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SEM, RCx, and Capital Projects. Where is the Line?

Updated: Jul 27, 2022

Written by: Austin Alvey Aguilera

With the costs of natural gas and electricity set to increase and new emissions goals and regulations being implemented, many commercial building owners and operators are turning to energy efficiency to reduce operational costs and meet sustainability goals. There are many options for energy efficiency in commercial buildings: capital projects to replace aging and inefficient equipment, incorporating efficiency checks into maintenance practices, and behavioral modifications aimed at reducing equipment runtime.

Various methods of reducing energy consumption have been categorized over the years under a few umbrella terms. Of those, building owners and operators are often most interested in low and no cost energy efficiency solutions. Two commonly used umbrella terms are Strategic Energy Management (SEM) and Retro-Commissioning (RCx). Whether you are new to the world of commercial energy efficiency or just have not had the chance to look into SEM or RCx before, it can be difficult to understand the practical differences between the two.

Let’s start by defining both SEM and RCx.

Strategic Energy Management (SEM)

SEM is the true low and no cost option to reduce energy consumption. It’s in the name: strategic. SEM is about integrating energy consciousness into building maintenance and occupant behavior. In each of these applications the key idea is to be strategic, to integrate plans and processes around energy management into each approach. The first step is to create a plan. Planning typically involves creating a sustainability or energy committee that is responsible for tracking and implementing energy efficiency goals and projects. To fully realize savings, all aspects of energy use should be considered.

Behavioral modifications can be addressed through workplace awareness campaigns, standard operating procedures (SOPs) that are energy conscious, and strategically using available space. Similarly, savings can be achieved when efficiency checks are a regular part of the operations and maintenance schedule. A few practices to consider are annual maintenance checks to preserve equipment efficiency, night walks to identify equipment that is operating unnecessarily, and ensuring SOPs include leveraging local utility incentive programs.

Some of you may be thinking that proper maintenance, especially of large systems, can be costly, require expert help, and involve replacing failed parts (dampers, actuators, etc…). This is absolutely true. And we have a name for this scenario: retro-commissioning.

Retro-Commissioning (RCx)

The term retro-commissioning can mean one of several things.

  • Utility efficiency programs use RCx to describe the situation above – needing expert help or costly replacement parts. Utility efficiency programs will often make the distinction between SEM and RCx and offer different incentive rates for each.

  • Academic research into building efficiency uses RCx to describe the practice of studying energy use and planning the efficiency path for a building. During the RCx phase, the intended energy load (or intensity, EUI) is compared with the building systems' current performance. This information is used to plan future efficiency projects. Once a cycle of planning, identifying, and implementing has been completed, you start again at the beginning of the cycle with a new RCx plan.

For the purposes of our comparison, we will explore the line between utility defined RCx, capital project, and SEM, as these distinctions are of importance to building owners and operators.

SEM, RCx, and Capital Projects. Where is the Line?

Let’s start with the distinction between RCx and a capital project. This is a gray area that is defined by the utility efficiency program you are working with. The line is typically defined by the percentage of the total cost of an energy efficiency project that is material versus labor cost. For example, if a building owner is replacing a chiller and 70% of the cost of the project is material cost with the remaining 30% covering labor cost, this is a capital project. However, if a building efficiency project involves only 10% material costs and the other 90% is labor cost, this is often defined as a RCx project. But where is the line? Often the distinction is drawn at 80% labor and 20% material costs. That’s 80% or more labor and less than 20% material cost. At less than 20% material cost, utility efficiency programs often define these projects as RCx.

Now that we’ve explored the line between capital equipment upgrades and RCx, at what point does the maintenance practice side of strategic energy management become a RCx project? Again, this is a gray area. But one common way of distinguishing the two is to think of SEM as part of normal maintenance, implemented by facilities personnel or during regular tune ups from vendor representatives. RCx, on the other hand, is a larger, often building-wide effort aimed at returning building performance to design levels or improving performance with new programming and limited equipment upgrades.

Cleaning and calibrating dampers can easily be a SEM maintenance effort that could earn you incentives from a utility SEM program. But that same cleaning and calibration effort could, if combined with a larger tune-up project, be considered a piece of a RCx project.

But what about that staged approach to improving building energy performance to which RCx can also refer? If you’re interested in learning more about the research that has been done into this type of RCx, you can check out the 2005 study, “The Cost-Effectiveness of Commissioning New and Existing Commercial Buildings: Lessons from 224 Buildings,” by Lawrence Berkeley National Laboratory, PECI, and the Energy Systems Laboratory at Texas A&M University.

Closing Remarks

If you have made it this far, you are certainly on the right track whether you think RCx, SEM, or capital projects will be the best first step for your building in your energy efficiency journey.

Interested in learning more? Contact us at to start mapping out your energy efficiency goals.


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