In the United States, buildings consume 41 percent of the nation’s total energy use, through lighting, heating, air conditioning, elevators, and the thousands of items plugged into their sockets. In large urban centers such as Chicago and New York, the figure surpasses 70%. As the world seeks to forge a path to a clean energy future, the simple fact is that we need to reduce the energy used by cities and their buildings.

The good news is that an increasing number of cities have made commitments to aggressive climate and sustainability goals, a trend we anticipate accelerating following the recent UN agreement in Paris. With the sustained national focus on codes, standards, and green-building certifications, such as the U.S. Green Building Council LEED certification, there has been tremendous progress in the quality and performance of new buildings. However, we cannot take the resource-intensive path of simply building our way to a more energy-efficient future. The vast majority of our current building stock will still be in place in 2030 — the current timeframe identified to make significant progress toward climate commitments. This is especially true in the commercial buildings market, specifically large commercial buildings, where well over 75 percent of existing buildings will still be in use in fifteen years’ time.

Addressing energy use in existing large commercial buildings has proven notoriously difficult. Today large commercial buildings address only two percent per year of the NPV-positive investments in efficiency that are available to them. When a market is operating so far below its financial potential, the reason is usually that supply models do not meet the buying criteria of the market — and existing building energy retrofits are no exception. A traditional energy overhaul of a building (retrofits that include replacing mechanical systems, windows, insulation, and other features during a remodel) requires significant investment, and is therefore typically timed with major renovations or capital-intensive building system replacement. While the customized approach can drive deep energy savings for an individual building and has its place in the market, it is not a model that can be deployed rapidly or at scale.

A more industrialized approach is needed, one that will reduce cost and simplify the decision-making process for buyers. However, just as each city skyline is unique, every building represents a one-of-a kind combination of uses, systems, and opportunities for efficiency — so the challenge is how to undertake an industrialized retrofit process that will address the uniqueness of each building. To gain market traction, retrofits need to be:

Relevant (appropriate to their building)

Fast (a project lasting less than a year),

Capital-light (or better yet, funded by low-cost capital provided by a third party)

Affordable (with a simple payback of less than 4 years, and ideally closer to 2).

These criteria are not impossible to meet. Informed by our work with Retrofit Chicago’s Commercial Buildings Initiative (a public-private partnership to promote and support energy efficiency among commercial and institutional buildings), we are developing an industrialized approach to the building retrofit process that incorporates certain characteristics of the mass customization model. The mass customization model leverages technology to integrate a customized consumer experience with the efficiency of mass production processes —it has been applied successfully to numerous industries and specific applications, from jackets and running shoes, to automobiles and housing.

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This approach has been made possible by the advent of low-cost sensing technology and the ability to acquire data from building systems and energy-consuming equipment. Vast amounts of data can be collected and fed dynamically into software applications. This resulting technology platform is used to identify and capture opportunities to make buildings more efficient, and provide continued improvements over time.

How can this be done at scale? The first key is to limit retrofit scope to a limited pool of pre-engineered core retrofit measures, measures that have been selected for their applicability to a large number of existing buildings. The second key is to only pursue incremental unique retrofit measures that the technology platform identifies as individually meeting the market criteria. The final element to the industrialized retrofit approach is the ability to procure and implement retrofit measures across multiple buildings simultaneously, allowing for the capture of economies of scale.

Our hope is that such an industrialized approach can reduce the cost of retrofitting buildings by well over 30 percent, with a typical simple payback below four years. Building users should see the benefits too — as high efficiency LED lighting with digital controls will enable consistent light levels; more pervasive and smart digital controls will allow for better temperature and humidity balancing, and variable air and water flows (as opposed to either full on or full off) in the heating and air conditioning systems will result in lower background noise levels

Chicago is piloting this approach, but other cities will need to follow suit for this work to significantly impact global emissions. City governments have a critical role to play; they should implement energy benchmarking and disclosure ordinances that help identify the opportunity buildings; act as a convener and potentially as a program administrator to enable the model to be deployed at scale; and pass legislation that enables innovative financing mechanisms, such as Property-Assessed Clean Energy (PACE), that deliver dedicated financing for energy efficiency.

It is not new technology that we need to drive down energy consumption in buildings and the carbon footprint of our cities. The technology we need is already here, it is the market mechanisms for scaling that are missing. We hope that the pilot project in Chicago will demonstrate an approach that the broader market can follow.