Unlocking Energy Data Across Your Building Portfolio with Smart Meters

New environmental regulations continue to crop up across jurisdictions to support net zero goals. For example, Local Law 97 (New York City) requires most buildings over 25,000 square feet to adhere to stricter energy efficiency and greenhouse gas emissions limits. The Denver Energize Ordinance requires buildings over 25,000 square feet to share energy usage. There has been a notable increase in energy consumption and CO2 emissions reporting requirements across municipalities and states in the United States.

Additionally, the U.S. Securities and Exchange Commission (SEC) recently adopted new disclosure rules to promote investor transparency. Under the new guidelines, large accelerated filers (those with at least $700 million in shares held by public investors) and accelerated filers (those with $75 million—$700 million in public shares) must disclose their Scope 1 and Scope 2 greenhouse gas emissions, if material. This, of course, requires companies to measure those emissions.

Many investors today consider sustainability when making investment decisions. A study conducted in 2022 by GRESB found that more than 75% of surveyed investors encourage their fund managers to participate in annual GRESB assessments, with approximately a third of investors making participation mandatory. 

Third-party benchmarks, like the GRESB Real Estate Assessment, have been developed to provide investors with a transparent benchmark to accurately compare assets from different funds. Because these benchmarks aim to compare assets fairly, robust data coverage is highly weighted. For example, 20% of the GRESB Real Estate Assessment points are awarded for verified monthly consumption data for each site across electricity, water, and natural gas usage. GRESB and other assessment frameworks award points based on a portfolio's data coverage to encourage funds to provide accurate visibility into their sustainability performance, such as energy consumption, waste management, water use, and greenhouse gas (GHG) emissions.

Many firms have internal sustainability and efficiency goals to reduce their environmental impact and optimize efficiency. Almost 60% of real estate investment and management firms strive to meet emission reduction goals. Monitoring progress toward these goals is only possible with data. Measuring energy usage is a crucial first step in reducing energy consumption.

Smart meters — also known as shadow meters in the real estate investment and management space — are installed across a portfolio to provide direct access to energy usage. Depending on the smart meter, this data can provide a building-level overview or even track specific pieces of equipment.

Smart meters help real estate investment and management firms by automatically providing real-time, transparent data on tenants’ energy use.

Smart metering is the best option for building owners who lease buildings using triple-net terms. Given the lease structure, firms often do not have access to utility usage for these assets.

Smart meters are the best option for real estate firms. Onsite manual data collection is expensive and time-consuming and does not offer the additional value smart meters provide. Utility bill scraping can provide top-level results, but this relies on tenants to provide access to their bills; this can be tedious or a dead end if tenants decline to share this information.

Smart meters aren’t just a valuable tool for sustainability reporting — they also benefit tenants. Building owners can share energy insights with tenants to identify ways to help lower their operating costs. For example, a smart meter can reveal if the building systems are running outside operating hours or if the electric consumption is unexpectedly high. Tenants can lower their utility bills by identifying and addressing issues like these. A Department of Energy study estimated that smart metering programs can generate up to 20% in energy savings by identifying and actioning on energy savings opportunities.

Consider a real-life example to see how this solution can make a difference. WPT Capital Advisors, a real estate investment and management firm in the American industrial warehouse space, needed access to its energy consumption data for ongoing sustainability reporting. The company had yet to submit to GRESB because it lacked the necessary data to complete the assessment. Manual data collection would have taken months and required coordination with dozens of utilities—a process that building owners would otherwise need to coordinate monthly.

WPT partnered with Redaptive to install smart meters in 16 locations. WPT could track water, natural gas, and electrical usage across its portfolio without requiring challenges like integrating utility APIs or acquiring utility bills from individual tenants. WPT reports a 50% reduction in data collection costs and uses insights from Redaptive’s data platform to engage with its tenants on co-sponsored sustainability initiatives.

Considering the value smart meters unlock with investors, tenants, and your firm’s Net Zero plan, implementing a smart meter program is a worthwhile investment.