Understanding the economics of renovation projects will not only help architects during the design and planning phases, but will also ensure that ventures are completed successfully. Walls & Roofs explores how a building can be renovated keeping cost-effectiveness and energy-efficiency in mind.
Taking on a renovation project can be costly and time-consuming, but it can also increase a commercial building’s economic value and “green” status. New building regulations motivate the construction industry to take the green route. This puts pressure on existing building owners to approach renovation projects from a sustainability point of view.
The true value of renovation investment
A report published by the European Council for an Energy-Efficient Economy (ECEEE) on building renovation costs shows that large renovation opportunities may get lost if the pre-renovation analysis is not conducted correctly. According to the report, How deep to go: remarks on how to find the cost-optimal level for buildings renovation, life-cycle costing based on net present values provide a sound basis for developing a common methodology to calculate the cost-optimal levels of a renovation project.
Andreas Hermelink, author of the paper, states that if building owners want to take sustainability seriously, a building’s heat consumption should be conformed to function on 20 to 40 kWh per square metre after renovations. “This represents savings of between 80% and 90%,” notes Hermelink.
The report details distortions that arise from a number of assumptions and practices which are commonly used to calculate optimal levels of investment in energy-efficiency. “Methods that make investments look better than they should include static calculations and using exponential energy price increases over the time period.”
Hermelink states that one should move away from using payback methods that tend to suggest cheap and short-term investments, while missing the maximum profit level for the investor. He says building owners should also steer clear of using high interest rates instead of real mortgage interest rates, and relying on questionable alternatives when energy-efficiency investments are integrated into improvements that are going to occur anyway. “Using lifetimes that are too short, given the lifetime of the technology deployed, will also distort the true value of such investments,” notes the author.
The report mentions that there are many co-benefits that can make investments beneficial from a societal viewpoint. These include benefits such as reduced energy consumption, lowering a building’s impact on global climate change, higher quality energy services (including health benefits), and lower risk in terms of increased poverty during periods of escalating energy prices. This means that there can be sub-optimal energy and CO2 emissions reductions without cost-optimal investment in technologies.
Uplifting the local economy via renovation projects
According to www.greenbuildingelements.com, with the current struggling international climate, it makes more sense to take a serious look at renovation and repair instead of embarking on new construction projects. “Renovation projects use less material and more labour than new construction,” the website states. “When renovating and repairing an already existing structure, one minimises the environmental impact of a building project.”
Renovation projects have numerous advantages. The website states that labour is boosted to 76% for renovations and repair projects. “Data have been collected to support this, and studies show that repairing existing structures produced 50% more jobs than new construction.” Furthermore, rows of abandoned storefronts lining the streets of a decaying downtown or the boarded-up house on the corner would be the perfect place to start. “If renovating these structures would contribute positively to the local community, dwellings can be reused and retrofitted to have a positive effect on the environment as well. The outward physical improvement would be an obvious plus, but it’s the labour and economic reinvestment that proves even more valuable to the locals.”
The website further cites that in this age of overcrowding and recession, it is crucial to think in terms of reuse and renovation. “Builders and consumers both need to think innovatively, adapting to already existing structures in order to cope with the current economy.” The site states that there will always be a need for new construction, but today’s message is one of balance. “To use what we already have in the best possible way, we must think about renovation and repair.”
Case study: heritage renovations
Renovations for heritage purposes focus on preserving South Africa’s architectural landmarks for posterity. As part of South Africa’s cultural heritage, all buildings over 60 years old are covered by national legislation with regard to building renovations and maintenance. Renovating in heritage areas are often more complex, as there are a range of specific building and renovation guidelines. Woodstock in Cape Town serves as a firm example.
As a designated heritage area, the visual streetscape is seen as a cultural asset and is protected by law. Certain sections of the Upper Woodstock area were declared as an architectural heritage area a number of years ago.
The Aesthetic Advisory Committee, a sub-committee of the Upper Woodstock Residents Association (UWRA), has been set up as a result of the concern of residents that the heritage and architectural character and property value of Upper Woodstock should be maintained.
The advisory committee works with the heritage section of the City of Cape Town’s Planning Department to ensure that building renovations, particularly these to street facades, should be sympathetic to the architectural style and history of the area. According to www.woodstock.org, the committee receives input from the city council regarding controversial building plans submitted and will seek to notify the city council when they are concerned about building works that seem to be proceeding without approved plans or contrary to the style of the area.
Guidelines for building and repairs in the Woodstock/Salt River areas have been developed to help owners to maintain affordable housing, help residents to increase the value of their homes and to maintain the quality of public spaces. The website states that the initiative aims to encourage the protection and sympathetic development of Woodstock and Salt River. Although the guidelines have a heritage slant, they fully recognise that repairs, renovations and new constructions will – and should – occur in the area, but that these should enhance the area’s unique architectural qualities.
An opportunity to go green
The way in which people design, build, renovate and operate buildings has a profound effect on the planet. According to the United Nations Environmental Programme (UNEP), buildings account for more than one third of the total energy usage and its associated greenhouse gas (GHG) emissions – both in developed and developing countries. “At the same time, the building and construction sector has the largest potential for cutting GHG emissions responsible for global warming.”
UNEP states that with proven and commercially available technologies, energy consumption in both new and old buildings can be cut by 30% to 50% without significantly increasing investment costs. “This potential is not being realised due to the fragmented nature of the sector and a lack of climate change policy in many countries, and there is also a lack of awareness of baseline performance requirements.”
According to UNEP, buildings emit large amounts of greenhouse gasses due to energy that is utilised to heat, cool, ventilate and light buildings. The organisation states that 10% to 20% of energy consumed in this sector is used to manufacture materials and to construct and demolish buildings. “Greenhouse gas emissions from buildings worldwide are set to increase sharply over the next two decades, mainly due to construction booms in Asia, the Middle East and Latin America.”
The World Business Council for Sustainable Development’s Energy-Efficiency in Buildings (EEB) project concludes that by cutting energy usage in buildings by about 30%, Europe’s energy consumption would fall by 11%. “The renovation of existing buildings is more mundane and comes with a lot of compromises. But since the world’s building stock is already here and will be used for decades and even centuries to come, the sustainability potential of renovations is tremendous.”
From the energy conservation point of view, renovation of existing building stock represents by far the largest potential in the building sector, notes www.paroc.com. “At the same time, from a technical point of view, it represents the most demanding challenge. It is not feasible to bring the energy-efficiency of an existing building up to date to the level of a passive building. In most cases, it would not make economic sense.”
Instead of renovating an existing building in a single operation, a so-called energy-optimised renovation is recommended. The economics of the process are optimised by looking at the repair of the building as a sequence of component-based projects throughout the life of the building. “Each component should be upgraded or replaced at an optimum point after the service life has come to an end. Each time a component undergoes renovation, the best available technology is used to bring the energy-efficiency to the passive level,” states www.paroc.com.
The energy-efficiency of a building is more than just the sum of its components. Components interact and therefore it is vital to look at the building as a whole. “Old windows equipped with air inlets in the frames are replaced with modern, highly energy-efficient windows that do not have any air inlets. Fresh air is taken in through the heat-recovery unit, and the heating, ventilation and air-conditioning (HVAC) system has to be modified correspondingly. This illustrates that a change of a component might have an impact on another component.”
The website further states that careful planning is necessary in order to avoid mistakes. “Through the years of several component-based renovation schemes, the energy-efficiency of an existing building is upgraded in an economically feasible way to the passive level. At the same time, the lifespan of the building is extended in a sustainable way.”
If one decides to focus only on energy-efficiency, there are cost-effective changes to implement. “These changes should not be a discouragement to living sustainably, but should let consumers know that they can create an energy-efficient building without spending more on all the bells and whistles that go along with it,” states www.studentpulse.com. “By knowing the small ways to improve energy-efficiency in larger-scale renovations and having the knowledge on how to use the environment around you to conserve energy, one can save money and reduce the impact on a building.”
Back to the future
“Green” retrofitting is definitely the way to go to ensure that existing buildings have a lower impact on the environment. David Biello writes in Yale Environment 360 that retrofitting buildings is one of the most cost-effective ways to make major cuts in energy use and greenhouse gas emissions. According to the author, the iconic 102-storey Empire State Building recently underwent a $20-million retrofit, which included everything from cleaning and re-insulating more than 6 000 windows to caulking leaks in the building’s facade. This reduced energy usage by nearly 40%.
Although there is no regulations yet to make sure that these buildings conform to new energy-efficiency standards, it might soon become a reality. The World Economic Forum report, A profitable and resource-efficient future: catalysing retrofit finance and investing in commercial real estate, recommends that government leaders should take practical steps to stimulate investments into energy-efficiency upgrades in existing commercial buildings in order to enable job creation and green growth. One of the key recommendations of the report is a government-mandated, standardised energy consumption reporting and efficiency rating system for buildings. The information generated by such a reporting and rating system can help would-be investors to make better-informed decisions to invest in energy-efficiency projects.
According to estimates, the world population will balloon to 9-billion people by 2050. As a result, more buildings will be built than ever before. Undeniably, it is time to look at sustainable, cost-effective ways to renovate existing buildings. This will ultimately help to mitigate resource scarcity and help to spur economic growth.
- According to The state of the South African construction industry 2nd quarter 2012, non-residential building renovations constitute 28% of private sector construction activity.
- Statistics SA highlights the following renovation plan approval rates on a provincial level for March 2012 MAT Western Cape 27%, Eastern Cape 33,1%, Northern Cape 28,8%, Free State 23,4%, KwaZulu-Natal 40,9%, North West 15,5%, Gauteng 26,1%, Limpopo 17,7% and Mpumalanga 30,2%. The total approval rate is 28%.
– Written by Nichelle Lemmer & Karien Slabbert
Full acknowledgement and thanks are given to UNEP, ECEEE, The state of the South African construction industry 2nd quarter 2012, Yale Environment 360 and the websites www.greenbuildingelements.com, www.paroc.com, www.studentpulse.com, www.weforum.org and www.woodstock.org for the information given to write this article.