Office tenants are likely to see or hear of NABERS Energy ratings when searching for office space. In the Australian commercial office market, landlords are legally required to publish the NABERS Energy Rating of commercial office buildings in accordance with the Building Energy Efficiency Disclosure Act 2010, including amendments made in 2015 and 2017, for all space available to lease greater than 1,000 square metres. This has provided a basis of comparison for prospective tenants to “shop around” for the most efficient building. But what does NABERS Energy actually measure and how do ratings compare to each other? Also, what does NABERS Energy efficiency mean to a tenant?

NABERS Energy was developed by the NSW State Government as the Australia Building Greenhouse Rating (ABGR) scheme in 1998 and is now widely regarded as the basis of cross comparison of energy efficiency across buildings based upon the output of Carbon Dioxide the building produces per annum (kgCO2pa).

Buildings are assessed by NABERS Accredited Assessors by analysis of the amount of energy consumed, who consumed what, and the sources of energy consumed. This can be reported as either:

  1. Base Building
  2. Whole Building (Base Building and Tenancy)
  3. Tenancy Only

Note that most landlords only report the Base Building Energy Efficiency in public advertising as required by the BEED Act referred to earlier. As a result, the efficiency of the Landlord make little difference to the efficiency of the Tenant itself. Further, most leases will incorporate provisions such that the Tenant shall not undertake any activity that will negatively impact the Landlord’s NABERS Energy rating. They are rather protective of this!

It should be noted that the determination of the NABERS Energy rating for a Base Building only requires the following inputs to be recorded by the NABERS Accredited Assessor.

  • Address of Property
  • Postcode – Used to assess the climactic region as a means of balancing the rating nationally.
  • Rated Area – Landlords will seek to maximise this as far as possible, as the NABERS Energy rating is based on Energy Intensity. It is important to ensure that the Base Building rating excludes all areas defined as Net Lettable Area.
  • Rated Hours – Again, the Landlord will seek to reduce this as much as possible to reduce the implication of Energy Intensity. This is usually due to a reduction in Building Hours used to determine ratings.
  • Annual energy consumption – This is based upon recorded consumption as provided by the retail or wholesale energy provider. An accurate assessment of this relies upon segmentation of the “power trees” such that base building equipment or facilities aren’t included in any pro-rating of the energy consumption figures – thereby potentially reducing the overall Energy Intensity applied to the Base Building.

So is NABERS Energy any good for Tenants?

When NABERS Energy Tenancy or Whole Building (combining Tenancy and Base Building) ratings are undertaken, there is an inverse relationship between energy efficiency and energy costs, such that higher NABERS Ratings are a consequence of lower consumption.

The basis for assessment is the same as for Base Building, however an additional assessment is made as to the quantity of computers in operation throughout the tenancy. This is conducted by the NABERS accredited assessor during the review.

The average energy cost per square metre (assuming an average office environment in Perth) after application of the NABERS Energy ratings are as follows:

 

NABERS Energy Rating Consumption per square metre per annum Cost per square metre per annum
6 Stars 50.04kWh $20.20
5 Stars 100.08kWh $39.69
4 Stars 129.62kWh $51.20
3 Stars 159.15kWh $62.71
2 Stars 188.69kWh $74.22
1 Star 218.22kWh $85.72

 

*Based upon a 1,000sqm Rating Area, with 1 computer per 10sqm and greater than 20% occupancy for 9 hours per day. Power costs are Supply and Consumption charges for Synergy Business Plan Fifty (L3) Tariff (1 July 2019).

These estimates are important when assessing any Capital Expenditure undertaking to improve the NABERS Energy Tenancy Rating – a rating that is published and can be used as a basis for promoting Corporate Social Responsibility and Sustainability (once a formal Accreditation has been attained).

An improvement of 1 Star (Below Average) to 4 Stars (Best Practice), the Capital Expenditure Breakeven (assuming a five-year term and in nominal (undiscounted) terms) would be around $172.60 per square metre for any sustainability exercise. During initial office fitouts, much of this would be selection of highly efficient lighting fixtures (such as LED) and judicious planning of mechanical air conditioning systems.

Factorre includes these costs and opportunities for improvement during the Assess phase of any engagement, including alignment with overall corporate objectives highlighted in the initial Plan phase.