Good business decisions combined with good sustainability choices generates costs savings, reduces energy and GHG, and provides our tenants with more efficient and reliable equipment.
Purpose of the project
The purpose of installing high efficiency HVAC is three-fold. The first purpose is to consistently maintain conditions for the comfort and health of our tenants by utilizing quality and reliable high efficiency HVAC equipment that uses new and/or improved technology in compressors, motor control, evaporator and condenser coil design and controls. The second purpose is to obtain sustainability benefits by changing equipment over from R22 refrigerant to R410A which is a more environmentally friendly refrigerant and to reduce energy usage along with reduction in greenhouse gases. The third purpose is to align good business decisions with good sustainability choices.
Approach
The approach used identifies older (ranging from 15+ to 20+ years based upon the type of HVAC equipment) less efficient HVAC equipment which includes, water source heat pumps, split systems, package systems, water cooled and air cooled chillers and budget for high efficiency replacements as part of our green capital expenditure budget process. Also, if there are unexpected failures of HVAC equipment, the approach is to evaluate the age and efficiency level of the existing equipment and replace the equipment with higher efficiency HVAC based upon cost, performance and payback for the premium cost of the high efficiency equipment. Our approach is to utilize the cost and payback of the premium for high efficiency in making decisions regarding repairing an inefficient older HVAC unit or installing new low efficiency unit. In each case there is a sunk material and labor cost for repair or install of low efficiency units that needs to be accounted for when evaluating the benefit of high efficiency equipment. The methodology we use for the financial aspect is Pay Back (years) = (Cost of High Efficiency HVAC minus Cost to Maintain or Replace with Low Efficiency HVAC ) / (Annual Saving due to Increased Efficiency).
Implementation
The HVAC high efficiency equipment replacement project were applied using two methods: (1) by identifying planned replacements as part of our 2016 annual budget process which were released for bid and approval by HCP and (2) by applying high efficiency replacements for any unbudgeted needs where equipment failed in lieu of repairing old inefficient equipment. The implementation took place throughout 2016 as needs arose and as budgeted projects were released for implementation. The equipment was replaced in common areas and tenant spaces in our healthcare buildings in the HCP portfolio.
Results
147 HVAC projects were implemented including 74 water source heat pumps, 58 split-system and package units, 3 chiller and 5 cooling towers and 7 commercial rooftop package units, totaling 379 individual equipment pieces. Estimated annual savings was $275,358 and premium efficiency cost was $721,448, yielding an ROI of 38.2% and a payback of 2.6 years. Annual energy reduction was 2970 Mwh. Estimated annual reduction in GHGs was 1525 metric tonnes of CO2e. Over the past 4 years, we have implemented 499 of these projects, yielding reductions of approximately 9,488 MWh in energy and 4,873 metric tonnes of CO2e.
Responsible investors are leading the way to the post-pandemic recovery and the sustainable future ahead
With overall numbers of new cases and deaths continuing to decline and lockdown measures slowly being eased in most major economies, the worst of the COVID-19 pandemic appears to be abating. As countries start to rebuild in the months ahead, the crisis has clearly revealed a fundamental reshaping of investor priorities, accelerating trends which began long before the pandemic took hold.
Influence of ESG factors on the performance of private equity real estate funds in APAC
Sustainability has been gaining traction as a concept in recent times. However, the focus for fund managers appears to be fundamentally still on the bottom line, building the case for understanding the relationship between Environment, Social, Governance (ESG) factors and financial returns. The relatively young nature of the topic of sustainability coupled with the paucity of data available within the private real estate fund industry has resulted in a generally underdeveloped understanding of how ESG factors correlate with the performance of private real estate funds, especially so in APAC where the industry is at a more nascent stage compared to the European and US markets.
Canada is known as one of the most diverse countries in the world, but many of our industries have trouble reflecting Canada’s diversity in its workforce. This has certainly been the case with commercial real estate (CRE), which has traditionally had the reputation of being composed of mostly white, able-bodied males.
