Cambridge Multifamily Energy Innovation Project

11.S948 Terms of Reference Summary

MIT Energy Efficiency Strategy Project

Director: Harvey Michaels

Researchers: Ryan Cook, Alexis Howland, Adi Nochur

Manager: Brendan McEwen

INTRODUCTION

PROJECT GOAL: ENERGY PROGRAM DESIGN FOR EXISTING MULTIFAMILY HOUSING

TIMELINE• FALL 2012 – BACKGROUND RESEARCH & PRELIMINARY CONCEPT

DEVELOPMENT

• SPRING 2012 - PRACTICUM

• JUNE 2012 – DELIVERY OF DETAILED PROGRAM DESIGN

PROGRAM COMPONENTS

• ENERGY DISCLOSURE

• ENERGY MAP AND DISCLOSURE PLATFORM

• COMMUNITY BASED MARKETING & ENDORSEMENT

• IMPROVED COMMUNICATION BETWEEN UTILITY & PARTNERS

• ON UTILITY BILL FINANCING

• COMPREHENSIVE SCOPE

• EXPLORE UPGRADE REQUIREMENTS

OUTREACH

•Cities •Community Groups•Utility advertising•CDC networks•Etc.

MassSAVE Homes

BACKGROUND ENERGY EFFICIENCY PROGRAMS

MF Weatherization

MF Market Integrator

LEAN (low income

MF)

MA Green Retrofit

Initiative

Commercial

Fuel Switch

MF HVAC

WAP

OUTREACH

•Cities •Community Groups•Utility advertising•CDC networks•Etc.

BACKGROUND ENERGY EFFICIENCY PROGRAMS

MF Weatherization

MF Market Integrator

LEAN (low income

MF)

MA Green Retrofit

Initiative

Commercial

Fuel Switch

MF HVAC

1-4 unit market rate

5 – 20 unit market rate

>5 Low Income

MassSAVE Homes

WAP

BACKGROUND ENERGY EFFICIENCY PROGRAMS

BACKGROUND ENERGY EFFICIENCY PROGRAMS

THE STATE OF HOUSING IN CAMBRIDGE

HOUSING MARKET DOMINATED BY

RENTALS

RENTALS ARE 65% OF MARKET

95% OF RENTALS ARE MULTI-UNIT

33% OF RENTALS ARE 2-4 UNIT

27% OF HOUSING UNITS ARE CONDOS

STUDENTS ARE 27% OF ADULT POPULATION

53% OF RENTAL HOUSEHOLDERS ARE UNDER 35

OVER 60% OF RENTERS HAVE LIVED IN CURRENT HOME LESS THAN FIVE YEARS

52% OF RENTAL UNITS BUILT BEFORE 1940

13% OF RENTAL UNITS USE OIL HEATING

YOUNG RENTAL DEMOGRAPHIC IN

TRANSITION

HOUSING STOCK PRIME FOR EFFICIENCY

LOCAL BARRIERS TO EFFICIENCY

MULTI-FAMILY HOUSING A HARD-TO-REACH MARKET IN ENERGY EFFICIENCY

• SPLIT INCENTIVES AND THE “LANDLORD-TENANT PROBLEM”

• TRADITIONAL ENERGY EFFICIENCY PROGRAMS HAVEN’T CRACKED THROUGH

• DESPITE POTENTIAL FOR GREAT SAVINGS, A MARKET FAILURE

LOCAL RENTAL HOUSING MARKET PRESENTS SPECIFIC DIFFICULTIES

• NO COORDINATION AMONG MANY SMALL PROPERTY OWNERS

• YOUNG, MOBILE RENTAL DEMOGRAPHIC• ADDITIONAL RULES FOR CONDOMINIUMS Creative Commons License,

http://www.flickr.com/photos/bradywahl/3942246432/

RECOMMENDATIONS

DATA TOOL: ENERGY MAP FOR RENTALS

ACCESSIBLE, UNDERSTANDABLE VISUALIZATIONS•Energy data•Building characteristics

IMPACT•Renters can assess energy costs•Establish social norm and influence landlords•Allow contractors/community organizations to target “gushers”

COLLECTING ENERGY DATA – 2 OPTIONS

1. UTILITY AUTOMATIC POPULATION•ConEd in New York has agreed to release data for multi-tenant buildings

2. GET DATA FROM CURRENT TENANTS•Manually enter•Enter e-bill information•Challenge when tenants move

COLLECTING ASSET DATA

POTENTIALLY MULTIPLE SOURCES•Building owner, manager•City databases & tax assessor record•Building energy models•Quick audit data•Audit matching from historical databases

NEXT STEPS: SPRING SEMESTER

DETERMINE BEST DATA COLLECTION METHOD

EVALUATE ASSET MODELS

EVALUATE BENCHMARKING OR PERFORMANCE RATINGS

COMPONENTS OF AN RFP

DEMO MAP•Different layers could include efficiency potential and savings, available NSTAR rebates•Possibly build on Cambridge Solar Map platform

ORGANIZING STRATEGIES & MARKETING

INVESTIGATING VIABILITY OF INNOVATIVE MARKET APPROACHES

• INCENTIVIZE COMMUNITY ORGANIZATION PARTNERSHIPS

• PROVIDE MECHANISMS FOR CERTIFICATION AND RECOGNITION

• UTILITIZE DEADLINE-BASED MARKETING

• ORGANIZE BULK PURCHASING

CREATING ROOM FOR EXPERIMENTATION

IN PROGRAM DESIGN• WHAT ARE DIFFERENT STRATEGIES

DESIGNED TO ACCOMPLISH?

• HOW MIGHT THEY BE LEVERAGED IN THE LOCAL CONTEXT?

NEXT STEPS - MARKETING

MARKET RESEARCH• FOCUS GROUPS WITH STAKEHOLDERS TO UNDERSTAND

RANGE OF INTERESTS AND ISSUES

• INTERVIEWS WITH PREVIOUS PROGRAM PARTICIPANTS TO UNDERSTAND DEMAND DRIVERS

LOOKING FOR FOOTHOLDS IN THE MARKET• CREATE ENGAGEMENT STRATEGIES FOR DIFFERENT

MARKET SEGMENTS

A MARKET SEGMENTATION APPROACH

MARKET SEGMENT POINT OF ENTRY PROGRAM DELIVERY MECHANISM

ON-PREMISES OWNERS

LANDLORD SELF-INTEREST

TRADITIONAL INCENTIVE PROGRAM

OIL-HEATED HOMES LANDLORD BILL-PAYERS

TRADITIONAL INCENTIVE PROGRAM

STUDENT HOUSING ANCHOR INSTITUTION STUDENT/UNIVERSITY-BASED MARKETING

CONDOMINIUMS OWNERS ASSOCIATIONS

RECRUIT ENERGY CHAMPIONS

MANAGED BY THIRD-PARTY

PROPERTY MANAGEMENT FIRMS

PARTNERSHIPS AND INCENTIVES TARGETING PROPERTY MANAGERS

VACANT/FOR-SALE UNITS

HOUSING MARKET EFFICIENCY AS A SELLING POINT, DATA-DRIVEN APPROACHES

“EVERYTHING ELSE” INFORMATION ACCESS

DATA-DRIVEN PEER PRESSURE

FINANCING

FINANCING CHALLENGES TO MULTIFAMILY EFFICIENCY INCLUDE:•High upfront costs•Split incentives between landlords and tenants•Customer barriers to credit•Lack of energy savings data for lenders

EFFECTIVE PROGRAMS THEREFORE MUST:•Create incentives for participation•Reduce overall financial risks•Provide access to energy savings data

ON-BILL FINANCING: A PATHWAY FORWARD

ADVANTAGES•Eliminates upfront cost barrier

• Ideal: monthly savings >= repayments•Potential to reduce split incentive barrier•Utility payments as proxy for creditworthiness

• Regularity of utility payments diminishes risk

ON-BILL LOANS VS. ON-BILL TARIFFS•Loans: non-transferable, stay with borrower•Tariffs: Tied to property via the meter

• Only tariffs address split incentive

RECOMMENDATION: ON-BILL TARIFF

POTENTIAL MODEL: MPOWER FUND (PORTLAND, OR)•Focused on Multifamily market•Pilot goal of retrofitting 30 buildings totaling 2,500 units by April 2014•Building owners and utilities enter into 10-year energy service contracts

IMPORTANT CONSIDERATIONS•Fund management – A non-profit SPE?•The source of funds – Rate payer funds, CDFI, market-rate lenders•Underwriting criteria •Security •Establishing appropriate utility billing systems - On-bill repayment can often require complicated modifications to utility billing systems. NSTAR resistant.

FACILITATING DEEP GREEN RETROFITS

CHALLENGES •Unit level rapid upgrades; optimize infrequent deeper renovations•Expensive, emerging technical opportunities

– Challenge insulating masonry walls

TECHNICAL OPPORTUNITIES•Potential for super-insulative, thin interior insulation •Explore solutions to Multi-unit hydronic heating

• Improved controls• Heat source conversion – Fuel cell? In-room electric heat pump?

FACILITATING DEEP GREEN RETROFITSPOTENTIAL PROGRAM COMPONENTS•Full cradle-to-grave project management

• Benchmarking & prioritization• Contractor project management• Financing

•Ongoing capital asset management assistance•Energy information feedback & ongoing engagement

Tune up existing HVAC

systems (short term)

Tune up existing HVAC

systems (short term)

Bench-markingBench-

marking

Re-tenanting upgrades

(~1-5 years)

Re-tenanting upgrades

(~1-5 years)

Capital asset maintenance(e.g. Exterior

wall;many year

time frame)

Capital asset maintenance(e.g. Exterior

wall;many year

time frame)

Occupant / building managerbehavior change &

information feedback

Occupant / building managerbehavior change &

information feedback

Potential basic program components.

Ongoing project managementOngoing project management

GOVERNANCE

PROGRAM DELIVERY OPTIONS•Extend & expand MA Green Retrofit Initiative•Integrate into Utility Program Portfolio•City led non-profit program – revamped CEA

POTENTIALLY IMPORTANT ELEMENTS•Energy disclosure – automated utility data population•Upgrade mandate – grant legislative authority to require upgrades

Credit: Rockcreek. CC

THANKS!