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This article is co-published by the Energy News Network and Planet Detroit with support from the Race and Justice Reporting Initiative at the Damon J. Keith Center for Civil Rights at Wayne State University.
EcoWorks, headquartered inside a historic, concrete building with a zigzag roof, is perched on a quiet stretch of 7 Mile Road in Detroit. On an overcast April day, the nonprofit’s office is in the middle of a transformation.
Outside the building, a stout heating and cooling system funnels air into common rooms. Despite a silvery sky, a row of solar panels fixed atop the building next door, which EcoWorks also owns, generates just enough electricity needed to run the organization’s daily operations.
Henrik Mader, EcoWorks’ energy analyst, is among a smattering of employees working inside the office today. A contract worker scurries down a narrow hallway strewn with a bucket, a mop and a ladder, finishing up the installation of the cooling system. One of the program managers, Gibran Washington, fields calls from residents about energy assistance.
After giving a quick tour of the building’s new energy-saving technologies, Mader whips out a smartphone from his pants pocket, showing an app called mySolarEdge, which tracks the energy flowing from a solar inverter, three little white boxes located at the back of the building.
Mader is helping oversee the building’s much-needed transition into the 21st century.
“Things were just really inefficient. Very uncomfortable for everyone. Really high utility bills,” he said. Much of the internal equipment, including the air conditioning and ventilation systems, hadn’t been updated in decades.
Mader hopes these energy-saving technologies will pave the way for a carbon-free future. EcoWorks wants to eliminate all of its carbon emissions, which drive climate change and toxify the air, as rapidly as possible. The impact of the climate crisis is more far-reaching and intensified than previously assessed, wreaking havoc on ecosystems and livelihoods in Detroit and around the globe.
EcoWorks is among a growing number of commercial building owners in Detroit implementing energy-efficient technologies, which reduce energy waste, utility costs, and carbon emissions.
“We have the opportunity to be leaders in this,” said Connie Lilley, the executive director of the Detroit 2030 District, which helps building owners reduce energy and water consumption. The organization also offers a free program on energy reduction and sustainable practices for its members who own multifamily homes, houses of worship and community centers.
“We have the workforce, we have the intelligence. … I think we’ve all proven that it’s possible to do better than we’re doing,” Lilley said.
The organization recognized its “biggest losers” in commercial building energy consumption at its annual Detroit Energy Challenge Awards Breakfast on Tuesday. The first-place winner was Shelborne Development for The Beach Club Detroit Apartments, which reduced its energy consumption by nearly 60% year over year. Second place was Fifth Third Bank at 8 Mile & Livernois with a 21% reduction, and third place was Bedrock for Detroit Media Partnership with a 20.78% reduction.
So far, it’s difficult to gauge how many commercial building owners have adopted energy efficiency improvements. But the potential to save money and energy by improving energy efficiency and adding renewables to Detroit’s existing commercial building stock is significant, experts say. The main obstacle is securing funds for energy efficiency retrofits and renewables, which pay for themselves over time. Fortunately, new financing tools are coming to bear.
The technology updates in EcoWorks’ building, specifically the new heating and cooling system, would not have been possible without a roughly $500,000 long-term loan facilitated by Michigan Saves, a nonprofit green bank specializing in clean energy financing. The green bank also provided financing for EcoWorks’ solar arrays, Mader said.
Mader anticipates EcoWorks’ investment will reduce the building’s utility costs by 50%.
“There’s a growing trend towards electrifying new buildings, just because the cost of new gas infrastructure is really, really high,” Mader said. “I think more developers are starting to catch on.”
Reaching energy saving potential
Nationwide, energy efficiency can cut energy use and greenhouse gas emissions in half by 2050, an American Council For An Energy-Efficient Economy analysis found. About one-seventh of emissions reductions could come from making existing buildings more efficient.
Making old and new buildings more energy efficient may help Detroit reach its climate goals. In 2019, the Detroit City Council passed a greenhouse gas ordinance, which prescribed a deadline to cut emissions from city sources by 35% by 2024 and reduce city-wide emissions by 2025. More aggressive action targets are being developed through the city’s climate strategy, officials said.
The city’s most recent greenhouse gas inventory 2018 found that about 68% of the city’s greenhouse gas emissions come from industrial, institutional, residential, and commercial buildings, according to Joel Howrani Heeres, Detroit’s sustainability director. Reducing the carbon footprint of those commercial buildings could usher the city closer to its goals.
“We recognize buildings are a large source of emissions in the city,” Howrani Heeres said. There’s also a growing understanding of the need to electrify buildings and install renewable energy sources on the largest scale possible in order to achieve the city’s climate goals, he added.
Using the U.S. Environmental Protection Agency’s online Energy Star Portfolio Manager tool, the city has been tracking the energy, water, and gas use of over 130 municipal buildings over the last year and a half. Monitoring utility use will help prioritize system upgrades.
City officials are looking to increase the number of all municipal and privately owned buildings retrofitted for energy efficiency. To reach the climate targets established by the United Nations’ Intergovernmental Panel on Climate Change, most buildings will need more than one improvement or upgrade, Howrani Heeres said.
Increasing the number of retrofitted buildings would help reduce large swaths of carbon emissions annually, Howrani Heeres said. The city plans to release more details about specific energy reduction targets for its buildings by the end of the year as part of the city’s climate strategy.
The overall payback on energy efficiency improvements depends on the age of the building and the type of retrofit. Capital investment in energy efficiency often competes with building owners’ other interests.
Some incentives encourage business owners to adopt energy efficiency improvements. Several utilities offer rebates for business owners. The Property Assessed Clean Energy Program, known as PACE, is a financing option that allows property owners to implement energy upgrades. Owners can take advantage of utility cost savings which can help repay the loan through property taxes.
These energy efficiency programs need more spotlight, said Ben Dueweke, the director of community partnerships with Walker-Miller Energy Services, an energy efficiency services company based in Detroit.
Dueweke said the PACE program also allows building owners to make necessary stormwater, energy efficiency, or renewable energy upgrades without taking on traditional debt. The financing obligation is secured to the property itself.
“So if that building is sold, that just goes with the building instead of the owner,” he said.
Before installing the solar arrays and heating and cooling system, Mader said EcoWorks replaced a leaky roof and added insulation and a white membrane to deflect sunlight and lessen the discomfort of the urban heat island effect, when roofs and pavements trap heat and make surrounding areas hotter. They also swapped out old bulbs for more efficient LED lights.
Some building owners have already embarked on clean energy agendas. Bedrock, the city’s largest real estate developer, will use 22,000,000 kilowatt-hours of its energy from DTE solar farms starting in 2023, according to The Detroit News. A local electrician union, IBEW Local 58, made its headquarters a net-zero energy facility, meaning annual energy consumption equals the amount of renewable energy produced on site.
There’s a massive opportunity for other Detroit commercial building owners to chart a similar path. In 2016, commercial energy consumption per square foot in Detroit was 42,000 British thermal units, a measure of energy content that experts considered high. The city wants to reduce the average commercial energy consumption by 10% by 2024.
But a lack of financing still poses barriers to some building owners. Home and business owners alike may not qualify for private loans or may be offered higher interest rates if they have a low credit score.
Nonprofits like EcoWorks may also struggle to secure other private financing since their operations rely on various funding streams, like foundation grants.
Michigan Saves, which was established in 2009 through a grant from the Michigan Public Service Commission, the state’s utility oversight body, played a crucial role in assisting EcoWorks to finance its energy efficiency work. EcoWorks acquired its loan through a not-for-profit investment capital fund specializing in clean energy solutions, with Michigan Saves acting as an intermediary.
Michigan Saves offers unsecured loans, which are a type of loan offered by a bank, credit union or online lender that isn’t backed by collateral. These loans also have low, fixed interest rates and can be repaid over a longer period of time, making them more affordable and accessible to borrowers.
Additionally, Michigan Saves offers a special type of credit enhancement called a loan loss reserve, which helps commercial lenders lessen potential losses on defaulted loans or instances of nonpayment. The reserve essentially acts as a safety net for lenders. California and Connecticut also have loan loss reserves geared toward energy efficiency.
“It’s really where the magic occurs,” said Mary Templeton, the president and CEO of Michigan Saves. “We have this loan loss reserve that backs up private lenders. And so what that does is it allows those lenders to offer much better interest rates, much longer terms, and more access to people that wouldn’t otherwise qualify for traditional lending.”
An ‘attitude shift’
Since the Detroit 2030 District launched five years ago, Lilley said she’s seen a noticeable attitude shift among building owners. Before, it wasn’t as common to engage in this type of work. Building owners often juggled a full plate of priorities which may supersede any urgency to update old equipment.
“They just were trying to figure out how they were going to pay their rent the next month,” Lilley said. “So that was really difficult.”
But the 2030 District’s efforts are quickly regaining traction after the pandemic had slowed the pace of progress, Lilley said. In the last year, the building owner membership has grown significantly. About 180 building owners joined in the last year, Lilley said. The district’s total membership includes 373 building owners.
Making a building healthier and more sustainable requires owners to track energy and water usage, which is also another need leaders are working to address. The 2030 District helps facilitate that crucial step of the process.
“In reality, all building owners are kind of the same. They’re trying to figure out how to manage climate change, and what does it mean to them, and their building, and their employees or the business,” Lilley said. “We kind of assess where they’re at.”
After building owners implement energy-efficient improvements, they must continue to monitor their performance.
EcoWorks plans to install sub-meters, devices that will also track the office’s daily energy use. Mader said close tracking will help inform office behaviors and whether systems need adjustments along the way.
Policy action needed to scale up
Galvanizing a movement among building owners to rethink energy use behaviors is crucial, but so far, these commitments are voluntary. In Detroit, proposed policy actions could drive energy efficiency adoption.
Utility benchmarking requires all buildings of a certain size threshold to track their energy usage monthly and submit data to the city. That data could then be shared with the public through an interactive map or another tool.
“The point of this is usually to help quantify the amount of energy that city is using for its largest buildings, and understand who the high performers are, [and] the low performers,” said Dueweke, the community partnerships director. Detroit’s energy waste reduction committee, which is part of the City Council’s green task force, is developing a utility benchmarking policy, Dueweke said. Dueweke helps lead the committee.
Benchmarking would also recognize high performers and direct resources to lower performers, in order to increase the efficiency of building stock at large, Dueweke said.
Similar policies are catching on across the country. At least 22 states have adopted benchmarking requirements for public and commercial buildings, including Ann Arbor, Chicago, Denver, Minneapolis, and Portland, Oregon.
Howrani Heeres, the city’s sustainability director, supports a utility benchmarking policy.
“It’s just a nudge for people to say, ‘Hey, you know, this is important; we need to be measuring this,” he said. “We’re trying to set an example that this is the right thing to do. And we’d like for all of you to do that.”
Instituting building performance standards is another way to drive accountability. Under such proposed standards, the city would require buildings to meet specific performance targets, whether that’s energy use, water use, or emissions, and improve these performances over time. Washington D.C. and St. Louis have adopted building performance standards.
“That is actually going to be one of the bigger levers that I think we’re gonna see across the country,” which will drive building owners to make investments in energy efficiency, Dueweke said.
After getting some key energy efficiency projects off the ground, Mader hopes EcoWorks will demonstrate to building owners and neighbors alike that such work is achievable and a boon to the neighborhood.
“It also needs to happen really quickly,” Mader said. “We need to equitably decarbonize pretty much everything as soon as we can. If more buildings did this work, we would be meeting our targets, and I think, preserving the future.”