What Does a NYC Building Energy Grade Mean, and How Can I Improve Mine?

October 4, 2021
Rules and Regulations

Our clients have been asking us all about New York City’s new building energy grades ever since the city mandated that building owners post them prominently on every large property. While New York diners are used to seeing letter grades posted outside of restaurants and bars, building owners are still acclimating to these new grades that measure a structure’s energy efficiency on a scale of A to F. It’s easy to imagine an inspector from the Health Department issuing a letter grade after looking over a restaurant, but it’s less obvious how building energy grades are issued and what they tell us about how much pollution a building emits. Beyond that, many of our clients have been left wondering what these grades mean for building owners now and in the future.

The intention behind the grades is to “name and shame” big carbon emitters, and nudge them towards making their buildings more sustainable and environmentally friendly. While a low building energy grade might not send visitors and tenants screaming the way a C outside a Michelin rated restaurant would, failure to improve that grade might cost you big down the line. As part of the City’s ambitious climate goals, the vast majority of large buildings in the five boroughs will have to dramatically cut their carbon emissions or face some serious fines. With that in mind, it’s important to understand what, exactly, these grades mean and how you can improve yours to avoid paying big penalties down the line. So if you’ve got questions, read on, because we’ve got answers.

What are building energy grades?

In 2019, the New York City Council passed Local Law 95, which amended previous legislation to require the owners of most large buildings to post their building energy grade in a “conspicuous location.” Big buildings that fall under the law’s purview had to have their energy grade posted by October 30th of last year. Property owners who neglected to do so faced a $1,250 fine.

Grades range from A to F and are based on your building’s ENERGY STAR Portfolio Manager Score, which measures how well your property’s energy consumption stacks up to similar buildings on a scale of 1 to 100. Here’s how ENERGY STAR Portfolio Manager Scores line up with the City’s building energy grades:

Don’t wait for a Department of Buildings (DOB) inspector to swing by your property and make an assessment, it’s up to building owners to submit their ENERGY STAR score to the city every year. Failure to report your property’s ENERGY STAR Portfolio Manager Score to the DOB or hang your grade out front will earn you an F, along with a bevy of fines.

While the majority of buildings with more than 25,000 square feet must comply with the law, there are a few exemptions. Multifamily residential buildings with less than 20 units, or indoor parking are off the hook, as are some mixed use buildings if certain amounts of the property are unable to be covered by the ENERGY STAR rating system. All buildings with large data centers, television studios, and/or trading floors are also exempt. But just because your property’s exempt doesn’t mean you don’t have to add some DOB sponsored decoration, ineligible buildings have to display an “N” out front.

If you’re wondering what your building’s energy grade is, we built a website that makes it easy to look up. Look up your address here.

How can improving your building’s energy grade save you money?

The ENERGY STAR score that NYC’s building energy grades are based on provides a comparison between your building and similar ones nation-wide. That means that a building with a score of 50 is operating at the national median energy efficiency. So while a building with an ENERGY STAR score of, say, 53, can proudly boast of being in the top half of its class, it's stuck posting a “D” grade by the front door. But what does that “D” mean outside of hurt pride? Well, when you consider the rising cost of fuel and electricity and the looming carbon emission cuts for big buildings mandated by Local Law 97, improving that grade could save you quite a of money in the short and long run.

Let’s use a large office building in Manhattan as an example. Let’s say this building wound up with a D and an ENERGY STAR score of 45. If the owners of this building invested in energy efficiency measures now and brought the building’s grade up to an A, they’d save upwards of $161,000 every year on fuel and electrical savings while dramatically reducing their carbon footprint. That would reduce that one building’s energy consumption by over 2,500 gallons of oil, or the equivalent of taking 60 cars off the road every year.

Local Law 97 was passed as part of New York City’s ambitious Climate Mobilization Act which aims at making the City carbon neutral by 2050. Because big buildings account for upwards of 70% of all carbon emissions in New York, Local Law 97 mandates that most large buildings have to meet certain emission standards by 2024, and cut their carbon emissions by 40% by 2030. So if that Manhattan office building brought its grade up to an A, it would reduce its carbon emissions anywhere from 527,000 - 713,000 pounds, bringing into compliance with Local Law 97 and sparing its owners thousands of dollars in penalties.

So, how do I improve my building’s energy grade?

Improving your building’s energy grade can be a daunting task. After all, more than half of all buildings in the city are graded “D.” That said, it’s worth remembering that space conditioning and hot water heating account for more than half of most building’s energy consumption. Simply put, if you can reduce your heating costs, you can reduce your carbon footprint, save money on utility costs, while making big strides towards compliance with new regulations like Local Law 97.

Even better: maximizing your building’s space and water heating system’s efficiency often doesn’t mean overhauling the system or breaking the bank. With the right technology, monitoring, and management, you can cut your building’s emissions and save money. Using advanced, industry leading technology backed by a team of boiler experts, Runwise is the most cost effective way to raise your energy grade. There are a lot of big buildings in New York owned and managed by busy people, so fortunately Runwise’s industry leading wireless system can be installed in a day and works with any central heating system. So what are you waiting for? Find out how Runwise can raise your Building Energy Score today.