Performance Benchmarking: Analysis Of Retail and Office Properties’ Electricity Consumption
Thursday, 26 May 2011 |  Andre Ferreira  |  0 comment

Imag by Stig Andersen

An extract from Chapter Five of The Sustainable Energy Resource Handbook Volume 2.

INTRODUCTION

Rising Electricity Costs in South Africa have placed tremendous focus on the ability for landlords of commercial property to reduce operating costs, with the view to remain competitive on the basis of profitability and rental income security.

The Investment Property Databank is a global organisation with operations in 20 countries and originating in 1985 in the United Kingdom. In South Africa IPD has provided financial performance benchmarking to the commercial property industry for the past 10 years with its client base consisting of 70% of the listed property investment market on the JSE. In 2008, emanating from the UK office, a global effort was launched towards establishing an environmental performance benchmarking service to complement the already successful financial performance benchmarking. This process of leveraging, to great advantage, off internationally accepted and accredited property type classifications, allowing for cross country and cross property type environmental performance measurement to be developed with ease.

In South Africa, IPD’s definitions of per m2 area space definitions are based on the Method for Measuring Floor Area published by SAPOA (2010). The IPD Environment Code, now in its second edition (November, 2010) is the culmination of a global effort towards environmental data collection and benchmarking. The Environment Code represents a forward progression from the IPD Occupier Cost service whereby monetary cost figures for environmental resource usage (water, waste and electricity) have been accumulated over time.

The IPD Environment Code represents the combination of resource quantity together with cost to enable a more comprehensive assessment. In South Africa, due to the recent launch of the Environment Code, there is no significant database of resource usage as is already evident in the UK. Due, however, to the operation of the IPD Occupier Cost service in South Africa there is a basis for analysis to be undertaken.

METHODOLOGY
The process involves the use of Electricity Costs figures in Rands per m2 per Annum for 2009 and the subsequent conversion of these into estimated consumption figures in Kwh per m2 per annum inferred by using publicly available Eskom 2009/10 tariff schedule as per the Eskom website.

Subsequently, assuming equal variance between cost sample data and inferred tariff schedule data, a confidence interval was created assuming a normal distribution to test whether the inferred benchmark medium consumption figures could have originated from the existing cost sample given predetermined Eskom tariff.

If the hypothesis is rejected at the 25% level of significance (to take account of quartile benchmarks) then it is noted that the observed median consumption level could not have been verified given existing cost and tariffs (Keller, 2003). In other words, assuming a correct tariff and consumption level (which is tested for reasonableness via percentage difference from the mean) it is inferred that there is an over- or under-charging of the client.

This testing procedure was conducted under two assumptions for tariff structure. On the basis of a 10% - 80% - 10% time consumption split between off peak, normal and high peak consumption periods, as well as for a 20% - 60% - 20% composition. It is observed that overall, the latter composition produces the greatest number of statistically significant consumption benchmark medians per sub sector property type and thus is used in the analysis. This process could be repeated to the point where the largest number of benchmark medians is found to be statistically significant. However, this is left as the basis of future inquiry and removed from this analysis for the sake of simplification.

To access the rest of the chapter and to read more on retail and office properties' electricity consumption order the Sustainable Energy Resource Handbook Vol 2 online here.

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