Experts say 2021 could be a pivotal year for EV adoption thanks to greater selection of EV offerings, rising consumer interest NEWS PROVIDED BY EDMONDS View the original article here
SANTA MONICA, Calif., Feb. 2, 2021 /PRNewswire/ — Electric vehicle sales are poised to hit their highest level on record in 2021, according to the car shopping experts at Edmunds. Edmunds data shows that EV sales made up 1.9% of retail sales in the United States in 2020; Edmunds analysts expect this number to grow to 2.5% this year.
“After years of speculation and empty promises, 2021 is actually shaping up to be a pivotal year for growth in the EV sector,” said Jessica Caldwell, Edmunds’ executive director of insights. “We’re not only about to see a massive leap in the number of EVs available in the market; we’re also going to see a more diverse lineup of electric vehicles that better reflect current consumer preferences. And given that the new presidential administration has pledged its support for electrification, the U.S. is likely to see incentive programs targeted at fostering the growth of this technology further.”
“2021 is actually shaping up to be a pivotal year for growth in the EV sector” – Jessica Caldwell, analyst, Edmunds
Edmunds analysts anticipate that 30 EVs from 21 brands will become available for sale this year, compared to 17 vehicles from 12 brands in 2020. Notably, this will be the first year that these offerings represent all three major vehicle categories: Consumers will have the choice among 11 cars, 13 SUVs and six trucks in 2021, whereas only 10 cars and seven SUVs were available last year. For the full list of EVs expected to come to market in 2021, please see the table below.
This diverse spread of EV offerings should help encourage stronger loyalty among EV owners, which has dwindled over the years as shoppers have gravitated toward larger vehicles. According to Edmunds data, 71% of EV owners who didn’t buy another EV traded in their vehicle for a truck or SUV in 2020, compared to 60% in 2019 and 34% in 2015.
“Americans have a love affair with trucks and SUVs, to the detriment of EVs, which have until recently been mostly passenger cars,” said Caldwell. “Automakers should have a much better shot of recapturing some of the EV buyers who they’ve lost now that they can offer larger, more utilitarian electric vehicles.”
Edmunds analysts note that this infusion of fresh new products comes at a time where the market is also seeing a positive shift in consumer interest in EVs. According to Google Trends data, consumer searches for electric trucks and SUVs have recently hit a high point after trending upward for years.
“Besides affordability, one of the biggest barriers to increased EV sales has simply been tepid consumer reception — it’s been tough for companies that aren’t Tesla to crack the code of how to get shoppers hyped up for these vehicles,” said Caldwell. “But in the past year we’ve seen automakers throw huge advertising dollars behind their EV launches in an attempt to drum up some buzz, and it’s promising that consumers seem to at least be more aware of the options out there.”
As more consumers look to EVs as a possibility for their next car purchase, Edmunds experts emphasize that shoppers should take extra time to consider their alternatives and do their research.
“Buying an EV is an entirely different beast than a traditional car purchase, so extra research and diligence are key,” said Ivan Drury, Edmunds’ senior manager of insights. “Range and weather conditions play a huge factor in determining whether certain EVs make sense for your everyday needs, and whether you own a home with a garage or rent an apartment could affect your charging situation. Federal and state tax incentives are at play with these purchases. And with a number of manufacturers following Tesla’s direct sale model, there might not be opportunities to take a test drive, or even to trade in your current vehicle, like you would at a traditional dealership.”
To help consumers, the Edmunds experts have put together a comprehensive analysis of the true cost of powering an EV, and they also maintain an authoritative EV rankings page that highlights the best electric vehicles currently in production.
Electric Vehicles Expected to be Available for Sale in 2021
Looking at the whole life cycle of EVs, the verdict is clear.
Looking at the whole life cycle of EVs, the verdict is clear. Written By: David M. Kuchta View the original article here.
Are electric vehicles truly better than gas cars for the environment? Not in all facets or in all regions of the world, but overall, unquestionably, yes—and as time goes on, only more so.
While much clickbait has been written questioning the environmental superiority of EVs, the cumulative science confirms that in almost every part of the world, driving an EV produces fewer greenhouse gas emissions and other pollutants than a gas-powered car. The internal combustion engine is a mature technology that has seen only incremental changes for the past half-century. By contrast, electric vehicles are still an emerging technology witnessing continual improvements in efficiency and sustainability, while dramatic changes in how the world produces electricity will only make electric vehicles cleaner.
“We still have a long way to go, and we don’t have the luxury of waiting,” said David Reichmuth of the Union of Concern Scientists in a recent interview with Treehugger.1
The transportation sector generates 24% around the world and 29% of total greenhouse gases (GHG) emissions in the United States—the largest single contributor in the U.S.2 According to the EPA, the typical passenger vehicle emits about 4.6 metric tons of carbon dioxide per year at an average of 404 grams per mile.3 Beyond carbon emissions, road traffic from gas-powered vehicles generates fine particulate matter, volatile organic compounds, carbon monoxide, nitrogen oxides, and sulfur oxides, the adverse health effects of which—from asthma and heart disease to cancer and pregnancy disorders—have been well demonstrated and disproportionately impact low-income communities and communities of color.4 EVs can’t solve all those problems, but they can make our world a more livable place.
The key to comparing gas-powered vehicles with electric ones is life-cycle analysis, which accounts for the entire environmental impact of vehicles from the extraction of raw materials to the manufacturing of vehicles, the actual driving, the consumption of fuel, and their end-of-life disposal.
The most significant areas of difference are in the upstream processes (raw materials and manufacturing), during driving, and in fuel sources. Gas-powered vehicles are currently superior when it comes to resources and manufacturing. EVs are superior when it comes to driving, while the issue of fuel consumption depends on the source of the electricity that fuels EVs. Where the electricity supply is relatively clean, EVs provide a major benefit over gas-powered cars. Where the electricity is predominantly coal—the dirtiest of the fossil fuels—gas-powered cars are less polluting than electric vehicles.
But coal is less of a major source of electricity around the world, and the future favors EVs fueled by clean energy. In two comprehensive life-cycle studies published in 2020, the environmental superiority of gas-powered vehicles applied to no more than 5% of the world’s transport.5 In all other cases, the negative impacts of upstream processes and energy production were outweighed by the benefits of a lifetime of emissions-free driving.
In the United States, given the decreasing reliance on coal in the electricity grid, “driving the average EV is responsible for fewer global warming emissions than the average new gasoline car everywhere in the US,” according to Reichmuth’s recent life-cycle analysis for the Union of Concerned Scientists.
As Nikolas Hill, co-author of a major 2020 study for the European Commission, told the podcast How to Save a Planet: “It’s very clear from our findings, and actually a range of other studies in this area, electric vehicles, be they fully electric vehicles, petrol-electric, plug-in hybrids, fuel cell vehicles, are unquestionably better for our climate than conventional cars. There should be absolutely no doubt about that, looking from a full life-cycle analysis.”
Raw Materials and Manufacturing
Currently, creating an EV has a more negative environmental impact than producing a gas-powered vehicle. This is, in large part, a result of battery manufacturing, which requires the mining, transportation, and processing of raw materials, often extracted in unsustainable and polluting ways.6 Battery manufacturing also requires high energy intensity, which can lead to increased GHG emissions.7
In China, for example, the raw materials and manufacturing process of a single gasoline car produces 10.5 tonnes of carbon dioxide, while it takes 13 tonnes of CO2 to produce an electric vehicle.8 Equally, a recent Vancouver study of comparable electric and gas-powered cars found that the manufacture of an electric vehicle uses nearly twice as much energy as manufacturing a gas-powered vehicle.9
But the differences in manufacturing, including raw materials extraction, need to be placed in the context of the entire life cycle of the vehicles. The majority of a gas vehicle’s emissions come not in the manufacturing process but in the cumulative time the vehicle is on the road. By comparison, raw materials and manufacturing play a larger role in the total life-cycle emissions of electric vehicles.10
On average, roughly one-third of total emissions for EVs come from the production process, three times that of a gas vehicle.11 However, in countries like France, which rely on low-carbon energy sources for their electricity production, the manufacturing process can constitute 75% to nearly 100% of a vehicle’s life-cycle GHG emissions.12 Once the vehicle is produced, in many countries emissions drop precipitously.
So while EV manufacturing produces higher emissions than the production of a gas-powered car does, a lifetime of low- to zero-emissions driving leads EVs to have greater environmental benefits. While, as we saw, manufacturing emissions are higher in China for EVs than for gas-powered cars, over the lifetime of the vehicles, EV emissions in China are 18% lower than fossil-fueled cars.13 Likewise, the Vancouver study cited above found that over their lifetimes, electric vehicles emit roughly half the greenhouse gases of comparable gasoline cars.14 And the benefits of EV driving come quickly after manufacturing: according to one study, “an electric vehicle’s higher emissions during the manufacturing stage are paid off after only two years.”15
The longer an EV is on the road, the less its manufacturing impact makes a difference. Driving conditions and driving behavior, however, do play a role in vehicle emissions. Auxiliary energy consumption (that is, energy not used to propel the car forward or backward, such as heating and cooling) contributes roughly one-third of vehicle emissions in any type of vehicle.16 Heating in a gas-powered car is provided by waste engine heat, while cabin heat in an EV needs to be generated using energy from the battery, increasing its environmental impact.17
Driving behavior and patterns, though less quantifiable, also matter. For example, EVs are far more efficient than gas-powered vehicles in city traffic, where an internal combustion engine continues to burn fuel while idling, while in the same situation the electric motor truly is idle. This is why EPA mileage estimates are higher for EVs in city driving than on highways, while the reverse is true for gasoline cars. More research needs to be done beyond specific case studies on the different driving behavior and patterns between drivers of EVs compared to gas-powered vehicles.18
While most studies of the benefits of electric vehicles are understandably related to greenhouse gas emissions, the wider environmental impacts of non-exhaust emissions due to traffic are also a consideration in the life-cycle analysis.
The negative health consequences of particulate matter (PM) from road traffic are well-documented.19 Road traffic generates PM from resuspension of road dust back into the air, and from the wear-and-tear of tires and brake pads, with resuspension representing some 60% of all non-exhaust emissions.20 Due to the weight of the battery, electric vehicles are on average 17% to 24% heavier than comparable gas-powered ones, leading to higher particulate matter emissions from re-suspension and tire wear.21
Braking comparisons, however, favor EVs. Fine particles from braking are the source of approximately 20% of traffic-related PM 2.5 pollution.22 Gas-powered vehicles rely on the friction from disc brakes for deceleration and stopping, while regenerative braking allows EV drivers to use the kinetic force of the motor to slow the vehicle down. By reducing the use of disc brakes, particularly in stop-and-go traffic, regenerative braking can reduce brake wear by 50% and 95% (depending on the study) compared to gas-powered vehicles.23 Overall, studies show that the comparatively greater non-exhaust emissions from EVs due to weight are roughly equal to the comparatively lower particulate emissions from regenerative braking.24
Beyond manufacturing, differences in fuel and its consumption are “one of the main drivers for life-cycle environmental impacts of EVs.”25 Some of that impact is determined by the fuel efficiency of the vehicle itself. An electric vehicle on average converts 77% of the electricity stored in its battery toward moving the car forward, while a gas-powered car converts from 12% to 30% of the energy stored in gasoline; much of the rest is wasted as heat.26
The efficiency of a battery in storing and discharging energy is also a factor. Both gas-powered cars and EVs lose fuel efficiency as they age. For gasoline cars, this means they burn more gasoline and emit more pollutants the longer they are on the road. An EV loses fuel efficiency when its battery becomes less efficient in the charging and discharging of energy, and thus uses more electricity. While a battery’s charge-discharge efficiency is 98% when new, it can drop to 80% efficiency in five to ten years, depending on environmental and driving conditions.27
Overall, however, the fuel efficiency of a gas-powered engine decreases more quickly than the efficiency of an electric motor, so the gap in fuel efficiency between EVs and gas-powered cars increases over time. A Consumer Reports study found that an owner of a five- to seven-year-old EV saves two to three times more in fuel costs than the owner of a new EV saves compared to similar gas-powered vehicles.28
Cleaning the Electricity Grid
Yet the extent of the benefits of an electric vehicle depends on factors beyond the vehicle’s control: the energy source of the electricity that fuels it. Because EVs run on standard grid electricity, their emissions level depends on how clean the electricity is going into their batteries. As the electricity grid gets cleaner, the cleanliness gap between EVs and ICE vehicles will grow only wider.
In China, for example, due to a large reduction of greenhouse gas emissions in the electricity sector, electric vehicles were projected to improve from 18% fewer GHG emissions than gasoline cars in 2015 to 36% fewer in 2020.13 In the United States, annual greenhouse gas emissions from an electric vehicle can range from 8.5 kg in Vermont and 2570.9 kg in Indiana, depending on the sources of electricity on the grid.29 The cleaner the grid, the cleaner the car.
On grids supplied exclusively by coal, electric vehicles can produce more GHG than gas-powered vehicles.30 A 2017 comparison of EVs and ICE vehicles in Denmark found BEVs “were not found to be effective in reducing environmental impacts,” in part because the Danish electricity grid consumes a large share of coal.31 By contrast, in Belgium, where a large share of the electricity mix comes from nuclear energy, EVs have lower life-cycle emissions than gas or diesel cars.32 In Europe as a whole, while the average EV “produces 50% less life-cycle greenhouse gases over the first 150,000 kilometers of driving,” that number can vary from 28% to 72%, depending on local electricity production.15
There can also be a trade-off between addressing climate change and addressing local air pollution. In parts of Pennsylvania where the electricity is supplied by a high share of coal-fired plants, electric vehicles may increase local air pollution even while they lower greenhouse gas emissions.33 While electric vehicles provide the highest co-benefits for combating both air pollution and climate change across the United States, in specific regions plug-in hybrid vehicles provide greater benefits than both gas-powered and electric vehicles.34
How Clean Is Your Grid?
The U.S. Department of Energy’s Beyond Tailpipe Emissions Calculator allows users to calculate the greenhouse emissions of an electric or hybrid vehicle based on the energy mix of the electricity grid in their area.
If EV drivers currently have little control over the energy mix of their electricity grid, their charging behavior does influence the environmental impact of their vehicles, especially in places where the fuel mix of electricity generation changes throughout the course of the day.35
Portugal, for example, has a high share (55%) of renewable power during peak hours, but increases its reliance on coal (up to 84%) during off-peak hours, when most EV owners charge their vehicles, resulting in higher greenhouse gas emissions.”36 In countries with a higher reliance on solar energy, such as Germany, midday charging has the greatest environmental benefit, whereas charging during hours of peak electricity demand (usually in the early evening) draws energy from a grid that relies more heavily on fossil fuels.30
Modifying EV charging behavior means “we can use EVs to benefit the grid,” as David Reichmuth told Treehugger. “EVs can be part of a smarter grid,” where EV owners can work with utilities so that their vehicles are charged when demand on the grid is low and the sources of electricity are clean. With pilot programs already underway, he said, “we’ll soon see the flexibility inherent in EV charging being used to enable a cleaner grid.”
In the build-out of electric vehicle charging stations, the success of efforts to increase the environmental benefit of EVs will also rely on charging stations that use clean or low-carbon energy sources. High-speed DC charging can put demands on the electricity grid, especially during hours of peak electricity demand. This can require utilities to rely more heavily on natural gas “peaker” plants.
Reichmuth noted that many charging stations with DC Fast Charging are installing battery storage to cut their utility costs and also reduce reliance on high-carbon power plants. Charging their batteries with solar-generated electricity and discharging them during peak demand hours allows charging stations to support EV adoption at the same time that they promote solar energy even when the sun isn’t shining.37
End of Life
What happens to electric vehicles when they’ve reached their end of life? As with gas-powered vehicles, scrap yards can recycle or re-sell the metals, electronic waste, tires, and other elements of an electric vehicle. The main difference, of course, is the battery. In gas-powered vehicles, over 98% of the materials by mass in lead-acid batteries are successfully recycled.38 EV battery recycling is still in its infancy since most electric vehicles have only been on the road for fewer than five years. When those vehicles do reach their end of life, there could be some 200,00 metric tons of lithium-ion batteries that need to be disposed. A successful battery recycling program needs to be developed to avoid decreasing the relative benefits of EVs.39
It Only Gets Better
Periods in the life cycle of an electric vehicle can be more environmentally harmful than in similar periods of a gas-powered car, and in areas where the electricity supply is dominated by coal, EVs produce more air pollution and greenhouse gases than gas-powered cars. But those areas are far outweighed by the overall benefits of EV—and the benefits can only improve as EV manufacturing evolves and as electricity grids get cleaner.
Were half of the cars on the road electric, global carbon emissions could be reduced by as much as 1.5 gigatons—equivalent to the current admissions of Russia.40 By 2050, electrification of the transport sector can reduce carbon dioxide emissions by 93%, nitrogen oxide emissions by 96%, and sulfur oxide emissions by 99%, compared to 2020 levels, and lead to the prevention of 90,000 premature deaths.41
The electric vehicle industry is young, yet it is already producing cars that are environmentally more beneficial than their gas-powered equivalents. As the industry matures, those benefits can only increase.
Organizations have had to do without the office during lockdown. Will they ever go back? View the original article here
COVID-19 has focused minds on exactly what the office is for and how central a role it should play in corporate strategies and budgets, as well as making the strengths and limitations of home set-ups all too apparent.
Over the last few weeks, WSP has been considering what the future holds for the buildings where so many of us used to spend so much of our waking hours. From a human point of view, we’ve already explored how we’ll feel about going back to the office and how we might behave differently when we get there. From an engineering point of view, we’ve looked at whether we can virus-proof the office and improve resilience in this and future pandemics. Both of these have implications for how much space organizations might need or want in future, how much that space costs to fit out and operate, and ultimately how much occupiers can, or choose to, afford.
This article is about those decisions: how is demand for office space likely to change as a result of COVID-19?
Why do we need offices? Hasn’t lockdown proved that we can work just as well remotely?
To the surprise of many, COVID-19 has indeed demonstrated that a considerable amount of the work that usually takes place in offices can carry on when they are closed. Some have discovered that they can be more productive at home, and enjoy the freedom of a more relaxed schedule. Few openly mourn their morning commute.
But if COVID-19 has accelerated the trend for home working, it has also revealed its limitations – in a knowledge economy, an organization’s success will still depend on face-to-face interaction, collaboration and serendipity. With universal flexible working, the office could become a vital anchor. “When you’re trying to attract, retain and nurture top talent, the workplace plays a really significant part in how people perceive a business,” says Michael Holloway, general manager of property investment at Kiwi Property, one of New Zealand’s largest real estate firms. “Rather than doing a job interview on a videoconference, you want to go into their space and see how they value other members of staff.”
The office has an arguably even more important role in providing learning opportunities for younger employees, says Jim Coleman, head of economics at WSP in London. “A lot of developing people is not formal training, it’s all the other interactions. There’s still a lot to be gained from being together as a team.” This will apply differently across demographics – with a tension between younger employees’ need for training and senior employees’ greater motivation to work from home. “For people at the start of their careers, there’s probably more desire to be with other people because you’re still learning and you want the experience and the social life that goes with it. Whereas as you get older and you may have settled down and have children, it’s much easier to work from home.”
A greater amount of home working will persist: for the sake of resilience as much as anything else. “The next time a coronavirus comes along, we know we need to move quickly to this model, which means that it has to be in play – at least in part – most of the time,” says Coleman. “I don’t think any business will want to go back to the way things were done, so that has an immediate implication for space.”
“I don’t think any business will want to go back to the way things were done, so that has an immediate implication for space”. Jim Coleman Head of Economics, WSP UK
How much office space will companies want?
Changing working practices are not the only determining factor. The International Monetary Fund has described the “Great Lockdown” as the worst economic downturn since the Great Depression of the 1930s, and foresees a recession at least as bad or worse than the 2007-08 global financial crisis.
Inevitably there will be a reduction in occupier demand, though it will vary from sector to sector. The worst-affected tourism and leisure industries will need less corporate space, while some professional services firms may be able to continue as normal with altered working practices. Booming sectors like technology and e-commerce are already more likely to embrace virtual working – Twitter CEO Jack Dorsey has said that employees can work from home permanently if they want to. “Companies could see this as an opportunity to downsize, to reduce operating costs and invest more in technology,” says Paul Stapley, vice president in the project management team at WSP in Canada. “Occupiers have already been moving to shorter lease terms. If they’ve only got, say, six months left, they may decide to walk away.”
Organizations had already started to shrink footprints so that they had less than one desk per person, and the recession is likely to accelerate that trend. “In a crisis, there is always a focus on trying to reduce fixed costs like offices,” says Magnus Meyer, Managing Director WSP Nordics & Continental Europe. “The typical tenant will start thinking that maybe they don’t need space for 100% of their employees, maybe only 75% or 60%. Or they might not expand because of the crisis, but just work with the space they have.”
What makes COVID-19 such a strange phenomenon is that its immediate impact will be to push organizations in the opposite direction – they will need more space per employee. Companies have been squeezing more and more people onto floorplates for a long time, with just 8m2 per employee becoming a typical density. For offices to reopen safely and maintain physical distancing, ratios will have to shoot up again, with shifts, staggered start times and continued remote working essential.
It’s too early to say whether we will ever again feel comfortable occupying space in such close proximity to others, which makes the longer-term impact on office requirements very hard to gauge. Perhaps the better question is whether organizations will want the same kind of space that they’ve occupied in the past.
“Companies could see this as an opportunity to downsize, to reduce operating costs and invest more in technology”
Paul Stapley Vice president in the project management team , WSP Canada
What kind of office space will organizations want?
Companies will now be well aware that they could make do with less office space. But they may also have realized that they also need better, more resilient office space. “This crisis is probably going to accelerate the need for modern, flexible office space with lots of services,” says Meyer. “The buildings that suffer will be the older ones that tenants just don’t want any more. They’re just the wrong product.”
Landlords will have to differentiate themselves with added services: “You might call it ‘high-end’, not from a luxury perspective but from a content perspective – you won’t just lease a ‘stupid’ space, you need to fill it with services to help the tenant be more productive, whether that is sustainability or wellness solutions or digital technology.”
To justify its existence, the office will have to become a destination with a purpose, says David Gooderham, global account director with WSP in London. “If people continue to be the driver for change, as the most important component of an organization’s profitability, businesses will have to provide safe working environments that increase the feelgood factor and ultimately raise productivity and creativity. There’s much that we can learn from this lockdown period to make the workplace better and our interactions with it more effective.”
Holloway thinks the “hotelization” of office space will continue, with workplaces importing some of the home comforts that we’ve become used to. This might mean more relaxed dress codes, but also real planting and soft furnishings, to make spaces more cosy while helping to subtly create distance between people. “We need to think about furniture and other design solutions to create separation without losing the benefits of collaboration. If offices have a future, people need to feel safe in them.”
Coworking spaces have been leaders in the field of hotelization, and are perhaps the ultimate destination offices. But COVID-19 has left tumbleweed blowing through these buzzy, high-density communities. We’ve considered whether this will be the death of the coworking space in a separate article.
“To justify its existence, the office will have to become a destination with a purpose”
David Gooderham Global account director, WSP UK
This is another area where the short-term impact of COVID-19 may look very different to how things will eventually pan out. As workplaces start to reopen with physical distancing measures in place, offices in the centre of major cities are the most problematic, often necessitating commutes on crowded public transit. Suburban or out-of-town locations where workers typically drive will be able to resume something approaching normal operations much more quickly.
But if offices become destinations to meet coworkers, get inspiration and exchange ideas, rather than just to sit at a desk, those in buzzy locations make more sense. If organizations don’t need as much space because people work remotely more often, they may choose not to cut their rent bill but to spend the same amount on a smaller, more characterful building in an amenity-rich central location – a much more attractive destination for employees than a featureless office park.
A shift to working fewer days in the office will benefit expensive central locations most, believes Tommy Craig, senior managing director at Hines in New York. “New York is a very challenging place to achieve good work-life balance because it’s extraordinarily expensive to live and raise a family. If you alter that paradigm and allow employees to work from home one or two days a week, the whole work-life balance shifts in the direction of something much more favourable. Commuting 40% less is a big deal, given how large New York is and the length of our commutes.”
Economic activity has strongly clustered in the US’ larger cities over the last 50 years, as employment has shifted from manufacturing to services. Professor Bill Kerr at Harvard Business School has studied the progress of its world-beating talent clusters such as Silicon Valley, which exert a powerful, self-perpetuating global pull for skills and capital. Will they continue to thrive in the post-pandemic world? “What made talent clusters so powerful is that ideas can jump from person to person – of course if germs and viruses are also jumping from person to person, that’s going to make them a lot less attractive,” he says. “This has always been a big challenge for places that were built around interaction and being in close proximity.” If we can get back to work within the next few months, he thinks talent clusters will be secure for some time to come. “But if the pandemic continues for several years, these cities are going to struggle and we may see a more systematic pullback from the clusters. It’s a question of how it plays out over the next year.”
Another impact of COVID-19 could be that companies split operations between several locations, potentially benefiting smaller centres. “A lot ofcompanies are going to be thinking about how they could make their workforce if not pandemic-proof, at least pandemic-resistant,” says Kerr. “Opening a second office might not have made sense historically, but may be something that younger companies should do at an earlier stage. We have celebrated density and packing people together, but that’s putting a lot of eggs in one basket.”
” A lot companies are going to be thinking about how they could make their workforce if not pandemic-proof, at least pandemic-resistant”
Bill Kerr Professor, Harvard Business School
What about new office developments? Do we really need to build extra space?
This will be down to the dynamics of supply and demand in local markets. In some places, there was already a structural undersupply of modern, high-quality office space, and COVID-19 is likely to exacerbate this, even if the overall demand remains the same. Changes may also take a while to feed through. As CBRE Canada has pointed out, commercial real estate is a lagging industry – two years elapsed before office vacancy rates peaked following the global financial crisis.
The other side of the equation is the supply of capital for office projects. WSP director Gary McCarthy advises financial institutions, and he thinks real estate will still be attractive. “There is a deep pool of capital available for the right assets and real estate will continue to offer long-term investment managers a defensive strategy for their portfolio, and return yields sufficiently above government bonds. There will be specific challenges – regional offices will struggle more than prime city centre offices – but I don’t see there being a drop in capital commitment.”
The big question for investors in the commercial sector, McCarthy adds, will be how to differentiate your asset from the rest. How can you make sure that your office is the one that tenants and their employees want to go to. What will make an office into a compelling destination in a post-COVID world? That’s a question we’ll consider in the next article in the series. Subscribe to receive the latest updates
2020 is in our rearview mirror. The pandemic will end, most likely sometime in late 2021. Businesses are beginning to restart and plan. However, much has changed since the pandemic took hold of our lives and economy. Initially the commercial building industry’s focus has been on the health issues of building occupants by addressing IAQ, employee density, social distancing, occupancy patterns and work schedules. But an important aspect not to be overlooked is to refocus on proactive strategies that manage operating expenses. With increased vacancy in commercial properties, decreased economic and business activity, now is the time to institute energy conservation and cost-saving measures to help contain building operating costs. A commercial energy audit will help building owners become more profitable by reducing wasted energy use whether operating under normal business conditions or COVID-19.
Commercial Energy Audits
What comes to mind when the term “audit” is used? I usually think of a financial audit which requires a close examination of documents and perhaps a negative outcome. The term “energy audit” might initially invoke the same response from building owners and managers. The idea of closely examining a buildings energy needs and operating efficiency might appear to be looking for unwanted change especially if the building seemingly operates fine daily. A commercial energy audit should be viewed as an energy opportunityassessment to reduce energy expenses and increase profit. Compared to a financial audit when the best that could happen is nothing, an energy audit has positive outcomes.
What motivates an energy audit?
With the inherent push back on change what motivates building owners or CFO’s to conduct an energy audit? It is usually financial driven, sustainability driven or a combination of both. An energy audit is often the first step in making a commercial building more efficient. The goal of an energy audit is of course to identify energy-saving opportunities but can also increase asset values, lower ownership costs, and promote environmental stewardship, human comfort, health, and safety.
What is involved in an energy audit?
Buildings, whether long-standing or recently constructed, have potential for energy improvements. Typically, an energy audit is a loose term and follows a general framework of identifying energy usage throughout the building, assessing building systems, and conducting on- site inspections. A final report is produced outlining energy conservation and system improvement measures.
However, an energy audit is a specific term defined by ASHRAE, a global organization focused on advancing technology to improve sustainability. ASHRAE specifies three types of energy audits:
Level 1: A basic, high-level walkthrough. It requires data collection regarding the operation of building systems and a review of facility utility bills with the purpose of identifying major problem areas.
Level 2: Includes a Level 1 audit and additional complex, detailed calculations in connection with proposed energy efficiency measures. Note: The literature suggests an entire workbook of calculations for each identified project, which means people tend not to identify small projects because the write-up is the same. As a result, a Level 2 may less useful because organizations do not consider ways to address the “low-hanging fruit” (such as LED lighting, for example) which tend to have low-cost and high return—avenues for energy efficiency that are certainly worthy of consideration.
Level 3: Sometimes called a “comprehensive audit,” this level includes more detailed data analysis related to the projects identified during the Level 2 audit, as well as extensive cost and savings calculations.
The result of any commercial building energy audit is to analyze and understand a facility’s energy usage. Then to design appropriate strategies for making improvements that will reduce energy input and ultimately save money.
The Energy Audit Process
Emerald Skyline’s team is trained to assist property owners and facility managers understand their buildings and discover the greatest opportunities for energy savings. We specialize in energy management solutions and discover the greatest opportunities for energy savings. The energy audit process allows us to determine what systems are causing you the most money on your utility bills.
Review Historic Utility Bills
To begin our process, we collect facility’s historic utility bills to determine the facility’s annual energy consumption.
Examine Existing Assets
Next, our team collects on-site data by performing the energy audit. During this time, we are determining potential solutions that maximize savings.
Present Economic Solutions
After we complete the audit and compare the utility bills, our team works together to design comprehensive systems custom tailored to each individual facility that maximizes energy savings.
HVAC units, boilers, hot water heaters, chillers, and more to determine current state of equipment, age, life expectancy, and performance.
Interior and Exterior Lighting
Lighting technology has increased significantly over the years. With LEDs not only do you improve lighting quality, but significantly reduce electric usage
The building envelope (windows, insulation, roofs, etc.) seal is essential to keep your conditioned spaces from leaking air. Ensuring proper insulation throughout the facility is key to minimizing heating and cooling costs.
In facilities with tall ceilings, maintaining consistent airflow helps maintain comfort in the facility.
Every facility is custom and operates differently. Our team has audited facilities across many industries from retail, hotels, offices, multi-family, and more. We have an expanded knowledge on systems and are flexible to tackle any project. In this time of uncertainty, it is important to keep operating expenses to a minimum. Unnecessary costs include costs for energy that you do not need to use. An energy audit will help determine the best energy conservation measures for your building.
As we settle into fall, some U.S. employees are being summoned back to the office. Physical occupancy in office properties was at 25 percent as of Sept. 9, according to data collected by Kastle Systems in 10 large U.S. cities. Most people are continuing to work from home, however, many with no return date in mind. In fact, when a viable COVID-19 vaccine is finally rolled out, some might discover they have no office to return to, with companies rethinking whether they need a physical base at all. Facing this turn of events, property owners and managers are prioritizing energy efficiency as they grapple with fluctuating consumption levels.
“Managing occupied, partially occupied and unoccupied spaces with cooling, heating and lighting is essential,” said Barry Wood, LEED accredited professional & director of retail operations at JLL. “Many tenants will not fully reoccupy, and owners and managers must be able to adjust and adapt their energy usages to the needs of the building and tenant.”
According to Wood, improving energy efficiency is a differentiator in most buildings because utilities typically rank in the top five for expenses. “Also, because of COVID-19, many buildings are seeing that rental income and expense recoveries are down, and owners and managers must be creative in managing the balance of the property needs. Maintaining conveniences to the tenants and guests coming to the property is essential to ensure they are comfortable being there.”
Best practices depend on the facility, but Wood said they will certainly include varying the set points on chillers and rooftop equipment; ensuring the operation of chillers, cooling towers, air handlers and roof op equipment is within the highest efficiency zone; and working with tenants to cluster workers—within CDC suggested guidelines—for lighting and cooling efficiencies.
Additionally, properties should stagger schedules to take advantage of natural daylighting. Another item on the list is the revision of settings on occupancy sensors for lighting and cooling in walk-through traffic areas as well as individual offices that may have shorter stay times.
It will be a challenge to obtain the same capital improvement dollars as before. Wood said, “To be approved for this type of project at properties, many owners will focus this capital money on ‘must do’ or ‘re-tenanting’ projects rather than operating efficiencies, therefore the building operations and engineering team will be essential in finding savings through operating efficiencies.”
MONITORING ENERGY USAGE
Technology is bringing big advances in monitoring energy usage, but adoption has been sluggish. However, since COVID-19 has pushed up operating costs, having an efficient building has become sexy in the minds of owners. Energy consultants offering audits, such as Bright Power, have the receipts to prove that energy monitoring does save money and can reduce carbon emissions.
“When stay-at-home orders began, we saw our office and higher education clients’ building staff adjust equipment schedules to reflect the new reduced occupancy schedules,” said Samantha Pearce, director of energy management services at Bright Power. Clients that had action plans—or were able to easily prepare plans based on what equipment was essential for limited occupancy—are saving more.
According to Pearce, the best tip to offer is finding out how your equipment is operating, and how to adjust settings quickly and efficiently. “Remote monitoring and energy management services are an impactful way to mitigate the impact of COVID-19 on maintenance and operations plans.”
We had a client who needed to switch from heating to cooling at their building. We were able to walk them through the switch remotely since we had installed a remote monitoring system before the stay-at-home order. And, we were able to verify that the switch happened correctly, rather than have the property staff wait for resident complaints or before receiving increased utility bills,” she said.
Since the pandemic began, virologists have been preaching for bringing in as much outside air as possible. Doing this during mild weather can actually improve efficiency; for example, by utilizing the spring outdoor air to lower the temperature in a crowded auditorium instead of using a cooling tower. However, during extreme weather, increasing outdoor air can bring a drop in efficiency. In both cases, the outcomes depend greatly on the site’s mechanical equipment.
“It becomes extremely important to know how to capture those savings (during mild weather) in order to possibly counter the potential increased costs of increasing outdoor air supply during the extreme weather seasons,” Pearce said.
NEW OPERATIONAL GUIDANCE
Commercial buildings sitting vacant since March are significantly less energy efficient and more expensive to operate. According to Jeff Gerwig, LEED green associate & national engineering manager for Colliers International U.S., the reason is new operational guidance from the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE) during the pandemic. ASHRAE’s new standards help create healthier indoor environments. However, energy efficiency measures implemented for years are now being reversed to achieve the recommendations.
“The primary impacts on energy efficiency and operating costs have been centered around three items,” explained Gerwig. “First, the increase of HVAC operating hours—ASHRAE recommends increasing building operating hours, if possible, up to 24/7. Also, outdoor air dampers are being opened to maximum percentages allowable to bring more outdoor air inside the property and create higher demand for HVAC operations.”
ASHRAE also recommends that dampers be opened up to 100 percent if possible, and Demand Control Ventilation (DCV) be disabled. “This technology worked in conjunction with outdoor air dampers. It measured indoor pollutant concentrations and used precise amounts of outdoor air to maintain spaces.” Gerwig added, “Given that ASHRAE recommends outdoor air percentages be increased to highest levels possible, these devices are being disabled.”
CREATING SAFE, HEALTHY ENVIRONMENTS
Employees are bound to continue reoccupying buildings in coming months, providing an excellent opportunity to consider both air quality and whether buildings are on track with long-term sustainability or efficiency goals.
“The types of air quality requirements we’re seeing put in place are very dependent on both the region/state and the type of building and can have a variety of implications on energy efficiency,” said Lou Maltezos, executive vice president of Ameresco, a company that specializes in renewable energy and energy efficiency consulting.
“As building owners have considered and experienced what ‘back to work’ looks like in communities around the world, we’re seeing a number of customers consider items such as touchless controls, updated HVAC systems and automated entry/exit systems to address both the efficiency needs of the building and the health and safety of the occupants,” Maltezos added.
For example, with the correct process and tenant instruction in place, owners can implement technologies such as ionization to their outside air units in return ducts that may reduce the amount of air needed to condition a space. Maltezos added that efficiency relies on utilizing data not only from the space, but the air handlers and controls system as well, for providing the correct amount of outside air.
In the current climate, it is essential to stay in touch with thought leadership on all matters related to energy. “Unfortunately, in most cases the energy savings reported (since COVID-19) for most buildings are not as significant as expected and not in line with occupancy reductions,” weighed in Thomas Vazakas, Cushman & Wakefield associate director of energy, infrastructure and sustainability for the EMEA region. “This is due to the inability in most buildings to have effective controls and zoning.”
For example, heating and cooling is provided to all open plan areas, whether occupied or not. Similarly, in many cases there are no occupancy sensors for lighting, therefore most, if not all, the lights will be on even though only a small area of the office needs it.
“As a result, we see most buildings using very similar energy to heating, cooling or lighting even though their occupancy is 50-90 percent less than it used to be,” explained Vazakas. “This is a great opportunity to install adequate controls in our buildings to ensure no energy is wasted.”
As the effects of the health crisis unfold, owners and managers continue testing in resilience. “Surely the loss of human lives is devastating, but at the same time COVID-19 presents an opportunity to rethink our priorities and change the way we live—and how we use our buildings. Many property owners are already looking into this and trying to use this crisis to help them develop and implement their sustainability goals and especially their corporate plans to meet Net Zero Carbon,” Vazakas concluded.
When this agenda also results in operational savings, it’s icing on the cake.
By: Ted Konigsberg, President Infinity Commercial Real Estate
AS YOU CAN SEE IN THESE OLD PHOTOS, WE’VE BEEN HERE BEFORE.
WHAT CHANGES TO OUR BUILDINGS AND CITIES RESULTED?
WHAT CHANGES CAN WE EXPECT TODAY?
After months of conference calls, Zoom videos and webinars, only now is our industry’s vision of the new physical world beginning to emerge.
If the past is prologue, we can predict the future through research of the structural changes that occurred after the Cholera Epidemics of the 1800’s the Typhoid Epidemics of the 1800’s & 1906-1907), and the Spanish Flu of 1918 -1919.
Six cholera pandemics in the 19th century cost hundreds of thousands of lives. The renovation of Paris’ and London’s infrastructures followed, as did the construction of New York’s Central Park in 1857.
Upgraded sanitation, broadened streets and open public areas. The Spanish Flu took over 50 million lives around the world. Robert Koch’s discovery of the tuberculosis bacillus in 1882, transmitted by droplets (sound familiar?) gave rise to sanitoriums, buildings designed to house, treat, and isolate patients, emphasizing strict hygiene and ample exposure to sunlight and air.
The beginning of the 20th Century gave birth to Minimalism and Modernism. Victorian décor (soft fabrics, velvet drapes and wall coverings, small rooms, carpets and rugs) where dust and germs could linger and become vectors of disease, was replaced by modern stark designs, with minimalist furniture and cleanable surfaces like tile, glass and steel. Buildings were designed to bring light and fresh air to the occupants. The visionary Swiss architect Le Corbusier designed structures that included sinks at the entrances: Today, this survives as the guest or half bath. Open terraces, roof gardens, skylights and cross ventilation became prevalent. Rooms were large, open, airy. These photos are of buildings and interiors 85 -100 years old!
Dust lodged in decorative features was the enemy of hygiene. Designers used lightweight, washable materials. Michael Thonet used bentwood and cane, Aalto used bent plywood, and Marcel Breuer and Mies van der Rohe used tubular steel. Furniture was light and easily moved for cleaning, to deprive dust, germs and insects of hiding places in the dark.
By the 1920’s air conditioning was viable and in use in buildings of public accommodation. Yet, the Empire State Building has multiple open-air decks, and single hung, OPENING windows, as do vertical buildings of the time. Light, fresh air, social distancing…
Restaurants changed too. Below is a photo of the original Lawry’s The Prime Rib, built in Los Angeles in the 1920’s. Note the banquette seating for isolation and the materials used for surfaces throughout the room, all easily cleanable.
The events of the early 1900’s impacted our collective psychology, and the effects long outlived the events themselves.
The changes in our constructed environment became the norm, but the difficult lessons were forgotten as the generations that lived through these pandemics passed. We are now compelled to relearn them.
OK, SO YOU’VE LOOKED AT SOME COOL OLD PHOTOS AND ARE TOTALLY BORED BY MY MUSINGS… WHAT DOES THE FUTURE LOOK LIKE?
CIVIL ENGINEERING, PLANNING: Cities will expand open areas, such as parks and streets. No car zones, which London and Paris have had for many years, will become common in shopping and entertainment districts, to allow for distancing and outdoor tables and exhibits. Expect significant upgrades to water and sanitation systems. Working from home has created huge demand for high speed internet access: Fiber optic installations, new towers for 5g. The death of the automobile has been vastly over-hyped. When will you feel safe traveling by train, bus, or subway? When will you feel safe ridesharing? So, upgrades to parking and roads, less construction of new public transportation. A return to the suburbs. Rezoning and reconfiguration of many high-density buildings, such as failed hotels and offices.
EXISTING VERTICAL BUILDINGS: Major upgrades to HVAC systems, such as UV lights in air handlers, HEPA filters, coil disinfectant systems. Wall sconces in hallways replaced by UV light air purifiers. Larger washrooms with hot water sinks and touchless faucets. Tile instead of carpeting. Reconfigured common areas for distancing. Rooftop gardens. Cleanable wall coverings and furniture. Touchless door systems. Voice-activated elevators.
NEW VERTICAL BUILDINGS: In addition to the above, opening windows, Balconies, open-air decks, and rooftop amenities, like running tracks and gardens. Wider and windowed stairwells and hallways, larger and more elevators. Perhaps a return of the atrium concept with skylights. Much larger common areas.
RESIDENTIAL: Do you feel safe walking through a crowded lobby, pushing buttons on an elevator with multiple people in it, passing your neighbors in the hallway? Not having access to the building gym, restaurant, or pool if there’s another outbreak in the future? Vertical condos and apartment buildings will suffer. On the lower-end, garden style apartments with their stairwells and patio or balconies will become desirable again. For larger residences, townhouses and single-family homes (sale and rent) will benefit. A fenced yard will matter. High speed internet will matter, as you will spend more time working from your “cave”. A half bath at or near the entrance will matter. A spare room separate from the main living areas with a dedicated washroom for use as your office, grown kids room, or parent’s room (will you send mom to an assisted living facility unless you have to?) will be a very desired feature, as will an entry “parlor” separated from the living areas.
OFFICE: A protracted decline. Companies realize their employees can effectively work from home, while reducing risk of infection and corporate liability. In high-tech industries, international employees will not have to be relocated to work in the US; software engineers can stay in Bangalore and be just as productive via VPN, WebEx and Zoom. Why apply for a Visa? An offset will be a greater amount of footage required per occupant to effect social distancing, but that won’t be enough to fully compensate the increased vacancy. The “We-Work” co-working and hoteling concept will face demise, but operators such as Regis will thrive. Rents will fall, CAP rates will rise. A shift to single story walk-in, non-CBD (suburban) property locations, much of which will be repurposed retail space and industrial/office flex buildings.
INLINE RETAIL: Will suffer in the short term but rebound strongly. Local services still matter. Convenience stores, liquor stores, dry cleaners, hair salons, drug and grocery stores are necessary. Expect countless neighborhood restaurant closings, but also expect “virtual” restaurants (kitchens) to emerge, as online ordering will continue. Outdoor seating will help make up for lost table density. Expect alternate types of uses, like office, medical and dental.
BIG BOX RETAIL: Power centers give their tenants something malls can’t: Control of their sites. Curbside pickup will continue. Further, many of these are in “last mile” locations. Think of Best Buy, which is thriving. They use their stores as distribution centers: When you order from them, chances are the item comes right from store inventory, which how they compete with Amazon on delivery. Expect to see more of this model. Amazon’s share of the total US retail market is only 3%. Walmart does 3 times the volume of Amazon, and their operations are extremely efficient and improving. Those retailers with a brand that matters to consumers, an efficient and friendly online experience and a store centric logistics model will capture market share. As to broad-line big boxes like JC Penney, Sears, Neiman-Marcus… They will continue to suffer, and possibly not survive.
MALLS: Only the best operators will endure. Those that do will be greatly changed. Most failed anchor stores will require complete repurposing and reconstruction. Both large and small tenants will want outward facing ingress and egress, so malls will have to face outwards, not inwards. With their large land areas, the best locations will make those changes, and attract outparcel operators. Those that survive will embrace mixed use: Residential, office, and even “last mile” logistics facilities will replace many existing tenants. Rents will fall. The short-term pain will be immense, and failed malls may be a great investment opportunity for developers.
HOSPITALITY: Central Business District facilities will be badly impacted. We may see numerous properties repurposed. To survive, touchless check-in and doors, expanded common areas. No significant new construction of CBD and airport properties, pure survival mode for years to come. As folks drive more and fly less, roadside motels and extended stay properties, with outdoor room entrances and kitchenettes, will thrive again. Soon, companies like Airbnb will have a resurgence, continuing to capture market share, as they offer travelers privacy and control.
INDUSTRIAL: The lack of supply chain reliability has become painfully evident, and as time to delivery becomes increasingly important, manufacturing will return to our shores. Even Grandma orders online now and expects everything to be delivered immediately. Manufacturers will gladly pay a little bit more to source components from a reliable US based supplier, instead of waiting a month (at best) for a “slow-boat from China”. Further, automated manufacturing depends much less on the cost of labor than the cost of electricity and real estate: Both are cheaper here than in Asia.
As retail become more reliant on fast delivery, expect “last mile” locations to excel, along with dedicated cold chain distribution facilities. Many local and regional tenants will ditch their dedicated office locations and seek out industrial flex with 20% to 40% office components, so they can reduce overall rents, control access and exposure, and feel safe. Rear loaded multi-tenant properties with curb appeal and high parking ratios are gold!
MANUFACTURING, INDUSTRIAL FLEX AND LOGISTICS WILL THRIVE.
By The Enel X Energy Intelligence Team, Strategy View the original article here.
As America enters its second month of widespread lockdowns, the effects of these measures are becoming clearer, especially in electricity demand. Data from the largest United States regional transmission operators (RTOs) show grid-wide declines in electricity usage.
However, because this data includes commercial, industrial and residential end users, the true impacts to specific sectors of the economy are largely hidden—increases in residential energy demand partially or entirely offset significant declines seen in commercial demand. Below, Enel X provides an inside look at our internal data to show how the effects of coronavirus are being felt across individual sectors.
The Broader Picture: Energy Demand Is Down
Grid-wide RTO data shows that energy demand is broadly down for the entirety of 2020. In the first two months of 2020, a mild winter led to lower-than-average consumption due to a decline in heating demand. Then, in mid-March, coronavirus shutdowns led to further drops in demand.
Every year will include variations due to temperature fluctuations, but this sustained and ongoing drop has some analysts worried about long-term effects on consumers. A decline of this magnitude, as James Newcomb of the Rocky Mountain Institute told Utility Dive, could severely affect revenue for utilities. To recoup their losses, utilities may have to increase customer rates.
The drop since mid-March is even more noteworthy when controlling for factors like temperature—The New York Times highlighted work by Steve Cicala, an economics professor at the University of Chicago, who has demonstrated that changes in electricity demand closely tracked changes in GDP during the 2008 financial crisis. Currently, Cicala’s adjusted numbers find electricity demand down about 8% from expectations as of April 6th.
Enel X Internal Data: A Drop in Demand Across Sectors, With Notable Exceptions
Grid-wide data does not tell the story of specific industries, though, and the aggregate numbers include residential data. Internal data from our commercial and industrial customers – who represent approximately 2% of demand across USA and Canada—tells a more detailed story. Most commercial and industrial sectors have seen far more significant declines in consumption than the grid-wide data suggests.
The industries at the bottom of the chart are those with the most drastic reductions, and they are largely unsurprising—media and entertainment is considered inessential, flights are restricted, and schools are closed.
Increases show that some businesses – or even entire industries – are now ramping up their efforts and being called upon to work harder than ever. Manufacturing has seen a moderate decline in average demand, but our numbers show the sector has seen an uptick in peak demand.
In part, this may be because many individual manufacturers are operating at a higher level than ever before. One customer we spoke to – a manufacturer of household foods – explained just how much has changed this past month. As a result of quarantine orders and increases in grocery demand, they said, their products have been flying off of shelves. Their order volume has gone up significantly as a result, and that’s led to much higher production levels—what is normally a 24/5 plant has become 24/7, and the plant itself is expanding.
“Even as demand returns to normal,” the customer told us, “our plant will have to work at higher than normal production levels likely until at least the end of the year.”
What Lies Ahead
Professor Cicala notes that the United States’ electricity trend has tracked Europe with a lag, indicating a further drop may be coming. The grid-wide data shows there is room to fall—ERCOT (Texas), for instance, only implemented state-wide lockdowns on April 2.
If widespread shutdowns and work-from-home measures remain in place when warm summer months arrive, consumption could vary greatly from normal patterns. Commercial buildings often have more efficient cooling systems than personal homes, and offices generally have fewer cubic feet per person than a home does.
While it’s too soon to tell what long-term implications the virus will have on the energy sector, the impact has already been felt in the way homes and businesses are using electricity.
By Kirsten Korosec View the original article here.
Tesla delivered 88,400 vehicles in the first quarter, beating most analysts expectations despite a 21% decrease from the previous quarter as the COVID-19 pandemic put downward pressure on demand and created logistical challenges.
Tesla said Thursday it produced 103,000 electric vehicles in the first quarter, about 2% lower than the previous period.
The deliveries and production figures beat most analysts expectations, causing Tesla shares to jump more than 10.4% in after-hours trading. Analysts, who had anticipated lower numbers due to the COVID-19 pandemic, had varying forecasts. A consensus of analysts by FactSeat expected more than 79,908 vehicles would be delivered while Reuters reported IBES data from Refinitiv forecast numbers as high as 93,399 vehicles.
The company, which sells directly to consumers as opposed to using dealerships, was able to beat those expectations in part because it continued to produce and deliver its electric vehicles to customers in spite of the COVID-19 pandemic. The pandemic has prompted city, county and state officials to issue stay-at-home orders that have directed non-essential businesses to close. While manufacturing is often exempt from these orders, pressure from the United Auto Workers as well as falling demand has prompted automakers, including GM, Nissan, Ford, Fiat Chrysler Automobiles, Toyota and Volkswagen suspended production at all U.S. factories.
Tesla also suspended production, beginning March 23, at its plant in Fremont, Calif. However, deliveries have continued.
While COVID-19 still affected Tesla, the company still managed to beat its delivery numbers from the first quarter of 2019.
Here’s a breakdown of the first quarter 2020 deliveries and production:
Tesla delivered 88,400 vehicles (compared to 112,000 in Q4 and 63,000 in Q1 2019)
Tesla produced 103,000 vehicles (compared to 105,000 in Q4 and 77,100 in Q1 2019)
This quarter deliveries included some Model Y vehicles, the newest addition to Tesla’s portfolio. Model Y production started in January and deliveries began in March according to Tesla.
Tesla also said that its new Shanghai factory, which is producing the Model 3 for Chinese customers, is achieving “record levels of production, despite significant setbacks.” Tesla didn’t provide any details on the levels of production at the Shanghai factory. The first public deliveries of Model 3 sedans produced at its Shanghai factory began January 7, one year after Tesla began construction on its first factory outside the United States.
As solar and heat pump prices fall, these highly energy-efficient homes are paying for themselves faster. Here’s how they work and why they’re spreading northward.
Home-builder Bill Decker explains some of the techniques used to create highly energy-efficient homes in chilly southeast Michigan. New research shows that the extra cost of making a home net-zero energy can pay for itself in under a decade in Detroit and 11.4 years in Chicago. Credit: Dan Gearino
LAMBERTVILLE, Mich.—On a drive down a country road, builder Bill Decker gives an off-the-cuff seminar about energy efficient homes.
He shifts from carpentry to electrical engineering, and then to theology—his belief that his faith compels him to take care of the earth. Every few minutes, he pauses and points out a house his family-owned company has built.
He has been in business since 1981 and only now is his industry beginning to grasp something he has been arguing for a while: Net-zero-energy homes—homes that are so efficient a few rooftop solar panels can produce all the electricity the home needs—can be built almost anywhere, even in places with brutal winters.
His case is bolstered by a recent report from the Rocky Mountain Institute showing net-zero energy houses can make financial sense in much of the Midwest as costs for some of the key components fall. The initial extra costs of making a new home a net-zero energy home pay for themselves through energy savings in less than a decade in both Detroit and Columbus, Ohio, and in less than 14 years in most of the 50 largest U.S. cities, the report says.
At the forefront are custom builders who specialize in efficient houses and helped to create this market, people like Decker, 79, whose southeastern Michigan company, Decker Homes, is just across the state line from Toledo, Ohio.
“It isn’t just energy efficiency we’re talking about here,” he says. “It’s the whole world. We’re talking about climate change.”
Indeed, housing is responsible for about 20 percent of U.S. greenhouse gas emissions, including its share of power plant emissions.
Yet his sales pitch is largely about comfort. An energy efficient house doesn’t have chilly drafts, and the temperature varies little from room to room, and those are things that appeal to most people, he says.
‘It’s the Little Things that Add Up’
Decker parks on the dirt driveway of a house in progress as a light rain turns to snow flurries. In a living room that is studs and bare wood floors, he notes the features that make this house highly energy efficient. The key is making insulation an essential part of construction.
Decker walks to the corner of the room and points out an opening of several inches between studs to allow for easy placement of insulation. Builders call this a “California corner,” which is an alternative to a typical corner design that is much more difficult to insulate.
“It’s little things that add up,” he says.
Zero-energy homes start with well-sealed and well-insulated attics, walls and basements or slabs. They often use triple-pane windows, especially in places with cold winters. Inside, energy-efficient appliances, highly efficient LED lighting and smart thermostats help avoid energy waste.
Their designs often take natural lighting into account, too, and position windows and overhangs for additional solar heating in the winter and shade in summer. Since the homes are sealed to avoid letting cold or hot air in—and cool or warm air out—they also have ventilation systems customized to maintain comfortable circulation.
Decker recently completed his first house with an air-source heat pump, which is less expensive than geothermal heat or other electric options. In cold weather, the system extracts heat from the outside air and uses it to maintain a comfortable indoor temperature. In warm weather, the process is reversed, with the system gathering heat from inside and transferring it outside.
He is starting to use air-source systems because newer models work well in below-freezing temperatures, which was not the case just a few years ago. Heat pump advancements are one of the main factors making highly efficient homes more affordable in many colder climates.
This is in addition to a cost factor that affects all climates: Rooftop solar prices have plummeted in recent years and are projected to continue doing so. That is true of battery power storage as well.
In Detroit, Net-Zero Pays for Itself in 9 Years
The costs and benefits of building net-zero houses vary widely in major cities, ranging from San Francisco, where the benefits would cover the costs in eight years, to Philadelphia, where it would take about three times as long, according to the Rocky Mountain Institute.
The largest savings tend to be in cities with high electricity rates and older building codes.
The key point is that energy efficiency pays for itself, which is not the case for many other major expenses in a house, said Jacob Corvidae, principal at Rocky Mountain Institute, a research nonprofit that focuses on clean energy.
“Zero-energy homes are actually affordable,” he said. This is important because many consumers, builders and policymakers are reluctant to consider zero-energy homes because of the perception that costs are prohibitive, he said.
In Detroit, for example, a 2,200-square-foot net-zero energy house would cost $19,753 more than the same house with no solar and typical efficiency. The energy-bill savings would be $2,508 in the first year, and the solar and efficiency costs would pay for themselves in about nine years with inflation and other changes taken into account.
Bill Decker’s son, Dale, shows some of the construction methods used to insulate and seal a highly energy-efficient home against air leaks and energy waste. Credit: Dan Gearino
The Midwest is well represented among cities with short payoff periods. Detroit is second in the report. Columbus ranks fourth, with a payoff of less than 10 years. Chicago ranks 10th and Indianapolis is 12th, with payoffs of about 11 years and 12 years, respectively.
Detroit has high annual savings in part because the city has some of the highest electricity rates, Corvidae said. Columbus’ high savings are in part because the city has an older building code, so standard houses do not have high efficiency standards.
A home with all the energy efficiency attributes of a net-zero energy house but not the solar panels will save customers money even more quickly, the report notes, though it doesn’t provide all of the climate benefits. In Detroit, a “net-zero-energy ready” house without solar would cost $1,574 more than a typical house and would pay for itself in less than two years. After that, the investment means hundreds of dollars in savings for the homeowner every year.
New California Mandate Gets Close to Net-Zero
Net-zero energy homes are a fraction of 1 percent of new housing being built, but their share is growing. Builders completed 13,906 net-zero housing units last year in the United States and Canada, a 70 percent increase from the prior year, according to a report by the nonprofit Net-Zero Energy Coalition.
California was the leader with more than 5,000 units, five times more than runner-up Arizona, where the Rocky Mountain Institute report shows net-zero homes in Phoenix can cover their costs in 11 years.
California’s lead is likely to grow because of a state building code update that takes effect in 2020 and will require solar panels on most new housing and have strict efficiency standards, the first state to do so. The code falls short of a mandate for net-zero energy housing, but it comes close.
Meanwhile, some of the country’s largest home builders, such as PulteGroup and Meritage Homes, are taking steps to offer net-zero energy options. In Cortez, Florida, Pearl Homes is building a zero-energy community that also incorporates energy storage and electric vehicle chargers.
The corporate moves are tied to consumer demand and because energy efficiency is becoming more affordable, said Ann Edminster, a consultant and architect who works with the Net-Zero Energy Coalition.
“We’re starting to see the tip of that iceberg, and when it really hits, it’s going to be huge,” she said.
Bill Decker thinks many more people would want an energy efficient house if they only had someone to explain the benefits. In his part of the world, that someone is him.
“It’s creating value, saving money, helping the environment,” he said. “In the end, you say to yourself, ‘Why would you do anything else?'”
Long-time builders Greg and Sue Thomas have opened Green Key Village, a 78-acre net-zero home development in Lady Lake, Florida, about 50 miles northwest of Orlando. The homes will be certified under the Florida Green Building Coalition, and one model home has already achieved a platinum rating, Thomas said. The homes will also be Energy Star and Department of Energy Zero Energy Ready Home. Each home will be HERS rated, and the goal is to achieve a HERS index of 50-55 prior to renewable energy installation. An average code built home has a HERS Index of 100.
Also, the homes have earned the Florida Friendly Landscaping silver designation in recognition of resource-efficient landscape design.
To help them with the challenge of selling a net-zero community, the Thomas’s brought on Tony Richardson to help them sell. With more than 30 years of experience in green home building and marketing, Richardson is a Green Designee of the National Association of Realtors, and a USGBC Green Associate.
Green Key Village is the first residential neighborhood in the nation designed using software offered by Ekotrope that was developed at the Massachusetts Institute of Technology. The software analyzes 10,000 variables to give designers data to compare each component of the home by its cost and energy efficiency. They can evaluate wall thickness, window size, insulation depth and every other aspect of the home. The development offers eight floor customizable plans in one- and two-story options. ranging from $318,000 to $414,000 and home sizes ranging from 2,755 square feet to 3,637 square feet.
Thomas said the Ekotrope analysis helped them make cost/benefit trade offs. For example, the home uses a 15-SEER rated air conditioning unit because the payback for a higher rated unit would have been longer than the life of the product. The analysis also showed that with the high-efficiency HVAC and a heat pump hybrid water heater, one of the most efficient on the market, the HVAC heat pump had to be only a 2.5-ton capacity in the 3,000-square-foot model home.
In an exclusive interview with ProudGreenHome.com, Greg and Tony talked about the challenges of presenting high performance, net-zero living to a mass-market real estate environment.
What was your vision for the community?
Greg: Where we live there’s a house with a big front porch and every afternoon the neighbors gather on that porch. In my mind, if all our houses had front porches I think it would be a great gathering place for neighbors to meet and fellowship. We wanted to build that kind of a neighborhood.
My dad was a builder, and I’ve been a builder for 30 years. It’s always been concrete block and stucco. That’s worn out. I said, let’s look for something different. We went to the coast, and saw houses with bright colors with lap siding, a metal roof and big windows covered with Bahamas shutters.
We put it out here in the middle of Lady Lake and have a great looking subdivision that isn’t made from a cookie cutter.
So that was our goal. We wanted to combine old Florida charm and new green living. I think we’ve hit it pretty good.
What are some of the challenges in communicating a high performance home to the general buyer?
Greg: I like to give them a brief overview and then back off until they ask more questions about it. It overloads them; actually, their eyes glass over when they’re just looking for the granite countertops.
It’s hard not to load them up with all the information, but we’ve spent so much money on this technology you hate to not to.
What makes your homes perform so well?
Greg: We used Ekotrope software to optimize the house design and balance all the HVAC loads, insulation and so on. We use open-cell spray foam on the underside of the roof deck, and the mechanical room is in the attic but it’s in conditioned space in the attic under the foam on the roof. Depending on the floor plan, the room can be 200 square feet to 500 square feet.
The GE heat pump water heater is in the room, and with it being a heat pump it keeps that area cooler and drier as it operates. It’s like having a dehumidifier up there. The manifold block plumbing system originates there too, right next to the water heater. And the HVAC ductwork is in there, too. It all works together.
It’s a nice attic room with stair leading to it homeowners could use for storage as well.
What are some of the green aspects of the home?
Icynene open-cell spray foam insulation
Advanced framing techniques
GE heat pump water heater
Two Panasonic energy recovery ventilators
Amana 15 SEER heat pump
Double pain Low-E windows from YKK
LED & CFL lighting
Energy Star appliances
What is the result of your green building strategies?
We cut the air conditioning load almost in half by going with the open cell spray foam insulation on the walls and ceiling. With the A/C, water heating, lighting and all the appliances are Energy Star rated, we’ve brought down our power usage on this house. Here an average house uses 1,500-1800 kilowatt/hours per month, and we’re down to less than 1,000. Then we take care of that with the solar panels.
What is your water conservation strategy?
As part of the Florida Green Building Coalition certification, we are certified to have less than a half-gallon of water in the lines. We use a maniblock plumbing system and PEX tubing.
Are you using advanced framing techniques, and how does that work with the wind load requirements?
We use regular 2×4 framing and what’s referred to as the “California corner,” two studs in the corners and we use horizontal blocking that gives you a nailing surface. You have to re-train your framers and help them remember that you can’t load up these corners with studs. We’ve heard of people going 24-inch centers but we haven’t gotten brave enough to do that.
All our homes have to be certified to meet 130 mph wind load. We use a solid sheathing with 4×10 OSB that helps fight uplift. Also the tie downs and anchors come into play to meet the wind load regulations.
Is there a price premium on the all the green attributes of the homes, and how do you communicate that to the buyers and the financial community?
From the water heater to the insulation the lighting to bath fans, to the ERV and solar panels, when you add all that up, the difference is $35,000 to $40,000 of additional value to the home.
We have prepared an addendum for our contract, because when you attach an addendum for the contract, the appraiser for the bank has to look at anything attached to the contract. For each model we have addendum that shows our cost for open cell spray foam insulation so and compare that to the traditional batt foam insulation on concrete block.
That also gives the homebuyer the documentation they need to apply for their solar tax credit.
How do buyers respond to the idea of a paying a premium for a high performance home?
We tell them, compared to an average $200 a month power bill, with the lower utility costs of these houses, you have $42,000 to $43,000 more power buying over the life of the mortgage. Whether you’re paying cash or using a mortgage, your overall buying power is that much more.
The math works. And you get a much a much healthier house. With the no-VOC paints, the low-VOC carpets and cabinets, your home is healthier. The ERVs are bringing in fresh air 24 hours a day.
Tony: These homes are priced very comparably to homes of similar size if they they had the same quality as these homes.
We can show on a cash-on-cash basis, they’ll be not spending more money but making money starting the first month and every month thereafter. There’s no flim flam here; it’s the truth.