New HVAC regulations have a major impact on asset management


Sustainability regulations for buildings are coming. To see what they might look like, we need look no further than places like NYC, where strict guidelines have already been established and fines are already imposed. The whole of the European Union has also put in place strict regulations which put nearly 25% of its building stock in non-compliance. As regulators across the country and around the world look at both the carrot and the stick to compel buildings to be more sustainable, there are more reasons than ever to stay ahead of the changes ahead.

Given that much of the energy consumed by buildings is used to heat and cool them, it is not surprising that heating, ventilation, air conditioning and refrigeration (HVACR) is at the center of many future regulations. One measure that is used to understand a building’s performance is the Seasonal Energy Efficiency Rating (SEER). It measures the amount of energy that will be used over the course of a year. All new units must meet the minimum efficiency declared by the US Department of Energy’s SEER ratings. “Overall, SEER goes up a point. Ultimately, the impact is much more than a point of efficiency. For most manufacturers, this really requires a redesign, from start to finish, of all your products,” explained Karl Pomeroy, President and CEO of Motilian HVAC technology, products and solutions company.

What does this mean for buildings? According to Pomeroy, “Almost all multifamily buildings in the United States are operating at a level of efficiency that is no longer considered acceptable.”

The most pertinent question for most building owners is: how much is it going to cost? “At first we thought it would be about 30% more, but now we think it will be more than that,” Pomeroy continued. Additional costs can be related to increased revenue, increased shipments, and other key elements throughout the HVACR process.

Another regulatory trend is the treatment of “materials of concern”. Materials of concern are defined as “any waste, substance or material which is classified, regulated, defined or designated under environmental law as radioactive, explosive, highly flammable, hazardous or toxic or as a contaminant or pollutant, or for which liability or standards of conduct may be imposed. Many of us are familiar with them from the California Prop 65 warning labels that frequent many articles and places. “Prop 65 has a list of 5,000 chemicals that could cause cancer or reproductive harm,” said Rusty Tharp, senior director of regulatory and industry affairs at Goodman Manufacturing. He said the warnings have become so ubiquitous that they often don’t mean much anymore, but they’re still an important reason buildings need to be aware of materials of concern.

How can operations, facilities, and procurement teams prepare for change? Even though it may seem like their hands are tied or it’s just too much to think about on top of everything else, it can pay off to start planning today. “The proactive is the new reactive. Where many owners have waited to take a break and then repair or replace, we suggest going past this,” Pomeroy said. “If you know you have units that need to be replaced in the next one to three years, why not replace today’s units at a lower cost?”

Buildings and their bank accounts will fare better if prescriptive action is taken sooner rather than later. “For cost-conscious owners, I would recommend getting your replacements done today. Change everything now and, when you need them later, buy spares,” Tharp said. With the supply chain issues and labor demands, many equipment vendors have experienced multiple price increases as well as implementation delays.

Even without the slowdown in the supply chain, costs increase because, to be more efficient, equipment often becomes more expensive. “In a world where you’ve already seen runaway inflation, the average cost of HVAC is already 20% higher in the north. Now you’re going to introduce new units that will add another 15-20%,” Pomeroy said. “If you’re a multi-family owner with 1,000 units, you could be looking at substantial cost increases.” If items are expensive now, they are likely to become more expensive in the months and years to come. A good way to find out what’s coming is to keep in touch with airline product suppliers and distributors and make sure they keep track of future changes. By having a plan, homeowners can schedule replacement work in the spring or fall when contractors have more availability and are working at a lower rate.

In order to stay ahead of the regulatory curve, property owners and managers must begin by understanding how the building is currently operating, the condition of each mechanical unit, and what will be needed to improve building performance. Owners and operators can benefit from working with those who can provide advisory services for predictive analytics for better budgeting and predicted equipment failures. When it comes to increased regulation of building operation, it seems to be a matter of if, not when. The few places that already have regulations intact might be outliers now, but in a few years the rest of the world could quickly follow them towards a more regulated and hopefully more sustainable built world.

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