How to Evaluate Performance: Asset Rating vs Operational Rating
I’m often asked about the right way to evaluate a building’s performance. This is an important question for those of us in the building energy efficiency space that unfortunately doesn’t fetch a single straightforward answer. This is because a building’s performance is dependent on a wide variety of interrelated factors that I’ll discuss below. I often think about building performance along two axes – Asset Rating vs Operational Rating. They are derived using different methods, answer different questions and provide different insights. But they are complementary and are equally essential!
Asset Rating measures the building’s environmental performance potential based on its location, orientation, structure, construction, systems and building use. As described by the Massachusetts Department of Energy Resources (MA DOER), this metric does not depend on the building’s occupancy, tenant behavior or operating schedule. The UK Chartered Institution of Building Service Engineers defines asset rating as the design rating of a building reflected by the CO2 emissions of a building’s design features on an A to G scale. A number of Asset Rating tools have recently sprung up, such as the US Department of Energy’s Commercial Building Asset Rating, MA DOER and Northeast Energy Efficiency Partnership (NEEP)’s Building Asset Rating and the UK’s Energy Performance Certificate. Asset Rating is also often gauged through proxies such as LEED, Green Globe and other green building certifications that emphasize design performance.
An Asset Rating is evaluated at a single point in time and is a long term metric since its drivers change very infrequently (once in perhaps 10 years when buildings undergo a major retrofit). Hence, an Asset Rating is often used for financial valuations, appraisals and sale or lease transactions since they are more dependent on long term performance of a building than on the current or historical usage of its most recent occupant. Think about it – when buying a home, would you care about how the previous occupant used the building or only that it be energy efficient?
To deduce an Asset Rating, one often needs to construct an energy model that runs a computer simulation on a 3D building information model after taking into consideration the building’s construction, structure, geo-location, building science and weather conditions. One can then assess a building’s potential performance by comparing the Asset Rating to a baseline model and normalizing it to occupancy schedules, equipment loads, construction materials and systems. In addition, an energy model identifies potential energy savings that could be obtained through design changes such as adding insulation, changing windows, or improving daylight controls. Because, an Asset Rating is determined by long-term assumptions, the energy conservation measures (ECMs) recommended by such an evaluation often require capital investment but lead to deeper, long-term energy savings.
On the other hand, a building’s Operational Rating is based on day-to-day operations of the building and measures the operational performance of a building that are affected by the building’s operating schedule, occupant behavior, HVAC system performance and equipment and lighting loads (in the context of the specific building’s geometry, equipment and local climate). The UK Department for Communities and Local Government defines Operational Rating as a numeric indicator of the amount of energy consumed during the occupation of the building over a period of 12 months, based on meter readings. It is also measured by tools such as the US Environmental Protection Agency (EPA)’s Energy STAR, American Society of Heating and Air-Conditioning Engineers (ASHRAE)’s Building Energy Quotient and the UK’s Display Energy Certificates (DEC).
Operational rating compares actual operational energy use of a building with its peer group, across a baseline period. Operational Rating is often measured and analyzed by data from sensors, smart meters and building management systems. It is best used for assessing the impact of operational improvements such as adjusting the economizer controls, changing the set points or the building’s operating schedule. These ECMs are often low-cost “low hanging fruits” that drive lower amount of savings compared to the design changes mentioned above.
The two methods of conducting energy assessments also give rise to two different approaches to Measurement and Verification. The International Performance Measurement and Verification Protocol (IPMVP) classifies the computer simulation approach as Option D and the metered approach as Option C. Both are thought of as “Whole Building” approaches to M&V which have been found to deliver 3X better savings than component or systems based approaches to retrofits (Option A and B)
Here’s a health analogy to drive home the point. Using an Operational Rating is like stepping on a weighing scale regularly and making frequent course correction. An Asset Rating, on the other hand, is like a whole body annual exam that takes into consideration a person’s height, gender, bone density, activity level, diet, race and other unique characteristics
What’s important to realize is that you need both! These complementary metrics will give you a more comprehensive and accurate picture of how to improve your building’s performance than a single measure alone could provide. Further, a comparison of the Asset Rating with the Operational Rating will identify performance gaps that prevent buildings from reaching their true potential, as well as identify high performing buildings and energy hogs in a given portfolio.
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