Association for Public Policy Analysis & Management

Commercial buildings are responsible for 36% of total electricity consumption in the United States. Two popular voluntary green building certification systems encourage the investment and development of energy-efficient and sustainable buildings through rating systems: Energy Star and Leadership in Energy and Environmental Design (LEED). There have been debates about whether these green-certified commercial buildings actually save energy, and thus cast doubt on their energy sustainability.

The contribution of this study is threefold. First, because the study is based on a much larger and longer-term longitudinal dataset than existing relevant studies on commercial building energy, this is the first statistically reliable empirical evidence of the actual energy consumption of green-certified commercial buildings. Second, data availability allows for more comprehensive and rigorous statistical and econometric analysis. This study controls for confounding factors through matching methods (Euclidian-type distance and propensity score matching) and panel regressions with a rich set of fixed effects. Third, this is the first study that investigates the amount of energy savings by time of day (and thus the impact on electric load profile) for green-certified commercial buildings using account-level 15-min interval high frequency electricity demand data, provided by a major Arizona electric utility company.

Results show that retrofitted LEED commercial buildings do not help occupants save energy, while occupants in Energy Star commercial buildings enjoy an 8% energy savings. In terms of impact on electric load profile, our estimated savings by hour of day suggests that the majority of energy savings happen during electric load system peak hours from 11am to 7pm, implying that in addition to overall energy and carbon reduction, Energy Star commercial buildings are important for peak power grid load reduction, benefiting not only the consumers but also the electric utilities. Estimating energy savings by hour of day can help evaluate the environmental benefit more accurately. Marginal emissions factors of electricity systems differ by season and time of day. We conduct a simple simulation analysis of the carbon emissions impact using the marginal carbon emissions factors by hour of day for North American Electric Reliability Corporation (NREC) regions. Our simulation analysis suggests that ignoring the timing of savings can over-estimate the carbon emissions reduction benefit of green-certified commercial buildings in Arizona by 24%.

Our results should be valuable to policy makers. First, policy makers should be advised to examine the underlying methodology of empirical evaluation of energy savings of energy efficiency investments and choose the estimates that are based on the most reliable empirical methods. Second, given that the most savings happen during load peak hours, green-certified commercial buildings can also help utilities flatten their load curve. Utilities should be informed of this because it can help utilities better evaluate the cost and benefit of potential utility-level incentives for commercial buildings to obtain green certificates. Third, when evaluating the environmental benefit of energy efficiency, policy makers should be aware of the potential bias generated by evaluation methods that ignore the intra-day timing of energy savings.