“Eliminating gas from our buildings would make a material difference in a short space of time.”
The council, which has published a guide for electrifying buildings across all sectors, wants an updated National Construction Code to mandate electrification of all new buildings from 2025.
New rules for Sydney
The City of Sydney last month endorsed new rules requiring new office buildings, hotels and shopping centres – along with major redevelopments of existing buildings – to achieve net-zero carbon energy use from 2026.
The quality of buildings matters. Environmental performance and the ability to draw staff working from home and remotely back on site play a growing role in the value of buildings and the rents they can charge.
At this week’s Property Summit David Harrison, the managing director of Charter Hall, the country’s largest office owner, pointed to a growing division in demand for older and newer buildings.
“Modern office assets are going to have much lower vacancy than 40-year-old buildings, they might still be in good locations, but … you know, you and I can’t look like a 20-year-old again, right?” Mr Harrison said. “So you can’t do that with old buildings.”
The issue threatens to widen the disparity that already exist between well-heeled owners of higher-quality buildings and those less able to invest in upgrading their lower-quality assets.
The costs of upgrading
But even for the largest owners, upgrading buildings takes time. Mirvac expects it will take until about 2030 – four years longer than it initially hoped – to electrify its 33-building investment portfolio of three build-to-rent, five retail and 25 office buildings.
“We’d like to do it by FY26, but there are a lot of challenges,” said sustainability manager David Palin.
The conversion costs vary from “a couple of million” dollars to “a couple of hundred thousand,” depending on how much gas a building uses, Mr Palin said.
Office buildings typically use gas to heat water for bathroom and kitchen taps – so-called domestic water – and some also use it for office heating.
The landlord and fund manager has so far completed electrification on just one building, the 15,931-square-metre office building at 65 Pirrama Road in Sydney’s Pyrmont and spent $180,000 to replace gas water heating with a “heat pump” – effectively a refrigerator in reverse that exudes heat into water.
Others are more complicated. Mirvac has turned off the co-generation plant built into the 8 Chifley Square tower on Sydney’s Hunter Street it completed in 2013, but is still testing the effect throughout the 32-level building of replacing gas with a heat pump, as the water heated by heat pump is cooler than gas-heated water, Mr Palin said.
To reduce costs, Ms Rooney said building owners needed to plan electrification into scheduled upgrades of plant and facilities.
“When you’re doing other retrofits you can do this work at the same time,” she said.
