Carbon Champion 2015 M&G Real Estate CleaR-Cut WInnEr M&G Real Estate was the deserved recipient of the 2015 CIBSE Carbon Champion of the Year Award. Andy Pearson explains how the retail landlords energy management strategy took energy efficiency at shopping centres to new heights O n a bustling Saturday afternoon in Manchesters Arndale Shopping Centre a crowd chanting release the balloons surrounds a man dressed in a sequin- encrusted red jacket and matching bow tie. The glittery host is challenging shoppers to guess the carbon footprint of various means and modes of transport. He selects a volunteer from the crowd and asks them to pick a balloon representing the item that they think has the biggest carbon footprint from a big green bin full of balloons. eoR RMade Call foR entRies As the chosen one rises into the air, others representing the carbon footprints of the remaining activities are also released from the bin. The balloons are tethered. The longer the line, the larger the carbon footprint the balloon represents. Once all are aloft, the host seizes the opportunity to discuss the relative carbon emissions of the various items with the crowd. The Big Carbon Balloon Game took place in June 2014. It was conceived to help raise awareness and public engagement in carbon saving activities. The game is one of a number of WINNER community carbon initiatives with which M&G Real Estate, manager of the Manchester Arndale Centre, is involved as part of a broader drive to reduce the energy consumption of its shopping centre portfolio. It is a project that is having a big impact: over the last three years the real estate fund manager has achieved a 23% overall reduction in landlord energy consumption across a total of eight UK shopping centres saving 21,152MWh, equivalent to almost 1m. The companys achievement was recognised by the judges at this years M&G Real Estate has achieved a 23% reduction in energy consumption across eight UK shopping centres consumed by the conpanys eight UK shopping centres, which have consistently formed part of its property portfolio. This enormous 130,000m2 centre contains more than 240 retail outlets housed on two levels, along with a 19-storey office tower. Reid describes it as a complex shopping centre, built over a period of time, when energy efficiency was not designed in. Unsurprisingly, M&G Real Estates drive to reduce its carbon emissions was initially directed towards tackling energy consumption at the Arndale Centre. Successful initiatives were then subsequently rolled-out across M&G Real Estates wider shopping centre portfolio. First the firm set about implementing measures that had either no or low-cost before considering those actions that would have required capital investment. Priorities are governed by capital outlay and linked to return on investment, explains Reid. In line with its no-cost/low-cost approach M&G Real Estate first set out to address shortcomings in the management and maintenance of the centres energy-consuming plant and equipment. This included tackling tasks such as reviewing the time settings for the on/off aRndale CentRes eneRGy stRateGy 1 Demonstrate that basic maintenance, good practice and housekeeping is being undertaken 2 Monitoring and targeting 3 Tenant engagement 4 Installation of automated metering and sub meters 5 Assess short payback energy saving measures 6 Assess longer payback energy saving measures 7 Consider the case for renewables Estate has also put in place an occupier engagement plan for the shopping centre. This has three main objectives: to update occupiers on energy, water and waste performance regularly; to improve occupier awareness of energy, water and waste initiatives; and finally to engage with occupiers to help them improve their performance in all of these areas. Another carbon-saving tenant initiative that M&G Real Estate is working on with the British Property Federation is the introduction of green clauses into leases across its entire retail portfolio. In 2013 the company signed five green Memorandums of Understanding with Marks & Spencer, which encouraged the sharing of consumption data and a joint approach to investing in the fit-out of assets to the benefit of both parties. Its a light green approach; clauses typically talk about sharing energy data between the landlord and tenant or not fitting out a retail outlet in a way that would harm the shopping centres environmental rating, says Reid. Looking to the future, Reid expects Minimum Energy Performance Regulations to start to have an impact on retail leases as the market adapts to forthcoming legislation. Under the Energy Act, from April 2018 proposed properties such as shopping centres. The organisation participates in the BBPs annual benchmarking exercise to see how it is performing against its peers. Working towards a low carbon future More recently M&G Real Estate has worked with CO2 Estates, an energy assessment and reporting software platform, to produce a Property Energy Performance Report for each of its shopping centres. The report provides an audit of each centres energy consumption and compares it with operational benchmark data provided by the Real Estate Environmental Benchmark (a joint initiative between BBP and Jones Laing LaSalle) to identify further potential energy savings and methods of energy management that should be developed to deliver cost savings. The Property Energy Performance Report includes recommendations for improvements categorised according to cost and detailing the effect on operational and asset rating. It also explains whether these benefits will accrue to the landlord or tenant, or both, and it suggests budget costs and paybacks. The report even incorporates control of plant, ensuring back-of-house lighting is switched off when not in use and ensuring the no-cost measures from the centres Air Conditioning Inspection report were properly implemented. There are a lot of energy savings that can be made through low-cost measures, such as turning off equipment when it is not in use, says Reid. In tandem with the implementation of no and low-cost management measures, M&G Real Estate also set about understanding how energy was being consumed at the centre by installing more than 130 sub-meters to monitor the operation of all major plant. In addition, the real estate fund manager has invested in an enhanced monitoring service provided by EP&T Global. This includes on-going analysis and reporting by a team of engineers who liaise with the centres operating staff. The service enables the operations manager and his team to identify the areas where the biggest energy wins can be achieved. The EP&T Global system has been in place for only 17 months, and is already showing savings well above the predicted reductions of 13% on electricity and 5% on gas. It is expected to save more than 1m during the first five years of use on the retail complex. To date, Manchester Arndale is the only shopping centre where the business case has been strong enough to invest in an enhanced monitoring solution, says Reid. After the no-cost/low-cost initiatives, energy saving actions with a short payback were targeted. These included measures such as switching the lamps in the centres low-level downlighters from inefficient 70W ceramic discharge metal halide lamps to much more efficient 26W LED fittings. Other measures included: a thermal imaging survey of valves; fittings and exposed pipework of the high pressure hot water system, which resulted in improvements to the insulation that saved 417,4020kWh, and had a payback of five months; and the introduction of night cooling to the malls by tweaking the operation of the BMS. Once the short-payback initiatives had been tackled, higher payback measures were considered under an annual asset plan. This includes energy saving measures, such as upgrading plant and equipment, which could be considered when and if parts of the shopping centre are to be refurbished or redeveloped. Weve eoR RMade aRndale CentRes eneRGy stRateGy CIBSE Building Performance Awards, where the property investment company won both the coveted Carbon Champion 2015 award, and the Energy Management category. The judges said M&G Real Estate had methodically set about making lasting energy improvements to its shopping centre portfolio. From the real estate fund managers perspective, its drive to reduce the carbon emissions from its shopping centres makes sound business sense. Nina Reid, director for responsible property investment at M&G Real Estate, says the initiative is driven by the joint aims of: managing the risk of obsolescence; ensuring compliance with environmental regulations; and reducing operational costs, which would otherwise be passed on to retailers through the service charge. In developing our strategy, and in making the business case for doing it, we understand the growing impact of legislation, such as the Energy Savings Opportunity Scheme (ESOS), she says. Other regulations influencing M&G Real Estates strategy include Minimum Energy Performance Regulations (MEPS), and Air Conditioning Inspection Reports (ACI). Manchester Arndale Centre accounts for more than half of all the energy tried to focus predominantly on low and no-cost measures. Where we do make an investment we look for a very clear payback that we can justify to our tenants, Reid explains. The types of measures implemented at the Manchester Arndale are summarised, in order of priority, in the panel. Tackling tenant energy use In addition to reducing the landlords energy consumption, M&G Real Estate has also produced environmental guides to help retailer tenants in its shopping centres to make improvements to their energy consumption by detailing the financial benefits of reducing their environmental impacts. The guides cover fit-out, refurbishment, energy efficiency of equipment and appliances, and explain the importance of monitoring consumption. Reid admits this can be a sensitive issue for those retailers that have a standard fit-out across all of their stores. Our approach is on the soft side. Its about helping our tenants particularly the smaller retailers understand energy consumption by explaining the benefits in terms of cost savings from putting in energy efficient lighting, for example, she says. Alongside the guides, M&G Real Call foR entRies Entries to the 2016 Building Performance Awards open on Monday 1 June and close on Thursday 10 September 2015. To receive the latest news and updates about the awards sign up to our newsletter. legislative changes will make it unlawful for commercial properties, including shopping centres, to be let if they have an EPC Rating of F or G (the lowest two grades). In a retail environment a tenants fit-out can have a big impact on the EPC rating. For example, if a tenant were to install an inefficient lighting system that makes the unit F or G rated, that unit can no longer be let the requirements of the TM44 Air Conditioning Inspection guidelines so it should also contribute to satisfying the requirements of ESOS. Shopping centres are all very different so we dont have a one-size-fits-all approach; instead we develop tailored plans for each centre, explains Reid. For example, moving to a naturally ventilated mall is an energy saving opportunity, but it is not an appropriate solution for every centre that we manage. Weve tried to focus on low and no-cost measures; where we do make an investment we look for a very clear payback that we can justify to our tenants unless the lighting scheme is changed, explains Reid. M&G Real Estate chairs the Better Building Partnerships (BBP) group involved with the creation of a landlord energy-rating tool to give detailed information on the split between landlord and occupiers, which is claimed to be more appropriate than the current version of DECs for multi-tenanted Even with the CIBSE Carbon Champion accolade under its belt M&G Real Estate is not resting on its laurels. Looking to the future, Property Energy Performance Reports are expected to play a key role in assisting M&G Real Estate to achieve its current target of a 20% reduction in carbon emissions by 2020 against a 2012 baseline. Our key lessons learned is that you have to keep a constant eye on what youre doing to prevent energy savings slipping backwards, says Reid. With this level of commitment it will take a brave person to bet against the real estate fund manager being in the running for next years CIBSE Carbon Champion. cJ