Despite advances in the energy efficiency of building components and mechanical equipment, total energy use in U.S. commercial buildings continues to increase. The reasons are twofold. First, modest declines in energy intensity (energy use per square foot) have been more than offset by increased numbers of computers and other plug-in equipment and — until recently — robust construction of new buildings. At the same time, building energy codes for new construction and programs aimed at retrofitting existing buildings have realized only a modest share of identified potential energy savings.

With initial signs of recovery in the housing and commercial real-estate markets, now is the time to look beyond incremental refinements and consider approaches to accelerate the pace of energy-efficiency improvements in new and existing commercial buildings.

The Challenge Ahead

Energy consumption in buildings accounts for 40 percent of primary energy use and about 75 percent of electricity use in the United States. Commercial-building energy use, meanwhile, accounts for half of the building-sector total, costing U.S. businesses about $170 billion annually, and is projected to grow more quickly than residential energy use over the next two decades.1

Changing this trajectory and realizing the 30-percent energy savings identified as cost-effective with today's technology2,3,4 calls for new strategies to drastically reduce the way energy is used in commercial buildings. This article highlights several innovative strategies beginning to receive attention:

  • Shifting focus from the efficiency of equipment and components to that of systems.

  • Moving from a building-by-building approach to community-scale energy efficiency.

  • Establishing widespread energy rating and disclosure to increase visibility of building performance.

  • Shifting program emphasis from one-time retrofits to ongoing energy management and continuous improvement.

U.S. Department of Energy (DOE) officials have called for energy-saving initiatives demonstrating “speed and scale.” To that should be added “depth and persistence.” Not only do we need to “touch more buildings” with some energy-efficiency action, we must find ways to achieve deeper energy savings and to sustain and continually improve those savings.

Minimizing regret, or the need to come back to a building and retrofit it later, when energy-saving measures are more difficult and costly to implement, entails “future-proofing” the most durable features of new buildings and major renovations by building in flexibility for easier and cheaper technology upgrades. For example, while installing rooftop photovoltaics or solar hot-water collectors may be cost-prohibitive today, features such as roof orientation and wiring and plumbing chases can be designed in a way to make upgrades feasible at a much lower cost in the future.

The City of Austin, Texas, and other jurisdictions require all new homes to be “solar ready”; similar provisions could be applied to commercial buildings. Other examples of “technology-readiness” requirements include extra space in a mechanical room for a thermal-storage ice tank, equipment controls that are demand-response-capable, ducting suitable for a future exhaust-air energy/enthalpy-recovery system, and access provisions for a future ground-source heat pump.

From Equipment to Systems

Some building experts believe we may be approaching the “max-tech” level, or the maximum efficiency that can be achieved at a reasonable cost, for individual building components. Whether or not that is true, it is becoming clear that there are many cost-effective efficiency opportunities at the building-subsystems level (e.g., lighting/daylighting/controls, passive and active HVAC distribution and controls). There is even more savings potential from integration of subsystems — particularly envelope, HVAC, and lighting — and perhaps integration with non-energy systems (e.g., fire safety, security).

Better design and management of relationships among components saves energy on an annual basis and helps to shift electricity use from peak to off-peak periods, allows rapid load curtailment in response to utility-grid constraints or dynamic pricing, and enables large buildings to take full advantage of on-site combined heat and power. Additionally, it may make possible lower first costs.

Moving from an equipment to a systems or whole-building focus will require some rethinking of energy test methods; energy-performance metrics, recognition, and labeling, such as ENERGY STAR or NEMA Premium; utility incentives; and perhaps mandatory efficiency standards. Motors and drives, for example, may need to be thought of as a single system, along with appropriate control hardware and software, to routinely achieve the estimated 30-percent potential savings from variable-speed compressors and fans.

Beyond the Building Envelope

Systems-level thinking can move us beyond a single-building approach to consider how a neighborhood or campus can benefit from well-designed systems to share thermal (district heating/cooling) or electrical energy (“microgrids”). On a larger scale, the “smart grid” may prove as important to customer end-use efficiency as to grid management and optimization on the utility side of the meter.

Smart-grid connectivity uses communications and control across the meter boundary to enable seamless management of electricity loads and generating sources, reducing total system costs, improving reliability, and helping to accommodate intermittent wind and solar generation on a much larger scale.

Systems-level thinking also can be applied to the concept of a “net-zero-energy” building, or a building that uses no more energy in a given year than can be produced within the building's footprint (e.g., by a solar array on the roof). A net-zero criterion may make more sense at the multibuilding or community scale than the individual-building scale.5 That is because it generally is easier for smaller low-rise buildings to achieve net-zero performance because of the higher ratio of roof space (for solar panels) to total floor space. A net-zero-energy community, office/industrial park, or university campus can provide space for solar or wind generation, while well-planned, mixed-use development can provide thermal- and electrical-load diversity to better optimize community-scale heating, cooling, and power systems.

Rethinking our energy systems at a more integrated level can be complex and challenging, but just as we should be preparing new buildings to better accommodate future technology upgrades, we should be thinking of larger-scale infrastructure investments.

Making Energy Performance Visible and Relevant

A well-known obstacle to energy-efficiency investments is the high-rate-of-return, or short-payback, investment criterion often applied to energy-saving opportunities. Some argue this is a “risk premium” associated with a lack of reliable cost and savings data. Others point to a reluctance to add new debt to balance sheets, frequent turnover of commercial properties, and difficulty creating lease agreements with adequate incentives for both landlords and tenants.

For each of these constraints, a significant part of the solution may be to increase the visibility of building energy performance in ways that are relevant to the decisions of owners/operators, potential buyers, and market intermediaries, such as lenders and commercial-property brokers.

Energy operating costs that are known and reasonably predictable make an energy-saving investment more “bankable” and allow its costs and benefits to be more readily — and credibly — allocated between landlord and tenants.

Across the country, a growing number of major cities and states (e.g., Seattle, Austin, New York — a current list can be found at are requiring energy rating and disclosure for large and medium-sized commercial buildings, often beginning with public buildings6 (see “New York City's Greener, Greater Buildings Plan,” HPAC Engineering, January 2012, Many of these programs are based on ENERGY STAR Portfolio Manager energy-benchmarking software, which compares buildings based on actual energy bills.

The DOE is developing a model program for “asset rating” that will compare buildings' estimated energy use based on physical features and assumed standardized operation and occupancy ( Ultimately, the combination of credible, widespread energy-asset ratings (to inform real-estate investment and lending) and energy-performance ratings (to inform owner/operating practices and tenant leasing decisions) could well have a transformative effect on energy-efficiency investments in commercial buildings.

From Retrofit to Continuous Efficiency Improvement

For both new and existing commercial buildings, energy efficiency needs to be thought of as a long-term process, rather than a one-time event (i.e., an energy audit followed by a retrofit project), while energy management needs to be seen as an integral part of overall asset management, with specific performance goals, tracking of progress, and a sustained owner/manager commitment to continuous energy-efficiency improvement.

For commercial and public buildings, this should include at least:

  • Periodic or continuous commissioning of systems.

  • Investments in people and monitoring/control systems.

  • The assurance that every building-modification project includes “opportunistic upgrades” of energy efficiency.

As an organizing framework and management philosophy, a commitment to continuous efficiency improvement must be supported by a decision structure that:

  • Clearly assigns responsibility and accountability for decisions impacting energy performance.

  • Reliably tracks performance trends against efficiency goals and industry best practices.

As the concept of continuous efficiency improvement gains traction, the energy-efficiency community is responding with resources, programs, and standards to ground energy-management principles within the standard operation of commercial buildings. A number of utility energy-efficiency programs are shifting from one-time energy audits or retrofit rebates to long-term partnerships with commercial customers that support continuous energy improvement through management practices, training, and staged multiyear investments.7

In July 2011, the International Organization for Standardization (ISO) released ISO 50001, a voluntary standard making energy-management practices and continuous energy-efficiency improvement a routine part of corporate management of commercial and industrial facilities.

Conformance with ISO 50001 provides market value, as participants are able to reference a global energy-management standard to customers, tenants, shareholders, and the general public. ISO 50001 has the potential to impact decision-making across a broad base, from procurement in the industrial supply chain to leasing agreements in commercial real estate, and it could affect up to 60 percent of global energy use.

ISO 50001 is a foundational element of the Superior Energy Performance and Global Superior Energy Performance initiatives being developed by the DOE in collaboration with private-sector partners and stakeholders. These pilot programs are designed to encourage and certify compliance with ISO 50001 and to recognize achievement of specified goals for improved energy performance.


We have a clear need — reverse steady growth in total building energy demand and capture billions of dollars in energy-cost savings per year — and a robust infrastructure of investment, experience, and support to achieve energy efficiency in commercial buildings.

With other countries setting top-down energy-reduction targets for owners of large commercial and industrial facilities, the challenge for U.S. energy policy is to show savings at least as large can be achieved through a more market-oriented approach in ways that are flexible, sustainable, and more cost-effective.


  1. DOE. (2011). 2010 buildings energy data book. Available at

  2. Belzer, D.B. (2009). Energy efficiency potential in existing commercial buildings: Review of selected recent studies. PNNL-18337. Available at

  3. Granade, H.C., Creyts, J., Derkach, A., Farese, P., Nyquist, S., & Ostrowski, K. (2009). Unlocking energy efficiency in the U.S. economy. McKinsey & Co. Available at

  4. Brown, R., Borgeson, S., Koomey, J., & Biermayer, P. (2008). U.S. building-sector energy efficiency potential. LBNL-1096E. Available at

  5. Carlisle, N., Van Geet, O., & Pless, S. (2009). Definition of a “zero net energy” community. NREL/TP-7A2-46065. Available at

  6. Burr, A.C., Keicher, C., & Leipziger, D. (2011). Building energy transparency: A framework for implementing U.S. commercial energy rating & disclosure policy. Institute for Market Transformation. Available at

  7. CEE. (2011). Summary of commercial whole building performance programs: Continuous energy improvement and energy management and information systems. Consortium for Energy Efficiency. Available at

Did you find this article useful? Send comments and suggestions to Executive Editor Scott Arnold at

Kateri Callahan is president of the Alliance to Save Energy (, a coalition of business, government, environmental, and consumer leaders promoting the efficient and clean use of energy worldwide. She has more than 20 years of experience in policy advocacy, fundraising, coalition building, and organizational management and in 2009 was part of the inaugural class inducted into the Energy Efficiency Hall of Fame established by Johnson Controls Inc. and the United States Energy Association. Jeffrey Harris is senior vice president for programs for the Alliance to Save Energy. His areas of expertise include U.S. energy-efficiency policy, international energy efficiency, utility and government-sector energy-efficiency programs, energy use in buildings, and market transformation. Previously, he served as a staff scientist with the Environmental Energy Technologies Division of Lawrence Berkeley National Laboratory.


From March 27-29 in Orlando, Fla., the Alliance to Save Energy and subsidiary the Southeast Energy Efficiency Alliance will co-host the fifth Energy Efficiency Global Forum (EE Global), an event exploring the most effective energy-efficiency policies and practices in buildings, utilities, and manufacturing.

Sessions will focus on how policy, innovation, and the implementation and integration of the latest technologies are shaping a more energy-efficient world and making a difference for businesses and governments around the world.

For more information and to register, visit