Building Retrofit Strategies: Medium vs. Deep Renovations Explained

The role of buildings in meeting science-based climate targets is pivotal. Climate change poses a significant threat to both humanity and the environment. With buildings contributing to 37% of global CO2 emissions, their decarbonization becomes essential in achieving these targets.

Moreover, considering that 50% of today's buildings will still be in use by 2050, retrofitting existing structures emerges as the most effective means to accelerate carbon reduction in the building sector. Sustainable renovations not only yield substantial energy savings but also offer considerable return on investment within a short timeframe, alongside attracting tenants, preserving asset value, and mitigating financial risks.
 
Addressing the climate challenge through retrofit initiatives is imperative. We currently face a confluence of short-term energy crises and long-term climate challenges. Energy prices are increasingly volatile, while energy supplies are becoming more uncertain. However, maintaining the current pace of climate action risks failing to limit global temperature rise to 1.5°C. Despite some progress, carbon reduction efforts are not advancing rapidly enough.
 
To adhere to the trajectory necessary for limiting global temperature increases to 1.5°C, emissions must be halved by the end of this decade, with a goal of reaching net-zero emissions by 2050. This necessitates a threefold increase in the pace of action. A key component of this strategy is reducing operational emissions resulting from building energy consumption by 5% annually between now and 2050.
 
Decarbonizing buildings requires a concentrated effort on retrofitting existing structures. Breaking this down, approximately 30% of carbon emissions stem from "embodied carbon," generated during the design and construction phases, while the remaining 70% originate from "operational carbon," resulting from a building's day-to-day operations.
 
Retrofitting holds crucial significance in preserving the value and attractiveness of existing buildings while meeting sustainability benchmarks, enticing tenants, and ensuring their viability in a more environmentally conscious economy. With major corporations aiming for net-zero status, there's an inevitable demand for leased buildings to align with these objectives and demonstrate tangible progress toward achieving them.
 
Considering that 90% of existing buildings failing to decarbonize could become financial liabilities and experience a devaluation in asset worth, potentially up to 30%, it's evident that addressing this issue is imperative for investors and tenants alike.
 
Although each building is unique, opting to retrofit an existing structure rather than constructing a new one can reduce lifetime carbon emissions by half. While new constructions might boast slightly better operational carbon performance, their embodied carbon tends to be significantly higher compared to retrofit buildings, which retain the core and shell.
 
So, where should one commence? To meet emissions targets effectively, the focus should be on implementing measures with a minimal carbon footprint, rapid payback on initial emissions, and low operational impact. These solutions need to be adaptable to diverse building types and climates and swiftly implemented in existing structures.
 
Embracing technology-first retrofits is where Schneider Electric excels in providing pathways to net-zero building solutions. A digital technology-driven approach leveraging modern digital and power management solutions proves to be the quickest to implement, with the lowest upfront carbon emissions and the most favorable returns on investment and lifecycle carbon perspectives.
 
Research conducted by Schneider Electric in collaboration with WSP, a global design and engineering firm, delves into quantifying the emissions impact of various efficiency, electrification, and renewable energy retrofit options for building decarbonization. The analysis involved building performance modeling of a baseline office building constructed to ASHRAE 90.1-2004 standards across different climate zones and grid emissions intensities. For instance, the baseline model in New York City emits 18.7 kg of CO2 per square meter per year in operational carbon emissions, reflecting the reliance on fossil fuels for heating and inefficient operational practices, common among existing buildings.
 
Our approach amalgamated publicly available datasets, proprietary research from Schneider Electric, and a parametric modeling methodology. This allowed us to grasp the trade-offs, advantages, and interactions among various office decarbonization strategies, with a specific focus on solutions outlined in the table below.
 
To assess the carbon emissions associated with each strategy, we employed the EN 15978 framework for comprehensive lifecycle impact assessment, alongside the GWP100 EF6 emissions metric. This enabled us to compare 4,096 permutations of the energy model, incorporating a spectrum of energy conservation measures (ECMs) in different combinations to encompass every conceivable scenario.
 
Crafting a Retrofit Decarbonization Strategy
Schneider Electric offers cutting-edge technologies today to support your journey towards building decarbonization and achieving net-zero status.
 
A pivotal element for swiftly decarbonizing buildings is the evaluation and prioritization of retrofitting endeavors. Through our research, three distinct categories of opportunity emerged: light, medium, and deep renovations. When devising the appropriate retrofit strategy, it's crucial to consider the entire lifespan of the building and portfolio ownership, alongside potential risks related to asset stranding due to local market conditions and other factors beyond ROI and carbon footprint considerations.
 
Let's delve into each category

These initial actions can yield a substantial 45% reduction in operational carbon emissions.

 
The primary benefits stem from automated building controls, particularly optimizing HVAC system controls and implementing sensors to regulate HVAC equipment settings (39.6%). Additional savings from light interventions are achieved through energy consumption monitoring and management to identify wastage (5.3%). Light interventions not only fulfill reporting and compliance requirements but also curb energy usage and carbon emissions. The estimated cost for implementing such renovations typically ranges between 20€ and 35€ per square meter (m2), with an ROI between 1 and 3 years.

Medium Retrofits: Competing in the Market
Medium retrofits represent a more intensive approach that entails greater disruption to operations and higher embodied carbon, yet they yield substantial reductions in operational carbon. These renovations encompass onsite renewable energy solutions, battery energy storage, and microgrids, alongside electrical distribution solutions that enhance efficiency and power quality. When combined with light intervention measures, medium retrofits have the potential to slash operational carbon emissions by up to 85%.
 
Implementing medium renovations involves deploying onsite renewables such as rooftop solar panels (PV) and managing energy generation and storage through microgrids, resulting in a 10.2% annual reduction in operational carbon emissions. In cases where onsite renewable potential is limited to rooftops, additional emissions reductions can be achieved through offsite renewables solutions like Power Purchase Agreements (PPAs) or carbon offsets, if necessary.

These solutions address residual emissions and contribute to a potential annual reduction of 21.4% in operational CO2 emissions. With increased electrified loads and fluctuating loads, measures like power factor correction and harmonic filtering may be necessary, providing an additional 7.5% reduction in operational carbon emissions. The estimated cost of implementing such medium retrofit solutions typically ranges from 115–175 €/m2, with a return on investment spanning 6–10 years.
 
Deep Renovations: Leading the Market
Achieving net-zero carbon emissions ultimately requires deep renovations, involving full electrification and enhancements to the building envelope. These changes are more disruptive, take longer to implement, and often necessitate temporarily relocating tenants. Deep renovations entail upgrades to roof and wall insulation, conversion of windows from single to triple-paned glazing, elevator modernization, and electrification of the building's heating system, thereby further reducing emissions to reach net zero following medium retrofits. The estimated cost for implementing such renovations typically ranges from 500–1,300 €/m2, with a return on investment exceeding 25 years.
 
Discussion with Forbes
During the 2023 Forbes Sustainability Leaders Summit, I had the privilege of conversing with Diane Brady, Assistant Managing Editor at Forbes, to provide insights and discuss our science-based knowledge and technology-first methodology.

Do listen to these brief excerpts from our interview: