Sharing Transparency for a More Efficient Future

Rating & Disclosure LogoRating and disclosure refers to the practice of evaluating the relative energy efficiency of a home or building and making this information known to consumers. The mechanism aims to raise consumer awareness about energy performance of and encourage building energy improvements through greater market transparency.


How Does It Work?

Rating the energy efficiency of a building is a complex and nonstandard process, but essentially involves ranking a structure's energy consumption patterns alongside a peer group, normalizing for factors like local climate and occupancy. Methodologies of assessing energy efficiency can take multiple forms. Although terminologies vary (check our Glossary for a comparison of terms), ratings for the built environment typically fall into two categories:


One type of rating involves an energy use simulation to compare the projected energy efficiency of a building based on architectural and systems characteristics. We call this an asset rating. Simulating a building's energy performance is also a nonstandard process that varies by location. Certain methodologies for asset ratings use energy model run on complex software. Others include energy audits, whereby engineers perform on-site testing to estimate energy performance.


The second rating type uses real utility data to compare how a building's actual energy consumption compares to similar buildings'. On this site, this is called an operational rating. Software is used for these ratings as well, such as the U.S. Environmental Protection Agency's Portfolio Manager online tool, which determines relative energy efficiency for free using a year's worth of energy consumption data.

Rating Policies

Historically, building energy performance measurement has been neglected in both the residential and commercial sectors. This has restricted opportunities to assess energy-savings opportunities in homes and buildings and limited the ability of consumers to compare the energy performance of buildings and factor energy performance into their decisions. This information gap prevents property and financial markets from accurately valuing energy-efficient homes and buildings and limits the market forces that should be driving investments in building efficiency.

Globally, rating and disclosure is gaining acceptance as a policy tool to help overcome these barriers. Like fuel efficiency ratings on vehicles, transparent building energy ratings enable the market to assess energy performance and identify buildings where energy costs are lower, unlocking demand for efficient buildings. Governments and utility companies can analyze ratings to create better public policies and incentives to improve building performance, and help measure progress toward efficiency goals.

In many parts of the world, including the European Union, Australia, China and U.S. cities and states, rating and disclosing the energy performance of homes or commercial buildings is mandatory. This trend has accelerated greatly over the past decade as nations have become keen to the vast amounts of energy consumed in buildings and opportunities to leverage market-based approaches to energy conservation.