Energy managers are uniquely positioned to connect building performance and operational risk with capital planning decisions. When called upon to recommend a whole building retrofit or more incremental performance improvements, energy managers find themselves balancing both short and long-term impacts associated with aging buildings.
These include variables like rising utility costs and regulatory or reporting and disclosure requirements and, increasingly additional considerations like building electrification, grid constraints, climate risk, performance standards, and the pressure to maintain insurability. As these inputs into the retrofit decision-making process converge, it is becoming increasingly clear that whole building retrofits make good business sense.
Early retrofit action reduces risk exposure
Retrofits can be both costly and complex. As a result, delaying, deferring or making smaller, fragmented upgrades is often framed as a conservative choice when compared to deeper retrofit activity.
While avoiding capital spending and waiting for clearer policy signals or deeper incentive offerings may have been the safer option in the past, this logic no longer holds true: the Pembina Institute’s research and convening platform, the Reframed Initiative, shows early and deeper retrofit action is increasingly needed to mitigate risk and capture an array of non-energy benefits.
Through the design and retrofit of six multi-unit residential buildings in Metro Vancouver, the Reframed Initiative has shown firsthand the impact more frequent and severe climate events are having on existing buildings and occupants. Whether it be the ability to withstand extreme weather events like wind, hail, and extreme temperatures, or in protecting occupants during those events, buildings are expected to take on new roles beyond providing basic shelter.
These events are also driving rising insurance rates and premiums at the same time owners are faced with increasing energy and operational costs. This means the time to retrofit is now.
Early retrofit action can also help avoid the compounding costs of poor performance and reduce the risk of increased exposure to outages, equipment stress, tenant complaints, and the potential for stranded assets that may not align with future standards.
In this context, retrofit activity is increasingly about risk avoidance. The most expensive projects that many organizations will face are not well-planned and coordinated deep retrofits, but rather rushed and reactive upgrades forced by regulatory requirements or premature equipment failures.
Retrofits as risk-reduction
As data from the Reframed Initiative has shown, a shift away from business-as-usual upgrades to deep retrofits is underway. This is largely due to the range of benefits retrofits can bring, from reducing emissions and energy waste, improving health and safety, and increasing occupant resilience.
Building on these benefits, demand-side management (DSM) tools like smart technologies, load management, efficient equipment, and renewables and storage can also help building owners lower upfront costs and reduce financial risk, as well as reduce energy purchases and peak demand charges and while creating new opportunities for revenue generation.
Alongside this shift, the benefits of building electrification are also gaining ground. Individually or combined, grid-interactive buildings, on-site renewables, thermal or battery storage, and smart load shifting are increasingly recognized as an effective approach to reduce peak electricity demand while lowering operating costs. For owners and operators, this translates to additional savings that can offset retrofit capital costs and support tenant retention.
Realizing these benefits demands an integrated approach that reframes retrofit activity as the enabler of electrification, rather than a competing priority. Building retrofits that position electrification as a primary goal and as part of an integrated retrofit are better positioned to avoid unnecessary electrical upgrades, maintain occupant comfort during grid stress or outages, and prepare to meet future performance requirements.
Making the case with non-energy benefits
When faced with the decision to recommend a deeper retrofit or not, energy managers often struggle to advance projects based on energy savings alone. That challenge, however, becomes easier when the value of retrofits is considered across a wider area of business priorities.
Well-designed retrofits deliver a range of benefits, including:
- Reduced exposure of building components to extreme temperatures and moisture damage.
- Fewer operational disruptions during extreme weather or grid disruptions.
- Fewer tenant complaints and less risk of reputational damage.
- Better management of deferred maintenance backlogs.
For decision-makers, these non-energy benefits broaden the justification for retrofit activity and create new ways to reduce risk and the costs associated with those risks, while also contributing to increased operating income. For energy managers, this refined business case creates opportunities to build support across finance, risk, operations, and asset management teams.
Broader benefits, and the resulting base of support those benefits create, drives increased coordination across retrofit projects, and is essential to overcoming persistent challenges related to constrained capital and project complexities.
Based on a broader interpretation of the business case for retrofits, energy managers can position retrofits as long-term asset renewal and work to integrate energy generation, storage, and mobility services seamlessly and cost effectively within broader retrofit projects. In doing so, payback periods are shortened, and long-term capital planning is improved.
The resulting lower operational costs serve to free up resources that can be redirected to deferred maintenance issues, making buildings more affordable to operate over time.
Energy managers play a pivotal role in building internal capability, data, and trust that retrofits deliver benefits and value beyond energy and emissions reductions. Increased focus on a long-term plan and a highly integrated approach can be used both in retrofits conducted all at once or in phases over time. This means retrofits can be delivered more effectively both in cost and complexity. For example:
- Building envelope assessments can be aligned with major upgrades and long-term capital planning.
- Less invasive tools like controls and load management can be implemented quickly and deliver immediate value.
- Major equipment replacements, such as heating systems, can be aligned with the equipment’s end of useful life and future electrification plans.
- Organizations can build capacity and institutional capacity through an incremental and phased approach across their portfolio.
The increased durability of occupant-centred retrofits
One of the most encouraging shifts noted in the Reframed Initiative is the growing focus on tenant and occupant outcomes. In this frame, comfort, daylighting, indoor air quality, and thermal stability are valued outcomes.
These factors help drive retrofit activity, particularly in multi-unit residential buildings, as it becomes increasingly clear that buildings that perform well for occupants are easier to operate, garner broader support, and more likely to deliver savings over time. The occupant experience is essential to scaling retrofit activity, as improving how occupants interact with the building leads to greater project credibility, and increased external support.
By incorporating occupant considerations from the outset, energy managers help accelerate retrofit activity across their organization’s portfolio by taking a deliberative and holistic approach. In practical terms, this means:
- Embedding retrofit readiness into asset management plans.
- Using envelope and systems assessments to inform sequencing.
- Piloting DSM and controls upgrades as near-term wins.
- Framing retrofits as risk‑reduction measures in leadership discussions.
- Leveraging case studies to show local, real-world feasibility.
Energy managers as retrofit champions
When the benefits of retrofits like enhanced resilience, occupant comfort, or opportunities for grid interactivity are value-stacked the financial case for retrofits becomes stronger and more actionable. Deliberative and integrated whole building retrofits are increasingly the best way to protect buildings, occupants, and business operations in an uncertain future. By recognizing the value of these retrofit outcomes, energy managers can ensure their organizations maximize operational savings and avoid undue risk.
