Energy efficiency in commercial buildings is a shared responsibility—but not every organization faces the same challenges. This blog is specifically for situations where building management involves owners, tenants, and facility managers from different companies or entities.
For these businesses, the Triangle of Death emerges: misaligned incentives block energy savings, increase costs, and slow down net-zero progress. This article outlines how to break the cycle, align interests, and turn energy efficiency into a win-win-win for all stakeholders.
👉 If you're an Energy Manager at a company that owns and operates its own buildings, this blog might not be the best fit for you. But don’t worry—we’ve got other insightful reads tailored just for you!
The Problem: Misaligned Incentives
Commercial buildings are a unique ecosystem where owners, tenants, and facility managers often pull in different directions:
- Owners need to invest in energy efficiency but don't directly reap energy savings.
- Tenants want lower energy bills but lack the control to drive improvements.
- Facility Managers get squeezed on price and often aren't rewarded for saving energy.
This misalignment creates the dreaded "Triangle of Death": a loop of inaction, wasted energy, and missed net-zero targets. The result? Higher costs, frustrated stakeholders, and stalled sustainability efforts.
The Opportunity: Everyone Gains
What if we could break this cycle and ensure that everyone benefits? Here's how each stakeholder stands to win:
For Owners:
- Cut Scope 3 Emissions: Tenant energy usage directly contributes to your carbon footprint. Improving efficiency helps you reduce emissions at scale.
- Command a Green Premium: Efficient buildings can justify higher rents and avoid "brown discounts" (lower valuations for inefficient buildings). Real efficiency performance attracts tenants and stabilizes portfolios.
- Upsell Services: Offer energy-savvy facility management as a premium service that sets your properties apart.
For Facility Managers:
- Differentiate on More Than Price: Shift from cost-cutting to performance-based contracts that reward tangible efficiency improvements.
- Prove Your Worth with Data: Use objective, data-driven metrics to showcase how your expertise drives savings and value.
The solution is simple: align incentives so every party shares in the success of energy efficiency.
For Tenants:
- Lower Your Bills: Energy efficiency translates directly into reduced monthly costs.
- Report Fewer Emissions: Efficiency upgrades help tenants reduce Scope 1 and 2 emissions with real, measurable gains.
The Framework: Aligning Interests
The key to breaking the cycle lies in aligning interests with clear frameworks and tools:
1. Performance-Based Contracts
Incentivise results by tying contracts to specific energy Key Performance Indicators (KPIs). When energy savings improve, everyone wins.Where a full EPC-contract (Energy Perfromance Contract) can be ideal to go all the way.Often a variable component, based on these KPIs, to your facility maintenance contracts can suffice to yield great results.
2. Objective Measurement & Verification (M&V)
Robust, automated methods (like IPMVP® standards) ensure fair and accurate measurement. This accounts for variables such as:
- Weather conditions
- Occupancy changes
- Operational adjustments
Make sure model uncertainty levels stay well below 5%, ideally 2-3%, so you can trust the numbers and eliminate disputes
3. Fair Accountability
Smart tools detect non-routine events to avoid unfair penalties. For example:
- Tenants cranking up the heat unexpectedly
- Owners altering building usage
Fair accountability ensures everyone works together toward shared goals.
Solutions from Every Angle
Breaking the stalemate means each stakeholder must act. Here's what that looks like:
For Owners:
- Integrate performance-based facility management.
- Prove real efficiency gains with transparent data.
- Stabilize asset value and future-proof your portfolio.
For Tenants:
- Recognize that paying slightly more for performance-based contracts can result in massive net savings.
- Demand transparent, objective performance data to track progress.
For Facility Managers:
- Add performance clauses to contracts or integrate lighter Energy Performance Contract (EPC) elements.
- Use AI-driven analytics to uncover easy energy savings, demonstrate wins, and position yourself as indispensable.
Pitfalls to Avoid
Even with the best intentions, energy initiatives can falter if stakeholders fall into these common traps:
- Greenwashing: Cosmetic upgrades or low-impact solutions won't withstand regulations or tenant scrutiny.
- Unrealistic Targets: Avoid vague goals. Use data-driven KPIs that build trust and set achievable, measurable milestones.
The solution is clarity and precision: robust KPIs, transparent measurement, and aligned incentives.
Secondary benefits
Energy efficiency isn't just about cutting costs or emissions—it delivers additional value:
- Less Hardware, More Insight: Advanced analytics can reduce the need for costly submetering, helping you meet regulations more affordably.
- Stronger Relationships: Transparency builds trust and strengthens partnerships between owners, tenants, and facility managers.
The result? A more collaborative, efficient, and profitable building ecosystem.
Conclusion: Objective Clarity is Key
The days of misaligned incentives and wasted energy are over. By aligning interests with performance-based contracts, transparent measurement, and AI-driven insights, you can transform the “Triangle of Death” into a win-win-win.
Not sure where to start?
At Enersee.ai, we simplify energy efficiency. Our AI-powered platform uncovers hidden opportunities to optimize your buildings and assets, while our Customer Success team ensures a smooth and impactful journey. Here’s how we help:
- Expert Guidance: Quick setup, seamless integration, and ongoing support.
- Tailored Insights: Clear KPIs and actionable data to maximize ROI.
- Precision Results: Reduce costs, cut emissions, and boost performance—effortlessly.
Together, we’ll make energy efficiency simple, measurable, and impactful.
Written by
Joachim
and
