Raising an office NABERS rating from 0 - 4 Star
How a WA based office helps both the environment and their occupancy rental. A range of Australian companies have helped make this happen.
"Every building has an impact on the environment. Buildings use 40% of the world's energy, emit 40% of the world's carbon emissions, and use 20% of the world's available drinking water"
According to NABERS (National Australian Built Environment Rating System) this is the challenge, and start point for better understanding and improving how each building across Australia operates.
To help commercial property owners understand their individual impact, Ecosave has become the largest Goverment-approved Energy perfomance contractor across Australia. Their global business is founded on energy and water efficiency.
Classic Funding Group was contacted by Graham Liddy from Capital Access Group about funding for a particular Ecosave project to help an office in WA. The 13- floor office is in Perth’s CBD. In this area there has been a recent market downturn, resulting in low occupancy. As a result the building’s NABERS Energy Performance had dropped down to Zero (0.0) Stars. This made attracting tenants to vacant floors and suites a difficult proposition for the property management company. Also, the building’s ageing plant and equipment posed significant reliability issues, resulting in escalating operational and maintenance costs for the landlord.
Getting a good rental income and being able to attract Government departments to take office space was a driver for the office owner to want to gain a 4 Star or better NABERS rating.
Ecosave conducted a targeted site assessment and identified viable opportunities to reduce base building HVAC energy consumption by 50%. In fully occupied mode, this would avoid 205.2 tonnes of CO2-equivalent greenhouse gas emissions per year.
The Owner was keen to facilitate the necessary capital works and implement the energy efficiency upgrades required to uplift the NABERS Star Energy rating. However, a solution was required to maintain minimal imposition on existing landlord and tenant budgets. This also had to address the split-incentive challenge to energy efficiency upgrades in commercial buildings: tenants would naturally benefit from energy efficiency through lower utility bills at the expense of the owner making the capital investment.
Ecosave developed an energy conservation proposal that would not only achieve – and guarantee – the identified energy and maintenance cost savings, but also eliminate the split-incentive issue for the owner. The solution was a funded 10-year Ecosave Services Agreement (ESA) requiring no upfront capital outlay or debt and aiming for cash-flow positive outcomes.
The main HVAC plant and metering funding are combined enabling a simple monthly payment to cover both the equipment rental and maintenance. This is particularly cost effective as off balance sheet compared to capital investment.
This type of finance generally falls outside a Bank's appetite for funding so the Victoria-based broker sought out alternative lender.
Classic Funding Group is a specialist in leasing and rental Clean Energy finance solutions. We were able to provide the finance for $500k over 5 years.
For a zero-dollar upfront cost, the building upgrades were valued at $751,350 and the predicted annual energy and maintenance cost savings are $140,509 in full occupancy mode.
Ecosave has also guaranteed that the energy conservation measures will achieve a 4.0 Star NABERS Energy rating once the building has exceeded 75% occupancy. Two new tenants have already been found.