Buildings in the U.S. consume a substantial amount of energy – approx. 40% of all energy use nationwide – and account for around 35% of carbon emissions. That alone makes improving energy efficiency in buildings one of the most effective ways to reduce environmental impact. The U.S. ramps up its climate goals and sustainability initiatives, and it’s clear that the building sector has a central role to play. Backed by government incentives and driven by advances in technology, a wave of efficiency upgrades and retrofits is already underway. Let’s take a close look at how buildings in the U.S. currently use energy, what’s changing, and where the opportunities lie to improve.
Energy use in U.S. buildings today
The energy footprint of America’s buildings is both vast and varied. Buildings consume, as we mentioned earlier, around 40% of all energy used in the U.S. – and an outsized 75% of all electricity. This demand translates into significant environmental consequences. Much of that stems from outdated systems and inefficient infrastructure across both residential and commercial sectors.
The scale is immense: more than 128 million homes and 4.8 million commercial buildings make up the U.S. building stock. Most were constructed under older codes and without today’s efficiency standards in mind. Fortunately, energy codes now govern up to 80% of a building’s energy load, offering a powerful tool for reducing consumption – if modern codes and smart building technologies are widely adopted. What makes this moment especially important is timing. An estimated 75% of the U.S. building stock will either be new or substantially renovated by 2035. That provides policymakers, architects, and engineers with a rare opportunity to shape how buildings consume energy for generations to come.
You may be interested in: The most common issues in commercial buildings
Residential vs. commercial energy use
Energy use patterns vary across different building types. Solutions must reflect this variation.
Features of residential buildings:
- Space heating accounts for the largest share of energy use. They constitute 43% of total energy consumption.
- Water heating is also a significant factor. Its energy consumption, as a share, is almost three times higher than that of commercial buildings.
- Emissions are largely derived from on-site fossil fuel use, such as gas furnaces and stoves – 93% of residential building emissions.
Commercial buildings can be characterized as below:
- Energy use is more diverse, with space heating accounting for 25%.
- Lighting is a major load—twice the share compared to homes.
- Emissions are more evenly split, with 60% coming from on-site combustion and the rest from electricity.
Over time, residential buildings have become more efficient on a per-square-foot basis, even as overall energy use has increased due to population growth and the construction of larger homes. In contrast, both commercial energy use and intensity have increased. That points to new challenges: more electronics, longer operating hours, and denser equipment loads in workplaces.
What’s driving the energy retrofit boom
Retrofitting existing buildings to improve energy efficiency has become one of the fastest-growing sectors in the global construction and technology landscape. Valued at over $183 billion globally in 2025, the energy retrofit systems market is projected to grow at a 6.8% annual rate through 2034, in accordance with the Market Research Future report. This growth reflects both environmental urgency and economic opportunity.
Retrofits can include:
- Upgraded HVAC systems (like high-efficiency heat pumps);
- Better insulation and air sealing;
- LED lighting and smart lighting controls;
- Advanced energy management systems (EMS);
- Smart metering platforms, smart thermostats for energy saving.
Solutions like ROOMSYS smart water metering provide facility managers real-time insights into electricity, water, and HVAC performance. It is especially valuable since it enables the early detection of inefficiencies such as equipment faults, abnormal loads, or leaks. This transparency helps cut waste and fine-tune operations. Still, the retrofit market faces challenges. High upfront costs, split incentives between landlords and tenants, and a patchwork of local energy codes limit progress. However, a wave of policy reforms, incentives, and new financing tools – like energy performance contracts and green bonds – is beginning to close those gaps, so retrofits are getting more accessible and economically viable than ever before.
Key benefits of retrofitting with smart technology
Today, the backbone of high-performing buildings is intelligent automation – and that’s where smart building platforms like ROOMSYS make a real difference. These systems integrate sensors, meters, and control interfaces; all aimed to continuously monitor and optimize energy usage across all major building systems.
Rather than simply improving individual components, smart retrofits focus on whole-building performance. ROOMSYS provides property managers and facility teams with actionable insights by tracking usage patterns in real time, identifying inefficiencies, and automatically adjusting operations to minimize waste. This level of control is especially valuable in multi-tenant or high-occupancy environments, where energy usage varies significantly throughout the day and across spaces.
Benefits of smart automation in energy retrofits include:
- Real-time energy usage data per unit, floor, or system;
- Automatic detection of anomalies like leaks, HVAC faults, or lights left on;
- Load balancing and demand response to reduce peak loads and utility costs;
- Centralized, remote control of lighting, HVAC, and water systems;
- Historical reporting to benchmark performance and support regulatory compliance in smart property management.
When paired with physical improvements, such as LED lighting, high-efficiency equipment, or upgraded building envelopes, smart automation significantly amplifies the impact of retrofits. The result is a more responsive, efficient, and sustainable building that’s easier to manage and more resilient against rising energy costs and stricter regulations.
How federal policy supports energy efficiency
Federal support has grown significantly in recent years, making it easier for homeowners and businesses to invest in efficiency. Through 2032, homeowners are permitted to claim tax credits of up to $3,200 per year. These cover up to 30% of the cost of energy-efficient upgrades. For example:
- A tax credit of $2,000 is available for heat pumps.
- $1,200 can be applied toward other energy efficiency improvements (i.e. insulation or an energy audit).
There's also a 30% tax credit for renewable energy systems such as solar, geothermal, and battery storage. Model energy codes for buildings are expected to save $138 billion in energy costs between 2010 and 2040, avoid 900 million metric tons of CO₂ emissions, and reduce primary energy use by 13.5 quads. The same refers to community-scale efforts. The U.S. Green Building Council’s LEED for Cities initiative has engaged 16 local governments (representing 14 million residents) in setting sustainability goals and tracking progress.
Market outlook and technology trends
The future of energy efficiency in buildings will be shaped by a few key forces:
- Technology cost declines: The Energy Information Administration (EIA) predicts that zero-emission electricity technologies could decrease in cost by 40% by 2050. That includes solar, wind, batteries, and electric heating.
- Advanced modeling: Tools such as software-based building simulations will continue to refine how upgrades are planned and measured.
- Smart integration: Automation and control systems – especially those with self-learning and cloud-connected capabilities – will become standard. ROOMSYS is an example of this trend, integrating smart metering, alert systems, and real-time dashboards for facilities of all sizes.
- Electrification: Heat pumps and induction cooking are replacing fossil fuel systems, especially in new construction. These systems align with federal incentives and reduce on-site emissions.
- Economic growth: The EIA projects GDP growth between 1.2% and 2.1% annually through 2050. Even as per-square-foot energy use declines, total demand may rise. That makes it even more important to act now on efficiency.
Conclusion
The U.S. building sector is in a unique position to drive down national energy use and emissions. 75% of all buildings are expected to be new or renovated by 2035, that's why decisions made in the next few years will define the energy profile of the built environment for decades. The tools are already in place: high-efficiency equipment, extensive building data, and automation systems like ROOMSYS, which enable property managers to view and control energy use in real time. Government policies align with these tools and offer strong incentives to act. For homeowners, building managers, and local governments, energy efficiency is no longer just a nice-to-have – it's a strategic investment in resilience, cost savings, and climate responsibility.
