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NYC Building Energy Letter Grades: What Property Managers Need to Know

Building energy efficiency labels are now available for property owners of large NYC buildings to download and post in their lobbies. Each year, the labels will be available on October 1st and must be posted by October 31st. Failure to display the label for applicable buildings by the October 31st deadline will result in a violation from the Department of Buildings and fine of $1,250.

 

Sample building letter grade label. Image depicts a B grade

Sample label from a Department of Buildings’ document with steps for compliance

 

How are letter grades determined?

Letter grades, based on energy usage, will be updated annually and reported to the City of New York during Local Law 84 energy benchmarking compliance. The letter grade is based on a property’s ENERGY STAR score, which is a metric calculated during energy benchmarking. The ENERGY STAR score ranges from 1-100 with higher scores representing better energy performance. The score considers multiple operational factors but is largely based on Source Energy Use Intensity (EUI). Source EUI is a measure of the annual energy used on site at a property – electricity, gas, fuel oil, district steam – plus the amount of energy required to generate, transmit, and distribute that energy to the site. Source EUI is negatively impacted by electricity usage (weighted nearly three times more than the use of gas or fuel oil), which is counter-intuitive during a time when the industry is pushing towards electrification. Note that this is due to the additional energy required to produce and deliver electricity to a building. If you are the owner or manager of an electrically-heated building and you have a low grade, you’re not alone – see the next section for next steps to improve your grade.

The ENERGY STAR score is mapped to letter grades using the following scale:

Image of the range of letter grades and ENERGY STAR scores - 1 to 100 and D to A

Range of letter grades mapped to ENERGY STAR scores

  • A – score is equal to or greater than 85;
  • B – score is equal to or greater than 70 but less than 85;
  • C – score is equal to or greater than 55 but less than 70;
  • D – score is less than 55;
  • F – for buildings that didn’t submit required benchmarking information;
  • N – for buildings exempted from benchmarking or not covered by the ENERGY STAR program.

In 2020, over half of NYC buildings have received C or D grades. ENERGY STAR scores are meant to be distributed evenly across the 1-100 spectrum with 50 as the national median. NYC buildings are rated slightly better than the national average, with a median of about 60, although there are a lot of low scoring buildings. A low grade is frustrating, but it’s important to keep in mind that a major purpose of this law is to spur action towards energy efficiency upgrades.

 

graph of 2020 NYC letter grade breakdown

Letter grade breakdown from an analysis of 2019 Energy and Water Disclosure Data for Local Law 84

How can I improve my grade?

One place to start is to look for errors in your energy data. Missing or misrepresented information can lead to incorrect ENERGY STAR scores. The most important data points to verify are floor areas, property use types (e.g., separately reporting a ground-floor retail space in a multifamily building), and operational details. For multifamily properties, verify the number of units and number of bedrooms. For commercial offices, verify the operating hours, number of workers, and the number of computers for each individual tenant.

If you have a building engineer, operator, or superintendent on site, discuss how the current systems are operating and whether there are ways to save energy. There may be training opportunities for your building staff to improve performance. Depending on staff experience, it may be beneficial to hire an outside consultant to perform an energy audit of your building systems. This study can provide you with an inventory of your systems and an assessment for ways to reduce energy usage and save money with a combination of operational and capital improvements.

We are still clarifying with the Department of Buildings how to correct errors in the energy data, and whether a new label can be generated before the next year’s deadline. Stay tuned for updates.

How do letter grades relate to carbon fines?

Many of our clients are confused by the relationship between energy letter grades and carbon fines – for good reason – as they are based on different metrics. There is some overlap in energy letter grades and carbon fines, but it is possible to face potential carbon fines even with A grades and no fines with D grades. Carbon fines are determined by Local Law 97 of 2019, which is one piece of the NYC Climate Mobilization Act. The same group of buildings required to comply with energy benchmarking and energy letter grades will be assigned carbon emission targets based on property type. Starting in 2024, buildings will be fined on an annual basis if they exceed their targets, which then become more stringent about every five years. Based on building performance today, approximately 20% of buildings exceed the 2024 – 2029 targets while approximately 75% of buildings exceed the 2030 – 2034 targets, according to the City Council’s press release.

The carbon fines are based on a property’s annual energy usage, accounting for the carbon intensity of each fuel type, with an ultimate goal of moving away from fossil fuels altogether. “Dirtier” fuels, such as #2 and #4 fuel oil, emit more carbon than natural gas. The carbon intensity of today’s electric grid is comparable to that of fossil fuels, but New York State climate goals are pushing towards a cleaner grid, with an aim to be carbon neutral by 2040. So it still makes sense to consider electrification projects, especially with next-generation technology such as heat pumps that can increase heating efficiency significantly beyond what even the best combustion systems can provide.

Who is required to comply?

The building energy label requirement (Local Law 33 of 2018, as amended by Local Law 95 of 2019) applies to buildings 25,000 square feet and greater. These are the same buildings covered by NYC’s energy benchmarking laws and the carbon fine law. Owners of properties that are listed on the Covered Buildings List for benchmarking compliance as per Department of Finance records are required to comply. The Covered Buildings List is updated annually.

Temporary exemptions are available for properties undergoing ownership changes and properties undergoing construction or demolition with no temporary certificate of occupancy (TCO) in the applicable reporting year. Properties that are exempted or not eligible for an ENERGY STAR Score will receive an “N” grade and will not be subject to the posting requirement. More information on ENERGY STAR score eligibility can be found here.

How do I access my label?

The label is not mailed. Owners must access it through the DOB NOW Public Portal, where they can download and print for posting. The labels can be printed on 8 ½”x11” paper and must be clearly visible to the public for the entire year, hung no more than six feet above floor level in a location near the building entrance. Some of our clients are planning to place the labels at a lobby desk or on a community bulletin board. Based on our reading of the law, the label is not required to be posted on the entrance door itself.

Still have questions? Reach out to us at benchmarking@swinter.com.

image of Jamie Kleinberg

 

 

Written by Jamie Kleinberg, Building Systems Engineer

 

 

image of danielle covington

 

 

Written by Danielle Covington, Building Systems Analyst

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