Advocates for high-performing, energy efficient buildings understand the hurdles to proving the business case to spur development and investment decisions among commercial real estate owners and investors. Although there is significant evidence that green buildings exhibit increased financial performance via decreased operating expenses and non-energy benefits such as workplace comfort and employee productivity, green building practitioners still face an uphill battle when asked to prove the profits, most frequently pointing to rent premium as an indicator to attract investment. This paper documents a recently conducted literature review commissioned by the US Department of Energy (DOE) of 39 peer-reviewed and published academic papers pertaining to green or energy-related building attributes and financial performance. The review (first published here) indicated that 27 papers found a positive correlation between green building certifications and rents. If this is the case, then why are green building development and energy efficiency retrofits not the norm for the industry? This paper first synthesizes the recent literature review to illustrate that the existing body of empirical evidence supports green building investment. Next, it describes a workshop of leading academics in real estate sustainability and finance who met in late 2017 to discuss gaps in green building research and assess data challenges in their fields. Insights synthesized the workshop were used to drive new DOE led research that can provide value and understanding to investors and builders of high performing buildings. Finally, the paper offers insights into why the market is not properly pricing building efficiency, with factors ranging from improper mitigation of risks associated with energy and lack of transparency and responsibility felt by building end users, and what further steps are needed to transform green building investment practices in the commercial real estate industry.

Energy savings performance contracting (ESPC) enables building owners to implement facility upgrades and reduce energy and water consumption (often with operations and maintenance expenses) using the resulting annual stream of cost savings to cover project installation and financing costs. The size of the international ESPC market is ~$30 billion per year and growing. However, ESPCs still face myriad barriers to achieving their market potential. Barriers include lack of data standardization and transparency, lost data, and inconsistent project performance monitoring. These barriers have limited stakeholders’ ability to understand how projects perform. The inability to document and quantify past projects’ success has led to skepticism, aversion, and unnecessarily high transaction costs. This work discusses a standardized approach to develop and document ESPCs through eProject Builder (ePB), which involves a simple Excel-based set of financial schedules combined with an on-line data archiving and tracking system. ePB enables standardized collection, calculation and reporting of project data in a way that promotes greater transparency of ESPCs to facility owners and other stakeholders. Specifically, the key benefits of ePB are that it (1) minimizes redundancies; (2) eliminates data inconsistencies resulting from multiple data repositories; (3) increases transparency by preserving and providing access to data in perpetuity; (4) enables development of “what if” scenarios; and (5) standardizes data to allow for comparative analysis of ESPC projects. Accordingly, ePB increases confidence in the ESPC vehicle among prospective customers. The paper demonstrates one key aspect of ePB’s value by using it to conduct sensitivity analyses of key factors in hypothetical ESPC projects.