3-Star VS. 4-Star NABERSNZ Ratings

This blog provides a detailed look at the typical differences between a 3-star NABERSNZ rating versus a 4-star NABERSNZ rating; giving real-life examples of efficiency differences and how that translates into cost savings for your buildings. 

What is NABERSNZ? 

NABERSNZ is a tool used to measure and rate the environmental performance of commercial buildings in New Zealand. It provides a standardised and independent assessment of a building's energy efficiency, water usage, waste management, indoor environment quality, and greenhouse gas emissions.

NABERSNZ ratings are based on a scale of 1 to 6 stars, with 6 stars representing best practice in terms of sustainability and energy efficiency. The ratings help building owners, tenants, and stakeholders understand and compare the environmental performance of different buildings, allowing them to make informed decisions regarding resource usage and sustainability.

The assessment process involves collecting data on energy and other relevant factors over a 12-month period. This data is then analysed, and a rating is assigned based on the building's performance relative to benchmarks and industry standards.

NABERSNZ ratings are voluntary but increasingly adopted by building owners and companies in New Zealand to demonstrate their commitment to sustainability and energy efficiency. The ratings provide valuable information for potential tenants or buyers who prioritise environmentally-friendly buildings and can incentivize improvements in a building's environmental performance over time.

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What does a 3-star NABERSNZ rating look like?

Since October 2022, emissions factors for all NABERSNZ ratings have been updated. One of the key things to note is that buildings still using gas as a heating source will face significantly greater penalties. What this means for a NABERSNZ rating is that 3 stars is probably the maximum a building can get.

In a broader sense, a 3-star rating generally indicates that a building isn't being managed properly in terms of:

  • Energy efficiency - a 3-star rating suggests that the building's energy consumption is moderate, but there's definitely room for improvement. The building may have implemented some energy-efficient measures, but there is potential for further energy-saving initiatives. Improving energy efficiency can help reduce operating costs and carbon emissions associated with energy use.

  • Environmental impact - a 3-star rating implies that the building has a moderate environmental impact. While it may have implemented some sustainable practices, there is scope for further improvements. The main one is reducing or eliminating the use of gas, but areas such as water usage, waste management, indoor air quality, and greenhouse gas emissions need to be considered as well.

Tenant satisfaction and marketability
A 3-star rating may have implications for tenant satisfaction and the marketability of a building, although these factors can vary depending on the specific market and tenant preferences. Generally speaking, however:

  • Tenant satisfaction. Tenants who prioritise energy efficiency and sustainability will probably prefer buildings with higher ratings.

  • Marketability. In the commercial real estate market, buildings with higher NABERSNZ ratings are often seen as more desirable, especially by tenants who value sustainability and environmental responsibility. Buildings with higher ratings may have a competitive advantage in attracting environmentally-conscious tenants. However, the marketability of a 3-star-rated building can still depend on other factors such as location, amenities, rental rates, and overall building quality.

The challenges faced by 3-star rated buildings

From an operational standpoint, 3 stars may indicate that a building is being used more than it should be. If the lease says nine-to-five, but the reality is that its operating hours are more than that, then rating penalties are likely.

Another typical challenge is the absence of a submetering system, which can result in the inclusion of additional energy usage that is technically out of scope for a NABERSNZ rating. Without a submetering system, it becomes difficult to accurately track and disaggregate energy usage within the building. This can lead to challenges in differentiating between mechanical loads and tenant loads, which is a common occurrence.

The inability to separate and measure these loads separately can impact the rating, as NABERSNZ focuses on energy efficiency and specific energy consumption benchmarks, depending on whether the rating is whole building, base build or tenancy.

Stepping up to a 4-star NABERSNZ rating

What sets a 4-star rated building apart is that it will have significantly reduced - or even eliminated - its use of gas as a heating source. It will be using electricity in the form of efficient HVAC systems, optimised lighting, better insulation, and enhanced control systems to minimise wastage.

It will be operating within the scope of its projected hours, and it will have a submetering system. It will also have addressed issues with leaky ducts, to minimise the amount of air that gets blown out during heating and cooling.

It will also:

  • Demonstrate a broader range of sustainable practices beyond energy efficiency. It may incorporate initiatives like water conservation measures, efficient waste management strategies, indoor environmental quality improvements, and lower greenhouse gas emissions.

  • Have increased tenant comfort and satisfaction, with better indoor air quality, thermal comfort, and lighting quality.

  • Have improved marketability, as it signifies a higher level of sustainability and energy efficiency, making it more appealing to environmentally conscious tenants and investors.

The path to improving your NABERSNZ rating

If your building hasn't been rated, now is the time to get one. You need a baseline from which to begin. That's why a 3-star rating isn't necessarily a negative thing; it provides you with an understanding of what the shortfalls are. The process of having your building rated will tell you a lot about it, and as long as you have an open mind towards improvements, you can then work on raising your rating from 3 to 4 stars.

When you get a NABERSNZ rating, look for a supplier who can work with you to improve your rating. Here at ESP, our focus is on providing the experience and tools to efficiently achieve the NABERSNZ ratings required by high quality tenants. Our integrated service offering and extensive experience allows us to deliver more effective energy and environmental results, whether you are looking for a whole building, base build or tenant rating.

By analysing the existing rating, we can provide a roadmap for achieving the desired upgrade. We can estimate the approximate reductions in energy consumption or environmental impact needed to bridge the gap between the 3-star and 4-star ratings, and we will propose specific actions or initiatives.

Elevating your NABERSNZ rating also means leveraging purpose-built technology. We’ve combined our expertise with cutting-edge tech to create a thorough and cost-effective assessment process that’s used by some of the country’s largest organisations.

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Continuous improvement as part of a sustainability strategy

Even buildings that achieve a 6-star rating are always looking for ways to become more energy efficient. It's an evergreen process; which is why you need experts like ESP to help you create a tailored long-term energy management plan for continual optimisation and performance improvements year in, year out.

Reaping the rewards of a higher NABERSNZ rating
The more energy-efficient your building is, the less it will cost to run. That's the major key benefit - cost savings. Energy-efficient buildings tend to have lower operating costs, reduced energy bills, and decreased maintenance expenses, resulting in improved financial performance. Greater operational efficiency also means you'll:

  • Attract high-quality tenants such as government agencies
  • Boost your brand reputation and demonstration of corporate responsibility
  • Improve asset values
  • Improve marketability and gain a competitive advantage

As sustainability regulations and standards evolve, continuously improving NABERSNZ ratings will ensure you remain compliant with emerging environmental requirements. Proactively addressing energy efficiency and sustainability measures makes it easier to meet future regulatory obligations. Investing in energy-efficient technologies and sustainable practices today can help future-proof your building against changing regulations, rising energy costs, and evolving market demands. It ensures the longevity and resilience of the building in the face of environmental and economic uncertainties.

Elevating your NABERSNZ rating is the key to sustainable success

Gaining a clear understanding of the difference between a 3- and 4-star NABERSNZ rating means you're in a better position to elevate your building rating. You can use the insights you've gleaned from the process of getting a 3-star rating to boost it to a 4-star, and by doing so you'll be overcoming challenges such as mismanagement, inflated operating hours and insufficient submetering systems.

Ultimately, the rewards of a higher NABERSNZ rating include lower operational costs, attracting high-quality tenants, enhancing brand reputation, increasing asset values, and gaining a competitive advantage in the market. Continuously striving for improvement ensures compliance with evolving regulations and positions buildings for long-term success in a sustainable future.

Did you know that NABERSNZ isn't the only method for rating buildings? Check out our guide to NABERSNZ and Green Star - a comparative analysis of New Zealand rating schemes.