Building Labeling

by Penni McLean-Conner, NSTAR

Offering consumers transparency
at the point of sale has become increasingly prevalent in our society. Consumers are informed about car mileage capabilities, calories in foods and energy usage of appliances. It is ironic, then, that one of the largest investments consumers make—purchasing or leasing a facility—has limited or no information on energy usage. Consumers are blind regarding their purchases’ operational costs.

We must address this lack of transparency if we are to encourage consumer investment in energy efficiency. Building labeling is gaining interest as a way to encourage owners to invest in energy-efficient equipment. This promising tool will increase consumer awareness in building energy performance and encourage energy efficiency investment in buildings to improve their performance.

Benefits of Building Labeling

  1. Increases consumer awareness. A top barrier to energy efficiency investment is awareness. With respect to buildings, consumers have little or no information about energy usage; therefore, energy efficiency investments that owners make in their buildings are not valued appropriately. Building labeling increases awareness and builds momentum for investment in energy efficiency.
  2. Creates market signals. The concept here is that a building label would create a market signal that would place a higher value on a higher-performing building. Building owners investing in energy efficiency measures would be afforded a channel via building labeling to market the superior energy performance of their properties to potential buyers or tenants.
  3. Supports financing. A barrier owners face is securing financing for energy efficiency investments. Building labeling enhances the ability of owners to attract financing. The lender sees a path, via building labeling, for the energy efficiency investment to create a return at the point of sale or lease.
Types of Building Labeling
Two major categories of building labeling exist today: operational labeling and asset-based labeling.

An asset-based label is most similar to the mpg disclosure on vehicles based on car designs and systems. Operational labels are based on occupant behavior. Going back to the car analogy, some drivers get better than the labeled mpg because of their driving habits.

Operational ratings evaluate the building based on actual energy usage. This data often is gathered through utility bills. This type of tool is effective in identifying efficiency investment opportunities.

Asset-based rating systems compare the energy-use potential of a building based on its design, mechanical systems, etc. This type of comparison is helpful particularly in creating a consistent comparison between buildings, which is most helpful to markets.

Voluntary labeling programs offer both asset- and operational-based labeling. Some of the most accepted building-labeling programs are Leadership in Energy and Environmental Design (LEED), Energy Star Portfolio Manager, and Home Energy Rating System (HERS).

LEED is a successful volunteer program used by building designers as a guideline to make buildings less wasteful. LEED assesses building performance from multiple perspectives, including energy efficiency, site renovation, innovative design and efficient waste management.

Buildings apply for LEED certification at platinum, gold or silver levels depending on their assessments. The value of LEED certification is being amplified as cities and states adopt laws that reward LEED certification with support such as loan guarantees, tax credits, etc.

HERS is an asset-based rating system for homes. The rating index goes from zero to 150, where zero represents a net zero energy home. A score of 100 represents the American Standard New Home in 2006. This system primarily targets new construction but provides a platform for labeling in the residential market.

The Energy Star Portfolio manager is a widely accepted tool to effectively assess building operational performance. Portfolio manager benefits range from being relatively easy to administer and low-cost. Energy Star provides building owners a baseline on existing energy use in buildings.

As building owners invest in energy efficiency improvements, the benefits of the investments can be tracked using a portfolio manager.

Building labeling is gaining momentum as an effective tool to advance energy efficiency investment.

Energy labeling creates consumer awareness about building energy performance that consumers have come to expect in their buying decisions.

Penni McLean-Conner is the vice president of customer care at NSTAR, the largest investor-owned electric and gas utility in Massachusetts. McLean-Conner, a registered professional engineer, serves on several industry boards of directors, including the Massachusetts Technology Collaborative and CS Week. Her latest book, “Energy Efficiency: Principles and Practices,” is available at http://pennwell

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