One of the biggest challenges facing the construction industry in decarbonising the building stock is the issue of cost and the unwillingness to accept that low cost does not equal best value. Someone said to me the other day that “construction is too cheap” – we ask more and more of our buildings in terms of their performance yet are not willing to pay more for either professional fees or construction works. No wonder there is such a performance gap between what is designed and what is actually built.
In a bid to meet tight programmes and stick to tight budgets, corners are cut, there is no time to explore new ways of doing things, and no appetite to try new things, to seek better ways of designing and constructing to ensure the best quality, the best building performance and the lowest energy use. By the time it gets to the installation and commissioning stages, the desire by all involved is, more often than not, to simply finish the job as quickly as possible, while incurring minimal costs.
One of the missions of the Active Building Centre (ABC) is to prove Whole Life Cost (WLC) benefits of Active Buildings. It is recognised that the addition of renewables and smart technologies will increase capital expenditure (capex), but it is assumed that such technologies will ensure operational energy, and hence operational expenditure (opex), will be lower and hence prove of greater value over the lifetime of an Active Building. If buildings are cheaper to run effectively then surely, they will prove WLC benefits?
It’s not quite that simple though, as the cost of (relatively) new technologies such as battery storage is still currently high and the technologies are unproven over any length of time, meaning that for construction industry professionals to calculate WLC considerations, they can only use the information they have available to them, relying on manufacturers warranties for lifetime predictions and using the current high costs.
To put this to the test, last year I commissioned a Life Cycle Cost (LCC) Comparison Report of our Active Office, comparing it to a standard office building of the same size, over a 60-year life period. It is important here to note the difference between WLC and LCC. While the LCC of a building relates to costs associated directly with construction and operation, the WLC includes additional factors, such as land, income generated from a building and support costs associated with the activity within a building. WLCs are usually calculated by clients, using LCCs prepared by construction industry professionals. The LCC does not take into consideration business models for generating income from energy trading, for example.
The report was carried out by an external consultancy with expertise in LCC work, using data provided by the SPECIFIC and ABC technical teams. The idea was to produce an independently prepared baseline report, highlighting the challenges facing the ABC in proving WLC of Active Buildings and identifying areas needing further research input. As anticipated, some of the energy systems were too novel for the consultants to properly assess. These included the batteries, PV-T system, PV roof and EV chargers. It was assumed that these would be replaced on a like-for-like basis at the end of their warranty periods at the same cost as they were in 2018 (the time of installation). However, there are several issues with these assumptions – firstly, the costs of these technologies are predicted to fall over the next ten years, based on historic evidence gathered by industry experts; secondly, there is no evidence to suggest they will need to be completely replaced at the end of their warranty period; thirdly, it is unlikely that the technologies will have no value at the end of this time; and, fourthly, technologies will have moved on by the end of their warranty period and may be replaced with newer, better, cheaper alternatives. Bloomberg have modelled the fall in battery prices between 2010 and 2018 – an incredible 85%:
And predict further falls in prices over the next 10 years:
Other benefits of Active Buildings – the potential avoidance of costly and disruptive infrastructure upgrades; the operation of the building and batteries in a strategically controlled way to drive down carbon and financial costs; provision of evidence to manufacturers regarding warranty periods; different business models, including use of variable energy tariffs; income generation; and carbon costs – could not be taken into account by the LCC consultants, but all stack up to prove the business case for Active Buildings. Hence there is a need for much more research in this area and our demonstrator buildings are a perfect place to start.
While I am certain Active Buildings will prove their worth over their lifetime, this is clearly a complex issue to prove and will need a different way of thinking to the ‘business as usual’ approach.