Colorado has long been a pioneer of environmental legislation—but HB 21-1286, or the Energy Performance for Buildings statute, was arguably its most ambitious. By setting sector-wide emission reduction goals of 7% by 2026 and 20% by 2030 (from the 2021 baseline) for covered buildings, the state aims to enhance building performance, reduce operational costs, and promote sustainable development for Colorado’s commercial properties.
To ease the transition, Colorado and local governments created Building Performance Standards (BPS), or benchmarking and reduction requirements for affected properties. This program sets energy performance targets for commercial, multifamily, and public buildings 50,000 square feet or larger to meet for 2026 and 2030.
Going into effect in October 2023, BPS rules require these buildings to report calendar-year data by a June 1st reporting deadline. They’ll need to continue reporting annually, with specific compliance milestones for reductions on June 1, 2027, and June 1, 2031.
Property owners out of compliance with the BPS will face strict penalties from Colorado. If they fail to submit an annual benchmarking report, they’ll be hit with a $500 fee for the first violation and $2,000 for each following violation. If they don’t reach emissions goals for a 2026 or 2030 target, they’ll face civil penalties of up to $2,000 for the first violation and up to $5,000 for each additional violation.
To add more urgency, after failing a first compliance milestone, building owners receive another violation every month if they do not show progress towards meeting BPS targets. If no further progress is made, the state may take legal action and force owners to comply by requiring the completion of one or more emissions reduction projects.
How do I Reach BPS Compliance?
The state understands that property owners need flexibility in order to change, so they have provided multiple pathways for property owners to fulfill BPS requirements. Colorado offers two main options, giving owners the freedom to choose the solution that’s best for their property. They are the:
Energy Efficiency Pathway
The first option, the Energy Efficiency Pathway, requires owners to reduce the amount of energy they use on-site to meet the building’s Site energy use intensity (EUI) target. As a metric, Site EUI is the total amount of energy for all fuel types (including natural gas) used by a building divided by its total gross floor area. This information is commonly found in the property’s energy bills.
To reach the pathway’s goals, owners will need to make energy efficiency improvements, upgrade their properties, or implement policies for tenants. Some examples are installing new lighting, increasing insulation, and updating HVAC or appliances.
Greenhouse Gas Reduction Pathway
Alternatively, owners can choose to satisfy BPS requirements by reducing their property’s greenhouse gas emissions, measured by Greenhouse Gas Intensity (GHGI). The metric is calculated by simply dividing the building’s emissions by its gross floor area. The state provides a calculator that makes it easy to assess the property’s greenhouse gas emissions.
In addition to reducing the property’s GHGI through energy efficiency measures, the state encourages use of renewable energy to achieve overall emissions reduction requirements. While energy efficiency investments decreases on-site energy load, renewable energy reduces their usage of grid energy from fossil fuels.
How Do I Choose a BPS Pathway? When is the Deadline?
Building owners must use the Compliance Pathway Selection form to select a compliance pathway by July 1, 2024. If they do not choose a pathway, they will be automatically bucketed into the Energy Efficiency Pathway.
Colorado also allows building owners to change their pathway through July 1, 2025. This gives them extra time to audit their site and pivot according to their findings if needed.
After that time, owners will be responsible for achieving the 2026 targets outlined by the BPS.
Using Solar to Satisfy BPS Requirements
Building owners may choose to achieve the required performance standards through a reduction in a building’s GHG emissions through a combination of energy efficiency, electrification of building systems, and the use of renewable energy systems.
In the Spring of 2024, Colorado passed legislation that allows Virtual Net Metering (VNEM) to be utilized at multi-tenant properties. Via VNEM, the solar energy generated from a single solar program can be applied against the energy usage of many separately metered tenants.
VNEM creates an important option for retail properties. Since a majority of the electricity utilized at a retail property is consumed through tenant electrical meters, most property owners do not have enough electrical consumption on their own house electrical meter to support a large solar program. However, via VNEM, a solar program can be installed that benefits separately-metered tenants and a program can be sized to be large enough to help meet the requirements of the BPS Greenhouse Gas Reduction pathway.
Property managers can finance a program in a variety of ways, as well as use virtual net metering to distribute energy to tenants.
In combination with cost-effective energy efficiency upgrades, installing solar at a commercial property allows owners to achieve BPS requirements via the Greenhouse Gas Reduction Pathway. If owners intend to use renewable energy for compliance with GHGI targets, the CO BPS has outlined requirements for qualification. They’ll need to:
- Prove that all cost-effective energy efficiency and electrification measures have been performed at the building. These are site updates with a benefit-cost ratio greater than one.
- Conduct an ASHRAE Level II Energy Audit demonstrating that cost-effective energy efficiency and electrification measures have been implemented at the building, as well as how renewable energy will help the building owner reach compliance with a GHGI target.
- Own and retire RECs from Colorado in the same year the solar energy was generated. Third parties can also retire RECs for the building owner.
If on-site solar is not feasible, the state also allows property owners to subscribe to a community solar garden in order to satisfy the GGRP. In these agreements, the owner pays a third party to receive a share of the energy generated by an off-site system. To use community solar energy towards BPS, Colorado requires properties to maintain a subscription for a minimum of 5 years. Additionally, it is typically only feasible for a property owner to subscribe to a community solar program for their house electrical meter, which may not have enough electricity usage to meet the BPS requirements at many retail properties.
Reaching BPS Targets with King Energy
King Energy specializes in deploying solar programs on retail and industrial properties where the energy generated is shared across local tenants via Virtual Net Energy Metering. Additionally, King Energy typically installs solar programs at no cost to the property owner, as the revenue generated from providing energy to local tenants pays for the program over its lifetime.
Therefore, King Energy provides a simple approach to supporting the BPS:
- King Energy will install solar at a commercial property, frequently at no cost to the property owner.
- Local tenants will be registered in the program and will receive the energy generated at a discount below the local utility.
- King Energy’s software platform will integrate with the property owner’s Energy Star Portfolio Manager reporting system, providing data on the energy generated by the solar program and on the amounts utilized by local tenants, thus satisfying the BPS reporting requirement.
Moving Towards Reduction Requirements
To help reach sector-wide reduction targets of 7% by 2026 and 20% by 2030, property owners will need to act quickly to avoid costly penalties. If they haven’t already, they’ll need to conduct audits and begin strategizing to satisfy the BPS requirements.
Property owners have until July 1, 2024, to select a pathway, and can change course by July 1, 2025. After that time, they’re responsible for reaching reduction targets for either Site EUI or GHGI.
For many properties, a solar installation is a simple, and often no-cost, way to help satisfy BPS requirements.
Take Steps to Reach Your BPS Goals
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For more info on BPS requirements and guidelines, read the Building Performance Colorado: Technical Resource Guide