A blueprint for market transformation: quantifying the full economic value of high-performance façades

Last year, the Façade Tectonics Institute (FTI) offered a comprehensive blueprint comprising 10 concepts for market transformation as part of its high-performance façades market barriers study (see figure 1). This month, I am diving into the details of the second of those 10 recommendations: Creating tools and programs that improve the ability to communicate the overall economic value of high-performance facades.

If owners and developers could calculate the financial benefits of high-performance façades, not just based on the energy cost savings, a robust, holistic return on investment (ROI) would be much more favorable for cost-justifying the upfront investment. Such non-energy benefits that need better financial quantification include:

• Downsizing HVAC systems, including the elimination of perimeter heating, plus associated impacts on reducing ducting and floor-to-floor heights;
• Increased leasable space, because of increased comfort near the façade;
• Increased occupant productivity and employee attraction and retention, and reduced absenteeism;
• Reduced illness and deaths from being able to maintain livable temperatures during high heat and extreme cold weather (passive survivability);
• Increased longevity of the façade;
• Reduced operational and embodied carbon emissions; and
• Grid resilience and peak demand reduction.

If implemented, this initiative would effectively address two major barriers to the adoption of high-performance façades:

1. Insufficient payback or ROI on the initial increase in first cost is caused by simplistic payback models. Today, typically only energy cost savings are considered.
2. Architects and consultants have limited capacity (tools and knowledge) to calculate the non-energy benefits of high-performance façades and advocate for better façade design with their clients.

Four components underpin this concept of communicating the full economic value of high-performance façades.

Develop a Credible Tool to Calculate ROI and Net Present Value (NPV)

The goal of such a tool would be to allow design teams to present to owners and lead tenants the ROI and NPV of different levels of investment in façade performance, including outputs that quantify all the non-energy items listed above.

The emphasis here is on credibility. While many research studies demonstrate the wide-ranging non-energy human health, well-being, learning, healing and productivity benefits of well-daylit, thermally and visually comfortable spaces, it is important that these studies be vetted. The results also must be translated into appropriate dollar-value quantification by a credible authority, such as a National Laboratory. Estimating increased lease rates because of these benefits would also be in scope. The tool’s ease of use will also be important to ensure its widespread use.

Create a Guide for Assessing the Financial Impact of the Non-Energy Benefits of Façade Performance

A guide providing a framework for the financial quantification of non-energy benefits is needed to define the calculation basis for the ROI/NPV tool. This guide would define and create guidelines for how the different non-energy benefits should be considered and quantified. Inputs for this would come from the existing body of knowledge on the topic and additional data generated from façade-related case studies and research (see below).

Develop a Schematic Design Façade Analysis Tool that Outputs all Non-Energy and Energy Benefits

In contrast to the tool described above, which delivers final financial cost-benefit, this tool would allow quick analyses of a range of envelope systems, outputting performance metrics, such as daylighting and comfort, energy use and peak demand estimates, HVAC size impacts and perimeter heating/cooling needs.

For example, the tool could support initial design evaluation and owner education by outputting data on the amount of floor space that would be uncomfortable for occupants, the number of days this occurs during a typical year, or the expected daylight admission into the perimeter zone.

Ideally, this tool’s output would feed into the ROI/NPV tool, providing a complete economic analysis.

Several software programs provide components of this need, but not in one combined, easy-to-use tool. For example, COMFEN, developed by Lawrence Berkeley National Laboratory and funded by the U.S. Department of Energy, integrates EnergyPlus and Radiance. COMFEN focuses on commercial fenestration, but needs updating. Honeybee also integrates daylight and energy modeling using EnergyPlus and Radiance. There is also a good tool from the Center for the Built Environment to assess thermal comfort, but it is not integrated with other metrics. A more comprehensive, easy-to-use tool that can be used to compare façade options in the early phases of design is needed.

Create Programs for Owners to Help Demonstrate Success

While the tools and guidance identified above are important for showing building owners the direct benefits of implementing high-performance façades, owners are more often persuaded by seeing their peers’ financial successes.

Funding more case studies in more climate zones and for more building types that demonstrate achieving the predicted economic benefits will go a long way to reducing perceived investment risk. The data generated could feed into the tools identified above.

Comparisons with minimally code-compliant buildings, along with pre- and post-occupancy assessments, will be important for energy efficiency and quantifying the impact on human factors. The cost of employing people in a building is approximately 100 times greater than the cost of energy. As a result, improving attraction, retention and productivity metrics by only 1 or 2% could quickly dwarf savings in energy costs and provide a compelling ROI.

Several demonstration programs already focus on the impact at the whole building level, such as the General Services Administration’s Green Proving Ground and Design Excellence Program, and incentive programs in Massachusetts and New York State. But none focus specifically on the façade. Façade-focused incentive programs could accelerate the installation of higher-performance façades. Such programs also need to have a definition of high-performance façades–the first and fundamental blueprint recommendation reviewed last month–underscoring the importance of creating a standard definition.

Suppose these programs and tools are implemented in combination. In that case, a standardized definition for high-performance façades, augmented with the other blueprint recommendations (see Figure 1), can result in faster implementation of high-performance façades.