Choosing the Right ASHRAE Energy Audit Level
An energy audit bought at the wrong level either costs more than the savings it finds or leaves a large capital commitment resting on rough estimates. This guide lays out what each ASHRAE level delivers, what every level must include, and the questions to put to an auditor before you sign.
Who this is for
- ■Commercial building owners and property management companies being told they need an energy audit.
- ■Industrial facility managers responsible for a building's operating budget.
- ■K-12 school districts, hospital facilities teams and municipal operators comparing audit proposals.
- ■Anyone who knows they need an audit and has no clear way to evaluate what they are being sold.
Are you matching the depth of the energy audit to the actual decision in front of you, or are you over-engineering a small building or, worse, under-engineering a large capital project?
Before ASHRAE defined audit levels, there was enormous variance in what an energy audit actually was, and in some corners of the market there still is. An energy audit run by an electrical contractor is not likely to cover all the energy-consuming equipment in your building. The contractor focuses on the items that generate revenue for their company: transformers and lighting. The building envelope, the boiler and the mechanical systems are not the contractor's trade, so they are not in the report. You get a document that looks like an audit, costs like an audit, and produces a recommendation list covering about 0.5 of the building.
A shallow audit costs you twice. First you miss the savings in the systems nobody looked at. Then the whole idea of an energy audit loses value in your eyes, and you either overpay later for rigorous work you have become skeptical of, or you stop auditing altogether and leave savings on the table.
ASHRAE defined 3 levels of audit rigor to solve that problem: Level One, Level Two and Level Three. The levels give you a shared vocabulary to use with any auditing firm, and they define the deliverables you should expect at each depth. The ASHRAE levels are a buyer-protection tool. Use them.
25%of this guide, read. The rest of it is below.
- 02 The mechanism The Preliminary Energy Use Analysis every level must include
Every legitimate ASHRAE energy audit, at Level One, Level Two and Level Three, is built on the same foundation: the Preliminary Energy Use Analysis. The requirement holds at every level, with no exceptions. The analysis has 6 components, and a proposal that leaves any of them out is not delivering the standard you are paying for.
What the Preliminary Energy Use Analysis containsEvery ASHRAE audit level starts with the same baseline work, and the utility rate review sits inside it. - 1 A site visit to assess the building and its energy-consuming equipment.
- 2 An analysis of the utility bills to determine whether savings can be captured by changing the utility rate.
- 3 A summary of utility bill data.
- 4 Calculation of the energy use intensity (EUI): how much energy per square foot the building consumes.
- 5 Benchmarking that compares your site's energy use against similar sites in the same region.
- 6 An estimate of the energy and cost savings available if the building met an EUI target.
The utility rate review is also the component that often gets skipped, even in legitimate audits. The review of your utility rate is a billing question, and it belongs to the Preliminary Energy Use Analysis at every level. Make sure your auditor is actually doing it and not treating it as a formality.
The three ASHRAE audit levels differ in how much engineering time goes into the report and how far you can trust its numbers. The level you need depends on the size of your building, the magnitude of the savings opportunity, and the size and risk profile of any capital decision the audit is supporting.
Level Also called What the numbers are What it adds Right fit Level One Walk-through audit Rough order of magnitude. Directional, not bankable. Low-cost and no-cost measures, capital measures noted when spotted, plus the preliminary analysis Small buildings with low energy spend; LEED-EB prerequisite Level Two Energy survey and analysis Detailed for low-cost and no-cost measures, rough for capital projects Facility description, equipment inventory, energy balance, financial analysis per measure, M&V plan Most larger buildings Level Three Detailed survey and analysis, Investment Grade Audit Detailed cost estimates and life cycle cost assessments Trend logs, data loggers, hourly HVAC simulations, scope of work and schematics Large capital projects and performance contracts Walk-throughLevel One: when cheap is correct
A Level One walk-through identifies energy efficiency measures while limiting the engineering hours needed to produce the report. There are 2 situations where it is the correct choice. The first is a small building where total energy spend is low. A small building uses very little energy and holds very little savings potential, so hundreds of hours of engineering time on a deeper audit would eat the savings. The second is a LEED-EB prerequisite. I am not advocating for LEED-EB. If your organization's goal is LEED-EB certification, a Level One audit is a required step in that path, and it serves that compliance purpose at a cost that makes sense for it.
Energy survey and analysisLevel Two: the default for larger buildings
A Level Two audit delivers meaningfully more than a walk-through while stopping short of the engineering investment a Level Three requires. The piece I would point you to is the measurement and verification plan for each recommended measure. When an auditor recommends upgrading HVAC controls or replacing a drive system, the M&V plan defines how you will confirm, after the work is done, that you actually achieved the projected savings. Without that plan, you are trusting the contractor's word that the project performed as promised. With it, you have a defined method for holding the work accountable.
If your goal is LEED-EB certification, a Level Two audit earns 2 points under LEED-EB Credit 2.1, Option B. Some clients choose it because it costs less than Retro-Commissioning, which falls under Option A of the same credit. I am telling you how the audit levels map to the credit structure if that is the goal in front of you, nothing more.
Investment Grade AuditLevel Three: when capital is on the line
A Level Three audit, also called the Investment Grade Audit, is built for capital projects where the dollar value at stake makes the cost of uncertainty too high: a major HVAC overhaul, a comprehensive mechanical retrofit, a performance contract where a financing entity is putting money behind projected savings. Trend logs and data loggers capture how the building actually responds to changes in ambient conditions and occupancy. HVAC calculations run on hourly simulations. The scope of work and schematics tell the installing contractors exactly what is to be installed. If you are working with an ESCO, the financing entity will likely require an Investment Grade Audit, because the projected savings are underwritten by the audit's conclusions. The precision of that audit is what makes the project financeable.
The three ASHRAE audit levels differ in how much engineering time goes into the report and how far you can trust its numbers. The level you need depends on the size of your building, the magnitude of the savings opportunity, and the size and risk profile of any capital decision the audit is supporting.
Level Also called What the numbers are What it adds Right fit Level One Walk-through audit Rough order of magnitude. Directional, not bankable. Low-cost and no-cost measures, capital measures noted when spotted, plus the preliminary analysis Small buildings with low energy spend; LEED-EB prerequisite Level Two Energy survey and analysis Detailed for low-cost and no-cost measures, rough for capital projects Facility description, equipment inventory, energy balance, financial analysis per measure, M&V plan Most larger buildings Level Three Detailed survey and analysis, Investment Grade Audit Detailed cost estimates and life cycle cost assessments Trend logs, data loggers, hourly HVAC simulations, scope of work and schematics Large capital projects and performance contracts Walk-throughLevel One: when cheap is correct
A Level One walk-through identifies energy efficiency measures while limiting the engineering hours needed to produce the report. There are 2 situations where it is the correct choice. The first is a small building where total energy spend is low. A small building uses very little energy and holds very little savings potential, so hundreds of hours of engineering time on a deeper audit would eat the savings. The second is a LEED-EB prerequisite. I am not advocating for LEED-EB. If your organization's goal is LEED-EB certification, a Level One audit is a required step in that path, and it serves that compliance purpose at a cost that makes sense for it.
Energy survey and analysisLevel Two: the default for larger buildings
A Level Two audit delivers meaningfully more than a walk-through while stopping short of the engineering investment a Level Three requires. The piece I would point you to is the measurement and verification plan for each recommended measure. When an auditor recommends upgrading HVAC controls or replacing a drive system, the M&V plan defines how you will confirm, after the work is done, that you actually achieved the projected savings. Without that plan, you are trusting the contractor's word that the project performed as promised. With it, you have a defined method for holding the work accountable.
If your goal is LEED-EB certification, a Level Two audit earns 2 points under LEED-EB Credit 2.1, Option B. Some clients choose it because it costs less than Retro-Commissioning, which falls under Option A of the same credit. I am telling you how the audit levels map to the credit structure if that is the goal in front of you, nothing more.
Investment Grade AuditLevel Three: when capital is on the line
A Level Three audit, also called the Investment Grade Audit, is built for capital projects where the dollar value at stake makes the cost of uncertainty too high: a major HVAC overhaul, a comprehensive mechanical retrofit, a performance contract where a financing entity is putting money behind projected savings. Trend logs and data loggers capture how the building actually responds to changes in ambient conditions and occupancy. HVAC calculations run on hourly simulations. The scope of work and schematics tell the installing contractors exactly what is to be installed. If you are working with an ESCO, the financing entity will likely require an Investment Grade Audit, because the projected savings are underwritten by the audit's conclusions. The precision of that audit is what makes the project financeable.
- 04 The trap that costs money The audit that costs more than it finds
Facility owners overpay for energy audits when they pick the audit level by how thorough it sounds and not by what the building can return. Here is the example that makes it concrete. You spend $10,000 on an ASHRAE Level Two audit, and it identifies 5,000 $/yr in energy savings potential. You overpaid. A Level One walk-through would have found the same savings potential at a fraction of the cost, and its order-of-magnitude numbers would have been directionally accurate enough to inform the decision.
What the mismatched audit cost and what it found10,000$Spent on a Level Two audit5,000$/yrAnnual savings potential it foundThe audit fee was larger than the annual savings it identified, which means the wrong level was bought.What owners assume What the ASHRAE framework says More engineering rigor is always the better buy. The audit cost should be justified by the size of the savings opportunity and the capital decision it supports. The ASHRAE levels are fixed packages you must buy whole. The levels are recommendations, not law. You can pick and choose which components go in the audit. A walk-through estimate is good enough to sign a performance contract on. Level One figures are rough order of magnitude. A financing commitment tied to projected savings calls for an Investment Grade Audit. The mistake runs in both directions. A small building with a heavy audit wastes money on rigor the savings cannot repay. A large capital project resting on walk-through numbers carries the risk of a multi-year, multi-million-dollar commitment built on estimates that were never meant to be bankable. The second mistake is the more expensive one.
When you evaluate an energy audit proposal, the ASHRAE standard itself is your leverage. Use it to hold audit providers accountable for what they told you you were buying. Ask the firm 3 questions before you go any further.
- 1 Which level are you proposing and why? If the firm cannot explain the rationale in terms of building size and savings opportunity, note it.
- 2 What are the specific deliverables at that level? A Level Two should produce an equipment inventory, an energy balance, a financial analysis per measure and an M&V plan. If any are missing from the proposal, ask why.
- 3 What are the auditor's credentials? Look for BEAP or BEMP, or a clearly equivalent qualification.
ASHRAE has certified more than 1,700 professionals, and 2 credentials apply here: the Building Energy Assessment Professional (BEAP) and the Building Energy Modeling Professional (BEMP). These credentials confirm the auditor has been evaluated against the ASHRAE framework, the same framework that defines what each audit level is supposed to deliver. If an auditor cannot point to one of them or a clearly equivalent qualification, ask harder questions about whether their method lines up with the standard you are purchasing against.
ASHRAE also publishes Procedures for Commercial Building Energy Audits, Second Edition. It defines best practices for energy survey and analysis and includes more than 25 forms in spreadsheet format that you can use to check what you should be receiving at each level. That document exists to protect the buyer.
Level OneSmall building, low spend
No major capital project on the table, or a LEED-EB prerequisite to meet. A walk-through is the match.Level TwoLarger building, mixed opportunities
Meaningful operating costs and a mix of low-cost and capital measures you need financial analysis and an M&V plan on.Level ThreeLarge capital commitment
A performance contract, a financing entity, and a high cost of a bad decision. Investment-grade rigor is required. When you evaluate an energy audit proposal, the ASHRAE standard itself is your leverage. Use it to hold audit providers accountable for what they told you you were buying. Ask the firm 3 questions before you go any further.
- 1 Which level are you proposing and why? If the firm cannot explain the rationale in terms of building size and savings opportunity, note it.
- 2 What are the specific deliverables at that level? A Level Two should produce an equipment inventory, an energy balance, a financial analysis per measure and an M&V plan. If any are missing from the proposal, ask why.
- 3 What are the auditor's credentials? Look for BEAP or BEMP, or a clearly equivalent qualification.
ASHRAE has certified more than 1,700 professionals, and 2 credentials apply here: the Building Energy Assessment Professional (BEAP) and the Building Energy Modeling Professional (BEMP). These credentials confirm the auditor has been evaluated against the ASHRAE framework, the same framework that defines what each audit level is supposed to deliver. If an auditor cannot point to one of them or a clearly equivalent qualification, ask harder questions about whether their method lines up with the standard you are purchasing against.
ASHRAE also publishes Procedures for Commercial Building Energy Audits, Second Edition. It defines best practices for energy survey and analysis and includes more than 25 forms in spreadsheet format that you can use to check what you should be receiving at each level. That document exists to protect the buyer.
Level OneSmall building, low spend
No major capital project on the table, or a LEED-EB prerequisite to meet. A walk-through is the match.Level TwoLarger building, mixed opportunities
Meaningful operating costs and a mix of low-cost and capital measures you need financial analysis and an M&V plan on.Level ThreeLarge capital commitment
A performance contract, a financing entity, and a high cost of a bad decision. Investment-grade rigor is required.- Decision matrix
When a deeper energy audit earns its cost
✓ Pay for more rigor- A performance contract or financing entity is putting money behind projected savings.
- You face a major HVAC overhaul or comprehensive mechanical retrofit.
- The building is larger with meaningful operating costs and a mix of low-cost and capital measures.
- You need a measurement and verification plan to hold the installed work accountable.
- Contractors need a scope of work and schematics to know exactly what to install.
✗ Keep the audit smaller- The building is small and total energy spend is low.
- The likely savings potential would not cover the cost of a deeper audit.
- No major capital project is on the table.
- The goal is a compliance prerequisite a walk-through already satisfies.
Questions for your morning huddle- If we are considering an energy audit right now, do we know the total annual energy spend for the building being audited, and does its savings potential justify the cost of the audit level being proposed?
- Has any audit proposal we received included a Preliminary Energy Use Analysis that explicitly reviews our current utility rate and assesses whether a rate change would reduce our all-in cost per kilowatt-hour?
- For any capital project tied to a performance contract or a financing commitment on projected savings, are we working from a Level Three Investment Grade Audit, or are we being asked to commit on Level One order-of-magnitude estimates?
- Can the auditing firm we are evaluating identify their BEAP or BEMP credential and produce the specific deliverable list for the level they are proposing?
The one thing to rememberMatch the energy audit level to the size of the savings opportunity and the size of the capital decision it supports. Do not pay for rigor the savings cannot justify, and do not skip rigor when a large capital commitment depends on it.
Before you sign any audit proposal, ask the firm which ASHRAE level they are proposing and why, get the full deliverable list for that level including the utility rate review, and confirm their BEAP or BEMP credential.
Know if the numbers actually pencil out before you sign anything.
A written second opinion on the project in front of you, whether that is a rate change, new equipment, or a renewable installation.
- 01A short call, to figure out quickly whether we can actually be helpful. If we can't, we'll say so on the spot.
- 02We pull the data, your bills, your rate structure, vendor proposals, project specs.
- 03You get the verdict in writing: whether the payback will materialize, and the opportunities or risks nobody has raised.
Get a Blueprint at blueprint.tac-nrg.com Free for Indiana-based operations spending five figures or more a month on electricity. No obligation. You keep the write-up either way. - The one thing to remember
Match the energy audit level to the size of the savings opportunity and the size of the capital decision it supports. Do not pay for rigor the savings cannot justify, and do not skip rigor when a large capital commitment depends on it.
Before you sign any audit proposal, ask the firm which ASHRAE level they are proposing and why, get the full deliverable list for that level including the utility rate review, and confirm their BEAP or BEMP credential.
The Energy Decision BlueprintKnow if the numbers actually pencil out before you sign anything.
A written second opinion on the project in front of you, whether that is a rate change, new equipment, or a renewable installation.
- 01A short call, to figure out quickly whether we can actually be helpful. If we can't, we'll say so on the spot.
- 02We pull the data, your bills, your rate structure, vendor proposals, project specs.
- 03You get the verdict in writing: whether the payback will materialize, and the opportunities or risks nobody has raised.
Get a Blueprint at blueprint.tac-nrg.com Free for Indiana-based operations spending five figures or more a month on electricity. No obligation. You keep the write-up either way.what is the difference between ashrae level one two and three energy audits
ASHRAE defines 3 levels of energy audit rigor. Level One is a walk-through that identifies low-cost and no-cost measures with rough order-of-magnitude savings figures. Level Two, the energy survey and analysis, adds an equipment inventory, an energy balance, financial analysis of each recommended measure and a measurement and verification plan. Level Three, the Investment Grade Audit, adds trend logs, data loggers, hourly HVAC simulations, life cycle cost assessments, a scope of work and schematics for large capital projects.
do i need a level two or level three energy audit
A Level Two ASHRAE audit is the right call for most larger buildings, because it balances engineering rigor against audit cost. A Level Three Investment Grade Audit is needed when a large capital project or performance contract is on the table and the cost of a wrong assumption is high, especially when a financing entity is underwriting the projected savings. Outside those cases, the extra accuracy of a Level Three may not justify its extra cost.
is an energy audit worth the money for a small building
For a small building with low energy spend, an ASHRAE Level One walk-through audit is usually the right match, because a small building holds little savings potential and a deeper audit's cost would eat the savings. The audit fee should be justified by the savings it can find: spending $10,000 on a Level Two audit that finds 5,000 $/yr in savings potential means you overpaid and should have bought a Level One.
do i need a level two or level three energy audit
A Level Two ASHRAE audit is the right call for most larger buildings, because it balances engineering rigor against audit cost. A Level Three Investment Grade Audit is needed when a large capital project or performance contract is on the table and the cost of a wrong assumption is high, especially when a financing entity is underwriting the projected savings. Outside those cases, the extra accuracy of a Level Three may not justify its extra cost.
is an energy audit worth the money for a small building
For a small building with low energy spend, an ASHRAE Level One walk-through audit is usually the right match, because a small building holds little savings potential and a deeper audit's cost would eat the savings. The audit fee should be justified by the savings it can find: spending $10,000 on a Level Two audit that finds 5,000 $/yr in savings potential means you overpaid and should have bought a Level One.
what should every energy audit report include
Every ASHRAE energy audit, at any level, requires a Preliminary Energy Use Analysis with 6 components: a site visit, an analysis of utility bills to see whether changing the utility rate would save money, a summary of utility bill data, an energy use intensity calculation, benchmarking against similar sites in the same region, and an estimate of savings if the building met an energy use intensity target. The rate review requires $0 of capital, so confirm it is actually done.
how do i pick a qualified energy auditor
Ask any energy audit firm which ASHRAE level they are proposing and why, what the specific deliverables are at that level, and what their credentials are. ASHRAE has certified more than 1,700 professionals, and the Building Energy Assessment Professional (BEAP) and Building Energy Modeling Professional (BEMP) credentials confirm an auditor has been evaluated against the ASHRAE audit framework. If a firm cannot show one of these or a clearly equivalent qualification, ask harder questions.
what is an investment grade audit for a performance contract
An Investment Grade Audit is the ASHRAE Level Three energy audit, typically performed as part of a performance contract with an energy service company. It uses trend logs, data loggers and hourly HVAC simulations, and it delivers detailed cost estimates, life cycle cost assessments, a scope of work and schematics. A financing entity will likely require one, because the projected savings are underwritten by the audit's conclusions.
- Energy audit
- A structured assessment of a building's energy-consuming systems that identifies cost-saving opportunities, defined by ASHRAE at three levels of rigor.
- Preliminary Energy Use Analysis
- The baseline work every ASHRAE audit level requires: site visit, utility rate analysis, bill data summary, EUI calculation, regional benchmarking and a savings estimate against an EUI target.
- Energy use intensity (EUI)
- A measure of how much energy a building consumes per square foot, used to benchmark it against similar sites in the same region.
- Energy efficiency measure (EEM)
- A specific recommended action an audit identifies, such as a controls upgrade or drive replacement, with estimated savings and cost.
- Energy balance
- A Level Two deliverable that accounts for where the building's energy goes across its systems and equipment.
- M&V plan
- Measurement and verification plan: the defined method for confirming after installation that a measure actually delivered its projected savings.
- Investment Grade Audit (IGA)
- Another name for the ASHRAE Level Three audit, built for large capital projects and typically performed as part of a performance contract.
- Performance contract
- A project, often with an energy service company (ESCO), where a financing entity puts money behind projected savings that the audit's conclusions underwrite.
- BEAP and BEMP
- Building Energy Assessment Professional and Building Energy Modeling Professional: ASHRAE credentials confirming an auditor was evaluated against the ASHRAE audit framework.