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Summary
One of the Building Codes Assistance Project’s goals is to help policymakers understand both the pros and cons of
adopting an energy code in their state or jurisdiction. As an independent judge of the efficacy of energy codes, we
also strive to use data and case studies to address energy code barriers, such as real or perceived construction costs
incurred by code changes. One such barrier to energy code adoption is the concern from some in the building com-
munity that upgrading to the latest version of the commercial energy code, ASHRAE 90.1-2007, will result in cost-
prohibitive increases in construction cost. After examining available data, BCAP has found that no definitive analysis
or study has exhaustively calculated the commercial cost increment for all 50 states. However, emerging studies,
particularly a recent New York state analysis, anecdotally demonstrate that upgrading the commercial energy code
may result in some construction cost increases which are offset by energy savings within a few years of project
completion.
To measure construction cost changes from IECC 2003 to 90.1-2007, the report modeled construction cost for three
standard commercial building types that are representative of commercial construction in each of the state’s three
climate zones. The report concludes that for New York to transition commercial buildings from IECC 90.1-2003 to the
90.1-2007 code would result in a construction cost increment increase of no more than 5% for all building types
throughout the state, inclusive of all three climate zones. The report also makes clear that costs will vary based on
the type of commercial building considered. For instance, for semi-heated buildings (such as warehouses and flex
space) the construction cost increment is estimated to be zero. For non-residential commercial space (which in-
cludes office buildings) the cost increase averages 4.4% between the state’s three climate zones. For a 54,000 square
foot office building, this cost increase would translate into an added cost of $23,482 per building.
Although these first costs are significant, the study estimates that building owners and operators will achieve signifi-
cant energy savings that allow them to quickly recoup construction cost increases. For instance, in two of the three
climate zones within the state, the payback period on the incremental cost is only 4 years. In the third climate
zone—which is based on notoriously expensive New York City construction costs—the payback period is 8 years.
These payback periods are estimated based on 2007 fuel costs; if energy costs increase, the payback period will be
shorter. It is also noteworthy that the authors may overestimate the payback period’s duration by using a conserva-
tive simple payback model. This type of payback model fails to capture the reality that building owners are able to
amortize the initial construction cost increases over the life of the building loan (known as “Life Cycle Costing”, with
the life cycle being the length of the loan, in this case) and pay these loans back over time with energy savings.
Incremental Costs and Annual Energy Savings for New Office Buildings in New York State
Initial Incremental Cost Annual Energy Savings
Climate Zone 4A 4.3% 4.8%
Climate Zone 5A 4.4% 5.4%
Climate Zone 6A 4.7% 5.7%
cost/benefit. One such study, released by DOE’s Pacific Northwest National Laboratory (PNNL) reviews incremental
first costs for previous ASHRAE versions in the city of New Orleans, Louisiana. The study, Analysis of Energy Savings
Impacts of New Commercial Energy Codes for the Gulf States, concluded that annual energy cost savings after up-
grading from the prior ASHRAE Standard, 90.1-2001 to 90.1-2004 were between 7% and 14%, depending on the
building type.
According to the study, not only did the code change save energy in all building types modeled, including offices,
schools, retail, and hospitals, moving from the 90.1-2001 to 90.1-2004 code resulted in lower up-front construction
costs. The construction cost savings provided by 90.1-2004 saved builders between $31,000 and $363,000, depend-
ing on the building type. In the case of the upgrade from 90.1-2001 to 90.1-2004, the incremental cost decreases
were in large part due to the new requirements for lighting commercial buildings. These requirements carry with
them design standards that took advantage of more efficient lighting and often employ considerably fewer fixtures,
resulting in considerable equipment cost savings. Although no study was completed regarding incremental costs of
moving from 90.1-2004 to 90.1-2007, this analysis demonstrates that first cost savings may again be substantial if
the new ASHRAE 90.1-2007 standard is adopted in other states.
Future research should be focused on creating incremental cost estimates for all climate zones in the U.S. Emphasis
should also be placed on documenting building construction cost and pairing this data with actual building energy
performance. To create reliable construction cost estimates, there is an acute need for detailed data on construction
costs. Some data has been developed by ASHRAE itself – although manipulating this data into useful construction
cost increment projections will require additional data and considerable analysis.
BCAP recommends a coordinated effort to summarize ASHRAE and other data by a third party organization or com-
mittee. Such an “arm’s length” analysis would dispel concerns by ASHRAE officials that the data might be susceptible
to criticism from code change opponents. Simultaneously, putting construction cost data in the public domain would
allow proponents and critics a foundation for debate grounded in robust, factual analysis.
BCAP
Dedicated to the adoption, implementation, and advancement of building energy codes
1850 M St. NW Suite 600 | Washington, DC | www.bcap-ocean.org