This case study was chosen as part of the Empire Building Challenge competition. Click here to learn more about the Empire Building Challenge competition.
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.
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.
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:
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.
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.
Reduce Energy Load
Recover Wasted Heat
Partial Electrification:
Full Electrification:
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.
Capital costs of decarbonization (est. in 2025 $).
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.
LL97 fines avoided starting in 2030.
Incentives.
Net difference between the present value of cash inflows and outflows over a period of time.
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.
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:
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
This case study was chosen as part of the Empire Building Challenge competition. Click here to learn more about the Empire Building Challenge competition.
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.
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.
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.
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.
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.
Capital costs of decarbonization.
Energy cost savings: 287k / YR.
Repairs & maintenance savings: 25k / YR.
LL97 avoidance from 2030-2034.
No fines in 2035+ assuming electric grid coefficient aligns with CLCPA goals.
Incentives.
Pursuing ConEd Rebates through the Clean Heat Rebate Program.
Net difference between the present value of cash inflows and outflows over a period of time.
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.
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.
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.
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.
Lessons from New York’s Empire Building Challenge
This article, published in NESEA’s BuildingEnergy magazine (Vol. 40 No. 1), addresses common “decarbonization blind spots” that impede progress and shares insights gained from the incremental methodology and integrated design process pioneered through NYSERDA’s Empire Building Challenge.
This case study was chosen as part of the Empire Building Challenge competition. Click here to learn more about the Empire Building Challenge competition.
345 Hudson, developed by Hudson Square Properties (HSP), provides a roadmap for sustainable practices by applying the Nordic design principles of holistic energy recycling and electrification. The 17-story commercial property located in Manhattan, NY was built in 1931 and features a mid-tier energy rating, aging heating system burning natural gas, and recurring carbon emissions fines starting in 2035.
The comprehensive retrofit takes advantage of tenant turnover as an opportunity to upgrade the building’s infrastructure to new, carbon-efficient, energy cost-saving technology and completely decarbonize the 856,000 gross square foot property. This project will demonstrate the power of thermal networking through an innovative approach by which heating and cooling is shared between tenants throughout the building and eventually between neighboring buildings.
Hudson Square Properties is a joint venture with Hines, Trinity Church Wall Street, and Norges Bank Investment Management, that owns 13 buildings totaling 6.3 million square feet in the Hudson Square Neighborhood.
90%
345 Hudson will achieve a 30% EUI reduction and 90% carbon emissions reduction by 2035 with its decarbonization roadmap.
The analysis examined opportunities to reuse, recycle, and balance energy flows via hydronic-based HVAC retrofits at multiple scales of renovation.
“The carbon reduction and energy efficiency strategy at 345 Hudson, one of our flagship properties, exemplifies Hudson Square Properties’ stewardship and commitment to the long-term strength of our neighborhood. 345 Hudson will provide a roadmap for sustainable practices throughout our portfolio and beyond.”
Sujohn Sarkar
Managing Director, Asset Management
Trinity Church Wall Street
A water source heat pump system is accompanied by a new, highly efficient energy recovery ventilation system to minimize energy waste.
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.
The Hudson Square partnership is committed to future-proof its flagship property by upgrading its building infrastructure while meeting legislative climate goals and staying competitive in the commercial office market. The project team brought together a consortium of global solution providers and engineering expertise to develop a long-term retrofit plan to minimize energy usage and carbon emissions.
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.
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.
Applying the Nordic design principles of holistic energy recycling and electrification to make decarbonization technically and economically feasible over time. This design approach follows a circular systems philosophy to reduce heating demand by recovering and redistributing heat from high-energy areas to low-energy areas, rather than simultaneously cooling and heating different zones. Heat is moved to or from different floors, and only then is energy introduced to the system via air source heat pumps.
Reduce Energy Load and Recover Wasted Heat
Developing a hydronic loop operating at ambient temperatures by converting the existing condenser water riser. The ambient loop enables future optionality with the integration of different heat sources and takes advantage of simultaneous heating and cooling opportunities between spaces and floors to reuse otherwise wasted heat.
Partial Electrification: right-size heat pump
Leverage the high efficiency of heat pump technologies, enable grid interactivity, and take advantage of future low-carbon electricity production planned by the state.
Full Electrification: replace/remove peak load equipment
Other Project Highlights
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.
Central ASHP and Adiabatic Dry-Cooler.
Tenant Conversions 1-3 with WSHP and 4-pipe system.
Connection to neighboring 555G.
Central DOAS + ERV.
Window Replacement (provisional).
Energy costs savings.
Repairs & maintenance savings.
$204k / YR avoided LL97 fines starting in 2030.
Empire Building Challenge incentive.
Utility program incentive.
Net difference between the present value of cash inflows and outflows over a period of time.
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.
Key to HSP’s strategy was understanding how to meet aggressive climate targets while addressing the practical objectives of their tenants—stable temperatures, fresh air, and reliable equipment—without placing too much onus on tenants to devise their own solutions or diligently manage their own consumption. To devise this approach, HSP divided building systems into three distinct spheres of ownership and influence. The first sphere encompasses the heating, cooling, and air distribution equipment under tenant control (e.g., radiators, fan coil units, etc.). The second sphere includes equipment commonly installed and maintained by the landlord, but controlled by the tenant (e.g., air conditioning units). The third sphere covers the core building infrastructure, under full control of the landlord, like cooling towers, boiler plants, and primary air handling units. This framework identified a major opportunity area in which to address carbon and energy goals: equipment supplied by the landlord but controlled by the tenant. Given this, the core objective was to create a scenario in which the landlord provides the solid grounding—such as the thermal network—for tenants to condition their spaces most efficiently. With this core functionality in place, tenants are afforded efficient systems performance simply by occupying the space and tapping into the building infrastructure. Incidentally, projected long term savings will be dependent on tenant plug loads and equipment fit-outs. The potential saving values displayed above are based on best-case scenario and CLCPA carbon projections.
As floors are phased in and more tenants take advantage of the thermal network, the amount of energy recycled across the building increases, incrementally improving the efficiency of 345 Hudson. By 2035, once fully implemented, whole-building energy use would be expected to drop by more than 30%. Total building carbon emissions would fall 90%, compared to a pre-retrofit baseline, with reductions increasing towards 100% as New York’s electric grid becomes fully renewable. These reductions reflect both emissions avoided by capturing 11GWh of waste heat currently rejected by the building (e.g., via cooling towers), and via the application of high-efficiency heat pumps. With a fully deployed thermal network and energy recovery ventilation, modeling reflects a scenario in which only 4 GWh of energy would be rejected. Notably, post-retrofit peak heating and cooling loads would fall dramatically—by 92 and 63% respectively—reflecting the significant benefits of capturing, sharing, and recycling heat across floors. The thermal network is key to electrifying buildings via heat pumps, as it reduces floor-level energy demand, allowing for smaller capacity heat pump systems.
345 Hudson’s 10-year deployment plan first targets improvements to the building’s core infrastructure, then phases in tenant retrofits, floor by floor. Select vacant floors will be retrofitted up front, with the hope of providing showcases to prospective tenants and their engineering staff to witness engineering solutions applied in practice—a critical step in moving the market given the systems’ novelty in New York. From there, additional floors will be phased in during periods of tenant turnover. As the project progresses floor by floor and use of the thermal network expands, heat pumps will supplant existing packaged terminal units and efficiency will improve dramatically. Updated floors will effectively become energy producers engaging in intra- floor heat exchange, rather than receivers of linear energy supply, benefiting the overall system. By 2025, HSP aims to connect the ambient loop at 345 Hudson to the neighboring building at 555 Greenwich, to share loads as needed and take advantage of its geothermal system. By 2030, the building will operate using only electricity, and take full advantage of the fully formed thermal network across all floors. With all floors connected, the thermal inertia (the energy stored within the hydronic network itself) of the whole building will often be substantial enough to store or release energy in response to changing utility rates or renewable energy generation—importing or exporting heat energy when needed, particularly during peak demand conditions. Reactive to grid demands, this solution allows the building to become an asset to the grid rather than simply a consumer.
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.
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.
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.
Large commercial and residential buildings must overcome various hurdles before implementing deep retrofits or capital projects that help achieve building decarbonization. This section addresses technical barriers and questions often faced by building owners and retrofit project developers.
Below are high temperature renewable resource alternatives to district steam. These alternatives are limited and face barriers to implementation due to cost, scalability, and other factors.
Building Electric Capacity Upgrades
Local Network Electric Capacity Upgrades
Gas Utility Earnings Adjustment Mechanisms (EAM) focused on System Peak Demand Reductions
Total Connected Loads and Peak Demand drive need for capacity upgrades
Thermal Storage
Geothermal (ambient temperature), Deep Bore Geothermal (high temperature) or Shared Loop District Energy Systems provide cooling and heating with lower peak demand than standard electric equipment
Other Energy Efficiency/Conservation Measures with proven/attractive economics (these measures are limited by lack of capital or knowledge)
Behavioral Modification
Submetering and billing, potentially creates split incentive between landlord and tenant
These include multi-purpose technology for heating, cooling, heat exchange and ventilation, filtration, and/or domestic hot water.
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.
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.
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.
These playbooks summarize retrofit strategies that maximize occupant comfort and energy savings through a transition from fuel to electricity- based heating, cooling and hot water systems.
Playbooks are organized by building system— lighting & loads, envelope, ventilation, heating & cooling, and domestic hot water– detailing common existing systems, typical issues, and recommended measures.
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.
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.
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
It is clear today that the use of fossil fuel-fired equipment in buildings has a limited future due to technological advancements, policy changes, ESG requirements, and other externalities. As asset managers, sustainability managers, and their consultants pursue decarbonization plans, misconceptions about decarbonization arise that can delay action and progress. Below is a list of the misconceptions encountered by NYSERDA’s Empire Building Challenge team and our recommended approaches that debunk these inaccuracies.
Instead of looking for tangential ways to create value, energy efficiency and decarbonization projects repeatedly fall into the trap of using energy savings (and some may now include carbon emissions fines savings) to justify investments in energy conservation measures. Often, this linear thinking approach yields unattractive investment economics. Alternatively, conduct scenarios analyses including net present value calculations: The lowest net present cost or negative net present value (NPV) over the decarbonization period will help inform the prioritization and selection of energy conservation measures. Demonstrating the return on investment (ROI) and/or internal rate of return (IRR) on the incremental cost of action over a do-nothing baseline will help persuade real estate owners to prioritize these projects. Rather than a simple payback analysis that looks only at the decarbonization path, the analysis should focus on comparing a decarbonization path with a “business-as-usual” path. This approach helps isolate the incremental cost of decarbonization over a business-as-usual approach.
This type of analysis requires completing a Strategic Decarbonization Assessment (SDA), which is based on a Discounted Cash Flow (DCF) analysis over the decarbonization period. The SDA should include the complexities of a capital refresh, tenant improvements, and non-energy benefits. Asset investment should be in the context of a comprehensive decarbonization roadmap rather than simply reactive maintenance.
A one-to-one equipment swap with air source heat pumps, which is typically the first full-electrification option considered, may not be a realistic decarbonization strategy – particularly for owners of large buildings facing various constraints around thermal distribution systems, roof space, tenant disruption, and energy supply. In fact, it is advantageous to determine the building’s need for heat pumps toward the end of the decarbonization road mapping process to ensure that the heat pumps can run optimally. Significantly reducing loads, recovering and reusing heat wherever possible by enabling thermal networking, and using a cascading approach to decarbonizing easy-to-electrify loads are likely advantageous steps to take before installing heat pumps. Systems should be optimized to deliver heating or cooling efficiently over the integrated sum of the year’s diverse conditions, the vast majority of which are at part-load. Efforts to reduce and shift loads can help reduce peak capacity. However, electrification of more difficult peaks may require special consideration within the building’s roadmap and taking a rational approach to resilience and accounting for evolving electric grid or thermal network supply conditions. This is the foundation of Resource Efficient Decarbonization.
Perhaps because the electrification movement was born in mild-climate California, the cold-climate, tall-building narrative has been incomplete. Decarbonization skeptics suggest that if it doesn’t make sense to electrify everything in one simple move, then it doesn’t make sense to electrify anything. The reality is that tall buildings in cold climates like New York must overcome space constraints and distribution challenges to provide comfort at peak load conditions without straining the electric grid or requiring oversized, sticker-shock-inducing equipment capacity.
A more suitable slogan for Northeast electrification champions would be “Electrify Everything Efficiently.” Engineers should model building energy consumption data across granular temperature bins (see Figure below) and plan for electrification with “easy” loads like domestic hot water, then mild temperature loads (typically representing 80%+ of total loads), and finally for the extremes. This is the cascade approach. Until a viable solution emerges, a building owner might even keep a small gas-fired boiler and their steam radiators around as a reserve as they learn to grapple with resilient functionality at heating design conditions. Despite global average temperatures increasing, cold snaps may even become more extreme due to a collapsing winter Polar Vortex.
There are plenty of technology-neutral enabling steps to take prior to committing to a particular low-carbon retrofit technology. Buildings are constantly evolving and exist on a continuum unless demolition is planned. Reducing loads, enabling thermal recovery, sharing and networking, and implementing grid interactivity are all priority measures that might take place prior to electrifying heat sources. Consultants also must determine the value of inaction and the value at risk if a building owner decides to do nothing. Balancing this risk with the pace of technological innovation is a delicate analysis and is impossible to conduct without a Strategic Decarbonization Assessment. When in doubt, look to leverage existing infrastructure like using chilled water loops for heating to replace partial loads. Electrifying perimeter heating used during extreme temperatures may be a later priority or absent from the critical path on a strategic decarbonization roadmap. Look to the case studies emerging out of the Empire Building Challenge for more information on this strategy.
Consider the tangential benefits of pursuing decarbonization early. For example, more and more Class A tenants are demanding environmental action from landlords to comply with shareholder environmental, social, and corporate governance (ESG) requirements. Accelerating facade improvements may reduce the need for invasive and expensive maintenance down the line. Indoor air quality, improved comfort, and operability are emerging priorities among all tenant types.
Yes, but not for too much longer. States are legislating 100% carbon-free electric grids like New York did in the Climate Leadership and Community Protection Act (Climate Act). Modeling total emissions over time using declining electric grid carbon emissions coefficients across multiple decarbonization scenarios is an important task. Phasing in electrification over time and in a strategic way is the only pathway to eliminating on-site emissions.
Achieving carbon neutrality typically requires and benefits from a phased approach versus decarbonizing all at once. Incremental implementation of low-carbon retrofits across a continuum is critical to reaching building operations carbon neutrality in cold climates. Evaluate the cost-effectiveness of phasing and maintaining technology optionality and the risk mitigation benefits these efforts might deliver. Decarbonization efforts fall on a decision-making tree, which evolves as time elapses and technology, policy, or other conditions change; each branch of the decision-making tree is a new decision point. Sustainability and asset managers can plan these intervention points over the decarbonization period.
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.
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.
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.
The Empire Technology Prize is a $10 million competitive opportunity for global solution providers focused on advancing building technologies for low-carbon heating system retrofits in tall commercial and multifamily buildings across New York State. This NYSERDA initiative, administered by The Clean Fight with technical support from Rocky Mountain Institute, includes a $3 million sponsorship from Wells Fargo. Accelerating low-carbon building retrofits is fundamental to New York State’s national-leading Climate Act agenda, including the goal to achieve an 85% reduction in greenhouse gas emissions by 2050.
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.
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.
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.
While each individual building has a unique capital improvement plan and timeline, retrofit projects or decarbonization interventions may be organized and grouped by similarity as property owners plan for the future. Below is the overarching hierarchy for decarbonization intervention points according to industry best practices:
This case study was chosen as part of the Empire Building Challenge competition. Click here to learn more about the Empire Building Challenge competition.
Located in Yonkers, NY, Whitney Young Manor, is a notable affordable housing complex with 195 apartments across 234,000 square feet and 12 stories. Built in 1974, the housing complex is now undergoing a $22 million makeover focusing heavily on decarbonization upgrades. This renovation aims to modernize the buildings by improving insulation and introducing a new heating and cooling system that’s energy efficient. These changes are expected to lower the buildings’ carbon footprint, enhance living conditions, and reduce energy costs. The developer, Paths Development LLC, is leveraging the recapitalization cycle of the property to upgrade its infrastructure and include decarbonization measures to meet its climate goals.
12 million
of total investment allocated to bring Whitney Young Manor to carbon neutrality by 2035.
Project has potential replication across a portfolio of 51 existing affordable housing developments managed by Paths.
“The Empire Building Challenge is enabling Paths to pilot innovative approaches to decarbonization while at the same time helping to preserve affordable housing.”
Kenneth Spillberg
Head of Development
Paths Development LLC
This project prioritizes intensive load reduction through envelope improvements and hydronic distribution to improve resident comfort while reducing carbon emissions, utility spend and maintenance costs.
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.
Whitney Young Manor is an aging affordable housing complex with open balconies, inefficient electric resistance baseboard heating, electric wall sleeve AC units, and gas-fired domestic hot water heaters.
The project team believes that with care, planning, and the appropriate resources, retrofitting these residential buildings can better serve tenants, deliver environmental benefits, and prove financially feasible for owners. Paths leverages the recapitalization cycle of the property to upgrade its infrastructure and include decarbonization measures to meet its climate goals.
This project prioritizes intensive load reduction through envelope improvements and hydronic distribution to improve resident comfort while reducing carbon emissions, utility spending, and maintenance costs.
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.
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.
Reduce Energy Load
Whitney Young Manor demonstrates the benefits of over- cladding and hydronic distribution to enable heat pump technology:
Recover Wasted Heat
The project team plans to integrate different heat sources connected to the central hydronic piping. This includes centralized air source heat pumps, Wastewater Energy Transfer (WET) system and gas-fired condensing boilers as back-up.
Electrification
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.
Capital costs of decarbonization measures.
Energy cost savings, repairs and maintenance savings, BAU cost of system replacement and upgrades.
LL97 emissions fines don’t apply at this property.
Incentives from Empire Building Challenge, Low-Carbon Pathways Program, and ConEd Clean Heat.
Net difference between the present value of cash inflows and outflows over a period of time.
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.
Energy conservation analysis at midtown tower
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