Institutional Investors Dig Into Detail on Deep Energy Retrofits for MURBs

By Tina Nicholson and Nathaniel Sneyd-Dewar

Some of Ottawa’s leading institutional investors are taking a closer look at the prospects for deep energy retrofits in the city’s multi-unit residential buildings (MURBs) after joining a six-month workshop series co-hosted by the Ottawa Climate Action Fund (OCAF), a project of the Ottawa Community Foundation, and the Ottawa Energy Collective (OEC).

Buildings represent the largest share of Ottawa’s greenhouse gas (GHG) reduction potential, but that potential extends far beyond new construction. The overwhelming majority of the buildings that will be with us in 2050, the target year to bring our emissions to net-zero, have already been built. So retrofitting those buildings to reduce their energy use and carbon pollution is a centrepiece of any climate plan.

MURBs are a particularly complex challenge on the road to a lower-carbon building stock. That’s why OCAF and the OEC convened some of the building sector’s most creative doers and thinkers to dig into the biggest barriers to bankable deep retrofits that get the job done and deliver a solid financial return to their investors. Participants explored the need to assure long-term paybacks for deep retrofit projects and make solid business planning a part of the roadmap for decarbonizing existing buildings.

Deep Thoughts on Deep Retrofits

Deep retrofits are energy efficiency projects that reduce GHG emissions by at least 50%. They deliver direct value by cutting energy consumption and operating costs. They provide indirect value by reducing carbon emissions; making buildings more valuable, comfortable, productive, healthy and reliable; and supporting important policy goals like decarbonization and climate resilience. 

Workshop participants agreed that some of these values are easy to quantify. Others would count as added benefits. But as people increasingly demand healthier places to live, work, learn, and play, it’s crucial to think broadly about the different kinds of value deep retrofits offer to different members of our community.

An essential role for energy retrofits is to prepare existing buildings for a low-carbon future. Electrification and low-carbon technologies are leading the charge, triggering fast enough, deep enough change that we can only follow the wisdom of hockey great Wayne Gretzky: We must “skate to where the puck is going, not where it has been.”

That means today’s retrofit decisions must not lock businesses, building occupants, or communities into fossil fuel technologies that won’t be with us over the long term and will continue to  increase in cost. The rapid shifts we’re already seeing in policy, financing, and building practices make deep retrofits and building decarbonization a critical part of Ottawa’s low-carbon future.

A Vast Payback for Building Owners

A key consideration for workshop participants was the vast value that deep retrofits can deliver to building owners. They future-proof buildings against rising energy costs and carbon taxes and future sustainability compliance standards. Better buildings also command higher rents, while increasing net operating income (NOI) by cutting utility and maintenance costs

Higher NOI can also contribute to higher building valuations and asset values, as well as improved brand recognition and capital access for asset owners. And because deep retrofits are verifiably sustainable, they support sustainability branding, with minimal risk of being accused of greenwashing.

Happier Tenants Mean Stable Buildings

Energy retrofits can also keep vacancy and turnover rates low, workshop participants noted. When living space is comfortable and energy bills are more manageable, tenants move less often, which reduces foregone rental income and turnover costs like painting, cleaning and new tenant intake And deep energy retrofits offer better physical and mental health through healthy air temperatures, humidity and noise levels, and better air quality—an even bigger selling point for occupants who work from home. 

We also know that we’re in a climate emergency and a housing affordability crisis. The multiple benefits of deep retrofits make it easy for building owners and investors to be part of the solution – and can reduce cost burdens on tenants. But there are also opportunity costs to factor in, beginning with the increased risk of power outages, health impacts, and supply chain bottlenecks. There’s still time to hold off the worst of those impacts. We all have a part to play, and now is the time to pick up the pace. 

Leading Ottawa building owners and developers are already changing the way they think about energy and exploring the long-term business case for deep retrofits. They recognize that climate change is a threat multiplier. And they are starting to integrate decarbonization into asset management across their building portfolios and do not focus on simple payback as the primary financial indicator. Their life-cycle cost analysis is pointing to deep energy retrofits as a worthwhile long-term investment in comfort, financial stability, and GHG reductions.


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