05/07/2012 04:22 pm ET Updated Jul 08, 2012

Empire State Building's Energy Savings Beat Plan

By Nick Zieminski

NEW YORK, May 7 (Reuters) - An upgrade of New York's Empire State Building has reduced the skyscraper's energy use by more than expected, the project's partners said on Monday.

The work, which began in 2009 and included improving the tower's 6,500 windows and an upgrade of its automation systems, has saved $2.41 million in the first full year since most of the work was completed. That is 5 percent above what engineers at Johnson Controls Inc promised as part of their $20 million contract for the work.

The savings are part of an expected 38-percent reduction in the building's energy use within three years, saving $4.4 million in annual operating costs.

Contractor Johnson Controls guaranteed the bulk of the savings, with the rest to come from the renovation of tenant spaces and work such as new systems for tenants to monitor energy use.

The Empire State Building is now 20 percent more energy efficient, and similar efficiency improvements can be achieved in most commercial buildings, Johnson Controls said. The retrofit's partners also included project manager Jones Lang LaSalle, The Clinton Climate Initiative and the Rocky Mountain Institute.

Johnson Controls will now work with the building and its tenants to manage energy use, said Dave Myers, who heads the Milwaukee-based company's building efficiency business. Under the terms of its performance contract, the company has guaranteed 20 percent savings for 15 years.

"It's very clear in existing buildings there is a tremendous opportunity to save energy," Myers said.

Retrofits of U.S. commercial buildings are forecast to become a $16 billion market by 2020.

The Empire State Building's owners aim to use their experience as an example for policymakers, and for other building owners, to spur a wider embrace of projects that modernize aging buildings in the United States.

"I think we're going to find out that these are not future savings being pulled forward, that we're going to end up with better result overall," said Tony Malkin, President of Malkin Holdings, the building's owner.

Malkin said he hopes making data available from the Empire State retrofit will spur legislation to create incentives for building owners for more such projects, which are labor-intensive and create jobs. For example, federal tax rules could create tax deductions for capital investments in energy efficiency; government could also provide financing guarantees.

Proponents of retrofits had few concrete examples of measurable, large-scale energy savings before the Empire State Building project, Malkin said.

"This is practice which can inform policy," he said.