Energy Efficiency When Leasing

Energy Efficiency When Leasing Your Business Facility

By Megan Porter

Many small and medium-sized businesses that lease facilities are often concerned about making improvements to their space. Businesses generally want assurance that any investment they make to their facilities will be paid back during the life of their lease. One misperception is that businesses that lease space can't recoup an investment in energy efficiency projects. The reality is that there are a number of energy efficiency measures that can yield short-term benefits.

Lessees have two paths that they can consider for undertaking energy efficiency initiatives.

  1. Businesses can take measures that require less installation, shorter implementation timeframes and smaller investments. These projects are more attainable for commercial business lessees and provide immediate impact on the business's energy usage and associated utility bills.
  2. Businesses can consider partnering with their building's management company. More than 4,600 commercial building partners across the nation work with ENERGY STAR to improve building energy efficiency.1 Additionally, lessees can consider negotiating a green lease up front to ensure certain energy efficiency measures are implemented throughout the lease period.

Independent implementation
Energy efficiency projects span complex retrofits of a building's HVAC system to simpler changes such as swapping out bulbs. Many lessees are responsible for paying their utility bills, sometimes responsible for maintenance, and are therefore motivated to implement any measure possible that can help reduce their energy usage. This list provides a number of suggestions a lessee can undertake, including some useful tips that can reduce energy consumption.

  • Enable power management settings and explore power management tools: Setting computers and other devices to sleep mode can reduce power loads. Additionally, consider installing a power management software solution. PC power management software offers a networked approach to powering down your computers without interfering with the needs of the user or information technology staff. PG&E offers rebates that can help offset the initial investment in PC power management software.
  • Lighting controls: Lighting accounts for approximately 35% of the electricity usage in the average commercial building in the U.S., much of which is attributable to waste.2 Motion sensors that turn lights on and off can also serve to indicate whether there are people in a certain space. Lighting controls have a number of applications, including installation in conference rooms, storage rooms and walled offices to reduce energy usage.
  • LED bulbs: Light-emitting diodes (LEDs) and other ENERGY STAR-qualified bulbs can provide immediate energy savings for any business. If your building's management company is responsible for light bulb installation, work with them to replace existing bulbs with LEDs. Additionally, rebates from PG&E on energy efficient LED lighting products can significantly reduce any upfront costs from retrofits and achieve long-term savings.
  • Power strips: Unplugging devices when not in use is an obvious way to cut electricity usage. Smaller and medium-sized office-based businesses tend to use power strips as a central point of energy use for such devices as printers, phones and desk lamps. Businesses can eliminate electricity usage of such devices with one click; however, it is important not to overload power strips with too many devices.3
  • Empower employees: Your staff can be perhaps one of your biggest allies for energy efficiency in the work space. Create interactive ways to engage your employees to reduce electricity usage. Perhaps this includes incorporating a green committee made up of coworkers who are passionate on the topic and can provide additional ideas to improve energy efficiency in your business.
  • Preserve water: Running hot water for just 5 minutes uses as much energy as leaving a 60-watt light bulb burning for 14 hours.4 Commercial tenants can educate employees on the importance of water preservation to reduce energy. Businesses can also fix leaky faucets or install low-flow plumbing fixtures.
  • Equipment: When a business is looking to upgrade or purchase new equipment, consider energy efficient models that can reduce your business's energy consumption. For example, food service equipment, refrigeration enhancements, such as auto door closers, anti-sweat heater (ASH) and strip curtains, all qualify for PG&E's rebates that can lower upfront costs.
  • HVAC Quality Maintenance Program: The Commercial HVAC Quality Maintenance Program was developed by PG&E to help California businesses get a higher level of performance, efficiency and reliability from their HVAC equipment. In fact, the program can reduce a business's annual operating, service and repair costs by up to $500 per unit for rooftop units.

The green lease option
Businesses can also explore the option of negotiating a green lease. Green lease programs are growing in popularity in California. A green lease program can provide a commercial tenant and landlord the opportunity to work together to better assess building energy usage and improve overall efficiency.5

Businesses should identify the type of energy efficiency applications and desired time frame for return on investment (ROI) when implementing a green lease program. This is especially important for businesses that have a short-term lease (e.g., 1 or 2 years) over a long-term lease (e.g., 10-plus years). Some green measures can generate immediate savings. According to one report, companies can achieve savings of 3% to 13% because of sustainable measures built into a lease.6

Affording energy efficiency initiatives
Financing, rebates and incentives are available for various energy efficiency projects for commercial businesses. Numerous energy efficiency financing options are available for business retrofits, upgrades, repairs or new installation. For example, PG&E offers 0% interest loans ranging from $5,000 to $100,000 with a 5-year repayment period.7 Businesses must consider factors that include project size, payback period terms and credit check requirements to identify the right program.

Commercial business lessees have great opportunities to implement energy efficiency. They can work either independently or cooperatively with their landlords to utilize energy efficient technology and other ways to reduce their carbon footprint.

To learn more about ways to improve energy efficiency for California businesses, download the infographic, "Where's the Waste? The inside story on your HVAC system."

Referenced in article:
  2. Pacific Gas and Electric Company
  4. Pacific Gas and Electric Company
  5. U.S. Department of Energy
  6. Jones Lang LaSalle
  7. Pacific Gas and Electric Company

Every business that leases space has the ability to reap the benefits of an energy efficiency project. Learn how here:
  • SMB Blog Author
    Megan Porter
    Senior Program Marketing Manager at PG&E, is a recognized leader in solutions marketing for small and medium-sized businesses. Megan uses her proven and practical expertise to bring energy efficiency education to businesses in every industry. In this vital role, she develops and oversees highly successful initiatives that result in the adoption of more efficient long-term energy management behaviors.

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