Program Design Guide: Energy Efficiency in Multi-Family Affordable Housing


A guide for matching energy efficiency programs with multi-family affordable housing savings opportunities and needs has been developed as part of the Energy Efficiency For All Project, a joint effort of the Natural Resources Defense Council (NRDC), the National Housing Trust, the Energy Foundation, and Elevate Energy. Excerpts from Energy Efficiency Programs in Multi-Family Affordable Housing are copied below – review the Guide in full here.

Executive Summary

Electric and gas utilities in the U.S. invest billions of dollars annually to help their customers become more energy efficient, often by making repairs and improvements to customers’ homes and buildings. These investments are smart—they improve lives by reducing energy expenses, create healthier, more comfortable houses and offices, and improve community building stock. The resulting energy efficiency produces a better utility system with less pollution, creates local jobs, and delivers other public benefits. Yet studies show vast amounts of cost-effective efficiency potential available in our nation’s affordable housing, in multifamily affordable housing (MFAH) in particular. In other words, a lot of the energy delivered to affordable housing is wasted—it simply goes out the windows or up the chimney.

This is an alarming outcome because residents of affordable housing can least afford to waste valuable energy—savings from efficiency could materially improve their household budgets, and efficiency repairs such as improving ventilation systems can produce significant health benefits. Affordable housing is often viewed by efficiency professionals as “hard to reach” because many building owners have been unresponsive to outreach efforts of efficiency programs even when the program offers valuable incentives to encourage the owner to make efficiency repairs or improvements. There are many reasons why this occurs. One reason is that owners of affordable housing often have very tight budgets for building projects, not just efficiency projects. They also often have complicated financing arrangements that make it difficult to borrow money to fund a project that is outside of the repairs planned in the original financing. Another reason many owners of subsidized housing do not respond to program incentives is that utility allowances from housing agencies can cloud decisions about reducing energy expenses. Many owners and residents lack information about energy usage in their buildings. To further complicate the matter, if tenants pay the cost of utility services the owner might not realize savings from reduced energy use.

Whatever the reasons that have caused MFAH to escape the reach of efficiency programs, the outcome is plain and problematic: many multifamily affordable buildings need efficiency repairs and improvements. Forgoing needed efficiency work does not “save” money in a real way, it simply shifts the costs. Low income families living in the buildings pay in the form of higher utility bills or rents, and often in the form of unhealthy homes. Taxpayers pay the cost in the form of utility allowances for subsidized housing. All utility customers pay in the form of wasted energy and higher utility rates.

Another problematic outcome is that owners and residents of MFAH have not participated in or benefited from efficiency programs to the degree that owners and residents of other building types have.

The good news is that our research—presented in this guide—strongly suggests that well-designed efficiency programs can indeed reach MFAH and can enable utilities to capture cost-effective efficiency potential. Program experience offers many useful and encouraging lessons about how to reach affordable housing in ways that will benefit the utility, the building owner, the residents, and the community at large. This guide is intended to explain specific best practices to efficiency program professionals: program designers and administrators, utility staff, regulators, and other stakeholders. We provide 12 specific and proven strategies for utilities to help owners invest to improve MFAH in their communities.

Why Target Multi-Family Affordable Housing?

There are several compelling reasons utilities and all efficiency programs should devote attention and resources to reach MFAH. As a foundational matter, helping lowincome customers meet their basic energy needs is an important policy objective. Utilities across the country offer energy assistance and weatherization services through well-established and long-standing programs. Unlike bill assistance programs, efficiency improvements in housing will create lasting capital improvements.

Sustaining the affordable housing stock—that is, maintaining the existence of housing units as affordable— is an important goal at the national level and for many major cities. Improving the energy efficiency of affordable housing directly furthers these policy goals by reducing energy waste, reducing operating expenses, and improving the condition of the housing. Utilities can and must play a central role in this important endeavor.

Capturing cost-effective efficiency in MFAH is also a compelling business opportunity for utilities and their customers. By capturing efficiency potential utilities obtain an energy resource.

Capturing this efficiency potential enables utilities to meet energy savings targets, reduce system costs, defer or avoid distribution system upgrades, and reduce marginal line losses. The cost of obtaining these system benefits delivers value directly back to customers —increasing the value of the building stock, reducing expenses, improving the health and safety of tenants, and more.

Multifamily housing is expected to grow as a source of sales, customer counts, and peak loads for most utilities. Among the many factors driving this trend are a fundamental shift toward urbanization in the United States, an increasing share of renters in the market, and an aging population. Deploying efficiency programs to effectively reach these buildings makes sense.

For these many reasons, utilities should actively explore how best to structure programs to help owners capture all cost-effective efficiency in MFAH.

The Guide proposes 12 best practices, copied below. For the details behind these best practices, visit the Guide here.

  1. Establish a goal to capture all cost-effective efficiency in MFAH.
  2. Assure coordination and count savings across electricity, gas, and water programs.
  3. Assure that cost-effectiveness tests work for MFAH.
  4. Improve building owners’ access to energy usage information.
  5. Develop programs specifically targeted to MFAH.
  6. Structure incentives for whole-building savings.
  7. Assure incentives are reliable at project outset.
  8. Support benchmarking, audits, and other assessments.
  9. Support a “one-stop shop” for building owners to access integrated program services.
  10. Build partnerships with key local market participants.
  11. Help building owners finance efficiency projects.
  12. Provide robust quality assurance.

Looking for more resources on multi-family affordable housing? Click here.

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