Illinois among the first to adopt new, stricter code. Learn the costs, benefits and implementation
A new, stricter energy code in force throughout Illinois affects construction projects from the standpoint of cost and time, but the biggest impact of the new law could be the way it motivates owners to engage contractors more strongly during the design phase of projects. And that would be a good change even if energy code compliance was not an issue.
Illinois is one of the first states to adopt the 2012 version of the International Energy Conservation Code promulgated by the International Code Council. ICC updates its energy codes every few years to encourage continuous improvement in efficiency. Many states follow the 2009 version, some use an older version, and a few have no statewide energy code. Only Maryland and Illinois started compliance with the 2012 code this year, while California and Washington state are committed to implementing it at a later date.
The new rules apply to new commercial construction, major renovations and rehabs, expansions, and large interior build-out projects. Performance is measured primarily by energy use intensity (EUI), a key metric of usage that takes into account a building’s size, location and function. Compliance with the new Illinois Energy Conservation Code (IECC 2012) results in a 30 percent reduction in EUI compared to the previous state standard IECC 2006, and a 60 percent reduction from 1975, the base year for comparing energy codes.
IECC 2012 sets more stringent requirements for construction projects in terms of the building envelope, roof reflectance, window-to-wall ratio and daylighting. In addition, projects must include high efficiency in at least one of three key areas: the HVAC system, the lighting package, or the installation of onsite renewable energy.
Construction projects must also undergo commissioning before receiving a certificate of occupancy. Commissioning is a process conducted by a third-party professional to verify that all the building’s mechanical, electrical and other systems perform as they were designed to do.
Costs and Benefits
Compliance with IECC inevitably adds to the cost of construction. High-efficiency equipment and materials may cost marginally more, or a lot more, than their sub-standard counterparts. The commissioning process alone is likely to cost $1 per square foot or more. The premium cost for compliance varies quite a bit depending on the type of building, the owner’s commitment to quality, and the procurement savvy of the project team.
For many owners, the money would be well-spent even if there was no need for compliance. The cumulative energy cost savings surpass the extra cost of construction and commissioning generally within five years, so an organization that occupies the building for 10 or 20 years comes out ahead no matter how return on investment is calculated.
Of course, owners of leased buildings do not gain the direct payback of energy savings, as tenants typically pay their own energy cost; however, there is mounting evidence that high-performing buildings attract tenants more readily, and at incrementally higher rents, than standard buildings. As energy costs rise over time and tenants become increasingly conscious of environmental concerns, the correlation between energy performance and financial performance of buildings will grow stronger.
In addition, commercial buildings in Chicago may soon be required to measure their EUI via the EPA’s Energy Star Portfolio Manager program and see their performance scores made available to prospective tenants. The same Energy Star label seen on high-efficiency home appliances and computers is also available to buildings that score among the top 25 percent of all buildings with similar characteristics. Energy Star scores range from 1 to 100, based on their performance relative to similar buildings, so a building with a 75 rating is superior to three-quarters of all similar buildings.
Energy Star has been a voluntary program in the past, and scores were not made public so prospective tenants could not easily assess the efficiency of different buildings. In recent years, however, several large U.S. cities have adopted mandatory measurement and disclosure laws so that all large buildings could be judged on an equal basis.
On June 26, Mayor Emanuel introduced an energy benchmarking ordinance modeled on these earlier efforts, and local real estate players expect the measure to be enacted. Under the proposal, the relative performance of some 3,500 Chicago buildings will be subject to disclosure starting in June 2015, adding a powerful motivation for landlords to maximize energy efficiency.
Cities and states push these initiatives as a way to reduce carbon emissions and ease the strain on utilities and grids, while providing a net financial benefit to those who are subject to the rules. Whether compliance with the new energy code is as beneficial in practice as it is in theory depends a lot on the design and construction team.
IECC 2012 Implementation
The new code affects virtually every aspect of buildings, which makes it more important than ever for companies to select design and construction partners as early in the process as possible. A competitive bid process does not allow contractors to add value during the design phase, when construction expertise can be vital. When a contractor is on board during the design phase, preconstruction work can start while some features are still being considered.
Integrated approaches to development are already replacing the traditional practice of sending architectural plans out for bids by multiple contractors, as a way to shorten the development timeframe and ensure that the products specified are cost-effective and can be obtained on schedule. Team integration is even more important now that energy modeling to achieve high performance is part of the design phase. In the past, very few buildings other than hospitals and laboratories were subject to energy modeling, but going forward, it will be part of most if not all large developments as a way to ensure code compliance and high performance.
Energy modeling is more science than art: The team inputs data on equipment used, insulation, window-to-wall ratios and other factors into energy modeling software, and the EUI predicted by the software will prove to be highly accurate. Change the inputs and you will see the effect on EUI. It’s not a simple process but it is a certain one—if the team has done the work correctly, the building will perform as expected upon completion.
Many new developments today also engage in life-cycle cost analysis, which looks at occupancy cost in terms of the cost of construction plus the total cost of operation over the anticipated life of the building. This analysis helps organizations make smarter decisions when it comes to energy efficiency, rather than assuming the cheapest code-compliant materials and products are the best value.
Since there are many ways to comply with the code and minimize life-cycle cost, the trick is to find the best combination of products and materials to meet the client’s needs. This requires expertise on the availability, cost and effectiveness of many different materials and products. The contractor should be able to assign an estimator to the project who can work with the architect to ensure the best combination of equipment and materials to meet the cost and performance criteria.
It’s also important to have one person who’s involved with the project from start to finish, so that design intent is not lost during construction. This expert works with the lead architect and MEP designers, energy modeling team and estimator during the design phase, and stays with the project through sub-contractor coordination, periodic inspections and commissioning. A construction coordinator who was not present during the early phases may not understand how decisions were reached, and the project can suffer as a result.
Selecting architects and contractors with experience in LEED compliant development will also help avoid problems with energy code compliance. Although LEED certification does not require energy modeling or life-cycle cost analysis, design and construction players with experience in green building development should be familiar with the challenges and strategies involved in high-performance building development.
Achieving compliance with IECC 2012 is a key consideration in Illinois construction projects today, but it need not result in a major cost premium or completion delays. Even better, a new or renovated building that achieves compliance will also have lower operational costs than most buildings, providing owners with a competitive cost advantage and enhancing the cash flow and value of investment properties.
Pierre Cowart is a senior vice president and Leigh McMillen is a project executive at Leopardo Companies, Inc. (www.leopardo.com), one of the nation’s largest and greenest construction firms.
A version of this article also appeared the Illinois Real Estate Journal.