Case Study

PENN 1

Innovative heat recovery project for carbon emissions reduction

Vornado Realty Trust is spearheading a groundbreaking retrofit at 1 Pennsylvania Plaza (PENN 1) in New York City, aiming to reach 100% carbon neutrality by 2040. This ambitious project is part of the company’s broader commitment to environmental sustainability, as outlined in their Vision 2030. PENN 1, a towering landmark in midtown Manhattan, stands at 57 stories and spans approximately 2.5 million square feet of office and retail space. Constructed in 1972, the building is a key component of THE PENN DISTRICT, Vornado’s flagship property cluster.

The roadmap to carbon neutrality at PENN 1 includes advanced waterside heat recovery measures. This strategy focuses on capturing and reusing heat from the building’s condenser water loop, a method that not only reduces heating loads but also facilitates a subsequent transition to electrification through air-source heat pumps and thermal storage. The PENN 1 project demonstrates a ‘thermal dispatch model,’ in which carbon-free energy sources are gradually deployed to fulfill the heating and cooling demands of a large commercial building.

By adopting this innovative approach, Vornado aims to significantly reduce the carbon footprint of PENN 1 while also setting a replicable model for building decarbonization in New York City. This initiative underscores Vornado’s role as a leader in sustainable real estate development, with a portfolio that includes over 34 million square feet of premier assets across New York City, Chicago, and San Francisco. Through Vision 2030, Vornado’s commitment to achieving carbon neutrality and a 50% site energy reduction reflects their dedication to pioneering sustainable solutions in the urban landscape.

PENN 1+2 Hero building
Emissions Reduction

100%

PENN 1 aims to achieve 100% carbon neutrality by 2030.

Lessons Learned

Accurate, calibrated energy models are essential for realistic projections of energy and carbon reductions, guiding the selection of feasible decarbonization measures for complex buildings.

Lessons Learned

Leveraging existing technologies in innovative ways, such as the purposeful dispatch of thermal energy and optimizing for scalability and affordability, can be as impactful as waiting for new technological breakthroughs.

Lessons Learned

Training and involving operations teams in the design and implementation phases are crucial for ensuring systems function as intended.

A baseline assessment is key to understanding current systems and performance, then identifying conditions, requirements or events that will trigger a decarbonization effort. The assessment looks across technical systems, asset strategy and sectoral factors.

Building System Conditions
  • Equipment nearing end-of-life
  • New heat source potential
  • Tenant load change
  • Resilience upgrades
  • Efficiency improvements
Asset Conditions
  • Repositioning
  • Capital event cycles
  • Carbon emissions limits
  • Tenant sustainability demands
  • Investor sustainability demands
Market Conditions
  • Technology improves
  • Policy changes
  • Utility prices change
  • Fuels phase out

The project team initially explored two packages of combined reduction measures to assess the impact of eliminating fossil fuels and electrifying the building’s heating end uses. Individual measures studied earlier in the project were selected and combined with additional infrastructure enhancements to develop two electrification packages summarized as follows: 

  • Beneficial Electrification: Incorporates a suite of tenant, airside, and envelope upgrades along with the installation of air source heat pumps working in conjunction with the cogeneration plant to keep the building heated; eliminates all district steam resources. 
  • Full Electrification: Incorporates the same set of upgrades but utilizes more air source heat pumps in place of the cogeneration plant. 

The thermal dispatch approach utilized at PENN 1 allows the building to intelligently prioritize low-carbon thermal resources for operational building needs ahead of those that are more carbon intensive. This strategy, enabled by electrification of heating loads and heat recovery measures, will reduce energy use by 22% and carbon emissions by 38% by 2030.

Effective engineering integrates measures for reducing energy load, recovering wasted heat, and moving towards partial or full electrification. This increases operational efficiencies, optimizes energy peaks, and avoids oversized heating systems, thus alleviating space constraints and minimizing the cost of retrofits to decarbonize the building over time.

Existing Conditions

This diagram illustrates the building prior to the initiation of Strategic Decarbonization planning by the owners and their teams.

Click through the measures under “Building After” to understand the components of the building’s energy transition.

Sequence of Measures

2022

2023

2024

2025

2030

Building System Affected

  • heating
  • cooling
  • ventilation
Penn One Building Before
Penn One Building After
Replace existing curtain wall glazing with triple pane insulated glazing unit (IGU)
Replace steam turbine chillers with high efficiency electric chillers
Replace constant volume induction units with Variable Air Volume (VAV) units as tenant spaces roll
Install WSHPs to reclaim rejected heat and offset building heating
Install ASHPs to partially electrify heating and inject heat to the secondary hot water system
Convert existing condenser water-cooled DX units to chilled water-cooled unites. Maximize heat recovery
Engage tenants during turnover to ensure best-in-class fit-out
Disable 24//7 cogeneration plant operation to eliminate most on-siite fossil-fuel usage and keep district steam as back-up; Maintain the Cogen plant as a resiliency and demand response asset
Install ASHPs to electrify the remaining heating load
Install thermal storage to offset peak demand and shift heating and cooling loads

Reduce Energy Load 

  • Envelope Improvement: install new triple pane glazing 
  • Induction Units Replacement: replace constant volume perimeter induction units with VAV units 
  • Enhance Tenant Fit-out: Install high-efficiency equipment and engage with tenants to ensure best-in-class fit-out during turnover
  • Thermal Layering: Heating loads are sequenced and prioritized to first engage low-carbon resources to meet the building’s heating demand, and then use next-available or higher carbon-intense thermal resources to come online. For example, first use low carbon electric thermal resources from water-source heat pumps, and then utility steam to meet remaining demand. When the ASHPs are installed, they will be dispatched second, as another low carbon alternative. This approach makes it possible to meet peak heating loads during extreme cold events with relative ease and low carbon emissions.

Recover Wasted Heat 

  • Condenser Water Heat Recovery: This tactic will use water-source heat pumps (WSHP) to utilize heat from the condenser water system to supplement heating hot water for the building’s hydronic system. 
    • The WSHP method creates a “heat-lifting” machine that will raise the temperature of hot water to match the building’s existing supply – usefully extracting heat that would otherwise be wasted and reducing steam heat emissions. 
  • Computer Room Air Conditioning (CRAC) Conversion: Convert existing condenser water cooled DX units to chilled water-cooled units to maximize heat recovery and improve cooling efficiency

Partial Electrification: 

  • Electric Chillers: Replace steam turbine chillers to electric chillers 
  • Partial Air Source Heat Pumps: Install ASHPs to partially cover heating load served by the secondary hot water loop

Full Electrification: 

  • Cogen Decommissioning: Retire cogeneration plant and eliminate on-site fossil fuel usage; keep district steam as back-up
  • Thermal Storage: Install thermal storage systems to enable full-building electrification by shifting and support heating and cooling peaks and empower grid flexibility 
  • More ASHPs: Install ASHPs to cover remaining heating load

Making a business case for strategic decarbonization requires thinking beyond a traditional energy audit approach or simple payback analysis. It assesses business-as-usual costs and risks against the costs and added value of phased decarbonization investments in the long-term.

Retrofit Costs

Decarbonization Costs

$4.15M

Capital costs of decarbonization (est. in 2025 $).

Avoided Risks

Business-as-Usual Costs

$8.01M

Energy cost savings (2026–2050 [25 yrs]): 3.56M.

Repairs and maintenance savings: 99k.

BAU cost of system replacement/upgrades: 2.7M.

Residual cost (remaining equipment value): 764k.

Avoided Risks

Business-as-Usual Risks

$724k

LL97 fines avoided starting in 2030.

Added Value

Decarbonization Value

$1M

Incentives.

Net Present Value

$1.015M

Net difference between the present value of cash inflows and outflows over a period of time.

Heat recovery remains a very costly endeavor. Even with the Empire Challenge award of $1 million, the energy savings alone yields a payback in excess of 7 years. Compared to other energy conservation measures with rapid ROIs, this is not in the realm of being a “no-brainer.” However, unlike other retrofits or upgrades that target electricity savings, this project reduces our future reliance on district steam, a utility that is expected to undergo very high cost escalations as they incorporate renewables into their production.

An emissions decarbonization roadmap helps building owners visualize their future emissions reductions by outlining the CO2 reductions from selected energy conservation measures. This roadmap is designed with a phased approach, considering a 20- or 30-year timeline, and incorporates the evolving benefits of grid decarbonization, ensuring a comprehensive view of long-term environmental impact.

Strategic decarbonization roadmap for PENN 1.

The Vornado team has gained countless lessons-learned on their decarbonization planning journey. The following are essential insights from the project team:

Insights from the energy model

The predictive energy model revealed that while the renovations to the building will yield significant energy and carbon reductions, the energy consumption from tenant spaces, such as computer and plug loads, must also be significantly reduced and intelligently managed to drive down the carbon intensity of the building (and reduce/eliminate exposure to LL97 through the 2030 compliance period).

While every effort was made to ensure that the model reflects the design team’s best understanding of the building’s existing conditions and future usage, the modeled energy consumption, energy cost, and carbon emission estimates will likely vary from the actual energy, cost, and carbon of the building after construction. This is due to variables such as weather, occupancy, building operation and maintenance, changes in energy rates, changes in carbon emission coefficients, and energy uses not covered by the modeling scope.

Underscoring the importance of an iterative design process

In the first iteration of the decarbonization strategy, the Vornado team approached the project with an all-or-nothing electrification mindset. They found that the strategies that achieve the deepest levels of decarbonization through fully eliminating district steam and co-generation waste heat as heating sources may not be practical nor cost efficient to implement in such a complex existing building. So, they went back to the drawing board.

In the second iteration of the project, a more holistic strategy emphasizing the following core principles was developed:

  • Re-use existing infrastructure (i.e., piping and ductwork) where possible
  • Recovery wasted heat from internal loads
  • Electrify heating loads affordably with heat pumps
  • Compress space requirements for electrification equipment/systems
  • Dispatch thermally stored energy to shift and smooth loads to promote grid flexibility

Resource Efficient Electrification framework: With these guiding principles, the Vornado team developed a new strategy that follows the  Resource Efficient Decarbonization Framework, which JB&B refers to as “Reduce, Recycle, Electrify”. Phasing, cost compression, and space compression were prioritized so that measures are more likely to be installed and scaled to other Vornado properties.

Key takeaways on the broader decarbonization decision-making process

  • Invest in a Calibrated Energy Model – In large and complex buildings, building owners should commission a decarbonization study with an investment-grade calibrated energy model. Energy models should be custom built to the building’s unique characteristics, ensuring the analysis of retrofits are accurate and adds confidence to decision making. An energy model is a flexible tool that captures interactivity of all systems and ensures the strategies and measures studied have realistic energy and carbon reduction projections.
  • Just Because It’s Feasible Doesn’t Mean It’s Practical – Anything is possible in an energy model. Technical teams must be aware that building ownership teams care about more than just the energy and carbon results from the model. Strategies must be practical in real-world scenarios and should aim to re-use existing infrastructure where possible, minimize disruption, use space efficiently, and compress costs as much as possible. Technical teams must be prepared to show building owners how a particular measure will be installed practically.
  • Don’t Expect 5–7 Year Paybacks on Decarbonization Measures – Deep decarbonization measures will likely have long paybacks. This is due to high upfront costs of electrification technology, supporting infrastructure, and invasive retrofitting. Working against these high-efficient electric systems is the price of electricity, which is 5 to 6 times more expensive per unit of energy than natural gas. Simple payback analyses are unable to capture the true value of decarbonization investments, including non-energy benefits. Ownership teams have to adjust their payback expectations when considering deep decarbonization measures. 
  • Technological Innovation Isn’t the Only Innovation – There is new and exciting technology out there that has the potential to revolutionize the way we electrify buildings, but in the meantime, there are innovative approaches to electrifying buildings today with currently available technology. Purposeful dispatch of thermal energy sources and optimization for scalability, practicality, and affordability are innovative strategies. 
  • Conditioning Exhaust Air – Recycling waste heat from exhaust air streams isn’t a new idea, but using the refrigeration cycle to extract and lift heat from exhaust air streams to serve heating loads is a new and innovative concept. Essentially, by air conditioning the exhaust air, like traditionally avoided toilet exhaust, heat can be recovered and lifted to higher temperatures by a heat pump to offset heating loads. The reverse is also true in the summertime, where exhaust air can serve as a heat rejection medium for the chilled water production of chiller plants. 
  • Potential of Low Temperature Hot Water in Existing Chilled Water Coils Low temperature hot water enables heat recovery and air source heat pumps to have a big impact, but reconfiguring all comfort heating systems in existing buildings to be low temperature is difficult and costly. The following approach offers a more practical alternative:
  • Partially electrify high temperature hot water systems (i.e., perimeter systems) with water-source heat pumps and condenser heat recovery. This allows existing distribution infrastructure to stay in place – critical to wider spread of heat pump adoption. 
  • Transition air handling unit steam or hot water coils to low temperature, which can be served by air source heat pumps. The cost and scope of coil replacements is much more manageable than replacing all heating systems with low temperature hot water infrastructure. In some cases, existing chilled water coils can be used with low temperature hot water and become a modified change-over coil, negating the cost of replacement. 
  • Operations Team Integration: These decarbonization strategies are new and complex. Existing operations teams must be part of the design and implementation of these systems and training is of critical importance. A system that is designed to be low-carbon will not be successful if it is not operated per the design intent and understood thoroughly by those operating them. 
  • Disruption and Phasing: Some of the best decarbonization strategies are also some of the most disruptive. Phasing must be based upon several factors including the rate of grid decarbonization, leasing turnover cycles, capital planning cycles, and equipment nearing its end of useful life. 

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ULI Federal Funding Opportunities 

A baseline assessment is key to understanding current systems and performance, then identifying conditions, requirements or events that will trigger a decarbonization effort. The assessment looks across technical systems, asset strategy and sectoral factors.

Building System Conditions
Asset Conditions
Market Conditions

Effective engineering integrates measures for reducing energy load, recovering wasted heat, and moving towards partial or full electrification. This increases operational efficiencies, optimizes energy peaks, and avoids oversized heating systems, thus alleviating space constraints and minimizing the cost of retrofits to decarbonize the building over time.

Making a business case for strategic decarbonization requires thinking beyond a traditional energy audit approach or simple payback analysis. It assesses business-as-usual costs and risks against the costs and added value of phased decarbonization investments in the long-term.

Retrofit Costs

Decarbonization Costs

Avoided Risks

Business-as-Usual Costs

Avoided Risks

Business-as-Usual Risks

Added Value

Decarbonization Value

Net Present Value

An emissions decarbonization roadmap helps building owners visualize their future emissions reductions by outlining the CO2 reductions from selected energy conservation measures. This roadmap is designed with a phased approach, considering a 20- or 30-year timeline, and incorporates the evolving benefits of grid decarbonization, ensuring a comprehensive view of long-term environmental impact.

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The resources linked below highlight opportunities for the real estate industry to leverage and/or access federal infrastructure funds to support sustainability, resilience,  health, and real estate and economic development goals. ULI will continue to add additional resources here as new opportunities arise. Investments in decarbonization by developers can have financial returns in the form of lower operating costs, increased property values, and attracting and retaining tenants. In addition, reducing greenhouse gas emissions and creating communities that are less reliant on cars can support developer and tenant ESG goals.

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High Rise / Low Carbon Event Series: Take the Heat!

A baseline assessment is key to understanding current systems and performance, then identifying conditions, requirements or events that will trigger a decarbonization effort. The assessment looks across technical systems, asset strategy and sectoral factors.

Building System Conditions
Asset Conditions
Market Conditions

Effective engineering integrates measures for reducing energy load, recovering wasted heat, and moving towards partial or full electrification. This increases operational efficiencies, optimizes energy peaks, and avoids oversized heating systems, thus alleviating space constraints and minimizing the cost of retrofits to decarbonize the building over time.

Making a business case for strategic decarbonization requires thinking beyond a traditional energy audit approach or simple payback analysis. It assesses business-as-usual costs and risks against the costs and added value of phased decarbonization investments in the long-term.

Retrofit Costs

Decarbonization Costs

Avoided Risks

Business-as-Usual Costs

Avoided Risks

Business-as-Usual Risks

Added Value

Decarbonization Value

Net Present Value

An emissions decarbonization roadmap helps building owners visualize their future emissions reductions by outlining the CO2 reductions from selected energy conservation measures. This roadmap is designed with a phased approach, considering a 20- or 30-year timeline, and incorporates the evolving benefits of grid decarbonization, ensuring a comprehensive view of long-term environmental impact.

During this High Rise / Low Carbon series program developed to support the Empire Building Challenge (EBC) and other NYSERDA programs, this two-part event series–focused on building decarbonization–features industry experts highlighting projects deploying breakthrough heat recovery solutions across the commercial and multifamily buildings sector. 

Part 1

Take the Heat! Part 1: Geo & Wastewater will showcase approaches to wastewater heat recovery and geothermal heat projects in New York City.

Opening Remarks

Molly Kiick, Project Manager, NYSERDA

Moderator

Greg Koumoullos, Project Manager, Customer Energy Solutions, Con Edison

Presenters

JP Flaherty, Managing Director, Global Head of Sustainability and Building Technologies, Tishman Speyer
Ed Yaker, Treasurer, Amalgamated Housing Cooperative
Mariel Hoffman, Director of Energy Engineering, EN-POWER GROUP

Panelists

Mariel Hoffman, Director of Energy Engineering, EN-POWER GROUP
Jay Egg, President, Egg Geo
JP Flaherty, Managing Director, Global Head of Sustainability and Building Technologies, Tishman Speyer
Ed Yaker, Treasurer, Amalgamated Housing Cooperative

Part 2

Take the Heat! Part 2 will showcase approaches to ventilation and cooling heat recovery. The session will include presentation and discussion by three EBC partner teams: Vornado, with Jaros, Baum & Bolles (JB&B); Brookfield, with Cosentini; and LeFrak, with Steven Winter Associates.

Opening Remarks

Laziza Rakhimova, Energy Efficiency Business Development Manager, Con Edison

Moderator

Mike Richter, President, Brightcore Energy

Presenters

Christopher Colasanti, Associate Partner, JB&B Deep Carbon Reduction Group
David Noyes, Project Executive, Brookfield Properties
Jonathan Da Silva Johrden, Building Systems Director, Steven Winter Associates, Inc.

Panelists

Karen Oh, Vice President, Energy Innovation and Strategy, Vornado Realty Trust
Christopher Colasanti, Associate Partner, JB&B Deep Carbon Reduction Group
David Noyes, Project Executive, Brookfield Properties
Jonathan Da Silva Johrden, Building Systems Director, Steven Winter Associates, Inc.

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Federal Commercial Building Incentives

A baseline assessment is key to understanding current systems and performance, then identifying conditions, requirements or events that will trigger a decarbonization effort. The assessment looks across technical systems, asset strategy and sectoral factors.

Building System Conditions
Asset Conditions
Market Conditions

Effective engineering integrates measures for reducing energy load, recovering wasted heat, and moving towards partial or full electrification. This increases operational efficiencies, optimizes energy peaks, and avoids oversized heating systems, thus alleviating space constraints and minimizing the cost of retrofits to decarbonize the building over time.

Making a business case for strategic decarbonization requires thinking beyond a traditional energy audit approach or simple payback analysis. It assesses business-as-usual costs and risks against the costs and added value of phased decarbonization investments in the long-term.

Retrofit Costs

Decarbonization Costs

Avoided Risks

Business-as-Usual Costs

Avoided Risks

Business-as-Usual Risks

Added Value

Decarbonization Value

Net Present Value

An emissions decarbonization roadmap helps building owners visualize their future emissions reductions by outlining the CO2 reductions from selected energy conservation measures. This roadmap is designed with a phased approach, considering a 20- or 30-year timeline, and incorporates the evolving benefits of grid decarbonization, ensuring a comprehensive view of long-term environmental impact.

Purpose by Design Architects
Sunamp
RMI
Dextall logo
Capital Logo
Winn Co
Gitel
SWBR
SoC Housing Logo
SHA Logo
Rise Boro Logo
PCA Logo
Mangrann Logo
LaBella Logo
KOW Logo
Kelvin Logo
Joe NYC logo
IAE logo
Hanac logo
First Service Residential Logo
Fairstead Logo
Ettinger Logo
Cycle Retrotech
Chartered Properties Logo
Ascendant Logo
Trinity Church Wall Street Logo
Hines Logo
Norges Bank Investment Management
Energy Machines logo
Consigli logo
URBS Logo
Inglese Architecture + Engineering Logo
Invesco logo
Sharc Energy logo
Loring Consulting Engineers logo
Curtis + Ginsberg Architects logo
Bright Power Logo
Paths LLC logo
EN-Power Logo
Egg Geo Logo
Blueprint Power logo
JB&B logo
Ryan Soames Engineering logo
Steven Winter Associates, Inc. logo
Corentini logo
Skanska logo
Reos Partners logo
Quest Energy Group logo
Luthin Associates logo
Johnson Controls logo
Buro Happold logo
Beam logo
Jonathan Rose Companies logo
Rudin logo
Silverstein Properties logo
Equity Residential logo
The Durst Organization logo
Vornado Realty Trust logo
Tishman Speyer logo
Omni New York LLC logo
LeFrak logo
LM Development Partners logo
Hudson Square Properties logo
Empire State Realty Trust logo
Brookfield Properties logo
Boston Properties logo
Amalgamated Housing Corporation logo

The recent Inflation Reduction Act (IRA), along with the Infrastructure Investment and Jobs Act (IIJA) from 2021, fund multiple programs and tax incentives to improve the energy efficiency of new and existing commercial and public buildings. The 179D tax deduction is revamped and now includes a new pathway for retrofits. Even larger broad greenhouse gas emission reduction programs under the IRA could be used to reduce emissions from commercial buildings. But the programs use a variety of mechanisms to offer varying incentives with varying goals and criteria. This brief summarizes programs that will or could provide significant resources for energy efficiency in commercial and public buildings.

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Case Study

Terminology & Definitions

A baseline assessment is key to understanding current systems and performance, then identifying conditions, requirements or events that will trigger a decarbonization effort. The assessment looks across technical systems, asset strategy and sectoral factors.

Building System Conditions
Asset Conditions
Market Conditions

Effective engineering integrates measures for reducing energy load, recovering wasted heat, and moving towards partial or full electrification. This increases operational efficiencies, optimizes energy peaks, and avoids oversized heating systems, thus alleviating space constraints and minimizing the cost of retrofits to decarbonize the building over time.

Making a business case for strategic decarbonization requires thinking beyond a traditional energy audit approach or simple payback analysis. It assesses business-as-usual costs and risks against the costs and added value of phased decarbonization investments in the long-term.

Retrofit Costs

Decarbonization Costs

Avoided Risks

Business-as-Usual Costs

Avoided Risks

Business-as-Usual Risks

Added Value

Decarbonization Value

Net Present Value

An emissions decarbonization roadmap helps building owners visualize their future emissions reductions by outlining the CO2 reductions from selected energy conservation measures. This roadmap is designed with a phased approach, considering a 20- or 30-year timeline, and incorporates the evolving benefits of grid decarbonization, ensuring a comprehensive view of long-term environmental impact.

Insights from Empire Building Challenge 

The following are terms commonly used in the building decarbonization universe:

Carbon Neutral Buildings:

Buildings that produce no net greenhouse gas emissions directly or indirectly. Carbon neutrality spans multiple scopes of associated greenhouse gas emissions including:operations on-site and via emissions associated with third parties delivering energy or products to site and embodied carbon emissions from the full lifecycle and production of construction materials. Emissions are often referred to as scope 1, 2 and 3. Essentially, scope 1 and 2 are those emissions that are owned or controlled by a company. Meanwhile, scope 3 emissions are a consequence of the activities of the company but occur from sources not owned or controlled by it.

Coefficient of Performance (COP):

The ratio of the amount of heat delivered from a heat pump over the amount of electrical input. For example, a heat pump has a COP of 5.0, if it can deliver 5 units of heat for one unit of electricity input. A COP of 1.0 is typical for resistance heat (e.g., toaster or hair dryer). 

Facade Overclad:

An additional weather barrier installed overtop an existing facade to increase building envelope energy performance, thermal comfort, and to reduce ongoing building maintenance. 

Heat Recovery/Recycling:

The capture and reuse of waste heat often incorporating thermal storage techniques, see Time Independent Energy Recovery (TIER).

Net Present Value (NPV):

An analysis of project cash flow over a set period which incorporates inflation and the time value of money; the “upfront” lifetime value of a project. A positive NPV yields a Return on Investment (ROI).

On-site Fossil Fuel:

Fossil fuel consumed typically via combustion within a building for the purpose of heating, cooling, domestic hot water production, or power generation.

Return on Investment (ROI):

The ratio between net income and savings from a project investment over a set period. ROI is typically presented as a percentage for the period of one year.

Simple Payback:

Economic benefits yielded from investment in a project. Simple payback is typically presented in the time (e.g. years) it takes to recover an investment, but does not consider variations in cash flow over time or the time value of money.

Strategic Decarbonization Assessment (SDA):

A mid- to long-term financial planning method for building owners to manage carbon emissions and energy use.

Thermal Distribution:

The means by which thermal energy is moved throughout a building. This includes moving heat through various heat transfer mediums including but not limited to water, steam, refrigerant gas, or ducted air.

Thermal Energy Network (TEN):

Infrastructure that enables heat sharing through a number of thermal transfer mediums and between heat customers and producers who extract heat from multiple sources using varied technologies.

Thermal Storage:

The storage of thermal energy for later use, utilizing various mediums and technologies.

Waste Heat:

Heat or cooling which is typically rejected to the air and not recovered. Waste heat sources include sanitary sewer heat, heat rejected from air source heat pumps, cooling tower heat, heat lost from ventilation exhaust, steam condensate return, and underground transportation, among others.

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Case Study

601 Lexington Avenue

Iconic midtown tower modernizes by recycling heat

As a partner of the Empire Building Challenge, BXP will complete a decarbonization pilot project at 601 Lexington Avenue. The 1.52 million square foot, 59-story, multi-tenant premier workplace in midtown Manhattan was constructed in 1977 and features building systems typical among commercial high-rises of a similar vintage. The innovative measures planned for implementation demonstrate a scalable and replicable decarbonization opportunity within a difficult-to-decarbonize building type. 

As part of their demonstration project, BXP will install water-to-water heat pumps to transfer heat from the condenser water loop to secondary water systems. Recovered heat will then be used to offset perimeter heating loads. By deploying existing technology in a novel way, this project creates a thermal network which utilizes heat that would otherwise be rejected to the atmosphere from the building’s cooling system. BXP will reduce the building’s annual steam consumption by over 30% with this innovative thermal system. 

BXP is a fully integrated real estate investment trust and is the largest publicly traded developer, owner, and manager of premier workplaces in the U.S. with a portfolio spanning 54.5 million square feet.

601 Lexington
Progress

Construction drawings are complete, and the project is awarded to the selected General Contractor. Water source heat pump equipment procurement has also been released.

Steam Use Reduction

30%

Heat recovery retrofit at 601 Lexington Ave will reduce annual steam consumption by over 30%. The project uses an existing technology in an innovative way to create a thermal network in the building, using heat that would otherwise be wasted.

Lessons Learned

Reducing demand and dependence on fossil fuel driven heating systems is an enablement step for building decarbonization.

Testimonial

“At BXP, we are committed to carbon-neutral operations and the advancement of built environment climate action. Climate action is collective action and alongside our partners at Norges Bank Investment Management, we are thrilled to pursue this decarbonization initiative at 601 Lexington Avenue.”

Ben Myers
Vice President, Sustainability
Boston Properties, Inc. (BXP)

Lessons Learned

The project is highly replicable elsewhere within the BXP portfolio and provides a bridge to carbon neutral planning.

A baseline assessment is key to understanding current systems and performance, then identifying conditions, requirements or events that will trigger a decarbonization effort. The assessment looks across technical systems, asset strategy and sectoral factors.

Building System Conditions
  • New heat source potential
  • Efficiency improvements
Asset Conditions
  • Carbon emissions limits
  • Owner sustainability goals
Market Conditions
  • Technology improves
  • Policy changes
  • Utility prices change
  • Fuels phase out

BXP is committed to carbon-neutrality by 2025 for its actively managed occupied office buildings. Starting in 2010, BXP adopted a phased approach with a long-term goal of achieving low site energy use and reducing GHG emissions at 601 Lexington Ave. Compared to a 2010 baseline, BXP has reduced the building’s GHG Emissions by 47% and site EUI by 33%. The notable reduction in energy use was achieved through a series of targeted energy efficiency measures, including a building automation system upgrade, installation of Variable Speed Drives on all major HVAC equipment pumps and fans, lighting upgrades, modernization of the central chiller plant (replacing steam chillers with high efficiency variable speed electric chillers), and optimization of operational controls.   

To accelerate decarbonization efforts, the next phase of retrofit projects should be geared to reduce district steam consumption within the building. This initiative aligns with BXP’s decarbonization strategy and energy efficiency objectives and positions the building on a path towards full compliance with Local Law 97.  

The heat recovery project focuses on minimizing the dependence on district steam, a fossil-fuel sourced commodity. This project demonstrates a replicable decarbonization solution in existing commercial high-rise buildings and joins a list of energy conservation measures already deployed at the property. 

To  compare the energy and carbon reduction impact of the measure on a business-as-usual scenario, a comprehensive energy analysis was performed to establish a baseline operation and compare alternatives. The effort included review of existing HVAC systems, electrical infrastructure, space constraints, submetering of heating and cooling loads, potential for energy recovery to offset heat loads, and evaluation of energy use and costs.

The detailed energy analysis indicated a considerable reduction in energy and GHG emissions compared to baseline energy use and significant utility savings per year.

Effective engineering integrates measures for reducing energy load, recovering wasted heat, and moving towards partial or full electrification. This increases operational efficiencies, optimizes energy peaks, and avoids oversized heating systems, thus alleviating space constraints and minimizing the cost of retrofits to decarbonize the building over time.

Existing Conditions

This diagram illustrates the building prior to the initiation of Strategic Decarbonization planning by the owners and their teams.

Click through the measures under “Building After” to understand the components of the building’s energy transition.

Sequence of Measures

2024

2034

Building System Affected

  • heating
  • cooling
  • ventilation
601 Lexington Building Before
601 Lexington Building After
Install WSHP to reclaim heat for re-use in the building’s perimeter heating systems. An automated cooling tower bypass valve will retain heat in the building, maximizing heat available for recovery during the heating season.
Install hydronic coils in select AHUs to supply low temperature hot water for preheating ventilation air, keep steam coils as back-up
Install air source heat pumps. These will reclaim heat from the atmosphere, to produce hot water for the remaining heating loads.

The project at 601 Lexington Avenue will deploy existing technology in a novel way, creating a thermal network that recovers and utilizes heat which is otherwise rejected by the cooling towers. 

Through NYSERDA’s Empire Building Challenge, BXP will install water source heat pumps (WSHPs) that will capture waste heat from the condenser water loop. The recovered heat will be reused into the building’s perimeter heating.

Currently, the building condenser water system carries heat from base building and tenant cooling systems to the cooling towers, where it is rejected evaporatively to the atmosphere. In office buildings, this heat is often constant and available for recovery year-round. In the proposed measure, WSHPs will be installed. They will replace the function of the cooling towers during the heating season and will reclaim heat from the condenser water loop for beneficial use. An automated bypass valve will divert condenser water from the cooling towers, retaining as much heat in the building as possible for recovery by the WSHPs. The heat recovered will be reused in the building’s heating systems and will significantly offset reliance on fossil fuel-based steam. These measures will reduce annual steam consumption by an estimated 30%.

These measures partially electrify building heat sources while recovering waste heat for beneficial re-use. This results in reduced energy consumption and enhanced demand management. These measures are replicable for existing buildings, designed to be both space-efficient and cost-effective.

In addition to the WSHPs, air source heat pumps (ASHPs) may be installed in the future to produce low-temperature hot water to cover some of the remaining heating loads. The project team plans to continue investigating ASHP infrastructure within the physical space constraints of this occupied building to minimize reliance on steam heating.

Making a business case for strategic decarbonization requires thinking beyond a traditional energy audit approach or simple payback analysis. It assesses business-as-usual costs and risks against the costs and added value of phased decarbonization investments in the long-term.

Retrofit Costs

Decarbonization Costs

$3.65M

Capital costs of decarbonization.

Avoided Risks

Business-as-Usual Costs

$262k / YR

Energy cost savings: 287k / YR.

Repairs & maintenance savings: 25k / YR. 

Avoided Risks

Business-as-Usual Risks

$120k / YR

LL97 avoidance from 2030-2034.

No fines in 2035+ assuming electric grid coefficient aligns with CLCPA goals.

Added Value

Decarbonization Value

$1.1M

Incentives.

Pursuing ConEd Rebates through the Clean Heat Rebate Program.

Net Present Value

$525k

Net difference between the present value of cash inflows and outflows over a period of time.

A simple payback measure as a standalone analysis does not accurately represent the benefit of decarbonization over time. A long-term outlook for decarbonization investments that accounts for utility cost escalations, building performance standard compliance fine avoidance, procurement costs to meet voluntary carbon neutral operations commitment over the life-cycle of the project, and other risks associated with taking the business-as-usual approach are critical while creating a business case for decarbonization.

The financial analysis for the project included a relative comparison to business-as-usual costs under various scenarios as described below:

  • Scenario 1 represented the financial impact of paying Local Law 97 penalties;
  • Scenario 2 represented a proactive procurement of carbon credits to minimally comply with Local Law 97;
  • Scenario 3 represented RECs and Carbon Credit procurement costs to achieve the goal of Carbon Neutral Operations by 2025.

The proposed project has a positive NPV when compared to a business-as-usual scenario and is a critical first step in the building’s long-term decarbonization plan as it significantly reduces the dependence on district steam for building heating loads. This is an enablement step for future decarbonization phases in 2034 and beyond. Additionally, the project is highly replicable elsewhere within the BXP portfolio and provides a bridge to carbon neutral planning.

An emissions decarbonization roadmap helps building owners visualize their future emissions reductions by outlining the CO2 reductions from selected energy conservation measures. This roadmap is designed with a phased approach, considering a 20- or 30-year timeline, and incorporates the evolving benefits of grid decarbonization, ensuring a comprehensive view of long-term environmental impact.

To advance the building’s broad decarbonization objectives, and through the reduce, recycle, electrify approach, the team studied energy and carbon emission reduction pathways for 601 Lexington Avenue through a robust, collaborative process with multiple stakeholders. 

The decarbonization projects require a phase-in plan and a multi-step approach, which includes technical analysis, detailed design, procurement, and implementation. The preliminary technical analysis for the decarbonization roadmap was performed in Q4 of 2022 as part of the Empire Building Challenge application. The first phase of the decarbonization roadmap is the Condenser Water Heat Recovery project, which received NYSERDA funding through the Empire Building Challenge. The full design (DD and CD) of this project was completed in 2023 and construction is expected to be complete in 2025.  

On-site decarbonization efforts may be furthered in a subsequent second phase implemented in 2034 with electrification of heating and DHW through air source heat pumps. It is anticipated that the heat pump technology and pricing will continue to improve; because of that, the energy and GHG reductions reflected in the carbon neutrality roadmap below are conservative estimates. As an interim phase, starting in 2025, the building will achieve Carbon Neutral Operations for Scope 1 and Scope 2 emissions by offsetting them through a combination of renewable energy and carbon credits procurements.

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