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The myth of costly green buildings

16 Apr 2020

By BCA

The simple logic is that energy efficient items are usually more costly upfront but they reap savings over time.
- Mr Tan Phay Ping, Building System and Diagnostics Pte Ltd
 

Buildings help to drive economic growth in cities by supporting commercial activities and fulfilling residential needs. As with other infrastructure like roads, ports, rail or utility supplies, buildings can suffer wear and tear after years of constant use and environmental exposure.

In starting a new building project, developers need to consider not only its “first costs” (design and construction expenses) but also long-term running costs such as utilities, operations, and maintenance. The latter are spread over a building’s lifetime and can run up to 30 years or more. In fact, as a building grows and ages, it is possible for the operating costs of a building (OPEX) to outstrip its initial construction expenditure (CAPEX)!

 
capex-maintenance-utilities-operations
 

A Life Cycle Cost Analysis (LCCA) is used to find out a building project’s “true cost”. Applying LCCA early in the design process allows developers to choose from a range of possible building and systems designs. The aim is to find the one that delivers the most cost-effective option to build, operate, maintain and decommission. This allows developers to work out how long it will take for a specific system to “pay back” its incremental cost.

Are green buildings worth it?

A year-long study was undertaken by Squire Mech Pte Ltd (jointly with RSP Architects Planners & Engineers (Pte) Ltd, Building System & Diagnostics Pte Ltd and Arcadis Singapore Pte Ltd) recently and it makes a strong case for the value of green buildings. The buildings were analysed from a lifecycle cost perspective and compared. All had achieved the various Green Mark ratings of Gold, GoldPLUS and Platinum.

What it found was that owners of Green Mark buildings reap greater energy and water savings throughout its lifecycle, and these savings outweigh the early investment cost. In fact, the greener the buildings, the higher the cost savings. However, greener buildings also needed a longer period to recoup the initial construction costs, with the highest tier Platinum-rated buildings taking close to six years to do so.

Findings for Green Mark Non-Residential Buildings (NRB)

 GM Certification  Green Cost Premium Simple Pay Back (yrs)  NPV Savings per GFA (median $/m2
 Gold 0.12%-1.89%  0.81-2.45   48
GoldPLUS  0.70%-1.87%  1.89-3.56   117
Platinum  1.00%-4.40%  2.30-5.80   225

Findings for Green Mark Residential Buildings (NRB)

  GM Certification  Green Cost Premium  Simple Pay Back (yrs)   NPV Savings per GFA (median $/m2
 Gold  0.23%-1.71%  Payback not applicable for residential projects as most of the savings are enjoyed by the household  39
 GoldPLUS  0.64%-3.76%  54
 Platinum  0.79%-4.15%  140

Reaping the benefits of Green Mark

One of the study’s lead authors, Mr Tan Phay Ping from Building System and Diagnostics Pte Ltd, pointed out that the use of LCCA helps developers to appreciate the long-term cost savings of an energy efficient GM building. This may not be apparent in the initial stage of the project where only the CAPEX is calculated. “The simple logic is that energy efficient items are usually more costly upfront but they reap savings over time”, he says.

In fact, the advantages of the BCA Green Mark scheme are manifold. Is it robust enough when benchmarked against other international Green Building Rating Tools such as the US LEED and Britain's BREEAM? Yes.

Is it well-suited for tropical and subtropical infrastructure? What about cost-effectiveness? Does it have enough flexibility for different design options? The answers are all yes. 

Going beyond calculating economic benefits, each Green Mark performance indicator also delivers additional gains in terms of social and environmental impact. A good example is the use of greenery to help absorb carbon dioxide as well as provide respite for building occupants. Such positive effects on air quality and users’ mental well-being risk being overlooked if they were only examined from the cost-benefit perspective. 

As Mr Tan pointed out: “Economic savings and environmental benefits are not mutually exclusive – and the Green Mark scheme is a good case in point.” Perhaps it is time for developers to relook at what green buildings mean – not simply as an act of social responsibility or prestige, but because it makes good business sense.

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The Building and Construction Authority (BCA) is an agency under the Ministry of National Development, whose mission is to shape a safe, high quality, sustainable and friendly built environment. As the lead public agency, we champion transforming Singapore into a future-ready built environment.