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Occupancy Based Management Delivers: Consumers Energy's New SEM Pilot

Written by: Sari Mira

In 2021, Consumers Energy commissioned Waypoint Energy to study Michigan's commercial real estate (CRE) market to evaluate the pandemic's impact. The results were striking: office occupancy plummeted from 91% in 2019 to 21.7% by Dec. 2021, while commercial and industrial energy use dropped only 15%. This disconnect between occupancy and energy consumption led to the creation of the Consumers Energy Occupancy-Based Strategic Energy Management (OB SEM) pilot.

OB SEM builds on the concept of continuous Strategic Energy Management (SEM) by incorporating an occupancy-focused approach. For example, in hybrid work models, employees choose work-from-home (WFH) days, complicating HVAC scheduling. OB SEM addresses and optimizes heating, cooling, and lighting systems based on employee attendance, maximizing efficiency while accommodating flexibility. OB SEM reviews lease policies to find opportunities for energy saving operations such as allowing HVAC and lighting shutdowns during vacancies instead of the conventional practice of continuous servicing.

The Program has been underway with Consumers Energy since May 2022 and has exceeded program goals. Participation and square footage enrollments goals were surpassed by 33% and 251%, respectively. The program exceeded energy savings targets by 146%, primarily driven by operational improvements (81%) and capital retrofit investments. Key areas of energy savings included compressed air (58%), HVAC controls (13%), lighting controls (12%), and motor controls (8%).

Economic analysis is a cornerstone of project success. The average payback period for all identified opportunities is 5.2 years; 2.3 years for operational measures. OB SEM also takes a CRE-centric approach and quantifies Energy Conservation Measures (ECMs) in terms of impact to a property’s Net Operating Income and Asset Value. For instance: a property in Grand Rapids, MI, invested $68,284 in identified opportunities, resulting in an estimated asset value increase of $641,026and a payback period of 2.5 years.

Ensuring persistent energy savings is a critical consideration of the OB SEM Program. The Waypoint team approaches this challenge through several strategies. Measures grounded in the Michigan Energy Measures Database (MEMD) undergo rigorous evaluation similar to state-driven evaluation, measurement, and verification (EM&V) processes. Operational savings persistence is achieved through a combination of cultural change, institutionalized policies, and ongoing utility support. The OB SEM program also benefits from insights provided by evaluating other SEM programs, indicating that energy savings do persist over time.

In conclusion, the collaboration between Waypoint Energy and Consumers Energy addresses the occupancy-energy gap in Michigan's CRE market through the innovative OB SEM pilot. By emphasizing occupancy-driven energy management, amending lease policies, and providing economic analyses, the program effectively enhances energy efficiency and sustainability while adapting to dynamic work trends. The pilot's success, characterized by surpassing enrollment and energy savings targets, underscores its potential as a model for long-lasting energy conservation.

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