Does the election outcome create further opportunity for greening your office building, retail centre or hotel ?


The short answer is yes it does, with direct financial support for improvements in emission reductions for commercial buildings.

Election promises impacting the commercial property industry were:

  • Green Building Fund extension (now office, retail and hotels that can be NABERS Energy rated) with $30Million dollars available for funding for new application rounds from now until July 2011.
  • Tax allowance bonus for Green building improvements, for office buildings, Retail Centres (over 10,000sqm) and Hotels. Conditions will apply, but if you meet them then this is a 14.5% reduction in project costs for improving energy efficiency.

With the details yet to be defined by the responsible departments we assume that the green building fund mark 2 will be delivered fairly quickly and with their previous rounds offering around $15million per round then another two rounds should be undertaken. Perhaps one for January and one for April 2011, which allows for time to set up and then for all funding agreements to be finalised before the tax allowance bonus commences in the following financial year.
The conditions of the tax allowance bonus for Green building improvements will need to be very clear to ensure the financial benefits can be guaranteed for an owner when undertaking a project. Industry consultation for this should commence straight away on the details for this legislation.

The main condition of performance to be eligible for the tax bonus in the election promise was that the works must move a building from a 2 star or lower NABERS Energy rating to a 4 star or higher NABERS Energy rating. Industry input into the criteria for meeting the tax bonus requirements will be required to ensure this policy does encourage investment. On the surface as it stands now, the cost to guarantee the energy improvements will outweigh the benefit received, so this may be as it states, a bonus, rather than an incentive to upgrade your property.

It all moves to NABERS Energy ratings

With the Commercial Building Disclosure (CBD) legislation in place from November 2010 we will see all advertisements for commercial office space over 2000sqm stating the NABERS Energy rating. The funding available federally under the Green Building Fund and tax bonus are dependant on NABERS Energy ratings. Commercial building owners must understand their portfolio energy performance and be working to a strategic NABERS performance strategy, embedding this in contracts with building contractors and building managers.

Costs to upgrade for energy improvements

From our work with environmental strategy and completion of a number of recent commercial building upgrades, when you isolate the energy improvement works the numbers vary from site to site and an order of costs is difficult to assess.

Projects we have recently completed or are under way which are targeting existing buildings to improve to 5 star NABERS Energy range from $50 to $150 psm. For an exemplar building targeted to be the lowest emission multi tenanted building in Australia the costs are coming in considerably higher with the tri-generation system and other emission reduction technologies added to the best practice upgrade. At the top end of the cost scale, would be an early 1970s building requiring new energy and HVAC systems throughout. The cost can be considerable and by this we mean around $600psm and you would want a vacant building to undertake the required work.

Technology and payback analysis

In assessing technology and payback you need to review not just the emission savings but also the impact on water use, outgoings, available funding and most importantly the impact on tenants indoor environment quality.

A review of indoor environment quality impact with the implementation of a dedicated outdoor air handling system with humidity control and energy reduction benefits has shown a significant impact to the improvement of the working environment to tenants but how you calculate the benefit for the payback analysis alters depending on a number of issues such as lease profile, tenant profile and existing NABERS Energy Rating.

A tri-generation system has a significant impact on emission reduction but should you be looking at a multi engine system with undetectable NOx and SOx such as Bennett Clayton engines and how can you size this to create an option for future tenants to obtain their low emission power? We selected this as a first for NSW Local Government Super at 76 Berry Street and as a first use of this technology for a tri-generation installation this gained the exemplar funding under the green building fund.

If you are looking at lighting improvements you need to assess the impact now of the Building Energy Efficiency Certificate (BEEC) and the tenancy lighting assessment within this which you will need to provide publically. Will a few watts per square metre make a difference to a tenant considering a lease or will quality and compliance to Australian standards be more important in their decision making process?

Rating and Funding Advice.

In the first 5 rounds of the Green Building Fund (Round 6 is yet to be released), Napier & Blakeley achieved great success with GBF applications for our clients, securing over $5M of funding for clients including obtaining one of only two awarded exemplar project funding.

Napier & Blakeley can provide you with strategic portfolio planning advice, applications for funding and complete your NABERS ratings for you.

For more info please contact your local office.

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