SUCCESS STORIES

Façade Leasing

Façade Leasing is a pilot scheme that aims to explore how the construction industry can work together to lease façades as a service based on energy efficiency or ventilation control.

There are two aims: first, to de-materialise this part of the construction industry, by shifting the current business model based on product volume to product-service-systems where materials can be recovered and repurposed, reducing environmental impact. Second, when façades are integrated into buildings with different technologies, they can vastly improve energy performance, making cost savings on energy consumption and reduce carbon emissions.

In a competitive construction industry, with a large number of intermediaries, the challenge is to foster collaboration and build direct channels between building owners and façade fabricators. Climate-KIC has provided initial funding for the project, helping give a sense of credibility and create conditions of trust. This has encouraged key industry players to get on board with the pilot to develop the new ways of working that leasing requires.

Key Points

  • Improving the energy performance of buildings through façade renovation could reduce EU CO2 emissions by five percent
  • Dematerialisation, shifting from product volume to services based on product functions, represents further reductions in environmental impact
  • Developing façade service packages to enhance building performance and indoor comfort represents a new strategic direction for an ailing industry
  • An organisational shift in the construction industry is needed to create the structures and incentives to deliver façades as services
  • The Façade Leasing project has assembled interested industry partners to collaborate and explore potential risks, benefits and ways to work together

Project Background and Drivers

Buildings are responsible for 40 percent of energy consumption and 36 percent of CO2 emissions in the EU. Older buildings can be up to 20 times as inefficient in their energy consumption for heating as new ones. Around a third of Europe’s building stock is more than 50 years old, but by improving energy performance and reducing energy demand, CO2 emissions could be reduced by around five per cent.

The legislation driving this includes the 2010 Energy Performance of Buildings Directive and the 2012 Energy Efficiency Directive. Countries, too, have national measures to reduce the energy consumption of buildings. These include schemes to provide financial support for insulation measures, air sealing, and improved ventilation systems.

Another key aspect of reducing environmental impact is to address the linear use of resources and materials through dematerialisation. Current systems of production and consumption are based on a ‘take, make and dispose’ model, using energy, and creating waste and pollution along the way. In a ‘circular’ approach, materials are regarded as valuable at all stages throughout a product lifecycle. In this way, products and materials have greater longevity – they can be retreated, restored, reprocessed or remanufactured into new products.

Conventional façades provide protection against climate, noise and pollutants, ventilation, humidity control and fire safety. However, they tend to be part of larger, centralised control systems, which are often inefficient. Integrated façades, by contrast, are de-centralised, flexible and responsive. As such they offer greater opportunity to control and enhance building performance and provide services – from thermal and indoor comfort to PV energy supply, passive air purification or even food production. Service contracts can be combined and tailored to the needs of the building.

A New Strategic Direction for the Façade Industry

The façade industry is currently experiencing a number of pressures that put its long-term prospects in doubt. These include a reliance on selling greater quantities of technological products dependent on vulnerable raw materials and reliant on a fluctuating construction industry for new business. Up to 88 per cent of façade installations are tied to the construction of new buildings. Because of this, it is difficult to begin discussions about façade renovation since general contractors are the main point of contact and hold sway over price structure, contract and operations.

The gap between client and supplier, occupied by general contractor intermediaries, prevents direct communication, long-term collaboration or material co-ownership between sub-contractors and clients. Façade manufacturers are the party with the widest technical expertise on the functioning of components, yet they are currently excluded from the life-cycle process of the building when construction is finished.

In the current business model, the building owner invests in a new façade, effectively becoming responsible for its maintenance – an activity outside of its core business. When the façade reaches the end of its life, the tendency is to initiate a new project, with new consultants and fabricators, who often lack in prior knowledge or material continuity. Work is duplicated and efficiency is lost.

Financial incentives are not shared between demand and supply side stakeholders. The short-term capital investment required by suppliers to maintain operations requires them to find new projects constantly. This is incompatible with the long-term investment required by real estate development or renovation projects.

The circular business model approach proposes an alternative way forward by offering different functionalities of façades service packages to enhance building performance. In this way of working, the façade fabricator acquires components from sub-suppliers and assembles them into a complete functional system. They deliver the service to the client through installation, maintenance, replacement and/or removal of components.

Financing for the façade renovation is based on Energy-Savings Performance Contracting, where the cost of an energy renovation is offset by the savings resulting from improved performance. The financial incentive for leasing façade services puts greater relevance on the energy saving potential of the system during operation, not just in its theoretical calculation at the time of construction.

“The idea of leasing a façade was not new – firms have been thinking about this direction for some time. When we heard that TU Delft was working on this topic, we decided to team up on the concept. VMRG is the mediator, if you like, between the research activities and firms producing, engineering and installing the façades. It has worked out well so far. It’s been hard getting construction companies so far that they go investing in innovation, but with this concept they will slowly move. It is one of the main tasks for our association,” says Martijn Veerman, project coordinator for the VMRG, the Dutch metal façade industry association.

Project Detail

The Façade Leasing team has developed a base of calculations estimating the financial performance and cash flows from client and supplier perspectives for four different façade service packages. These are a low-cost option, an option maximising de-centralised services, and two high-end models with high-performance solar shading and in-built automated control. When connected to data from energy simulation models, this practical tool can quickly provide an estimate of the benefits and costs of specific components within an integrated façade unit. The calculations can be adapted for variations in technologies, maintenance schedules, macro-economic context and contracting period.

In September 2016 a consortium, including component suppliers and façade fabricators, installed a pilot project temporarily replacing a section of the façade on the low-rise building of the Faculty of Electrical Engineering, Mathematics and Computer Sciences at TU Delft, otherwise known as the EWI building.

This pilot façade will demonstrate the state-of-the-art in façade-integrated technologies and allow the team to run tests and simulations with client and suppliers. The façade section replaced on the EWI building will stay in place for one year. The Façade Leasing team has organised a series of workshops with both supply and demand industry partners over the next year to develop energy service contracts, financing structures and operational services. These workshops will help identify specific problems in the current process, and propose new products and ideas to solve these towards the practical implementation of façades through performance contracts.

“There is still some way to go on this. We need to do much more research to get the lease façade up and running in the market. Issues such as design for disassembly, legal issues, organisation issues, electrical-technical issues – they all have to be sorted out before the first leased façade can be offered on the market,” says Veerman.

Climate-KIC support

TU Delft applied to Climate-KIC’s Pathfinder programme in 2015. Pathfinder projects are those that the connect suppliers and clients, demand and supply, getting industry players on board to explore the parameters of the innovation.

Getting a Climate-KIC Pathfinder grant was critical in getting the project off the ground, enabling the team to hire a dedicated researcher and spend time working with the supply chain, while getting industry parties interested in the proposals, according to Professor Tillmann Klein, Head of the Façade Research Group at TU Delft.

Being awarded a grant from Climate-KIC sends a signal to the market and helps kick-start the trust process. In innovation, if you can cover that most risky part, that’s half the battle.

Tillmann Klein, Head of the Façade Research Group at TU Delft

 

For more information visit Climate-KIC’s Business Technologies Accelerator

 
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