New Commercial Buildings May Suffer From Rebound Effect

Common wisdom may be that new commercial buildings consume less energy than their older counterparts, but that may not be the case, according to a new study, Commercial Building Electricity Consumption Dynamics: The Role of Structure Quality, Human Capital, and Contract Incentives. Using data spanning a decade (2000 to 2010) of buildings in Los Angeles, the study found that “newer cohorts of buildings consume more electricity than older cohorts.” Several factors, including the ever increasing use of personal appliances, as well as the rebound effect are largely to blame.

“Technological progress may reduce the energy demand from heating, cooling and ventilating the base building, but the increase in appliances and quality attributes (e.g., a nicer lobby, more elevators, the ability of tenants to independently adapt comfort temperature, etc.) actually increases energy consumption.”

However, this finding also depends on the behavior of occupants, who may be influenced by different incentives to consume more or less electricity. For example, leasing contracts may obligate the tenant to pay all of, a share of, or none of the buildings operating expenses. When tenants have to pay for their own electricity use, they will use less. Interestingly, the study shows that buildings fully occupied by government tenants have significantly higher energy consumption (38% on average) compared with commercial tenants. The authors point to government’s “soft budget constraints” as the reason for their increased energy use and lower responsiveness to financial incentives. The presence of an on-site building manager was found to reduce energy use.

In light of these findings, the authors recommend that future energy efficiency policies should not only use prescriptive building codes and voluntary certification programs, but also more explicitly consider the behavioral response of building occupants.