Residential Multifamily Apartment & Condo Efficiency
Residential Multifamily Apartment & Condo Efficiency Services Focus on Energy PROGRAM OVERVIEW The Apartment & Condo Efficiency Services program promotes energy efficiency to owners, managers, and tenants of existing and new construction buildings with four or more units. This program seeks to achieve both near-term energy savings and longer-term market transformation goals. The program works through market providers such as distributors and contractors to leverage their knowledge of available energy-efficient products and services. Most importantly, the program relies upon these market providers to identify multifamily building owners who have contacted them to replace or upgrade equipment. Program consultants then support the owner and market provider with independent information on energy and cost savings and available program rewards. The Apartment & Condo Efficiency Services program is part of Wisconsin’s statewide energy efficiency and renewable energy initiative called Focus on Energy. The goals of Focus on Energy are to encourage energy efficiency and use of renewable energy, enhance the environment, and ensure the future supply of energy for Wisconsin. Focus on Energy contracted with Wisconsin Energy Conservation Corporation to implement and manage this program as part of its portfolio of residential programs. The program uses a team of trained consultants and contractor allies to assist building owners and managers in identifying areas where they can improve energy efficiency, reduce utility costs, improve the value of their property and increase their tenants’ comfort and safety. These consultants work with the owner and the owner’s contractor to select and install equipment to ensure potential savings and other benefits are realized. The program depends on contractor allies who agree to include energy-efficient options in their proposals and to refer customers to the program for an assessment. These customers have typically already decided to spend money upgrading a property and need advice and solid information on what to do next. The consultant meets their needs by completing an assessment, identifying all opportunities, and providing the owner and his or her contractor with a report highlighting cost and energy savings and available rewards. Owners value this independent, objective information and contractors reinforce the value of the energy-efficient options in their proposals by including copies of the consultants’ reports. The program provides incentives for boiler controls, high efficiency boilers and water heaters, high SEER central air conditioners, ENERGY STAR-qualified clothes washers located in common area laundry rooms, in-unit ENERGY STAR-qualified appliances and room air conditioners, air sealing, attic and side wall insulation, and several lighting options for common areas and in-unit applications. The customer rewards also benefit distributors and contractors by helping them sell larger projects and earning greater margins on energy-efficient equipment. The program is beginning to support distributors’ efforts to expand their existing training to inform
Residential Multifamily
2
contractors about new energy-efficient products and teach installation and maintenance best practices for this equipment. The program offers a progressive incentive schedule for natural gas savings to induce building owners to upgrade multiple systems and select the highest efficiency equipment. As shown in the rewards table, owners may earn 150 percent or 200 percent of base level rewards and achieve greater energy savings when they implement whole building and/or highest efficiency improvements. Gas reward amounts range from $0.40 to $0.80 per therm (these are maximum reward levels, consultants offer lower amounts when possible). Generally, electricity savings are rewarded at a maximum rate of $0.06 to $0.08 per kWh. Direct installation of common area lighting had an average reward level of $0.11 per kWh in program year one and program year two. However, as shown in Table 3, the reward structure then provided free 24-hour per day lighting upgrades, which produced large kWh savings relative to the reward amounts. In early 2003, Focus on Energy evaluators recommended that rewards be modified to encourage owners to implement all recommendations (to minimize lost opportunities). The reward schedule for program year three reduced the reward level for 24-hour per day lighting and significantly increased the rewards for 12- and 6-hour per day lighting. This is achieving the desired results. It is also increasing reward costs per kWh. In the first quarter of program year three, the average reward level increased to $0.14 per kWh. Table 1: Progressive Custom Cash-Back Rewards for Natural Gas Measures Number of Systems Upgraded Single System Multiple Systems (Comprehensive) Measure Boilers & Unit Heaters Furnace (also see Fixed Reward, below) Attic Insulation Wall Insulation Water Heater (Small 75,000 BTUH, or 100 Gallon tank)
High Efficiency $0.40 per therm $0.60 per therm
Highest Efficiency $0.60 per therm $0.80 per therm
Qualifying as “High” 83–89% 90–92% R40 R19 0.61 or greater Energy Factor
Qualifying as “Highest” 90% or greater 93% or greater
83–89%
90% or greater
Apartment & Condo Efficiency Services, Focus on Energy
3
Table 2: Fixed-Amount Cash-Back Rewards Measure ENERGY STAR-Qualified Setback Thermostat (must include 5day/2-day setting) Boiler Outdoor Reset/Cutout Control (Single Stage) Steam Trap Repair/Replacement (Maximum 100 per location) Furnace 90 plus AFUE with Efficient Fan Motor (ECM) must be on prequalified list ENERGY STAR-qualified clothes washer only when installed in common area laundry room(s) 12.0–12.9 SEER Air Conditioner 13.0 or greater SEER Air Conditioner ENERGY STAR-Qualified Room Air Conditioner Casement Only >9.6 EER Casement – Slider >10.5 EER ENERGY STAR EER ENERGY STAR EER Btu/Hr w/louvers w/o louvers 10.7 >9.9 6,000 to 7,999 > 10.7 >9.9 8,000 to 13,999 > 10.8 >9.4 14,000 to 19,000 > 10.7 >9.4 >20,000 > 9.4 >9.4
Reward $40.00 per unit $100.00 per unit $20.00 per unit $150.00 per furnace $100.00 per washer $0.06 per kWh $0.08 per kWh $0.08 per kWh
Table 3: Direct Installation of Common Area Lighting Reward Schedule Reward Savings Percent of Installed Cost Percent of Total kWh Category Years 1 & 2 Year 3 Years 1 & 2 Year 3, Q1 6 hours/day 25% 65% 0.1% 6% 12 hours/day 50% 75% 28.5% 33% 24 hours/day 100% 85% 74.1% 61% PROGRAM PERFORMANCE In the past two years, the program has saved over 19.6 gigawatt-hours of electricity and over 1.5 million therms. These savings were produced by program assistance and rewards in connection with the installation of energy-saving projects in more than 2,000 existing buildings. During the first two years, the Apartment & Condo Efficiency Services program also included an ENERGY STAR Products component that resulted in owners, managers, and tenants installing 54,000 ENERGY STAR-qualified products. In these two years, the program has been in contact with 447 contractors, suppliers and distributors. A total of 149 contractors signed ally agreements and 103 of those have completed projects through the program.
Residential Multifamily
4
LESSONS LEARNED Market Characteristics Multifamily is the least energy-efficient type of housing. Reasons for this include the “split incentive,” owners’ competing capital needs, lack of access to capital and information, and low confidence in estimated retrofit savings. Further, many owners believe that energy is not important, they have already done everything through earlier energy efficiency programs, and there are few knowledgeable people to recommend and install efficiency improvements. Program Approach This program achieves effective results by involving contractors in win-win-win situations. This starts when owners who have decided to make an improvement ask a program contractor to give them recommendations and cost estimates. The contractor refers the customer to a program consultant, who provides the owner with unbiased additional information and other assistance to help him or her select and implement cost-effective measures. Often owners implement additional or higher efficiency measures that they may not have originally considered. As contractors learn that program consultants help them convince owners to purchase higher efficiency—and more profitable—equipment, they continue to refer owners to program consultants. The program builds relationships with contractors through meetings facilitated by equipment distributors. Additionally, after the distributor meetings, follow-up packages containing program rules, available rewards, and contractor ally agreements are mailed to interested contractors. Program staff follow up with individual contractors via face-to-face meetings to enlist them in the program. The program provides significant energy savings to building owners. Further, it improves their profitability and the value of their properties, and helps them improve the comfort and safety of their residents. By developing relationships with contractors and distributors and obtaining referrals from them, the program is able to affect projects that might otherwise be missed opportunities. This program approach is transferable to other markets and provides a successful model for using local market providers to continually refer new, actionable leads in exchange for support in selling efficient, profitable equipment and services. Changes and Program Evolution In implementing this statewide program the program has found two services to be most effective: first, prompt delivery of independent assessments to owners who are actively considering improvements; and second, providing direct installation of lighting fixtures. Focus on Energy experimented with a different whole-facility model during a pilot project phase in 1999–2002. Under the pilot model, Focus provided comprehensive facility assessments addressing energy and water costs on a cold call basis. Since most owners were not planning upgrades when the assessment was completed, most suggestions were framed as “replace on failure” recommendations. An evaluation, completed in 2002, found that 40 percent of owners
Apartment & Condo Efficiency Services, Focus on Energy
5
had implemented some of the recommendations (including many no- and low-cost measures) after two or three years had elapsed.1 In general, though, the cold call model operated on a longer timeframe than Focus’ current model of partnering with contractors and responding to owners starting to act. In addition, the ENERGY STAR Products program assumed responsibility for funding the CashBack Rewards for multifamily customers at the beginning of the third program year. This was done to simplify budgeting, reward accounting, and other administrative tasks. Replicability and Transferability of Program The core elements of the Apartment & Condo Efficiency Services program are replicable and transferable to other program sponsors. These elements include: (1) the development of relationships with market providers in order to support their efforts in selling energy-efficient products to customers, and (2) the simultaneous development of capabilities to provide independent, objective information promptly to interested customers working with the allied market providers. The necessary infrastructure development includes hiring/training energy consultants capable of performing energy assessments and producing succinct reports outlining the savings from costs of and rewards available for proposed improvements. Support staff accept referrals, obtain utility billing records, coordinate the delivery of reports, and handle other administrative tasks. Consultants also maintain relationships with market providers and recruit new program allies. Implementation may proceed from start-up to signing allies and demonstrating the usefulness of program support to those early allies within three to six months. Once the program is running, the timeline for individual projects to move customers from referral through assessment and recommendations may be as short as three to four weeks (depending on the responsiveness of the customer, the program ally, and the utility providing billing histories). Decisions may be made quickly by customers, or may take weeks or months. Future of the Program The Apartment & Condo Efficiency Services program has established efficient approaches for serving customers across Wisconsin. Improvements are being considered, tested, and adopted or rejected continuously. Significant additional efforts are being made to involve more market providers. The major uncertainty in Wisconsin is over the availability of continued funding at current levels. While other programs in the Focus on Energy residential portfolio currently involve many 1
Typical lifetimes of 15 to 20 years are common for major equipment, translating into replacement rates of only seven percent to five percent of equipment per year (respectively). These rates suggest that in two to three years only 10 percent to 20 percent of major equipment would likely have failed.
Residential Multifamily
6
more market providers and customers, the multifamily program is demonstrating that it too can serve significant groups with important services. This and other programs serving multifamily housing owners, managers, and residents help moderate-income residents reduce their energy and total housing costs.
Apartment & Condo Efficiency Services, Focus on Energy
7
PROGRAM AT A GLANCE Program name: Apartment & Condo Efficiency Services Targeted customer segments: This program targets the owners and/or managers of apartment or condominium properties with four or more units per building. In addition, the program provides residents with information on ways to save money and energy and another Focus on Energy program offers all customers Cash-Back Rewards for ENERGY STARqualified product purchases. Program start date: The statewide program started in June 2001, with the first installations completed in October 2001.2 Program participants: While the program benefits the owners/managers and residents of buildings with four or more units, the program counts as “participants” the number of multifamily buildings (averaging 16 units per building) where it provides assistance, support, and implementation of suggested improvements.3 4
Program participants Period Program Year Two Cumulative
Buildings 1,900 2,000
Eligible population: Eligible multifamily housing includes an estimated 318,000 units in 30,800 buildings with four or more units. A total of 18,000 “multifamily operators” are estimated to own or manage at least one building with four or more units. Fewer than 10 percent of these owner/managers belong to an apartment association, although owners with larger holdings are more likely to be association members.
Annual energy savings achieved5 Period Net kWh Net kW Saved Reduction Program Year Two Cumulative
1,360
19,595,300
1,522
1,519,041
Cost effectiveness: An independent evaluation determined that the program benefit/cost ratio was 5.05 for program year two (July 2002 through June 2003). Budget Year July 2001– June 2002 July 2002– June 2003 July & August 2003 July 2003– June 2004 2004 (projected)
Program Delivery Cost $1,279,216
Participant Rewards Cost $596,342
Total Program Cost (Budget for ’03-’04) $1,876,000
$2,879,573
$2,171,062
$5,051,000
$191,441
$178,280
$369,721
$2,610,500
$2,185,500
Budget $4,796,000 Focus on Energy funding uncertain (overall, the program is facing cuts of 48%)
Funding source: The funding for this program is derived from a public benefits charge applied to electric ratepayers in Wisconsin. The fund is overseen by the Wisconsin Department of Administration, who contracts with a nonprofit administrator, Wisconsin Energy Conservation Corporation, to manage residential energy efficiency programs across the entire state of Wisconsin. Best person to contact for information about the program • • • • •
2
An earlier regional pilot market transformation program operated from July 1999 until December 2002. 3 A property may include multiple buildings with different numbers of units. Further, the program supports owners’ efforts to implement multiple improvement projects that may each involve one or more buildings. 4 Participants reported include only those who completed installing suggested measures. Another 570 customers have received assessments, but have not completed installations.
17,291,776
Net Therms Saved 1,362,861
5
Jack Jenkins, Program Manager Focus on Energy, 211 S. Paterson, 3rd Floor, Madison, WI 53703 Phone: (888)509-3247 ext. 450, (608)2499322 ext. 450 Email: [email protected] Web page: focusonenergy.com
Focus on Energy Public Benefits Evaluation, Quarterly Report and Annual Overview, August 29, 2003.
Residential Multifamily
2
contractors about new energy-efficient products and teach installation and maintenance best practices for this equipment. The program offers a progressive incentive schedule for natural gas savings to induce building owners to upgrade multiple systems and select the highest efficiency equipment. As shown in the rewards table, owners may earn 150 percent or 200 percent of base level rewards and achieve greater energy savings when they implement whole building and/or highest efficiency improvements. Gas reward amounts range from $0.40 to $0.80 per therm (these are maximum reward levels, consultants offer lower amounts when possible). Generally, electricity savings are rewarded at a maximum rate of $0.06 to $0.08 per kWh. Direct installation of common area lighting had an average reward level of $0.11 per kWh in program year one and program year two. However, as shown in Table 3, the reward structure then provided free 24-hour per day lighting upgrades, which produced large kWh savings relative to the reward amounts. In early 2003, Focus on Energy evaluators recommended that rewards be modified to encourage owners to implement all recommendations (to minimize lost opportunities). The reward schedule for program year three reduced the reward level for 24-hour per day lighting and significantly increased the rewards for 12- and 6-hour per day lighting. This is achieving the desired results. It is also increasing reward costs per kWh. In the first quarter of program year three, the average reward level increased to $0.14 per kWh. Table 1: Progressive Custom Cash-Back Rewards for Natural Gas Measures Number of Systems Upgraded Single System Multiple Systems (Comprehensive) Measure Boilers & Unit Heaters Furnace (also see Fixed Reward, below) Attic Insulation Wall Insulation Water Heater (Small 75,000 BTUH, or 100 Gallon tank)
High Efficiency $0.40 per therm $0.60 per therm
Highest Efficiency $0.60 per therm $0.80 per therm
Qualifying as “High” 83–89% 90–92% R40 R19 0.61 or greater Energy Factor
Qualifying as “Highest” 90% or greater 93% or greater
83–89%
90% or greater
Apartment & Condo Efficiency Services, Focus on Energy
3
Table 2: Fixed-Amount Cash-Back Rewards Measure ENERGY STAR-Qualified Setback Thermostat (must include 5day/2-day setting) Boiler Outdoor Reset/Cutout Control (Single Stage) Steam Trap Repair/Replacement (Maximum 100 per location) Furnace 90 plus AFUE with Efficient Fan Motor (ECM) must be on prequalified list ENERGY STAR-qualified clothes washer only when installed in common area laundry room(s) 12.0–12.9 SEER Air Conditioner 13.0 or greater SEER Air Conditioner ENERGY STAR-Qualified Room Air Conditioner Casement Only >9.6 EER Casement – Slider >10.5 EER ENERGY STAR EER ENERGY STAR EER Btu/Hr w/louvers w/o louvers 10.7 >9.9 6,000 to 7,999 > 10.7 >9.9 8,000 to 13,999 > 10.8 >9.4 14,000 to 19,000 > 10.7 >9.4 >20,000 > 9.4 >9.4
Reward $40.00 per unit $100.00 per unit $20.00 per unit $150.00 per furnace $100.00 per washer $0.06 per kWh $0.08 per kWh $0.08 per kWh
Table 3: Direct Installation of Common Area Lighting Reward Schedule Reward Savings Percent of Installed Cost Percent of Total kWh Category Years 1 & 2 Year 3 Years 1 & 2 Year 3, Q1 6 hours/day 25% 65% 0.1% 6% 12 hours/day 50% 75% 28.5% 33% 24 hours/day 100% 85% 74.1% 61% PROGRAM PERFORMANCE In the past two years, the program has saved over 19.6 gigawatt-hours of electricity and over 1.5 million therms. These savings were produced by program assistance and rewards in connection with the installation of energy-saving projects in more than 2,000 existing buildings. During the first two years, the Apartment & Condo Efficiency Services program also included an ENERGY STAR Products component that resulted in owners, managers, and tenants installing 54,000 ENERGY STAR-qualified products. In these two years, the program has been in contact with 447 contractors, suppliers and distributors. A total of 149 contractors signed ally agreements and 103 of those have completed projects through the program.
Residential Multifamily
4
LESSONS LEARNED Market Characteristics Multifamily is the least energy-efficient type of housing. Reasons for this include the “split incentive,” owners’ competing capital needs, lack of access to capital and information, and low confidence in estimated retrofit savings. Further, many owners believe that energy is not important, they have already done everything through earlier energy efficiency programs, and there are few knowledgeable people to recommend and install efficiency improvements. Program Approach This program achieves effective results by involving contractors in win-win-win situations. This starts when owners who have decided to make an improvement ask a program contractor to give them recommendations and cost estimates. The contractor refers the customer to a program consultant, who provides the owner with unbiased additional information and other assistance to help him or her select and implement cost-effective measures. Often owners implement additional or higher efficiency measures that they may not have originally considered. As contractors learn that program consultants help them convince owners to purchase higher efficiency—and more profitable—equipment, they continue to refer owners to program consultants. The program builds relationships with contractors through meetings facilitated by equipment distributors. Additionally, after the distributor meetings, follow-up packages containing program rules, available rewards, and contractor ally agreements are mailed to interested contractors. Program staff follow up with individual contractors via face-to-face meetings to enlist them in the program. The program provides significant energy savings to building owners. Further, it improves their profitability and the value of their properties, and helps them improve the comfort and safety of their residents. By developing relationships with contractors and distributors and obtaining referrals from them, the program is able to affect projects that might otherwise be missed opportunities. This program approach is transferable to other markets and provides a successful model for using local market providers to continually refer new, actionable leads in exchange for support in selling efficient, profitable equipment and services. Changes and Program Evolution In implementing this statewide program the program has found two services to be most effective: first, prompt delivery of independent assessments to owners who are actively considering improvements; and second, providing direct installation of lighting fixtures. Focus on Energy experimented with a different whole-facility model during a pilot project phase in 1999–2002. Under the pilot model, Focus provided comprehensive facility assessments addressing energy and water costs on a cold call basis. Since most owners were not planning upgrades when the assessment was completed, most suggestions were framed as “replace on failure” recommendations. An evaluation, completed in 2002, found that 40 percent of owners
Apartment & Condo Efficiency Services, Focus on Energy
5
had implemented some of the recommendations (including many no- and low-cost measures) after two or three years had elapsed.1 In general, though, the cold call model operated on a longer timeframe than Focus’ current model of partnering with contractors and responding to owners starting to act. In addition, the ENERGY STAR Products program assumed responsibility for funding the CashBack Rewards for multifamily customers at the beginning of the third program year. This was done to simplify budgeting, reward accounting, and other administrative tasks. Replicability and Transferability of Program The core elements of the Apartment & Condo Efficiency Services program are replicable and transferable to other program sponsors. These elements include: (1) the development of relationships with market providers in order to support their efforts in selling energy-efficient products to customers, and (2) the simultaneous development of capabilities to provide independent, objective information promptly to interested customers working with the allied market providers. The necessary infrastructure development includes hiring/training energy consultants capable of performing energy assessments and producing succinct reports outlining the savings from costs of and rewards available for proposed improvements. Support staff accept referrals, obtain utility billing records, coordinate the delivery of reports, and handle other administrative tasks. Consultants also maintain relationships with market providers and recruit new program allies. Implementation may proceed from start-up to signing allies and demonstrating the usefulness of program support to those early allies within three to six months. Once the program is running, the timeline for individual projects to move customers from referral through assessment and recommendations may be as short as three to four weeks (depending on the responsiveness of the customer, the program ally, and the utility providing billing histories). Decisions may be made quickly by customers, or may take weeks or months. Future of the Program The Apartment & Condo Efficiency Services program has established efficient approaches for serving customers across Wisconsin. Improvements are being considered, tested, and adopted or rejected continuously. Significant additional efforts are being made to involve more market providers. The major uncertainty in Wisconsin is over the availability of continued funding at current levels. While other programs in the Focus on Energy residential portfolio currently involve many 1
Typical lifetimes of 15 to 20 years are common for major equipment, translating into replacement rates of only seven percent to five percent of equipment per year (respectively). These rates suggest that in two to three years only 10 percent to 20 percent of major equipment would likely have failed.
Residential Multifamily
6
more market providers and customers, the multifamily program is demonstrating that it too can serve significant groups with important services. This and other programs serving multifamily housing owners, managers, and residents help moderate-income residents reduce their energy and total housing costs.
Apartment & Condo Efficiency Services, Focus on Energy
7
PROGRAM AT A GLANCE Program name: Apartment & Condo Efficiency Services Targeted customer segments: This program targets the owners and/or managers of apartment or condominium properties with four or more units per building. In addition, the program provides residents with information on ways to save money and energy and another Focus on Energy program offers all customers Cash-Back Rewards for ENERGY STARqualified product purchases. Program start date: The statewide program started in June 2001, with the first installations completed in October 2001.2 Program participants: While the program benefits the owners/managers and residents of buildings with four or more units, the program counts as “participants” the number of multifamily buildings (averaging 16 units per building) where it provides assistance, support, and implementation of suggested improvements.3 4
Program participants Period Program Year Two Cumulative
Buildings 1,900 2,000
Eligible population: Eligible multifamily housing includes an estimated 318,000 units in 30,800 buildings with four or more units. A total of 18,000 “multifamily operators” are estimated to own or manage at least one building with four or more units. Fewer than 10 percent of these owner/managers belong to an apartment association, although owners with larger holdings are more likely to be association members.
Annual energy savings achieved5 Period Net kWh Net kW Saved Reduction Program Year Two Cumulative
1,360
19,595,300
1,522
1,519,041
Cost effectiveness: An independent evaluation determined that the program benefit/cost ratio was 5.05 for program year two (July 2002 through June 2003). Budget Year July 2001– June 2002 July 2002– June 2003 July & August 2003 July 2003– June 2004 2004 (projected)
Program Delivery Cost $1,279,216
Participant Rewards Cost $596,342
Total Program Cost (Budget for ’03-’04) $1,876,000
$2,879,573
$2,171,062
$5,051,000
$191,441
$178,280
$369,721
$2,610,500
$2,185,500
Budget $4,796,000 Focus on Energy funding uncertain (overall, the program is facing cuts of 48%)
Funding source: The funding for this program is derived from a public benefits charge applied to electric ratepayers in Wisconsin. The fund is overseen by the Wisconsin Department of Administration, who contracts with a nonprofit administrator, Wisconsin Energy Conservation Corporation, to manage residential energy efficiency programs across the entire state of Wisconsin. Best person to contact for information about the program • • • • •
2
An earlier regional pilot market transformation program operated from July 1999 until December 2002. 3 A property may include multiple buildings with different numbers of units. Further, the program supports owners’ efforts to implement multiple improvement projects that may each involve one or more buildings. 4 Participants reported include only those who completed installing suggested measures. Another 570 customers have received assessments, but have not completed installations.
17,291,776
Net Therms Saved 1,362,861
5
Jack Jenkins, Program Manager Focus on Energy, 211 S. Paterson, 3rd Floor, Madison, WI 53703 Phone: (888)509-3247 ext. 450, (608)2499322 ext. 450 Email: [email protected] Web page: focusonenergy.com
Focus on Energy Public Benefits Evaluation, Quarterly Report and Annual Overview, August 29, 2003.
