Energy Savers - Stephen Coman, Sustainability Manager

Released: 03 June, 2015

Stephen Coman, Knight Frank’s Sustainability Leader for the Charter Hall property portfolio, talks to enLighten about lighting projects to improve sustainability performance and reduce operating costs for his client, and about what he enjoys in his job.

What have been the main project drivers for the Chamaeleon light upgrade?

The main driver has been the opportunity to contribute to achieving our client Charter Hall's (CH) sustainability objectives, which in turn feed into CH’s business objectives. Specific objectives are to help improve NABERS ratings, reduce greenhouse emissions and building operating costs.

What has helped you in building the business case?

Business cases for lighting upgrades are fairly straightforward, as costs and energy savings are normally easy to obtain. Power consumption of light fittings is normally well known, as are operating hours. There is little need for actual measurement of consumption, although it is valuable to verify savings by monitoring consumption changes after a project is finished. A little bit harder is to build in the cost impact on maintenance and emergency testing, and of future equipment replacement.

In terms of business case analysis, I’ve found client managers are usually happy to see a simple payback period and the impact on costs per square metre of rental space. NPV and IRR calculations do paint a more positive picture as they take into account future savings. However, they rely on assumptions of future costs, including future energy prices and inflation.

What other successes have you had in energy efficiency /sustainability? How have LED lighting upgrades compared?

Because our client is the building owner, my sustainability role focusses more on the base building side than on the tenant areas. We are working with Charter Hall on a range of sustainability initiatives. As we are CH’s facilities manager, the focus is firstly on improving operating efficiency of the buildings by working through our facilities management team. Capital upgrades generally remain the owner’s responsibility, although we also make a contribution in this area, such as the Chamaeleon upgrades.

Improvements in operating efficiency are all about knowing why electricity, water and gas are being consumed, and about detecting inappropriate or unexpected consumption. In commercial buildings, it is typical for heating, ventilation and air conditioning (HVAC) to offer the largest opportunities for utility savings. Commercial building HVAC control systems vary from basic to sophisticated, but they all need close monitoring to keep them working efficiently.

In commercial base buildings, lighting energy consumption is typically small by comparison. For example, a stairwell upgrade to Chamaeleon fittings, while providing a simple payback period of 3 or 4 years, typically has an impact of 1 or 2 benchmarking points on the base building NABERS rating, which may equate to somewhere around 1/10th or 2/10ths of the gap between, say a 4* rating and a 4.5* rating. This becomes significant, however, when a building has a NABERS outcome close to the boundary between 2 star ratings. A stairwell upgrade can then push the rating over the line, or in the case of a “just achieved” rating, make the rating more secure next time around.

What do you enjoy in your job?

I’ve made a career change into sustainability after careers in other sectors. Working in sustainability has been my first real opportunity to use my original science skills and interests. I’m a committed believer in man-made global warming and the future problems it will cause. I get a lot of satisfaction from actually doing something that leads to emissions reductions. It’s great to work for a client such as Charter Hall who has such a strong commitment to environmental outcomes.

What have been the challenges in driving a portfolio wide project for Charter Hall?

The beauty of energy efficiency and related fields such as solar electricity, is that they are now beginning to make sense on their economics alone. As technologies improve and costs reduce, we no longer need to seek out the converted to champion our proposals. When it makes economic sense to implement an energy efficiency project, every business manager gets on board.

A particular challenge for commercial lighting projects is the issue of “split incentives”. Most businesses lease their premises and most of the lighting is in the tenancy areas, with the electricity paid for by the tenants. Even in base building areas, lighting electricity costs are passed on to tenants via outgoings. The result is that the tenants are the primary beneficiaries of energy efficiency projects through reduced costs, whereas the capital cost of implementing projects is normally borne by the owner. The benefit to the owner is accordingly harder to quantify. This issue can mean owners are less willing to implement lighting upgrades.

What we need and what are now emerging, are smarter ways of financing these capital projects to overcome the split incentive issue. One solution is offered by those service providers who will both finance and undertake projects in return for a share of the benefits. With the cost benefits increasingly attractive, it is now possible to achieve outcomes where all parties (and the environment) benefit. Even energy retailers can benefit by becoming providers of distributed green generation, which they are now also starting to do.

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