Our industry is engaged in an important dialogue to improve the efficiency and resilience of real assets through transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.
ENERGY STAR Portfolio Manager® (ESPM) is the most popular building performance tracking platform in the world. Launched nearly 25 years ago by the US Environmental Protection Agency (EPA), ESPM has emerged as the de facto reporting platform for nearly every local energy and emissions benchmarking policy and building performance standard in North America.
The ENERGY STAR program is at a critical crossroads. While the White House has proposed eliminating it, both the Senate and House Appropriations Committees have shown strong bipartisan support by approving its budget and continuation. With final approval still pending, it is more important than ever to clearly communicate ENERGY STAR’s value to local representatives.
Many great articles have been written about ENERGY STAR’s significant public benefits, environmental impacts, and return on investment. We must emphasize these successes as well as the lesser-known benefits of ESPM, such as how it spurs innovation and fosters a healthy and competitive market.
An honest communication
Recently, a flurry of op-eds has acknowledged the positive impacts of ESPM while also raising questions about its role in the industry. While private alternatives provide significant value and offer important insurance against political disruption, ESPM serves its own purpose and provides many incomparable benefits.
Rather than discrediting ESPM in the name of progress, it’s critical that benefits are honestly communicated. Below, several common myths and misconceptions that have been recently circulating are dispelled, and some less-known market benefits of ESPM are highlighted.
Myth #1: ESPM stifles market innovation
ESPM sets industry standards and provides the infrastructure to connect stakeholders within an ecosystem that incentivizes innovation and enables a marketplace of differentiated solutions.
As the most popular benchmarking platform in the world, ESPM supports a diverse ecosystem of stakeholders across real estate, engineering, utility, architecture, sustainability, and regulatory industries. ESPM enables this ecosystem by providing critical infrastructure for data exchange between data providers, users, and service providers. Specifically, ESPM infrastructure is leveraged by over 50 major energy utilities to sync data for over 100,000 properties, 105 service providers to provide data-driven solutions to over 200,000 properties, and over 50 state and local governments to administer their benchmarking and building performance policies.
These interconnections minimize costs for property owners and have enabled ESPM to evolve into an industry-standard data platform that enables seamless data exchange between all market participants. Crucially, ESPM ensures that all organizations have equal access to its platform and web services. By maintaining free, open, and equal data access, ESPM ensures standardization and interoperability across the industry.
ESPM fosters innovation & competition
By standardizing and democratizing data, ESPM accelerates innovation by reducing the cost and effort it takes for new solutions to enter the market. By intentionally limiting its scope to only support tracking basic data (e.g., property uses, use details, meters, and meter entries), ESPM provides users a valuable performance benchmark while incentivizing downstream innovation by third parties who can enrich these data to enable value-added applications across diverse domains.
In recent years, myriad new solutions have emerged that leverage ESPM to support organizations with more advanced investor reporting, climate disclosures, regulatory risk analysis, compliance tracking, decarbonization planning, etc. The ESPM ecosystem enables these innovative solutions to reach a primed market while benefiting property owners with an ever-expanding list of differentiated services.
By leveraging ESPM as a free, agnostic data repository, users can also protect themselves from expensive vendor lock-in and easily onboard other service providers in the ESPM ecosystem. This paradigm incentivizes incumbents to continually innovate to stay relevant.
ESPM supports a healthy and efficient market that incentivizes innovation and enables service providers who provide the most value to flourish.
In the absence of ESPM, property owners will face a fragmented market, higher costs, greater vendor lock-in, and fewer choices. New solutions will struggle to enter the market, and core features once taken for granted will no longer be freely available. So-called “freemium” models will require users to pay for any truly useful functionality.
Myth #2: ESPM deos not address industry needs
ESPM advances the industry by expanding access to data and information, addressing persistent market gaps, and providing an open forum for collaboration, education, support, and recognition.
Each year, ESPM convenes public working groups to identify persistent industry challenges that remain unaddressed by the market. These sessions bring together industry leaders committed to strengthening the ESPM ecosystem for a diverse set of stakeholders (e.g., property owners, consultants, utilities, and service providers) and inform the development of new features, resources, and datasets for the benefit of the whole industry. This ensures that ESPM is built for industry, by industry.
EXAMPLE: In 2022/2023, through stakeholder engagements and feedback sessions, ESPM learned that most solution providers, including ESPM, were not strictly adhering to GHG Protocol methodologies when reporting green power and market-based emissions. As Building Performance Standards (BPS) policies began taking effect, it became important to enable more accurate reporting of these metrics. ESPM held a long, transparent process of developing new features to more accurately track and report green power and market-based emissions. These features were deployed in August 2024 and have significantly improved the accuracy of green power reporting. At the same time, some non-ESPM solution providers have yet to fully align with GHG Protocol methodologies, showing the need for consistent standards.
To incentivize engagement, ESPM also recognizes stakeholders who achieve superior energy efficiency results and contribute to advancing the industry. In 2024, over 160 organizations earned the distinguished “ENERGY STAR Partner of the Year – Sustained Excellence” award and were invited to share best practices at the perennial Awards Celebration.
Through various industry engagements, ESPM serves as a neutral forum for identifying and addressing persistent market needs as well as spreading best practices. By giving everyone an equal voice, the ESPM ecosystem ensures that shared challenges are addressed while fostering a healthy, competitive market that rewards ongoing innovation and value creation.
ESPM expands access to data & information
ESPM plays a pivotal role in advancing widescale decarbonization efforts through its public advocacy, technical documentation, and educational resources. The ENERGY STAR Data Access Network connects utilities, governments, and other stakeholders to develop and spread best practices for expanding access to energy consumption data. Similarly, the ESPM Utility Data Map helps users identify where they can obtain whole-building consumption data for benchmarking, and the EPA Power Profiler lets users learn about their local energy grid and emissions profile. Expanding access to utility data directly benefits the real estate industry, including service providers, by enabling more data-driven solutions.
ESPM also maintains a comprehensive glossary of industry terms and an ever-expanding library of technical reference documents that describe complex concepts such as source energy, emissions accounting, and much more. These efforts raise awareness of best practices and provide an unbiased resource that can be used to verify third-party methodologies. The ESPM ecosystem provides an ideal environment for educating industry newcomers as well as established leaders. Users can get started with training resources and test technical concepts in a live setting, for no cost, by leveraging the ESPM platform.
ESPM is continually expanding access to data and information to spur innovation, raise public awareness, and develop the next generation of climate leaders.
ESPM is a public (and market) resource
Through its unwavering commitment to transparency, ESPM empowers users and fosters a developer-friendly environment for service providers.
For users, ESPM maintains a number of public resources to stay informed about current features and upcoming changes. A comprehensive library of training resources and FAQs explains hundreds of platform concepts, while industry-leading customer support ensures users receive detailed responses to any inquiry. The support team is remarkably knowledgeable and goes to great lengths to provide clear, thorough answers on all aspects of ESPM.
For service providers, ESPM provides detailed technical documentation to integrate with ESPM web services and holds regular public webinars to prepare them for upcoming changes. ESPM also maintains an up-to-date public board of known issues and version release notes so that developers are aware of all aspects of the platform.These efforts significantly simplify integration and ongoing maintenance.
ESPM’s transparency stems from its role as both an industry-standard technology and a vital public resource. It ensures that users and service providers have everything that they need to leverage ESPM data and sets a baseline for accountability across the industry.
In the absence of ESPM, access to utility data could become significantly restricted, and the quality of reported data across the industry will suffer. Public technical documentation and educational resources will be greatly reduced, reducing accountability to established reporting standards.
Myth #3: ESPM benchmarks are inadequate
ESPM enables free, accurate, and relevant performance benchmarks for all property types based on the most comprehensive and standardized data set in the world.
Public benchmarking policies and building performance standards have been in effect across North America since 2010. While the details of compliance and enforcement can vary, nearly every policy requires property owners to collect and report utility data via ESPM and have it periodically certified by a third party.
ESPM minimizes compliance costs, ensures data quality, and standardizes reporting. It also enables reported data to be aggregated across policies and jurisdictions. The Building Performance Database (BPD) is a free public resource that provides standardized performance data for over 300,000 properties. Data is sourced from each policy, providing the most comprehensive and accurate set of performance metrics for benchmarking in the world.
The BPD is the only dataset, public or private, that is primarily based on third-party verified values reported for regulatory compliance. Performance metrics are complemented by standardized building characteristics (e.g., property type, size, and climate zone), thus enabling benchmarks to be constructed against multiple variables to maximize relevancy.
Through the BPD, ESPM enables accurate and relevant energy and emissions intensity performance benchmarks that can be applied based on property type, size, and climate zone.
The Energy Star Score Performance Benchmark
At the heart of ESPM is the eponymous Energy Star Score (Score), a statistically robust building performance benchmark based on the Commercial Buildings Energy Consumption Survey (CBECS), which is administered across the United States every 4 years.
The Score is a highly advanced performance benchmark. Although its technical methodology is fully documented, due to its complexity, it is often misunderstood. Unlike most benchmarks, the score accounts for weather and several operational parameters that are specific to each property type. For example, benchmarks for office buildings account for the number of computers, workers, and weekly operating hours, while for hotels they account for the number of guest rooms, workers, and commercial refrigeration units.
Most benchmarks employ a normal distribution or simple regression to compare a building’s performance against a set of observed data. ESPM goes several steps further to create the most accurate and relevant comparison of building performance on the market.
Every few years, ESPM conducts a comprehensive sensitivity analysis of all CBECS data for each property type. The most sensitive building, operational, and weather parameters are used to construct a regression equation that predicts the source EUI for a property. Next, a cumulative distribution function (based on a multi-parameter gamma distribution) is constructed for the efficiency ratio of all properties of a specific type (e.g., offices, hotels). A score reflects the positioning of a property’s actual vs. predicted source EUI on the cumulative distribution function curve from 1 to 100%.
It is understandable that the Energy Star Score is difficult to comprehend, even for industry leaders. However, it is also undeniable that the Score is one of the most robust and accurate benchmarks available to help property owners understand their performance. Furthermore, it is totally transparent and consistently updated based on the most comprehensive commercial building dataset (CBECS) in the world.
In the absence of ESPM, performance benchmarks will rely on more opaque, proprietary data sources that vary across service providers, making data quality and methodologies less clear, diminishing confidence, and resulting in less actionable insights.
An industry united
The world is rapidly running out of time to meet the 1.5°C climate target. Global emissions in 2024 hit record highs, and climate change is already destabilizing life as we know it.To realign with the 1.5°C pathway, the real estate industry must act to remove barriers to action in order to mobilize resources and accelerate widescale decarbonization. The fastest way to do this is to unite around transparent data, open standards, and public resources and to leverage the largest ecosystem of property owners and service providers in the world.
Read a letter to Lee Zeeldin, Administrator of the EPA, here.
This article was written by Rimas Gulbinas, Chief Executive Officer at Abisko. Learn more about Abisko here.