Back in the 90s, before cars could display fuel efficiency on the dashboard, my dad would reset the trip computer every time he got gas to calculate the fuel efficiency right there at the pump. He always tried to be more fuel efficient than on the previous trip. In a way, he was benchmarking our family car this way. When we talk about benchmarking buildings the process is similar, but instead of looking at miles per gallon, we are looking at specific performance metrics. While engineers and sustainability professionals may be looking at energy use per square foot, investors may be looking at dollars per square foot. The goal is always the same: to get a better understanding of a building’s baseline performance, set performance targets, and strive to meet them. To track the progress, we report performance metrics on a regular basis. This process is known as benchmarking.

Energy Star Portfolio Manager

The most widely used benchmarking tool in North America is Energy Star Portfolio Manager. The free online tool was first introduced by the Environmental Protection Agency (EPA) in 1999 to help organizations and building owners voluntarily track their buildings’ energy and water use, greenhouse gas emissions (GHG), and other operational parameters to potentially receive the Energy Star designation for their buildings. With the rise of ESG in recent years, Portfolio Manager has gained traction, and currently over 330,000 buildings have benchmarked data using Portfolio Manager nationwide. That comprises nearly 25% of all commercial square footage in the US.

Benchmarking vs Building Energy Performance Standards

Over 50 jurisdictions in the US have annual benchmarking requirements for commercial, multifamily, or government buildings above certain square footage. Often, these benchmarking requirements pave the road for Building Energy Performance Standards (BEPS) and have additional requirements that go beyond the requirements of Energy Star. This may include third-party data verification, adjustments for or exclusion of certain use types (i.e., restaurants, 1^st-floor retail, industrial buildings, etc.), or other requirements that differ from reporting requirements for Energy Star certification or LEED. Because these requirements are set by each jurisdiction individually, it can be challenging to navigate the sometimes overlapping ordinances (i.e., Denver and the state of Colorado or Montgomery County and the State of Maryland). To avoid noncompliance fines, annual benchmarking data submissions are usually required by a certain date in the following year. Building owners who fail to submit benchmarking data for the previous calendar year by this deadline typically face fines that are calculated for every day the data is past the reporting deadline.

While BEPS’ builds on the data collected from benchmarking ordinances, they impose additional requirements on buildings to reduce either their energy use or GHG and are typically separate ordinances (i.e., NYC’s Local Law 84 for benchmarking and Local Law 97 for emission reductions).

In jurisdictions that also have a BEPS, not only timely but also accurate benchmarking data is paramount. Benchmarking a building accurately has three advantages:

1. BEPS baselines are usually calculated for each building individually based on historic energy performance. If energy use has been reported incorrectly during the baseline years, a building may not be evaluated based on a fair and accurate baseline. Frequent mistakes are excluding energy use (i.e., generator fuel, tenant energy use, etc.), incorrect allocation of shared utilities between buildings, and the use of incorrect square footage.
2. BEPS targets are usually calculated for each building use type category (i.e., office, multifamily, etc.) and are based on energy use data reported by all buildings. To set realistic targets, municipalities rely heavily on accurate data. By submitting accurate and complete data, building owners benefit from realistic performance targets in return.
3. A streamlined benchmarking process results in a predictable outcome and gives building owners the ability to plan and set interim targets for long-term compliance.

Since benchmarking ordinances are often a precursor of a BEPS, following benchmarking best practices early on sets individual buildings or portfolios up for long-term success.

Markets to Watch

The most important US markets to watch right now are highlighted in the table below. However, benchmarking and BEPS regulations are also gaining traction outside of the US. Currently, almost 50 state and local governments have joined the national BEPS coalition and are committed to implementing building performance policies and programs in their jurisdictions.

How to Comply

Knowledge of local benchmarking laws, a deep understanding of Portfolio Manager, building use type definitions, and reporting requirements are minimum qualifications to ensure buildings and portfolios are benchmarked accurately. Building owners often expect these skills from property managers and on-site engineers, but they typically do not fall in their area of expertise. This disconnect can lead to inaccurate, incomplete, or incorrect benchmarking data that can be difficult and time-intensive to correct retroactively. Additionally, many benchmarking ordinances require third-party data verification every so often which cannot be performed by the same person or company entering data on the building owner’s behalf. Hiring a dedicated benchmarking provider can result in better outcomes, reduced costs, and fewer unwanted surprises and fines.