimated from RS Means, ranged from $111 to 120/sf for the hotels and $110 to 117/sf for the offices.] Therefore, the initial investment costs for some of the Green Globes projects was over 2 times the investment costs for the baseline prototype buildings.

It is not possible in this study, given the relatively small size of the sample and the short time frame, to draw conclusions on relative trends in construction cost for Green Globes buildings.

Therefore, this study will use the construction costs provided for these Green Globes projects, with the caveat that this data has not been independently verified and may include costs related to specific technical or special function requirements that are not related to this study.

_________________

21 The Green Building Initiative, Green Globes Overview (http://www.thegbi.org/green-globes/).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Table 24: Green Globes One, Two, Three and Four Globes: Construction Cost Variation

Building Type Minimum Cost per square foot Maximum Cost per square foot Standard Deviation of Cost per square foot Average Cost per square foot Sample Size
Hotel $127.00 $244.00 $163.80 $49.43 5
Office $109.00 $235.00 $149.17 $47.85 6
Total Sample $109.00 $244.00 $155.82 $46.70 11

Long-Term Cost-Benefit

The Net Savings for the 20% of hotel buildings and 50% of the office buildings (45% of the sample) across the five locations are greater than zero, indicating that Green Globes provides economically efficient results (Figure 22). There do not appear to be significant differences in the Net Savings between the building types; however, this sample of 11 buildings is too small upon which to draw any significant conclusions on potential trends in Green Globes certified projects.

The Green Globes Net Savings are driven by the high initial investment costs (discussed above). The Net Savings are calculated using the reduction in the quantities of resources (energy and water) together with the local factor prices, balanced against the incremental initial investment costs. The Annual Net Savings for the Green Globes buildings range from approximately $500 to over $80,000 compared to the baseline prototype buildings (Figure 23). In this sample of the 11 Green Globes buildings, four projects had water savings that equaled over 50% of the Annual Net Savings.

The differences in local factor prices determines the relative savings in each locations; for instance, Baltimore has the highest energy prices, and the second highest wastewater disposal costs, and those factor unit prices increase the value of those reductions for those locations.

Figure 22: Green Globes Long-term Cost-Benefit: Net Savings for All Buildings, All Certification Levels, and All Locations

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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Figure 23: Green Globes Annual Net Savings: All Building Types, All Locations

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It should be noted that for the projects with Annual Net Savings over $20,000 a year, it would be expected that these Green Globes projects would be economically efficient. From this limited sample of 11 Green Globes projects, it appears that most of the buildings with incremental initial investments costs less than 20% of the baseline prototype buildings have Net Savings greater than the threshold (NS>0). If the incremental initial investment costs are greater than 20% of the baseline prototype building’s investment cost—or if the Annual Net Savings are small—the Net Savings will likely be negative, and therefore an inefficient economic investment (Table 25).

The sensitivity analysis on Net Savings provides additional insight into the potential savings associated with Green Globes buildings in different climate conditions and market conditions. The Long-term Cost-Benefit for the 40-year Study Period (Figure 22 and Table 26, middle column) represents the expected Net Savings under the current OMB discount rate of 2% and energy price escalation as per the EIA/FEMP energy price models, with water price escalation at 2%.

Table 25: Green Globes Incremental Investment Cost to Net Savings Comparison

Location Building type Certification %increase $/sf from Baseline Net Savings
Memphis Office Green Globes 3 102% 5821,071
Baltimore Office Green Globes 2 103% $218,994
Memphis Office Green Globes 4 103% $790,045
Helena Hotel Green Globes 2 110% ($477,481)
Baltimore Hotel Green Globes 2 116% $2,046,430
Memphis Hotel Green Globes 1 116% $180,633
Phoenix Office Green Globes 2 144% ($2,041,132)
Memphis Office Green Globes 3 147% ($1,223,329)
Baltimore Hotel Green Globes 1 149% ($2,516,575)
Baltimore Office Green Globes 4 201% ($4,597,574)
Helena Hotel Green Globes 1 211% ($5,348,579)

Note: Net Savings for Long-term Cost-Benefit when N=40, d=2%, eE=0.5%, eW=2%.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Table 26: Green Globes Sensitivity Analysis for Net Savings: 40-Year Study Period

  Office
  Certification Economic High Growth Long-term Cost Benefit Economic Slow Growth
Memphis GG3 $538,901 $821,071 $1,378,116
Memphis GG4 $567,160 $790,045 $1,320,114
Baltimore GG2 $36,796 $218,994 $526,315
Memphis GG3 -$1,598,778 $1,223,329 $387,235
Phoenix GG2 -$2,174,136 $2,041,132 -$1,722,805
Baltimore GG4 $5,089,888 $4,597,574 $3,578,645

  Hotel
  Certification Economic High Growth Long-term Cost Benefit Economic Slow Growth
Baltimore GG2 $1,122,300 $2,046,430 $3,837,527
Memphis GGI $229,449 $180,633 $872,277
Helena GG2 $485,065 -$477,481 $464,666
Baltimore G61 $2,529,019 $2,516,575 $2,490,938
Helena GGI -$5,385,541 -$S, 3 48,5 79 -$5,247,877

Economic High Growth when d=3%. eE=0.5%, eW=0%

Long-term Cost Benefit when d=2%, eE=0.S%, eW=2%

Economic Slow Growth when d=l,5%, el-2%, eW=4%

The sensitivity analysis represents the potential benefits that could be captured by these buildings under different conditions. That is, if energy and water prices escalate at 2% and 4% respectively (for the Economic Slow Growth scenario), the Net Savings for several buildings in this sample could increase by over 50% and, in some cases, almost double. These potential future Net Savings under this scenario could also be viewed as the potential future additional costs that will be incurred if a building does not implement energy and/or water saving options.

The sensitivity analysis provides additional insight into the range and conditions of potential future Net Savings (Figure 24). For the Memphis Office and Baltimore Hotel, the Net Savings are great than 0 within the Study Period of 20-40 years, indicating that these buildings are economically efficient for the scenarios under consideration. The potential Net Savings for the Baltimore Hotel is considerably greater than the potential Net Savings for the Memphis Office, and these savings increase rapidly over the time period, particularly related to the water price escalation.

Figure 24: Green Globes Sensitivity Analysis for Net Savings: Memphis Office and Baltimore Hotel

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Rate of Return on Investment

The (Adjusted) Rate of Return on Investment (ARROI) is particularly appropriate for ranking independent projects that have Net Savings greater than 0 to evaluate the relative return on specific levels of investment. (ARROI cannot be calculated for projects with Net Savings<0.) For the five (5) Green Globes projects with positive Net Savings, the ARROI is greater than the discount rate (2%), indicating economically efficient investments (Figure 25). The ARROI ranges from

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

approximately 2.5% to 8%, which is higher than the current investment returns (that is, the current returns on long-term US Treasury Notes, as denoted by the OMB real discount rate of 2%). Therefore, investments in these buildings would be better than most investments currently available to the US federal government on the market.

The Memphis Office-Green Globes Three has the highest return on investment of the five buildings, even though it had a lower Net Savings than the Baltimore Hotel–GG2. Because it had a lower incremental initial investment cost, it is therefore a better return on the investment. All of these projects would perform better than the current default option (i.e., Treasury Notes at 2%).

Figure 25: Green Globes Long-term Cost-Benefit: Adjusted Rate of Return on Investment (ROI) for All Building Types, All Certification Levels and All Locations

image

Payback

Simple Payback provides a measure of relative liquidity of an investment. (Note: For projects with Net Savings <0, the Payback Period is greater than the Study Period, and is not presented here.) The Cumulative Annual Net Savings for each of the five (5) Green Globes buildings with NS>0 indicates the time at which the accumulating savings equal the incremental initial investment (that is, when the line crosses the x-axis) (Figure 26). For these buildings, the Simple Payback time periods range between 3 years to just over 32 years, indicating that while the liquidity for some investments are fairly high (being significantly less than the Study Period of 40 years), other investments provide significant overall Net Savings but the liquidity is not high.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Figure 26: Green Globes Simple Payback through Cumulative Annual Savings: All Building Types, All Locations

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Summary Results for Green Globes

For this sample of 11 buildings that have been certified by the Green Building Initiative (GBI) at the level of One, Two, Three or Four Globes, which represent the two building types (Office and Hotel), five buildings (45% of the sample) provide economically efficient investment opportunities under certain conditions, examined within the context of the five selected locations for this study (Table 27).

For these buildings, the Adjusted Rate of Return on Investment (ARROI) is greater than the threshold of 2% (current return on long-term US Treasury Notes, as reported by OMB for FY13), and three of these projects recoup the incremental initial investment amount in less than one quarter of the total Study Period of 40 years (i.e., Simple Payback), indicating relatively high liquidity.

The sensitivity analysis of Net Savings addresses the robustness of these results under different conditions, specifically changes in the discount rate (from 1.5% to 3%) and changes in factor price escalation (specifically, energy price escalation from FEMP estimates (~0.5%) to 2%, and water price escalation from 0% to 4%). In those conditions, considering the long-term benefit at 40 years, 45% of the buildings would be economically efficient investments.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 27: Green Globes Long-term Cost-Benefit Analysis: Summary of Net Savings, ROI, and Payback for All Building Types, All Certification Levels, and All Locations

Green Globes
Location Building Type Net Savings ARROI Simple Payback Discounted Payback
Baltimore Hotel Green Globes 2 $2,046,430 5.2% 10.2 11
Memphis Hotel Green Globes 1 $180,633 2.5% 32.6 34
Helena Hotel Green Globes 2 ($477,481) ROkO PB>40 PB>40
Baltimore Hotel Green Globes 1 ($2,516,575) ROIcO PB>40 PB>40
Helena Hotel Green Globes 1 ($5,348,579) ROKO PB>40 PB>40
Memphis Office Green Globes 3 $821,071 8.1% 3.4 4
Memphis Office Green Globes 4 $790,045 6.2% 6.3 7
Baltimore Office Green Globes 2 $218,994 3.8% 19.7 21
Memphis Office Green Globes 3 ($1,223,329) 0.5% PB>40 PB>40
Phoenix Office Green Globes 2 ($2,041,132) ROKO PB>40 PB>40
Baltimore Office Green Globes 4 ($4,597,574) ROKO PB>40 PB>40

Long-term Cost Benefit when N=40, d=2%, eE=0.5%, eW=2%

SUMMARY OF RESULTS OF ECONOMIC EFFICIENCY EVALUATION

This study analyzed the economic efficiency of buildings built under the guidance of the ASHRAE Standards 90.1-2010 and 189.1-2011 for two building types (office, hotel) and five (5) locations representing the variety of climate and market conditions across the U.S. using building models. (The recent release of these standards precludes the use of actual building data, as described in the Methodology section of this report.) These ASHRAE building standards offer the opportunity to significantly reduce energy and water use (and related costs) in DOD facilities. As mentioned in earlier, Standard 90.1-2010 was developed explicitly to achieve the 30% energy improvement specified in the Energy Independence and Security Act (2007).

The results of the analysis in this study indicate that those standards are economically efficient across all five locations for both building types. The Long-term Cost-Benefit analysis of ASHRAE Standard 90.1-2010 provided significant Net Savings in energy reductions, equaling approximately $400,000 for offices and $200,000 for hotels over the 40-year Study Period. The (Adjusted) Rate of Return on Investment was between 5-8% across the building types and locations, and the payback time period was between 3 and 10 years, depending on the location and building type.

The sensitivity analysis results indicate that, if the cost of energy escalated at higher rates than currently projected by the US Energy Information Administration (that is, at 2% annual escalation), the potential Net Savings could increase up to $800,000 for offices and up to $400,000 for hotels over the 40-year Study Period.

The Long-term Cost-Benefit analysis of ASHRAE Standard 189.1-2011 provided greater Net Savings than 90.1-2010, in both energy and water cost reductions. In particular, the water cost reductions equaled approximately 50% of the Annual Savings across the building types and locations. ASHRAE 189.1-2011 also includes the requirement for on-site energy generation, and these incremental initial construction costs were included, and the on-site energy was used to offset the building energy used, so the overall building energy reductions were greater for 189.1-2011 than for 90.1-2010. The Net Savings for both offices and hotels were between $1-2 million over the 40-year Study Period, and the (Adjusted) Rate of Return on Investment were between 7-9% across

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

the building types and locations. The payback time period was between 3 and 6 years, depending on the location and building type.

The sensitivity analysis results for ASHRAE 189.1-2011 also indicate that, even if water prices remained constant (in real dollars) and the cost of money increased (discount rate raised to 3%), these buildings would remain cost-effective. In addition, if energy and water prices increased significantly (2% and 4% respectively), the potential Net Savings could increase to $2-4 million over the 40-year Study Period.

These potential Net Savings can also be viewed as the potential future additional costs that may be incurred for these building types and locations under different scenarios. This analysis examines specifically those costs that could have been avoided for these buildings if they were built under the guidance of these building standards.

This study analyzed the economic efficiency of buildings built under the guidance of the Leadership in Energy and Environmental Design (LEED) for two building types (office, hotel) and five (5) locations representing the variety of climate and market conditions across the U.S. using data from 25 LEED-certified buildings. (The Methodology section of this report describes the specific data provided by the US Green Building Council.) LEED, as a voluntary building rating systems, offers the opportunity to improve overall building performance, including attributes that were not assessed for financial implications in this study. For example, this study did not consider the economic implications of improvements in occupant health, safety, and well-being, since the empirical basis for those financial impacts have not been established. It also did not calculate the spill-over effects that could be associated with programs focused on local procurement of materials, equipment, and systems, including the development of the local economy, since these financial implications have not been empirically verified.

The analysis results in this study indicate that buildings built under the guidance of the LEED rating systems are economically efficient depending on building type and location, and are highly sensitive to the initial construction cost. This sample of 25 LEED-certified buildings provides insight into the cost-effectiveness of the rating system, but is not large enough to make conclusions on trends in LEED-certified buildings. Specifically, insufficient information was obtained relating to the cost drivers for the initial investment cost (i.e., construction cost); the costs used in this analysis may include items to meet specific technical or special functional requirements that are not related to this study (as discussed in the Results section of this report).

Three buildings in this sample had construction costs that were lower than the baseline prototype building and therefore provided the value of energy and water cost savings with no incremental cost increase. Nine additional buildings had Net Savings ranging from $400,000 to $2.4 million over the 40-year Study Period, with (Adjusted) Rate of Return on Investment of between 3-14%, and payback time periods from less than a year to 25 years, depending on the building type and location.

The sensitivity analysis for these LEED buildings indicate that, if energy and water prices increased significantly (2% and 4% respectively), the potential Net Savings could increase to $1-3 million over the 40-year Study Period. In addition, the sensitivity analysis indicates that an additional building that was not economically efficient with moderate energy and water price escalation (at 0.5% and 2% respectively) would become economically efficient if those prices increased significantly.

The remaining 12 buildings in this sample (48% of the total) had incremental initial investment costs over 20% higher than the baseline building prototype and had NS<0. Even though the average Annual Savings for the sample was over $30,000, the Net Savings for these buildings were not above the threshold value for cost effectiveness (that is, Net Savings need to be greater than zero), since the accumulation of savings over the 40-year Study Period was insufficient to offset the incremental initial investment cost. (In cases where the Net Savings is negative, it is not

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

possible to compute return on investment, and the payback period is always beyond the designated study period.)

Based on the results of the analysis in this study for this sample of 25 actual buildings, LEED-certified buildings provide significant Annual Savings, and are cost-efficient when the incremental initial investment costs do not exceed 20% of the baseline investment costs. In addition, the recent DOD guidance (2010) specifying that 40% of all points in those rating systems must be in energy and water categories will increase the economic efficiency (as measured in this study) of DOD buildings using this rating system. It must be noted, however, that these results are highly dependent on the data provided for this set of 25 buildings, particularly the reported initial construction costs.

This study also analyzed the economic efficiency of buildings built under the guidance of the Green Globes rating system for two building types (office, hotel) and five (5) locations representing the variety of climate and market conditions across the U.S. using data from 11 Green Globes-certified buildings. (The Methodology section of this report describes the specific data provided by the Green Building Initiative.) Green Globes, as a voluntary building rating systems, offers the opportunity to improve overall building performance, including attributes that were not assessed for financial implications in this study. For example, this study did not consider the economic implications of improvements in occupant health, safety, and well-being, since the empirical basis for those financial impacts have not been established.

The analysis results in this study indicate that buildings built under the guidance of the Green Globes rating systems are economically efficient depending on building type and location, and are highly sensitive to the initial construction cost. This sample of 11 actual Green Globes-certified buildings provides insight into the cost-effectiveness of the rating system, but is not large enough to make conclusions on trends in Green Globes-certified buildings. Specifically, insufficient information was obtained relating to the cost drivers for the initial investment cost (i.e., construction cost); the costs used in this analysis may include items to meet specific technical or special functional requirements that are not related to this study.

Five buildings in this sample had Net Savings ranging from $200,000 to $2 million over the 40-year Study Period, with (Adjusted) Rate of Return on Investment of between 3-8%, and payback time periods from 3 to 33 years, depending on the building type and location. The sensitivity analysis for these Green Globes buildings indicate that, if energy and water prices increased significantly (2% and 4% respectively), the potential Net Savings could increase to $0.5-4 million over the 40-year Study Period.

The remaining 6 buildings in this sample (55% of the total) had incremental initial investment costs over 20% higher than the baseline building prototype and had NS<0. Even though the average Annual Savings for the sample was over $25,000, the Net Savings for these buildings were not above the threshold value for cost effectiveness (that is, Net Savings need to be greater than zero), since the accumulation of savings over the 40-year Study Period was insufficient to offset the incremental initial investment cost. (In cases where the Net Savings is negative, it is not possible to compute return on investment, and the payback period is always beyond the designated study period.)

Based on the results of the analysis in this study for this sample of 11 actual buildings, Green Globes-certified buildings provide sizeable Annual Savings, and are cost-efficient when the incremental initial investment costs do not exceed 20% of the baseline investment costs. In addition, the recent DOD guidance (2010) specifying that 40% of all points in those rating systems must be in energy and water categories will increase the economic efficiency (as measured in this study) of DOD buildings using this rating system. It must be noted, however, that these results are highly dependent on the data provided for this set of 11 buildings, particularly the reported initial construction costs.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

APPLICABILITY OF COST EFFECTIVENESS STUDY TO DOD MILITARY CONSTRUCTION AND RENOVATION

The National Defense Authorization Act (NDAA) 2012 Section 4830(a)(3) requires the Department of Defense to provide a “policy prescribing a comprehensive strategy for the pursuit of design and building standards across the Department of Defense that include specific energy-efficient standards and sustainable design attributes for military construction based on the cost-benefit analysis return on investment, and demonstrated payback.”22

The results of the economic evaluation of the building standards and rating systems presented in this report have direct applicability to the development of the DOD comprehensive strategy for cost-effective military construction and renovation. The study highlighted opportunities for cost-effective high performance buildings built under the guidance of the specified standards and rating systems for different building types, specifically for a residential facility and an office building, in both energy and water usage. It also examined the potential economic value in different locations that represent the variety of climate zones and urban/rural markets across the U.S., incorporating local factor unit prices and conditions that affect cost-efficiency. The sensitivity analysis provides insight into the variability of cost-effectiveness, in particular, potential escalation of energy and water prices and changes in the cost of money (as represented by the discount rate).

In addition, the second portion of this study tested the applicability of the analytical approach, process and tools developed for this research to military construction and renovation projects going forward, as further input for the DOD comprehensive strategy. The results from these example applications of the analytical approach using empirical data from actual DOD buildings were reviewed with staff from the selected installations, HQ, construction agents, and the Office of the Secretary of Defense. The exercise provided important feedback for the potential application of the economic efficiency evaluation process for DOD military construction.

This study recognizes that the core purpose of military construction and renovation is to provide high performance facilities that are effective and efficient. Specifically, the results of this study and the application of the analytical approach can be used to identify opportunities to improve effectiveness and efficiency, such as to reduce the resource usage (and the related burden on neighboring communities), reduce vulnerabilities to price increases, and increase overall resiliency by reducing the “baseload” resource requirements under normal and extreme conditions. The primary objective is to ensure the usefulness of the approach to aid decision-making for strategic investments in DOD capital facility assets.

IMPLICATIONS OF ECONOMIC EFFICIENCY EVALUATION FOR MILITARY CONSTRUCTION AND RENOVATION INVESTMENTS

The findings from the economic evaluation of the specified building standards and rating systems indicate opportunities to improve the effectiveness and economic efficiency of military construction and renovation, as input into the DOD comprehensive strategy. The Department of Defense (DOD) and its components manage more than 500,000 buildings and structures worldwide, containing more than 2.1 billion total square feet of space. The annual energy budget for these facilities is more than $4 billion. Spending on military construction, family housing, BRAC, and related programs in FY 2010 was $23.3 billion, and was $13 billion in FY2012 (with wind-down of the BRAC program).

_________________

22 National Defense Authorization Act 2012, Section 4830(a)(3).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

The Department of Defense has incorporated life cycle cost analysis into all construction projects. Form 1391, which is used to initiate the authorization process for military construction projects, requires a life cycle cost analysis. The DOD’s Sustainable Building Policy includes supplementary information (October 2010), which requires that, beginning in FY12, 40% of all credits for a LEED-Silver (or equivalent) rating will be associated with energy and water credits. It also includes the specification that since “reducing total cost of ownership is intrinsic to sustainable buildings […] The DOD components shall incorporate life cycle and cost/benefit analysis into design decisions for new construction and renovation/repair projects.”23

In addition, DOD components have been developing tools and testing approaches to address these areas, including:

  • A recent Air Force briefing described the development of a “Sustainability Measurement Tool” that includes life cycle cost analysis and the “Sustainability Return on Investment” (SROI) system developed by HDR Decision Economics.24
  • The Navy has developed an “eROI tool” that includes life cycle cost analysis as well as other priorities (such as minimize shore energy consumption and provide reliable energy to critical infrastructure).25
  • Army Corps of Engineers has developed an “Energy and Sustainability checklist” (based on a Navy checklist) to track compliance with federal mandates, and other performance measures.
  • DOD-wide program on Total Ownership Costs to “maintain or improve current readiness while reducing operations and support costs.”26

The results of the analysis in this study indicate that the building standards and rating systems provide buildings that are economically efficient depending on building type and location. Specifically, the Long-term Cost-Benefit analysis of ASHRAE Standard 90.1-2010 provided significant Net Savings in energy reductions for both building types and in all 5 locations. ASHRAE Standard 189.1-2011 provided greater Net Savings than 90.1-2010 across all locations for both building types in both energy and water cost reductions. In particular, the water cost reductions equaled approximately 50% of the Annual Savings across the building types and locations. ASHRAE 189.1-2011 also includes the requirement for on-site energy generation, and these incremental initial construction costs were included, and the on-site energy was used to offset the building energy used, so the overall building energy reductions were greater for 189.1-2011 than for 90.1-2010.

Buildings built under the guidance of the LEED rating system (Silver, Gold and Platinum Certification levels) and the Green Globes rating system (One, Two, Three and Four Globes certification levels) are economically efficient depending on building type and location, and are highly sensitive to the incremental initial construction cost. The LEED Volume Certification program could further increase cost-effectiveness through pre-approval of standardized designs and management procedures, and coordinated procurement programs. In addition, the recent DOD guidance (2010) specifying that 40% of all points in those rating systems must be in energy and water categories will increase the economic efficiency (as measured in this study) of DOD buildings

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23 Office of the Secretary of Defense, Deputy Under Secretary of Defense (Installations & Environment) Dorothy Robyn (2010). “Department of Defense Sustainable Buildings Policy Memorandum.”

24 HDR Decision Economics (2012). “Sustainability Measurement Tool.”

25 CAPT Burgess, Operations Officer, NAVFAC (2011). “Mid-Atlantic Energy Programs.”

26 Office of the Under Secretary of Defense (Comptroller) (2011). Department of Defense Efficiency Initiatives: FY 2012 Budget Estimates, and 1997 memorandum referenced in (http://www.almc.army.mil/alog/issues/JanFeb99/MS368.htm).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

using this rating system. It must be noted, however, that these results are highly dependent on the data provided for these data samples, particularly the reported initial construction costs.

The sensitivity analysis incorporated variations in energy and water price escalations, as well as the cost of capital (represented by the discount rate). The results indicate that Net Savings for the specified buildings standards and rating systems would increase significantly with annual price escalations of 2% for energy and 4% for water and wastewater, which has been experienced in some locations of the US. The building standards and rating systems could reduce the vulnerability of DOD installations to price shocks—and increase cost-effectiveness—by reducing the use of these resources. The sensitivity analysis results also indicate that, even if the prices for energy and water decrease and the cost of capital increases (represented by a discount rate of 3%), most facilities built under the guidance of the standards and rating systems remain economically efficient.

The implication of these results for the DOD comprehensive strategy for cost-effective military construction is that ASHRAE 189.1-2011 (which includes ASHRAE 90.1-2010 by reference) would generally provide economically efficient high performance military facilities. The voluntary ratings systems of LEED and Green Globes can provide important guidance for overall high performance facilities (including attributes not measured in this study) as well as third party verification, and buildings certified under these rating systems would be cost-efficient if the incremental initial investment costs are within a margin (in these sample, 20% over the baseline building cost) and the annual savings are sufficient to offset that incremental cost.

It must be noted, however, that those results are highly sensitive to the heating and cooling loads for different climate zones and to the local factor unit prices. Consideration of specific choices associated with the application of those standards for design development and implementation should be evaluated grounded in the specific local context.

APPLICABILITY OF ANALYTICAL FRAMEWORK FOR DOD MILITARY CONSTRUCTION

Separately, and in parallel with the economic evaluation of the specified standards and rating systems, the consultant worked with the DOD components (Air Force, Army, Navy/Marines) and selected installations’ teams to test and demonstrate the analytical approach and tools developed in this study. This study analyzed empirical data from recent DOD buildings using the analytical approach and tools, working with the DOD components, construction agents, and selected installations. The results from the example application of the analytical approach and tools were reviewed with staff from the selected installations, HQ, construction agents, and the Office of the Secretary of Defense as input into the comprehensive strategy, as requested in the NDAA Section 2830.

The approach developed in this research study is designed to help decision-makers explicitly define uncertainties in the economy and local markets (e.g., discount rates and factor price escalations) and to identify potential financial opportunities and risks. The objective is to aid prudent investments in military construction and renovation that mitigate those risks and achieve expected performance levels. The methodology and tools developed in this research study, and as tested for applicability to DOD military facilities, can be used to compare:

  • High performance buildings to “standard” buildings (i.e., not high performance) to continue to assess the economic effectiveness of high performance buildings;
  • Expected to Actual performance of high performance buildings to track performance and refine future investment decisions;
  • Design alternatives for a planned capital investment to evaluate the relative economic effectiveness of each option;
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×
  • An independent set of building projects across a portfolio (such as for an installation or component) to establish a rational funding priority list based on expected economic performance.

The consultant provided materials and met with the staff from the selected installations, HQ, construction agents, and Office of Secretary of Defense to demonstrate and test the applicability of the analysis methodology developed in this study to actual DOD projects, and to obtain feedback on the applicability of the analytical approach and tools as input to the development of the DOD comprehensive strategy. Using the DOD Data Template provided by the consultant, the DOD components and selected installations collected data on recent DOD facilities, which were then using the tools developed in this research (Figure 26). The results included:

  • Net Savings, Rate of Return on Investment, and Payback using the current OMB real discount rate (d=2%) and study period (N=40 years) for recent actual DOD buildings compared to the identified baseline buildings;
  • Sensitivity analysis of the results relative to the minimum and maximum discount rates, time periods, and factor unit price escalations (i.e., energy and water).

Figure 26: Analytical Approach and Tools for DOD Military Construction and Renovation

image

The exercise provided important feedback for the potential application of the economic efficiency evaluation process for DOD military and construction going forward. In particular, the discussion raises certain challenges and opportunities associated with economic efficiency evaluations in the following areas:

  • Timing of economic efficiency analysis for decision support on project planning, design, and implementation, particularly in the context of current authorization and appropriation processes, as well as existing legislative mandates;
  • Current data collection and analysis processes at the installation, component, and DOD level, related to legislative requirements for reporting, and current management processes for strategic investment in DOD capital facility assets;
  • Industry and market factors influencing the long-term economic efficiency of DOD military construction and renovation.
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Timing of Economic Efficiency Analysis for Decision Support

As mentioned previously, the DOD requires an economic efficiency analysis with Form 1391 for the initiation of the military construction authorization process. At the moment, the authorization and appropriation processes for DOD military construction and renovation tend to focus more on individual projects than on a strategic level portfolio management approach.

The analytical approach of economic efficiency analysis would be best applied across a portfolio of projects at the earliest stages, for budgeting and planning, rather than on single projects just at the authorization stage. It could also be effectively applied during design development and implementation, in the choice of specific building characteristics—with respect to the overall installation requirements—that increase mission effectiveness and economic efficiency. In addition, the increased focus on capital investment for sustainment and renewal of existing facilities could best be accomplished across the portfolio of potential opportunities, within the context of mission effectiveness for installations, rather than on single projects.

For the economic efficiency analysis to be used effectively in decision-making, the early project planning and scope development through detailed design development and implementation would include:

  • Recognition of uncertainty with respect to future conditions, costs, and opportunities, which is particularly relevant for durable capital facility assets;
  • Clear specification of inputs and outcomes, which provide a critical basis to measure actual performance and correct assumptions;
  • Clear delineation of exogenous factors (e.g., market trends, potential disruptions) and analysis of potential impacts, which provides a basis for robust risk mitigation;
  • Flexibility to evaluate new conditions, opportunities, inputs and outcomes, which provide a means to rapidly and effectively improve performance and cost efficiency.

Therefore, the effective implementation of an economic evaluation approach may require refinement to the existing processes.

Current DOD Data Collection for Strategic Investment in DOD Capital Facility Assets

The application of an economic efficiency analysis requires access to credible and verifiable data on the initial investment costs, major repair/replacement costs, and operations, maintenance and repair costs over the expected life of the facility. The DOD components, installations and construction agents are initiating specific programs to collect information on energy and sustainability performance for capital facility assets, including both the expected and actual performance of the facilities. The effective use of an economic efficiency analysis approach may require additional data collection, as well as clear delineation of the process to collect, refresh, maintain, and disseminate the data effectively to aid decision-making. It may also require an explicit process to assess the performance of building systems, components, equipment and materials relative to the actual capture of expected benefits, to inform design, procurement, and implementation processes going forward.

In particular, this data should be grounded in the local market, incorporating local construction costs (and available skill levels) and local factor unit prices (e.g., energy, water, municipal and hazardous waste, and costs for O&M, cleaning, and landscaping), as well as potential future price escalation. This approach provides critical information related to uncertainty in future conditions relevant for strategic decision making and risk mitigation at the installation level as well as for specific military facilities.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

The definition of the appropriate base case is critical for obtaining useful and empirically verifiable results from the economic efficiency analysis. The economic efficiency analysis of Net Savings requires a specific base case against which to compare the relative incremental costs and benefits of alternatives. The Net Savings are calculated as the differences in costs between the baseline and the alternative(s). The baseline for DOD military construction and renovation should reflect the current market equivalent building relative to the benefits/costs analyzed for the specific location under consideration.

DOD components and construction agents could compile a “library” of useful baseline building cases from previous similar DOD facilities projects or through other reference sources. Specifically, the benefit-cost data for the baseline building cases could be obtained through:

1)   Values for expected energy performance from the EnergyPlus 90.1-2004 model (often used as the basis for LEED certification submissions) for specific projects;

2)   Actual performance data (energy, water, solid waste, and O&M) from existing buildings;

3)   Related public data sources and references on comparable buildings;

4)   Reductive analysis of current building designs, with the extraction of specific building systems, components, and equipment related to the specific benefits and costs being evaluated.

In compiling the baseline building cases, the models used during planning and design (including EnergyPlus) could be utilized during commissioning and operation to reflect actual facility usage. For instance, the original energy models can be rerun with actual occupancy loads and schedules, as opposed to the expected levels, to recalibrate the projected energy usage under current conditions. These refinements can provide a verifiable baseline for tracking building performance, as well as improve planning and design for subsequent similar buildings.

These baseline building cases could be used to expedite design development through the explicit consideration of effectiveness and economic efficiency. In particular, they could be used throughout bid review and project management to enable decision-making on the selection of building systems, components, equipment and materials through the explicit identification of expected benefits and costs and resultant relative economic efficiency, and the opportunity to mitigate risks (e.g., price escalation).

This study highlighted the differences in opportunities for costs and benefits for different building types, specifically for a residential facility and an office building, in both energy and water usage. For example, the office buildings provide more opportunities for energy-savings, given their higher use per square foot of energy and their (relatively) lower usage per square foot of water, while the residential facilities have relatively higher water usage (particularly with the inclusion of the laundry facilities) and thereby offer greater opportunities for water savings. Further data collection related to specific DOD military facility types could identify specific opportunities for reducing OM&R costs related to facility-specific resource use and therefore increase economic efficiency in military construction and renovation going forward.

The economic efficiency analysis, and the related data collection, can be also used to track actual performance relative to the expected benefits. As the energy and water monitoring systems installed on DOD installations come into effective use, the data on resource usage (and related cost) can be used to evaluate specific buildings, systems, or building types for additional real-time operational refinement and commissioning to meet the expected high performance levels. The data can also be used to monitor the cost savings for given investments, and progress in achieving legislative mandates, in required annual reports.

This study highlighted the differences among locations—including heating/cooling degree days (by climate zone) and local factor unit prices. For example, locations with higher cooling loads (such as Miami) also have higher electric loads (primarily used for air conditioning equipment),

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

while locations with higher heating loads (such as Helena) have higher natural gas loads. Since the costs of these energy sources differ significantly by location—and fluctuate on a monthly basis—the economic impact of specific strategies to reduce these energy usage categories should be calculated with respect to the specific location to assess opportunities for net savings. In addition, the volatility of energy costs can be usefully incorporated into the economic efficiency analysis to mitigate vulnerability to price shocks.

In the same way, water and wastewater prices differed significantly by location, and may increase rapidly in a short time period. Among the five locations in this study, the unit costs for water differed by a factor of 2, and the wastewater disposal costs differed by a factor of almost 3. Further, several of the locations were predicting a rapid increase in water and wastewater rates.27 Therefore, future economic efficiency analyses should explicitly incorporate consideration of local water and wastewater disposal costs, and the potential of significant future price escalations.

The cost-benefit categories of solid and hazardous waste were included in this study, and the analysis of factor unit prices for the 5 locations found a high differential among the locations, with a factor of 4 difference in solid waste disposal costs, and a factor of over 7 difference in hazardous waste disposal costs (although there is some difference in the definition of hazardous waste across the municipalities). Several of the DOD facilities analyzed in this exercise reported significant reductions in municipal and/or hazardous waste that provided substantial cost savings. Additional monitoring of reductions in solid waste would provide a means to incorporate these savings into the economic evaluations, and could have a significant impact on the relative economic efficiency of different facility alternatives and operations programs.

The cost-benefit categories of O&M (general), cleaning and landscaping were also included in this study. These costs could be expected to decrease with improvements in sustainable building systems and materials, and savings in these cost categories could have major cost implications, since these cost expenditures are often several times higher than expenditures for energy and water. Several DOD facilities analyzed in this exercise reported 1-5% reductions in O&M costs that provided moderate cost savings. Additional monitoring and assessment of O&M costs would provide a means to incorporate these savings into the economic evaluations, and could have a significant impact on the relative economic efficiency of different facility alternatives as well as potential operations programs.

The current data collection initiatives being developed by the DOD component, construction agent, and installation teams can provide critical capabilities to incorporate effective economic evaluations into decision making for military construction and renovation, with specific attention to local conditions and factor prices as well as potential changes over time. These approaches can improve the effectiveness and efficiency of military high performance facilities at the installation, command, and service level, as well as for the individual facilities.

Industry and Market Factors for Long-Term Cost Efficiency of Military Construction and Renovation

As noted earlier, the DOD expends over $10 billion a year in military construction and repair and is the largest single real property holder in the US and indeed in the world.28 As such, it has an important role to “demand pull” improvements and cost reductions from the industry. A

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27 Baltimore Brew, “City water, sewer rates expected to jump 9 percent,” (http://www.baltimorebrew.com/2011/05/18/your-water-sewer-bill-expect-over-1000-a-year/).

28 Deputy Secretary of Defense (Ashton Carter) (2012). “Energy Security and Innovation.” (http://www.defense.gov/pubs/pdfs/Energy_Security_and_Innovation_based_on_remarks_given_at_Georgia_Tech_04DB.pdf).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

recent National Academies report found that “Federal agencies can use their purchasing power to drive the market demand for sustainable products and services.”29

Anecdotal evidence indicates that the capabilities and capacities across the industries that support high performance facilities have developed rapidly over the last ten years. A recent study on sustainable buildings in Michigan asserts that “costs for green buildings continue to decrease as materials become standard and practitioners become more proficient in new technologies.”30 Further research is needed to determine the extent to which industry development as a whole may reduce initial investment costs and improve the capture of expected benefits from high performance facilities.

Several factors may be driving the market as a whole, and may significantly increase the economic efficiency of high performance buildings in general, and for DOD military construction and renovation specifically.

The “learning curve” (in economic terms) refers the rate of progress to achieve a stable production rate given the introduction of new processes, systems and/or materials. These learning curves often encompass both “labor learning” (for specific skills) as well as “organizational learning” to reflect the development and implementation of effective management practices of the new processes, systems, and/or materials.31

Market development is associated with achieving economies of scale, where the marginal cost to produce each unit decreases as the number of units increase. Recent research has started to explore the potential trends in economies of scale in the production of energy efficient equipment.32 Indeed, the LEED Volume Certification program explicitly recognizes the economies of scale in the certification of large numbers of similar projects, as a means to “streamline” the design and certification process while achieving the expected levels of high performance.

These factors (learning curves and market development) may affect different segments of the value-adding chain in the industries that support the design, construction, operation, and renovation of high performance buildings. For instance, three factors may specifically influence the initial investment costs for high performance facilities:

  • Learning curve and market development for manufacturers of high performance equipment, materials and systems, which reduce the unit prices for initial investment;
  • Learning curve and capacity development for designers (architects and engineers) of high performance facilities, which improve decision making and reduce the time required to plan, design, and manage high performance facility projects;
  • Learning curve, skill development, and organizational capacity development by general and specialty contractors, which improve the quality and reduce the time required to construct or renovate high performance facilities.

Two related factors may both reduce the incremental initial investment costs and increase the capture of expected benefits from high performance facilities:

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29 National Academies Press (2011). Achieving High-Performance Federal Facilities: Strategies and Approaches for Transformational Change, p. 7.

30 Urban Catalyst Associates (2010). Building Green for the Future: Case Studies in Sustainable development in Michigan, p. 3. (http://www.epa.gov/P3/success/michigan.pdf).

31 L.E. Yelle (1979), “The Learning Curve: A historical review and comprehensive survey,” Decision Sciences, Vol 10, Issue 2, pp. 302-328. (http://tuvalu.santafe.edu/~bn/reading_group/Yelle.pdf).

32 Jardot et al. (2009), “Effects of economies of scale and experience on the costs of energy-efficient technologies: A case study of electric motors,” ECEEE Conference Proceedings (http://www.eceee.org/conference_proceedings/eceee/2009/Panel_5/5.389).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×
  • Learning curve and capacity development within owner organizations, which improve the decision making during planning and design, and improve operations management over time;
  • Learning curve and capacity development for facilities managers, which can improve decision making during planning and design through integrated project teams, and improve the capture of benefits during operations and maintenance.

At this point, however, there is insufficient data available to make recommendations on these topics, but they offer the opportunity to further increase the cost-effectiveness of high performance facilities as the industries that support high performance facilities continue to develop. Further research is needed to determine the extent to which industry development as a whole may increase the cost-effectiveness of military construction and repair.

APPENDIX A: SENSITIVITY ANALYSIS DATA

Table A.1: Price Escalation 2010-2011 and Equivalent Annual Escalation for Energy, Water/Sewer, and Municipal Waste

Expenditure Category 2011 Annual Average (CPI) Percent change from 2010 to 2011 Equivalent Annual Escalation Rate (1982-2011) a
Housing—Fuel oil 367.804 30.0% 4.4%
Housing—Propane, kerosene, and firewood 348.050 8.6% 4.2%
Housing—electricity 196.737 1.9% 2.3%
Housing—Utility (piped) gas service 184.334 -2.8% 2.0%
Housing—Water and sewer services 402.868 5.8% 4.8%
Housing—Garbage and trash collection 395.091 2.8% 4.7%

Source: Table 3A. Consumer Price Index for all Urban Consumers (CPI-U): U.S. city average, detailed expenditure categories, 2011. CPI establishes 1982-84=100.
a Calculated from CPI.

Table A.2: (OMB) Discount Rate for Cost-effectiveness 2007-2012

Year 20-year 30-year
2007 3.0% 3.0%
2008 2.8% 2.8%
2009 2.7% 2.7%
2010 2.7% 2.7%
2011 2.1% 2.3%
2012 1.7% 2.0%

Source: Office of Management and Budget (OMB) Circular A-94, Appendix C.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure A.1: OMB Real Discount Rate – 30-year.

image

APPENDIX B: PROTOTYPE BUILDINGS—CHARACTERISTICS

The Department of Energy (DOE) Building Energy Code Program (BECP) reviews the technical and economic basis for updates to model energy codes and standards. DOE contracted with the Pacific Northwest National Laboratory (PNNL) to analyze the energy and cost savings of ASHRAE Standard 90.1-2010 compared to ASHRAE 90.1 2004 to provide technical and economic analysis support, utilizing the EnergyPlus simulation framework and sixteen prototype building types (Table 2). The objective was to ensure that ASHRAE 90.1-2010 achieved the goal of reducing energy use by 30% compared to ASHRAE 90.1-2004, as specified in the Energy Policy Act (EPAct) and the Energy Independence and Security Act (EISA).33

The U.S. Army Corps of Engineers Engineer Research and Development Center (ERDC) with PNNL used the same climate zones (and approximate locations) to analyze five buildings types (Unaccompanied Enlisted Personnel Housing, Tactical Equipment Maintenance Facility, Brigade HQ, Company Operations Facility, and Dining Facility). The objective was to “investigate current building features and construction methods and materials to optimize energy reduction and sustainability.”34

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33 Pacific Northwest National Laboratory (2011). Achieving the 30% Goal: Energy and Cost Savings Analysis of ASHRAE Standard 90.1-2010, NTIS, PNNL-20405.

34 U.S. Army Corps of Engineers (2011). MILCON Energy Efficiency and Sustainability Study of Five Types of Army Buildings.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table B.1: DOE PNNL Prototype Buildings, Locations/Climate Zones

Prototype building type (16) Locations/Climate Zones (15)
Office (small, medium, large)
Retail (stand-alone, strip mall)
School (primary, secondary)
Healthcare (outpatient, hospital)
Hotel (small, large)
Warehouse
Restaurant (quick, full-service)
Apartment (mid-rise, high-rise)
1A Miami
2A Houston, 2B Phoenix
3A Memphis, 3B El Paso, 3C San Francisco
4A Baltimore, 4B Albuquerque
5A Chicago, 5B Boise
6A Burlington, 6B Helena
7 Duluth
8 Fairbanks

Source: DOE EERE Building Energy Codes Program, 90.1 Prototype Building Models (http://www.energycodes.gov/commercial/901models/).

SMALL HOTEL

The small hotel design came out of the (PNNL) study. All of the attributes from the construction type, form, space configuration and size of the guest rooms were adapted from a Hampton Inn prototype floor plan.

Table B.2: Building Details for Small Hotel

 

Building

Small Hotel

Form

  Total Floor Area (sq feet) 43,200 (180x60)
  Aspect Ratio 3
  Number of Floors 4
  Window Fraction (Window-toWall Ratio) South: 3.1%, East: 11.4%, North: 4.0%, West: 15.2% Average Total: 10.9%
  Window Locations One per guest room (4’x5)
  Floor to floor height (feet) Ground floor: 11 ft
Upper floors: 9ft

Details

  Occupancy 259
  Orientation Long axis orientation North/south
  Requirements:  
     Parking Area 33,680 ft2
     Exterior Doors 31.22 ft2
     Façade 3,819 ft2

Architecture-Fixed across all Prototypes

  Superstructure (Not specified) Structural Steel Frame
  Substructure (Not specified) Column Footings, strip footings for slab
  Floor Deck (Not specified) Sheet metal decking, tooping slab
  Foundation Slab 6” concrete slab’
  Interior Partitions 2x4 stud (nonloadbearing, uninsulated)
  Plug Load 1.11 W/ft2 (guestrooms)
  Elevator 2 Hydraulic (16.055 W)
  Orientation Long axis orientation North/Sough
  Fuel Mix Gas, Electricity

Change by location, certification level

  Windows 4’x5’ (1 per question)
  Skylight None
  Ceiling No Plenum
  HVAC PTAC (Packaged Teminal Air Conditioner) with electric resistance heating in each guestroom; gas furnace with packaged AC (split system with DX cooling) for public spaces; electric cabinet heaters for storage areas and stairs
  Exterior Walls Steel frame (2x4 16” o.c.), 1” stucco, 5/8” gypsum board, insulation, 5/8” gypsum
  Roof Membrane, insulation, metal decking
  Floor Slab (Not specified) insulation
  Hot Water 2 natural gas (200 gal tank for guestrooms, 100 gal tank for laundry)
  Lighting 1.11 W/ft2 (guestrooms)
  Exterior Lighting 13.030 W
  Flooring Carpet
  Interior Finishes (Not specified)
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure B.1: Axonometric View of Small Hotel Prototype

image

MEDIUM OFFICE

The medium office design came out of the (PNNL) study. All of the attributes from the form, space configuration, construction type and floor plan are based on the specification of the medium size office schematics.

Table B.3: Building Details for Medium Office

 

Building

Medium Office

Form

  Total Floor Area (sq feet) 53,600 ft2 (163.8’X109.2)
  Aspect Ratio 1.5
  Number of Floors 3
  Window Fraction (Window-to-Wall Ratio) (Window Dimensions: 163.8 ft X 4.29 ft on the long side of facde 109.2 ft x 4.29 ft on the short side of the façade) Average Total: 33%
  Window Locations Windows ribbons – 4.29 ft. high, around building perimeter each floor
  Floor to floor height (feet) 13’

Details

  Occupancy 268 People
  Orientation Long axis orientation East/West
  Requirements:  
  Parking Areas 86,832.00 ft2
  Exterior Doors 5.36 ft2
  Façade 4,154.00 ft2

Architecture-Fixed across all Prototypes

  Superstructure (Not specified) Structural Steel Frame
  Substructure (Not specified) Column Footings, strip footings for slab
  Floor Desk (Not specified) Sheet metal decking, topping slab
  Orientation Long axis orientation East/West
  Fuel Mix Gas. Electricity
  Foundation Slab 8’’ concrete slab
  Interior Partitions 2x4 stud (nonloadbearing, uninsulated)
  Plug Load 1.75 W/ft2 (guestrooms)
  Elevator 2 Hydraulic (16,055 W)

Change by location, ceritification level

  Windows Windows ribbons – 4.29 ft. high, around building perimeter each floor
  Skylight None
  Ceiling 4” plenum
  HVAC Gas Furnace with packaged AC, Vac with electric reheat coil
  Hot Water Natural gas, 260 gal tank
  Lighting 1 W/ft2 (guestrooms)
  Exterior Lighting 14,385 W
  Flooring Carpet
  Interior Finishes (Not specified)
  Exterior Walls Steel frame (2x4 16” o.c.),. 4” stucco, 5/8” gypsum board, insulation, 5/8” gypsum
  Roof Membrane, insulation, metal checking
  Floor Slab (Not specified) insulation
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure B.2: Axonometric View of Medium Office Prototype

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APPENDIX C: DEFINITIONS OF BENEFIT-COST CATEGORIES

1.  Initial Investment Cost—total building cost for completed facility approved for occupancy (excludes land acquisition); cost per square foot.

2.  Major Repair and Replacement Costs—costs related to repair or replacement of major equipment within the study period, with identified timing for replacement.

3.  Building energy—for lighting, heating/cooling/ventilation, security, sensing/controls, building equipment (e.g., elevators). Excludes plug and process loads (e.g., computers).

3.1 Energy Source—electricity, distillate fuel oil (#1, #2), residual fuel oil (#4, #5, #6), natural gas, liquefied petroleum gas, coal, other (PV, wind, etc.).

3.2 Annual consumption—total energy use; energy use by occupant, energy use by square foot.

3.3 Local Cost—Price/kWh for electricity, Mcf for natural gas, Mbtu for other fuel types and rate schedule (residential, commercial, industrial).

4.  Supporting Facilities (Site) energy—for landscape/site lighting, security, sensing/controls, site equipment (e.g., transformers).

4.1 Energy Source—electricity, distillate fuel oil (#1, #2), residual fuel oil (#4, #5, #6), natural gas, liquefied petroleum gas, coal, other (PV, wind, etc.).

4.2 Annual consumption—total energy use; energy use by square foot.

4.3 Local Cost—Price/kWh for electricity, Mcf for natural gas, Mbtu for other fuel types and rate schedule (residential, commercial, industrial).

5.  Building water use—for building systems (e.g., cooling) and fixtures/appliances.

5.1 Water source—municipal, on-site well, rainwater harvesting, wastewater re-use, other.

5.2 Annual water usage (summer, winter)—total water use; water use by occupant, water use by square foot.

5.3 Local Cost—Price/gallon

6.  Building wastewater (water disposal)—from building systems (e.g., cooling) and fixtures/appliances.

6.1 Water treatment—municipal, on-site septic, wastewater re-use, other.

6.2 Annual water usage (summer, winter)—total water use; water use by occupant, water use by square foot.

6.3 Local Cost—Price/gallon.

7.  Supporting Facilities (Site) water supply—for landscaping and related exterior water uses.

7.1 Water source—municipal, on-site well, rainwater harvesting, wastewater re-use, other.

7.2 Annual water usage (summer, winter)—total water use; water use by square foot.

7.3 Local Cost—Price/gallon.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

8.  Municipal (Nonhazardous) Waste—solid waste haul and tip costs.

8.1 Annual waste generated—total cost or weight; waste by occupant, waste by square foot.

8.2 Local Cost—Price/ton.

9.  Hazardous Waste—hazardous waste material handling and disposal (e.g., hydraulic fluid, pesticides, etc.).

9.1 Annual hazardous waste generated—total cost or weight; waste by occupant, water by square foot.

9.2 Local Cost—Price/ton.

10. Building/site O&M-Labor (personnel daily supervision for operations, maintenance, repair), materials, equipment.

10.1 Annual O&M costs—total cost; cost by occupant, cost by square foot.

10.2 Local Cost—Price/square foot or total annual cost.

11. Building Cleaning—includes labor, cleaning materials and equipment.

11.1 Annual cleaning costs—total cost; by occupant, cost by square foot.

11.2 Local Cost—Price/square foot or total annual cost.

12. Landscaping—includes labor, equipment and materials for cutting/mowing, raking, planting, pruning, tending, etc.

12.1 Annual Landscaping costs—total cost; cost by occupant, cost by square foot.

12.2 Local Cost—Price/square foot or total annual cost.

APPENDIX D: BASELINE PROTOTYPE BUILDINGS RESOURCE USAGE AND FACTOR UNIT PRICES BY LOCATION

Table D.1: Benefit-Cost Data for Baseline Buildings: Quantities

  Baseline Building Data  
Benefit-Cost Category Office Hotel References
Energy DOE EERE Building Energy Codes Program, 90.1 Prototype Building Models, http://www.energycodes.gov/commercial/90 1models/
Building water 62 gal/sf/yr 165 gal/sf/yr (includes laundry) Office: http://www.seco.cpa.state.tx.us/SECO_Water_Standards_2002.pdfHotel: http://coloradowaterwise.org/Resources/Documents/ICI_toolkit/docs/Brendle%20Group%20and%20CWW%20ICI%20Benchmarking%2 0Study.pdf
Landscape water 30 gal/sf/yr 60 gal/sf/yr Office: http://www.seco.cpa.state.tx.us/SECO_Water_Standards_2002.pdfHotel: http://www.watertechonline.com/municipalindustrial/article/finding-hidden-water
Municipal solid waste 0.00178 tons/sf/yr 0.000712 ton/sf/yr http://www.wastecare.com/usefulinfo/Waste_Generated_by_Industry.htm
Hazardous waste 0.005 ton/sf/yr 0.000007 ton/sf/yr http://www.sustainability.umd.edu/documents/2010_Sustainability_Metrics_Report.pdfhttp://www.epa.gov/region9/waste/solid/ho use.html
Building/ site O&M $3.00/sf/yr $3.00/sf/yr FM Benchmark 6/19/2012, http://www.fmbenchmarking.com/
Building Cleaning $2.50/sf/yr $2.50/sf/yr FM Benchmark 6/19/2012, http://www.fmbenchmarking.com/
Landscaping $0.28/sf/yr $0.28/sf/yr 2008 M&O Study, http://asumag.com/Maintenance/2008M&OC ostStudy.pdf
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table D.2: Factor Unit Prices By Location

Location Electricity ($/kwh)1 Natural Gas ($/ft3)1 Water ($/gal)2 Wastewater ($/gal)3 Municipal Solid Waste ($/ton) Hazardous Waste <$/ton}9 Renewable Energy Credit ($/kwh)10
Miami $0.0980 $10.28 $0.0041 $0,0059 62,59 7 $114.18 $0.09
Phoenix $0.0921 $9.68 $0.0018 $0.0017 38.25 8 $10.00 $0.09
Memphis $0.0989 $8.66 $0.0027 $0.0020 22.00 6 $15.00 $0.09
Baltimore $0.1060 $11.11 $0.0032 $0.0041 80,00 4 $80.00 $0.09
Helena $0.0906 $7.99 $0.0035 $0.0028 70.755 $75.00 $0.09

1 DOE EIA, April 2012

2 Local water utility rates, June 2012

3 The Price of Wastewater: A Comparison of Sewar Rates in 30 U.S. cities - Circle of Blue WaterNews, August 20

4 Baftimore County, MD Public Works - Refuse Disposat/FAQs

5 Helena Transfer Station Fees

6 A Citizen's Guide to a Cleaner Memphis

7 Miami-Dade County - Department of Solid Waste Management Schedule of Disposal Fees Oct. 2011

8 City of Phoenix- Disposal Facility Fees, 2012

9 Army Corps State Taxes and Fees for Hazardous Waste Disposal

10 estimated based on PG&E PPA Nov. 2010 @ $0,09/kWh

APPENDIX E: FEDERAL STATUTES FOR LIFE CYCLE COST ANALYSIS

Federal capital projects are required to conduct life-cycle cost analysis under the National Energy Conservation Policy Act (1978), the Federal Energy Management Improvement Act (1988), the Energy Policy Act (2005), and the Energy Independence and Security Act (2007), which are specified in the Office of Management and Budget (OMB) Circular A-94 and the Code of Federal Regulations, Title 10, Part 436, Subpart A (10 CFR 436A). The Energy Independence and Security Act (EISA), Section 432, 4(B) further specifies that each energy manager may “bundle individual measure of varying paybacks together into combined projects.”

OMB Circular A-94 Appendix C is updated annually with the nominal and real discount rates to be used for cost-effectiveness studies of federal capital investments.

The Federal Energy Management Program (FEMP) is applicable to renewable energy, energy conservation, and water conservation projects in all federal buildings. Each year, FEMP provides the applicable discount rate to be used to assess those projects, with the discount rate set by statute (10 CFR 436) at a minimum of 3% and a maximum of 10%. In addition, the Department of Energy (DOE) Energy Information Administration (EIA) provides thirty-year forecasts of energy prices.

The National Institute of Standards and Technology (NIST) incorporates the OMB and FEMP discount rates, and the energy indices based on the DOE EIA forecasts into the Annual Supplement to NIST Handbook 135, Life-Cycle Costing Manual for the Federal Energy Management Program. NIST also provides the NIST Building Life-Cycle Cost (BLCC) software program, which incorporates the annual updates. (The BLCC software is available for download available through http://www1.eere.energy.gov/femp/information/download_blcc.html#blcc).

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

APPENDIX F: REFERENCES FOR FEDERAL REPORTING REQUIREMENTS FOR BENEFIT-COST CATEGORIES

The Federal Energy Management Program (FEMP) requires the Department of Defense to provide an Annual Energy Management Report (AEMR) to Congress, which “enables the Department to track and report progress against facility energy goals required by several relevant legislative statues, executive orders, and internal DOD directives. “35 The DOD is also required to report subject to other legislative requirements, including 10 USC Section 2925, and 10 USC Section 2911(e). Recent AEMR performance measures are listed in Table F.1.

Table F.1: Annual Energy Management Report—Outcome Measures

Measures
Measures Facilities energy use (electricity, natural gas, fuel oil, coal, purchased steam, LPG/Propane and renewables)
Energy intensity level (BTU/area) Renewable energy use Renewable energy potential
On-site energy production during grid outages
Water intensity (gallons/area) Potable water use
Industrial, landscaping and agriculture water consumption
Metering of electricity use
Non-tactical fleet vehicle fuel consumption
Progress on Federal Building Energy Efficiency Standards—30% more energy efficient than ASHRAE 90.1-2004 standard
Waste prevention (hazardous
Electronics stewardship

APPENDIX G: ASHRAE DATA GENERATION METHODOLOGY

ASHRAE Standards 90.1-2010 and 189.1-2011 First Costs

Prepared By: Merle McBride, Ph.D., P.E., ASHRAE Member

Date: August 8, 2012

Prepared for: ASHRAE in support of the NDAA 2013 Section 2830(a) in which Congress required the Department of Defense to submit a report, in part, on the economics of ASHRAE Standards 90.1-2010 and 189.1-2011.

ACRONYMS

AEDG Advanced Energy Design Guide
DOE U.S. Department of Energy
FC first cost

_________________

35 Office of the Deputy Under Secretary of Defense (Installations and Environment) (2011). Department of Defense Annual Energy Management Report Fiscal Year 2010, p. 9.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×
HVAC heating, ventilating and air-conditioning
Int. Ltg. interior lighting
kWh kilowatt hour
LPD lighting power density
Mcf thousands of cubic feet
NREL National Renewable Energy Laboratory
PPL plug and process loads
PNNL Pacific Northwest National Laboratory
PV photovoltaic
SWH service water heating
TSD technical support document
VAV variable air volume

FIGURES

Figure 1 Overlay of Representative Cities by Climate Zones

Figure 2 Incremental First Costs vs Energy Savings

TABLES

Table 1 Representative Cities

Table 2 Sources of Information

Table 3 Incremental First Costs for the Medium Office

Table 4 Incremental First Costs for the Small Hotel

Table 5 Standard 90.1-2010 Medium Office First Costs

Table 6 Standard 90.1-2010 Small Hotel First Costs

Table 7 Annual On-Site Renewable Energy Criteria

Table 8 Conditioned Space and Roof Areas

Table 9 Annual On-Site Renewable Energy Criteria

Table 10 PV Panels Energy Performance

Table 11 Annual On-Site Renewable Energy Standard 189.1-2009

Table 12 Annual On-Site Renewable Energy—Standard 189.1-2011

Table 13 Standard 189.1-2011 Medium Office First Costs

Table 14 Standard 189.1-2011 Small Hotel First Costs

Table 15 Summary of Results for Standard 90.1-2010

Table 16 Summary of Results for Standard 189.1-2011

Table 17 Range of Energy Savings (%)

Table 18 Plug Loads

ASHRAE STANDARD 90.1-2010 AND STANDARD 189.1-2011 FIRST COSTS

1.0 Introduction

In support of the ASHRAE energy standards development process the U.S. Department of Energy (DOE) provides technical resources through the Pacific Northwest National Laboratory (PNNL) to assist in the development of the criteria and periodic updates on the energy savings progress. Then, once the standard is finalized, PNNL determines the energy savings of the new

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

standard relative to a baseline standard(s). Evaluation of the final standard is a very time consuming process and consequently follows publication of the standard by a significant time lag. This is the current situation for both Standards 90.1-2010 and 189.1-2011. The first costs and final energy savings will be formally documented but the analysis and results are not currently available for use in this project.

Recognizing that the final reports for Standards 90.1-2010 and 189.1-2011 were not available, the challenge was to estimate the first costs using information contained in currently published reports. These first costs are understood to be approximate. This report presents the methodology used to develop the first costs and the final results. It is critical to understand that the calculation of the first costs is based on the energy savings. Thus, this report contains the annual energy savings as well as the first costs.

2.0 Objective

The objective of this analysis was to determine the first costs for ASHRAE Standards 90.1-2010 and 189.1-2011 relative to the baseline ASHRAE Standard 90.1-2004.

3.0 Background

The first costs for ASHRAE Standards 90.1-2010 and 189.1-2011 had not been previously calculated and reported so they have to be derived from the data that was readily available. The Technical Support Documents developed in support of the ASHRAE Advanced Energy Design Guides from PNNL for the medium office building (Thornton, 2009) and highway lodging (Jiang) provided the only first cost data for each city. However, neither of these reports contained all of the individual energy results which were needed in order to determine the first costs. Mike Rosenberg, from PNNL, was contacted and provided the EnergyPlus simulation results which contained the required energy information.

4.0 Representative Cities

All of the analysis was intended to use the same representative five cities, see Table 1. However, in some of the reports Memphis was replaced with Atlanta.

Figure 1 is an overlay of the representative cities in their climate zones. Each climate zone is shown as a separate color. The representative cities are shown as a white square while Atlanta is a blue square. In general the representative cities are centrally located within the climate zones. The climatic conditions for Atlanta are very close to Memphis so applying the data for Atlanta to Memphis was assumed to be appropriate.

Table 1 Representative Cities

CZ City HDD65 CDD50
1 Miami 200 9474
2 Phoenix 1350 8425
3 Memphis 3082 5467
3 Atlanta 2991 5038
4 Baltimore 4704 3709
6 Helena 8031 1922
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Figure 1 Overlay of Representative Cities by Climate Zones

image

5.0 Supporting Documents

Multiple reports have been previously completed which contain energy saving results in some form, either for individual cities and building types or weighted averages by climate zone or a national average, see Table 2. The information in these reports was used to estimate the first costs and annual energy savings for Standards 90.1-2010 and 189.1-2011.

Table 2 Sources of Information

Report Subject 90.1 Base Standard Energy Savings
PNNL-17875
(Jiang)
Highway Lodging—
30% AEDG
1999
2004
39.3%
33.5%
PNNL-19004
(Thornton 2009)
Medium Office—
50% AEDG
2004-VAV System
2004-Radiant System
46.3%
56.1%
PNNL-20405
(Thornton 2011)
Std. 90.1-2010 2004 25.6% PPL
32.7% w/o PPL
PNNL-189.1
Progress Indicator (Liu)
Comparison between
189.1-2009 and 90.1-2010
Medium Office
Small Hotel
3.9%
17.4%
NREL/TP-550-47906
(Long)
Std. 189.1-2009 2007-Medium Office
2007-Small Hotel
31.0%
34.3%

6.0 Technical Approach

Fundamentally, the technical approach was to use the ASHRAE Advanced Energy Design Guides energy savings for each specific building and location which also had the incremental first costs. This information was used to determine a linear relationship between the incremental first costs in $/ft2 and the energy savings as a percent. This linear relationship was derived for each

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

building type in each city. The $/ft2 was assumed to go through the origin when there were no energy savings. As an example of this concept, Figure 2 shows the five locations for both building types. A straight line through the origin is shown that connects the average for each building type. However, the actual calculations use a specific linear relationship for each individual city and building type which is the slope of each line.

The first step in this process was to estimate the energy savings for both of the building types in all five cities relative to the baseline Standard 90.1-2004. Those results were then used to approximate the first costs for Standards 90.1-2010 and 189.1-2011. This process was straight forward for Standard 90.1-2010. However, for Standard 189.1-2011 it was more complicated because photovoltaic (PV) panels were used to meet the annual on-site renewable energy requirements so those first costs had to be analyzed separately. Furthermore, the results for Standard 189.1-2009 could not be used directly because the requirements for the annual on-site renewable energy changed between Standards 189.1-2009 and 189.1-2011 which impacts the first costs so additional analyses were required.

Figure 2 Incremental First Costs vs Energy Savings

image

7.0 Incremental First Costs

The data in Tables 3 and 4 formed the basis for all of the first cost calculations used in this study. These incremental first costs account for all of the upgrades due to more stringent criteria for the envelope, lighting, HVAC and SWH. These incremental costs do not account for any of the first costs for the PV systems so they need to be calculated separately.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 3 Incremental First Costs for the Medium Office

Medium Office (PNNL 19004)
CZ City Energy Savings (%) Incremental FC ($) Incremental FC ($/ft2) Slope ($/ft2/%)
1 Miami 47 175,176 3.27 0.0695
2 Phoenix 53 206,606 3.85 0.0727
3 Atlanta 42 211,909 3.95 0.0941
4 Baltimore 43 196,787 3.67 0.0854
6 Helena 45 127,134 2.37 0.0527

Table 4 Incremental First Costs for the Small Hotel

Small Hotel (PNNL 17875)
CZ City Energy Savings (%) Incremental FC ($) Incremental FC ($/ft2) Slope ($/ft2/%)
1 Miami 27 129,607 3.00 0.1111
2 Phoenix 29 138,752 3.21 0.1107
3 Memphis 32 127,498 2.95 0.0922
4 Baltimore 34 120,879 2.80 0.0824
6 Helena 32 114,183 2.64 0.0825

8.0 First Costs—Standard 90.1-2010

The initial step in determining the first costs is to calculate the percentage of energy savings between the baseline Standard 90.1-2004 and 90.1-2010. In order to perform this calculation the electrical and gas energies are added together using kWh as the common metric which is listed as Energy in Tables 5 and 6.

Table 5 Standard 90.1-2010 Medium Office First Costs

90.1-2004 90.1-2010 Incremental 90.1-2004 90.1-2010
CZ City Energy (kWh) Energy (kWh) Save (%) FC ($/ft2) FC ($) Baseline ($) Total ($)
1 Miami 802,795 609,372 24.09 1.68 89,801 6,052,000 6,141,801
2 Phoenix 805,658 604,243 25.00 1.82 97,456 5,970,500 6,067,956
3 Memphis 788,061 566,718 28.09 2.64 141,712 5,754,000 5,895,711
4 Baltimore 823,329 579,172 29.65 2.53 135.714 6,273,000 6,408,714
6 Helena 856,362 621,534 27.42 1.45 77,472 5,944,500 6,021,972
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 6 Standard 90.1-2010 Small Hotel First Costs

90.1-2004 90.1-2010 Incremental 90.1-2004 90.1-2010
CZ City Energy (kWh) Energy (kWh) Save (%) FC ($/ft2) FC ($) Baseline ($) Total ($)
1 Miami 905,411 803,172 11.29 1.25 54,204 5,049,888 5,104,092
2 Phoenix 891,109 777,857 12.71 1.41 60,807 4,977,888 5,038,695
3 Memphis 939,094 806,713 14.10 1.30 56,166 4,825,388 4,881,554
4 Baltimore 1,001,871 845,071 15.65 1.29 55,642 5,172,960 5,228,602
6 Helena 1,067,193 892,747 16.35 1.35 58,327 4,990,888 5,049,215

9.0 Renewable Energy—Photovoltaic Panels

Photovoltaic panels were modeled with EnergyPlus for Std. 189.1-2009 to comply with the annual on-site renewable energy requirements which are presented in Table 7.

The major difference between Standards 189.1-2009 and 189.1-2011 is the area multiplier. In Std. 189.1-2009 the area multiplier is the conditioned space but was changed in Std. 189.1-2011 to be the total roof area, see Table 8.

This change has no impact for one story buildings but has a major impact on multi-story buildings such as those being analyzed in this project, see Table 9.

The next requirement in determining the PV first cost was to calculate the number of PV panels required for each building type in each city. An analysis was completed using the PVWatts calculator developed by NREL which is readily available at their internet web site. The results for a 4 kW panel are presented in Table 10.

Using the energy performance of an individual panel, the number of panels required can be calculated as well as their total first costs. A 4 kW DC panel was assumed to have a de-rated factor of 0.77 which would produce 3.1 kW AC. Goodman reported the cost in 2010 for PV systems as $4.59/W for commercial roof top installations. However, the costs have been steadily decreasing. A realistic estimate for 2012 per Eric Bonnema of NREL is $4.00/W so this value was used for this analysis. Thus, the total cost for a 4 kW panel is $16,000. Using this price the total panel costs and the building costs per square foot can be calculated.

The modeling of Std. 189.1-2009 (Liu) used the high efficiency HVAC requirements, see Table 11.

For purposes of this study the energy savings and first costs for Std. 189.1-2011 also assumed the high efficiency HVAC requirement, see Table 12.

Table 7 Annual On-Site Renewable Energy Criteria

Standard Criteria 189.1-2009 189.1-2011
Prescriptive Criteria (7.4.1.1) 6.0 kBtu/ft2 (20 kWh/m2) × Conditioned Space Floor Area Single Story Buildings = 6.0 kBtu/ft2 (20 kWh/m2) × Total Roof Area

All Other Buildings = 10.0 kBtu/ft2 (32 kWh/m2) × Total Roof Area
HVAC High Efficiency Modification (7.4.3.1) 4.0 kBtu/ft2 (13 kWh/m2) × Conditioned Space Floor Area Single Story Buildings = 4.0 kBtu/ft2 (13 kWh/m2) × Total Roof Area

All Other Buildings = 7.0 kBtu/ft2 (22 kWh/m2) × Total Roof Area
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 8 Conditioned Space and Roof Areas

Area Medium Office Small Hotel
Conditioned space 53,660 ft2 (4,985 m2) 43,200 ft2 (4,013 m2)
Roof 17,867 ft2 (1,660 m2) 10,800 ft2 (1,003 m2)

Table 9 Annual On-Site Renewable Energy Criteria

Code Requirement Medium Office (kWh) Small Hotel (kWh)
Std. 189.1-2009 99,700 80,260
Std. 189.1-2009-High-Efficiency HVAC 64,805 52,169
Std. 189.1-2011 53,120 32,096
Std. 189.1-2011-High-Efficiency HVAC 36,520 22,066

Table 10 PV Panels Energy Performance

CZ City Solar Radiation (kWh/m2-day) 4 kW DC produces annual AC (kWh)
1 Miami 5.26 5,357
2 Phoenix 6.57 6,468
3 Memphis 5.18 5,352
4 Baltimore 4.66 4,911
6 Helena 4.71 5,040

Table 11 Annual On-Site Renewable Energy—Standard 189.1-2009

Medium Office Small Hotel
C Z City Energy (kWh) Panels (No.) FC ($) FC ($/ft2) Energy (kWh) Panels (No.) FC ($) FC ($/ft2)
1 Miami 62,847 11.73 187,708 4.35 50,619 9.45 151,186 2.82
2 Phoenix 62,767 9.70 155,268 3.59 50,619 7.83 125,217 2.34
3 Memphis 62,750 11.72 187,593 4.34 50,619 9.46 151,327 2.82
4 Baltimore 62,842 12.80 204,739 4.74 50,619 10.31 164,916 3.08
6 Helena 62,561 12.41 198,606 4.60 50,619 10.04 160,695 3.00
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 12 Annual On-Site Renewable Energy—Standard 189.1-2011

Medium Office—36,520 kWh Small Hotel—22,066 kWh
CZ City Panel (No.) FC ($) FC ($/ft2) Panel (No.) FC ($) FC ($/ft2)
1 Miami 6.82 109,076 2.52 4.12 65,906 1.23
2 Phoenix 5.65 90,340 2.09 3.41 54,585 1.02
3 Memphis 6.82 109,178 2.53 4.12 65,967 1.23
4 Baltimore 7.44 118,982 2.75 4.49 71,891 1.34
6 Helena 7.25 115,937 2.68 4.38 70,051 1.31

10.0 First Costs—Standard 189.1-2011

The data available for this study included an energy analysis for Std. 189.1-2009 but nothing for Std. 189.1-2011. No data on first costs for either standard was available so it had to be estimated. The starting point was to identify the major differences in the criteria between Standards 189.1-2009 and 189.1-2011. Many features were the same between these two standards including all of envelope criteria plus the HVAC and SWH equipment efficiencies. There were two differences that were explicitly accounted for in this study, the interior lighting power and PV requirements.

The first costs for Std. 189.1-2011 include all of the building envelope, lighting and equipment upgrades plus the first costs for the PV system. In order to determine the building first costs the building energy is required. The building energy was calculated using Eq. 1.

Energy of 189.1-2011 = Energy of 189.1-2009 − Int. Ltg. 189.1-2009 + Int. Ltg. of 90.1-2010 × LPD Factor in 189.1-2011.   (1)

In Standard 189.1-2011 Table 7.4.6.1A LPD Factors when Using the Building Area Method lists the LPD Factor of 0.95 for offices and 1.00 for hotels.

It is important to note that the energy use associated with the interior lighting has been accounted for directly. However, the impact of the reduced lighting energy will increase the heating loads and reduce the cooling loads in the building but that has not been included.

The first costs for Standard 189.1-2011 are presented in Tables 13 and 14. The energy listed for Standards 90.1-2004 and 189.1-2011 is the total site energy for the building with the gas usage converted into kWh.

Table 13 Standard 189.1-2011 Medium Office First Costs

90.1-2004 189.1-2011 Building Incremental PV 90.1-2004 189.1-2011
CZ City Energy (kWh) Energy (kWh) Save (%) FC ($/ft2) FC ($) FC ($) Baseline ($) Total ($)
1 Miami 802,795 623,508 22.3 1.55 83,009 109,076 6,052,000 6,244,085
2 Phoenix 805,658 605,325 24.9 1.81 96,895 187,235 5,970,500 6,157,735
3 Memphis 788,061 598,540 24.1 2.27 121,618 230,796 5,754,000 5,984,796
4 Baltimore 823,329 619,554 24.8 2.11 113,292 232,274 6,273,000 6,505,274
6 Helena 856,362 652,357 38.9 2.05 109,802 225,739 5,944,500 6,170,239
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 14 Standard 189.1-2011 Small Hotel First Costs

90.1-2004 189.1-2011 Building Incremental PV 90.1-2004 189.1-2011
CZ City Energy (kWh) Energy (kWh) Save (%) FC ($/ft2) FC ($) FC ($) Baseline ($) Total ($)
1 Miami 905,411 733,948 18.9 2.10 156,797 65,906 5,049,888 5,206,685
2 Phoenix 891,109 727,481 18.4 2.03 142,398 54,585 4,977,888 5,120,286
3 Memphis 939,094 727,860 22.5 2.07 159,559 65,967 4,825,388 4,980,947
4 Baltimore 1,001,871 738,893 26.2 2.16 165,328 71,891 5,172,960 5,338,288
6 Helena 1,067,193 765,549 28.3 2.33 170,788 70,051 4,990,888 5,161,676

11.0 Summary

Tables 15 and 16 present the Standard 90.1-2010 and 189.1-2011 first costs and site energy consumptions for both building types so all of the information is conveniently located and summarized for quick reference.

The analysis used to develop these first costs and energy consumptions has required many simplifying assumptions. The fundamental approach was to assume a linear relationship between the first costs and the energy savings. Fortunately the energy savings of the AEDG exceeded that of Standards 90.1-2010 and 189.1-2011 so all of the first costs were interpolated and did not need to be extrapolated, see Table 17.

An estimate of the first costs and energy savings for Standard 90.1-2010 and 189.1-2011 has been completed. A simplified linear approach was used to determine the results since no reports have been published that contain the required data. Two major differences between the standards were specifically analyzed, the interior lighting power densities and the annual on-site renewable energy requirements. While the direct energy consumption of the interior lights was analyzed the impact of the reduced lighting power was not accounted for in terms of increasing the heating loads and reducing the cool loads. Correct modeling of the interactions was beyond the scope of this project and is best done thorough detailed hourly simulation models such as EnergyPlus.

All of the results presented in Tables 16 and 17 include the energy consumptions associated with the interior equipment in each of the buildings. Interior equipment refers to any electrical device that plugs into an outlet (typically not hard wired) and any interior process loads. Plug loads in offices would include computers, monitors, printers, copy machines, vending machines, refrigerators, coffee makers, and desk lamps for task lighting. In addition, hotels would also have televisions, microwave, hair dryers, table and floor lamps in each guest room. Process loads include the clothes washers and dryers in hotels. Table 18 is the summary of the interior equipment energy consumptions that were modeled in the EnergyPlus simulations.

Table 15 Summary of Results for Standard 90.1-2010

Medium Office Small Hotel
CZ City FC ($) Elec. (kWh) Gas (Mcf) FC ($) Elec. (kWh) Gas (Mcf)
1 Miami 6,141,801 575,130 113 5,104,092 584,536 724
2 Phoenix 6,067,956 563,558 135 5,038,695 543,719 776
3 Memphis 5,895,711 507,455 196 4,881,554 516,889 960
4 Baltimore 6,408,714 474,919 345 5,228,602 498,256 1149
6 Helena 6,021,972 465,091 518 5,049,215 478,914 1371
Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Table 16 Summary of Results for Standard 189.1-2011

Medium Office Small Hotel
CZ City FC($) Elec.(kWh) Gas(Mcf) FC($) Elec.(kWh) Gas(Mcf)
1 Miami 6,244,085 588,664 117 5,206,685 517,411 718
2 Phoenix 6,157,735 561,436 145 5,120,286 496,353 766
3 Memphis 5,984,796 509,573 293 4,980,947 471,153 851
4 Baltimore 6,505,274 484,121 449 5,338,288 456,958 934
6 Helena 6,170,239 466,415 616 5,161,676 440,558 1077

Table 17 Range of Energy Savings (%)

Document Medium Office Small Hotel
AEDG 42-53 27-34
Std. 90.1-2010 24-30 11-16
Std. 189.1-2011 22-39 19-28

Table 18 Interior Equipment Energy Consumptions

Medium Office Small Hotel
Standard kWh Mcf kWh Mcf
90.1-2010 211,799 0 164,169 388
189.1-2011 235,822 0 158,386 388

12.0 References

ASHRAE. (2004). ANSI/ASHRAE/IESNA Standard 90.1-2004: Energy Standard for Buildings Except Low-Rise Residential Buildings. Atlanta, GA: American Society of Heating, Refrigerating and Air-Conditioning Engineers.

ASHRAE. (2009). ANSI/ASHRAE/USGBC/IES Standard 189.1-2009: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings. Atlanta, GA: American Society of Heating, Refrigerating and Air-Conditioning Engineers.

ASHRAE. (2010). ANSI/ASHRAE/IESNA Standard 90.1-2010: Energy Standard for Buildings Except Low-Rise Residential Buildings. Atlanta, GA: American Society of Heating, Refrigerating and Air-Conditioning Engineers.

ASHRAE. (2011). ANSI/ASHRAE/USGBC/IES Standard 189.1-2011: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings. Atlanta, GA: American Society of Heating, Refrigerating and Air-Conditioning Engineers.

Crawley, D.B., L.K. Lawrie, F.C. Winkelmann, W.F. Buhl, Y.J. Huang, C.O. Pedersen, R.K. Strand, R.J. Liesen, D.E. Fisher, M.J. Witte, J. Glazer. (2001). EnergyPlus: Creating a New-Generation Building Energy Simulation Program. Energy and Buildings 33:319-331. Amsterdam: Elsevier Science.

Goodrich, A., T. James, M. Woodhouse. (2012). Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices in the United States: Current Drivers and Cost-Reduction Opportunities. Golden, CO: National Renewable Energy Laboratory, Technical Report NREL/TP-6A20-53347.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Jaing, W. R.E. Jarnagin, K. Gowri, M. McBride, B. Liu. (2008). Technical Support Document: The Development of the Advanced Energy Design Guide for Highway Lodging Buildings. Richland, WA: Pacific Northwest National Laboratory, PNNL-17875.

Liu, B. and J. Zhang. (2011). 189.1 Progress Indicator Report: Energy Use Comparison between 189.1-2009 and 90.1-2010. ASHRAE Standard 189.1 Committee, ASHRAE Annual Meeting, June 29, 2011, Montreal, Canada.

Long, N., E. Bonnema, K. Field, and P. Torcellini. (2010). Evaluation of ANSI/ASHRAE/USGBC/IES Standard 189.1-2009. Golden, CO: National Renewable Energy Laboratory, Technical Report NREL/TP-550-47906.

Thornton, B.A., W. Wang, M.D. Lane, M.I. Rosenberg, B. Liu. (2009). Technical Support Document: 50% Energy Savings Design Technology Packages for Medium Office Buildings. Richland, WA: Pacific Northwest National Laboratory, PNNL-19004.

Thornton, B.A., M.I. Rosenberg, E.E. Richman, W. Wang, Y. Xie, J. Zhang, H. Cho, V.V. Mendon, R.A. Athalye, B. Liu. (2011). Achieving the 30% Goal: Energy and Cost Savings Analysis of ASHRAE Standard 90.1-2010. Richland, WA: Pacific Northwest National Laboratory, PNNL-20405.

13.0 Web Sites

PVWatts: www.nrel.gov/rredc/pvwatts.

ASHRAE DATA METHODOLOGY: WATER USE ANALYSIS

The following is a summary of water use savings estimates made by WMI. The starting point for all of the estimates was the water use given in the data temples.

Plumbing Fixtures

To calculate the saving for plumbing fixture related measures WMI uses a model that considers multiple factors. The number, type, and flow rate of the existing fixtures help us to determine the overall existing condition of the domestic fixtures. Often, the fixture flow rates differ from the designed flow rates. For example, many 1.6 gpf toilets fitted with 1.6 gpf diaphragm flushometers typically use between 1.8 and 2.5 gpf. Once existing flow rates are determined, frequency of usage is then calculated based on building demographic information.

Usage is affected by many factors: the population of a facility, the hours of use, the average number of times a person will use the facilities. Another factor is the split of the population between male and female. Studies have shown that on the average people need to use the toilets an average of once every two hours and when available, men will use the urinals about 75% of the time.

The basic formula is as follows:

Existing usage model = Population × uses per day (decreased by the flush factor) × days of use per year × the average existing flow rates of the fixtures.

Post-program usage model = Population × uses per day (decreased by the flush factor) × days of use per year × the average proposed flow rates of the fixtures.

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
×

Showers are also included in the hotel template calculations. These were based on an average of sampled flow rates for showers in hotels throughout the U.S. and usage was calculated using a conservative shower duration length of 8 minutes per shower.

The post-program annual gallons saved = the difference between the two.

ASHRAE 189.1 was used as the basis for efficient plumbing fixture selection and use.

Landscape

Water use for landscape irrigation in high performance landscapes is based on proper selection of plant material, proper soil preparation, and watering based on the actual needs of the plant material in the landscape. The basic principles of good landscape water practices include:

  1. Design Landscape to keep water (rainwater, storm water, and irrigation water) where it falls.
  2. Prepare soil shape and content to capture and hold water
  3. Design landscape to minimize the need for irrigation water (eliminate irrigation systems where possible)
  4. Minimize turf areas and choose adapted and drought tolerant plant materials
  5. Meter or sub-meter installed irrigation systems
  6. Capture and use on-site sources of water and/or reclaimed water
  7. Design efficient irrigation system using US EPA WaterSense principles
  8. Practice proper maintenance.

Water use is based on evapotranspiration of the plant material actually used. The equation is:

Water Demand = [Area of landscape × (ETo × Kc) - Effective rainfall)] × [FF] × 0.623 DU

  • ETo—Reference evapotranspiration
  • Kc—Crop Coefficient
  • Effective rainfall—assume 25% (WaterSense)
  • DU—Distribution Uniformity
  • FF—Freeze factor when system off in Winter
  • 0.623—Gallons per inch on one square foot of area

Monthly evapotranspiration for each site was taken into consideration along with plant material and practices common to those areas. Savings were based on the difference between the amounts of water given in the data templates and the water use based on good practice for all of the eight principles outlined above. These principles are reflected in ASHRAE 189.1

Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Suggested Citation:"Appendix C: Consultant's Report: Cost Effectiveness Study of Various Sustainable Building Standards in Response to NDAA 2012 Section 2830 Requirements." National Research Council. 2013. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations. Washington, DC: The National Academies Press. doi: 10.17226/18282.
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Next: Appendix D: Literature Review »
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Congress has an ongoing interest in ensuring that the 500,000 buildings and other structures owned and operated by the Department of Defense (DOD) are operated effectively in terms of cost and resource use. Section 2830 of the National Defense Authorization Act for fiscal year requires the Secretary of Defense to submit a report to the congressional defense committees on the energy-efficiency and sustainability standards used by DOD for military construction and major renovations of buildings.

DOD's report must include a cost-benefit analysis, return on investment, and long-term payback for the building standards and green building certification systems, including:

(A) American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 189.1-2011 for the Design of High-Performance, Green Buildings Except Low-Rise Residential.

(B) ASHRAE Energy Standard 90.1-2010 for Buildings Except Low-Rise Residential.

(C) Leadership in Energy and Environmental Design (LEED) Silver, Gold, and Platinum certification for green buildings, as well as the LEED Volume certification.

(D) Other American National Standards Institute (ANSI) accredited standards.

DOD's report to the congressional defense committees must also include a copy of DOD policy prescribing a comprehensive strategy for the pursuit of design and building standards across the department that include specific energy-efficiency standards and sustainable design attributes for military construction based on the cost-benefit analysis, return on investment, and demonstrated payback required for the aforementioned building standards and green building certification systems. Energy-Efficiency Standards and Green Building Certification Systems Used by the Department of Defense for Military Construction and Major Renovations summarizes the recommendations for energy efficiency.

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