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How an Agreement to Rate can close the energy performance gap

News | 08 Nov 2023

NABERS has introduced the Agreement to Rate process to help planners and policymakers close the gap between energy efficient building design and actual energy performance.

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    Buildings are responsible for around a quarter of Australia’s emissions. Local and state governments have set net-zero targets, but these targets are at risk because of the building energy performance gap.


    In simple terms, the energy performance gap is the difference between predicted energy use and energy consumption in operation. This gap varies from building to building – but in some cases it can be very large.


    In 2019, the International Partnership for Energy Efficiency Cooperation found the energy performance gap was a “systemic problem” around the world, and that some buildings consume 250% more energy than predicted. On average, buildings use 25% more energy in operation than what is modelled during the design process, the IPEEC found.


    Zoom into Australia and, while data is scarce, we have one important piece of research that sheds light on the energy performance gap and how to manage it.


    In 2019, the Green Building Council of Australia (GBCA) assessed 176 offices with base building NABERS Energy ratings and Green Star ratings. The GBCA’s report, Closing the performance gap in Australia’s commercial office sector, found that 67% of those offices achieved their NABERS Energy predicted rating. An additional 21% were within 0.5 stars.


    The report also found that the performance gap in high performance offices is closing over time. While 69% of Green Star certified office buildings analysed in 2012 achieved their modelled greenhouse gas performance target or were within 0.5 stars, 88% achieved the same result in 2021.


    The GBCA’s report offered a clear call to action to policy makers and planners. “Australia’s high performance office buildings represents just 14% of the market. To achieve net-zero building at scale, we must transfer the lessons learnt in this segment of the market to mid-tier offices and other sectors.”

    Two tools to turn promise into performance

    There are many reasons why buildings don’t perform to their promise.


    At the design phase, the technology specified may be inefficient or oversized, or the building designed to ideal conditions and everyday performance overestimated. Wrong assumptions may be made in modelling, or the quality assurance process may be flawed.


    During construction, it can come down to incorrect installation of technology or changes to design that compromise energy efficiency. And during operations, performance can be eroded through occupant choices, controls that don't work as expected, or through a lack of fine-tuning during the first few years of operations.


    Two NABERS tools can help to address these challenges and close the performance gap.

    A NABERS Commitment Agreement is a contract signed by a developer or owner that outlines an intention to design, construct and commission a building to achieve a specific NABERS Energy rating.


    NABERS Commitment Agreements are a proven, powerful tool. The GBCA’s Closing the performance gap report found 91% of buildings with Green Star ratings and NABERS Commitment Agreements met or exceeded their NABERS Energy target. What’s more, 98% met their target at peak performance.


    This is, in part, because a NABERS Commitment Agreement requires modelling to assess performance across a range of realistic scenarios, from variations in weather conditions to occupancy. A building must perform at its target NABERS rating across all these scenarios. Once certified, the developer can promote their building is targeting a specific NABERS Energy rating.


    Agreement to Rate is a simple, streamlined alternative to the NABERS Commitment Agreement that has been designed support policies that measure building operations.


    An Agreement to Rate is a contract signed by a developer or owner at the design stage which outlines a commitment to obtain a NABERS rating once a building is operational.


    It can be used alone or alongside a NABERS Commitment Agreement, but unlike a Commitment Agreement, an Agreement to Rate doesn’t require a set target or a performance level to be disclosed. But a specific NABERS rating cannot be marketed during the design phase either.


    An Agreement to Rate can be used for multiple NABERS rating types, including Energy, Water, Indoor Environment, Waste and Embodied Emissions. It is cost-effective, with no requirement for modelling during the design phase. Unlike the NABERS Commitment Agreement process, it doesn’t include a mandatory design-stage independent review, so it works best within a policy framework that has checks and compliance measures.

    Planners and policymakers step up


    The IPEEC’s report includes a range of recommendations for policymakers to close the energy performance gap, but two key potential policy options stand out: more transparent measurement of operational energy performance; and outcome-based regulations.


    We know transparent measurement and disclosure of operational energy consumption drives better performance.


    Australia’s national Commercial Building Disclosure program, which mandates that NABERS Energy ratings of commercial offices more than 1,000 sqm are disclosed at the time of sale or lease, has encouraged developers to consider energy performance at the design phase. NABERS has tracked a 35% reduction in energy intensity, on average, in nine years, which is among the fastest reductions in energy intensity in the world.


    On the other hand, state and local governments are stepping up with “outcome-based regulations”.

    The NSW State Environmental Planning Policy (Sustainable Buildings) 2022 – or the Sustainable Buildings SEPP for short – was introduced on 1 October 2023. This requires operational performance of large commercial buildings to be verified with a NABERS agreement at the development application stage, with energy efficiency reports when the construction certificate is issued, and through NABERS Energy and Water performance ratings within 24 months of an occupation certificate being issued.


    NABERS has developed a fact sheet to help planners and policy makers understand the NSW Sustainable Buildings SEPP and how they can apply its principles to their own jurisdictions.


    Meanwhile, the City of Sydney, as part of its Sydney Local Environment Plan, only grants development consent in the Central Sydney tower cluster area when a developer can demonstrate a commitment to achieve “best practice energy performance”. This can be verified through a Commitment Agreement to achieve a NABERS Energy rating above 5.5 stars.


    By referencing NABERS, these governments have linked design to operational performance. With the new Agreement to Rate process, governments and consenting authorities have new tools to close the energy performance gap and ensure their net-zero targets stay on track.


    Learn more about the Agreement to Rate process. Check out NABERS’ free online courses to find out how planners and policymakers can use NABERS in sustainable building planning to close the performance gap.