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Energy Technologies Area (ETA) researchers are continually building on the strong scientific foundation we have developed over the past 50 years. We address the world’s most pressing climate challenges by bringing to market energy-efficient innovations across the buildings, transportation, and industrial sectors. ETA is at the forefront of developing better batteries for electric vehicles; improving the country's aging electrical grid and innovating distributed energy and storage solutions; developing grid-interactive, efficient buildings; and providing the most comprehensive market and data analysis worldwide for renewable technologies like wind and solar.
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The Energy Technologies Area (ETA) is unique in translating fundamental scientific discoveries into scalable technology adoption. Our approach combines an understanding of the marketplace and the role of state and federal regulation and policies. ETA's research drives real-world, practical results that affect and improve the everyday lives of Americans and those across the globe. Saving energy and battling the Climate Crisis are key to the foundation of our research, which is driven by technoeconomic analysis and in-lab experimentation and discovery.

Raising the Rent Premium: Moving Green Building Research Beyond Certifications and Rent

Publication Type

Conference Proceedings

Date Published

08/2018

Authors

Zhu, Cindy, Andrew White, Paul A. Mathew, Jeff Deason, Philip Coleman

DOI

10.20357/B7RG6W

Abstract

Advocates for high-performing, energy efficient buildings understand the hurdles to proving the business case to spur development and investment decisions among commercial real estate owners and investors. Although there is significant evidence that green buildings exhibit increased financial performance via decreased operating expenses and non-energy benefits such as workplace comfort and employee productivity, green building practitioners still face an uphill battle when asked to prove the profits, most frequently pointing to rent premium as an indicator to attract investment. This paper documents a recently conducted literature review commissioned by the US Department of Energy (DOE) of 39 peer-reviewed and published academic papers pertaining to green or energy-related building attributes and financial performance. The review (first published here) indicated that 27 papers found a positive correlation between green building certifications and rents. If this is the case, then why are green building development and energy efficiency retrofits not the norm for the industry? This paper first synthesizes the recent literature review to illustrate that the existing body of empirical evidence supports green building investment. Next, it describes a workshop of leading academics in real estate sustainability and finance who met in late 2017 to discuss gaps in green building research and assess data challenges in their fields. Insights synthesized the workshop were used to drive new DOE led research that can provide value and understanding to investors and builders of high performing buildings. Finally, the paper offers insights into why the market is not properly pricing building efficiency, with factors ranging from improper mitigation of risks associated with energy and lack of transparency and responsibility felt by building end users, and what further steps are needed to transform green building investment practices in the commercial real estate industry.

Journal

2018 Summer Study on Energy Efficiency in Buildings

Year of Publication

2018