EPA's New Energy Star Score Models Under Review | Practical Law

EPA's New Energy Star Score Models Under Review | Practical Law

The Environmental Protection Agency (EPA) recently updated the performance metrics used in assigning Energy Star scores to commercial buildings. The EPA is now reviewing input from commercial landlords and other stakeholders and further evaluating score changes before implementing the updated metrics. During the review period, the EPA will suspend awarding Energy Star certifications for all U.S. property types with new score models.

EPA's New Energy Star Score Models Under Review

Practical Law Legal Update w-017-0132 (Approx. 4 pages)

EPA's New Energy Star Score Models Under Review

by Practical Law Real Estate
Published on 15 Oct 2018 • USA (National/Federal)
The Environmental Protection Agency (EPA) recently updated the performance metrics used in assigning Energy Star scores to commercial buildings. The EPA is now reviewing input from commercial landlords and other stakeholders and further evaluating score changes before implementing the updated metrics. During the review period, the EPA will suspend awarding Energy Star certifications for all U.S. property types with new score models.
On August 26, 2018, the Environmental Protection Agency (EPA) updated the energy efficiency performance metrics it uses to assign Energy Star scores to commercial buildings (see Legal Update, Energy Star Scores to Change Under Updated EPA Metrics). Energy Star is a voluntary program managed by the EPA and the Department of Energy (DOE) that helps promote energy efficiency and greenhouse gas reduction.

Energy Star Scores

Energy Star Portfolio Manager is an online benchmarking tool that allows commercial property owners to track energy efficient metrics for their properties. Based on these metrics, certain property types receive a 1-100 Energy Star score which is assigned by comparing a property's energy performance to similar properties nationwide. A score of 75 or above qualifies the property for Energy Star certification, indicating that it meets strict energy standards set by the EPA.
The Energy Star score for most commercial properties is based on the Commercial Buildings Energy Consumption Survey (CBECS), which is conducted approximately every four years by the DOE's Energy Information Administration (EIA). However, many Energy Star scores are currently based on data from CBECS conducted before 2007.

Updated EPA Metrics

The latest CBECS market data became available in 2016 and is based on the results of a 2012 survey. On August 26, 2018, Energy Star score models were updated using this market data for the following property types:
  • Banks.
  • Courthouses.
  • Financial offices.
  • Hotels.
  • Places of worship.
  • K-12 schools.
  • Commercial and governmental offices.
  • Retail stores, wholesale clubs, and supercenters.
  • Supermarkets.
  • Warehouses, including refrigerated, non-refrigerated, and distribution centers.
Excluded from the score model updates are:
  • Multifamily.
  • Data centers.
  • Senior care communities.
  • Manufacturing facilities.
The new CBECS data shows an overall improvement in the energy performance of all U.S. commercial property types in the last decade. Because Energy Star scores are assigned by comparing similar properties nationwide, the estimated average score has decreased for most affected property types after the model updates, with many experiencing a double-digit drop.
Previous Energy Star certifications were not affected by the score updates and remain valid even for scores now dropping below a 75.

EPA's Three-Phase Review Period

The EPA implemented a three-phase review process when the new score models went live in Portfolio Manager allowing owners to enter their data:
  • During Phase 1 which ended October 10, 2018, the EPA collected feedback about the new scores from affected U.S. commercial building sector stakeholders.
  • Phase 2, currently underway, involves:
    • analyzing the collected feedback with stakeholders and technical experts; and
    • potentially adjusting the scoring models.
  • In Phase 3, the EPA will communicate the results of its analysis and finalize all scores.
The EPA anticipates concluding the review process in 2019 with sufficient time to avoid disrupting any building benchmark reporting requirements that many buildings conduct in the spring.

Temporary Suspension of Energy Star Certifications

The EPA has suspended awarding 2018 certifications for the property types with model updates until the new scores are finalized. According to the EPA's Energy Star website, the agency will:
  • Extend the deadline for 2018 certification for those properties.
  • Provide an option of applying for 2018 certification for a period in 2019. Although the application details have not been finalized, the EPA anticipates that it will begin accepting applications by property type as each model is evaluated and finalized.
Certification has been placed on hold only for existing buildings. Designed properties may still apply for the Designed to Earn Energy Star certification.

Practical Implications

Affected property owners should verify and update their data and calculate their revised scores in Portfolio Manager. The EPA recommends steps to improve accuracy and possibly a score by:
  • Replacing default values with actual values for new required property use details. The pre-populated default values have been set conservatively.
  • Benchmarking data center space. For a building with data center space that is not separately metered for benchmarking, the tool now offers an option to use estimated data to account for the high energy intensity of such spaces.
Property owners should also continue to monitor the EPA's Energy Star website for updates and possible changes to the score models.
For more information on energy efficient buildings and Energy Star certification, see Practice Notes, Green Buildings: Laws and Practices and Owning and Leasing Green Real Estate.