Apartments Offer Big Energy Efficiency Opportunity for Utilities

Dan Kandy
Report suggests the implementation of energy efficiency programs in multifamily residential buildings could save billions

The American Council for an Energy Efficient Economy (ACEEE) sees utilities and renters in multifamily buildings as a match made in heaven for achieving energy efficiency goals. According to Engaging as Partners in Energy Efficiency: A Primer for Utilities on the Energy Efficiency Needs of Multifamily Buildings and Their Ownersa report from ACEEE and CNT Energy, building owners and tenants stand to save around $3.4 billion annually if the best current multifamily energy efficiency programs were put into place nationally. The report notes that multifamily buildings offer relatively easy sites for recruitment to energy efficiency programs, compared to single-family homes. However, challenges stand in the way of such a partnership. For example, how do you attribute savings when a building uses multiple fuel sources? Additionally, the variation in size (or number of units) and rental type (market rate or subsidized, for example) makes a one-size-fits-all approach impractical.

The report goes on to outline the benefits, opportunities, and barriers that building owners are presented with when pursuing energy efficiency goals, and provides a guide for utilities seeking to design and implement an energy efficiency program for multifamily buildings.

Some of the report’s take-aways:

  • “The energy efficiency potential of the multifamily rental sector compares favorably to the single family and small commercial sectors because it is large and, in some ways, more homogeneous and organized than these sectors.”
  • “In a particular geographic area, multifamily buildings of similar size and age often have very similar energy efficiency upgrade needs. In contrast, small commercial efficiency programs must address dozens of different small business industries, such as restaurants and dry cleaners, often located in leased space, with vastly different energy uses and energy efficiency needs.”
  • “Multifamily programs are an excellent opportunity for utilities seeking a new source of energy efficiency savings… Lighting, appliance, domestic hot water, and direct install programs can [all] benefit from this commercial-level scale.”
  • “The multifamily industry suffers from a split incentive problem when it comes to energy efficiency… The split incentive problem occurs when building owners do not see an immediate benefit to installing and maintaining energy efficient HVAC equipment and appliances because their tenants are responsible for paying the utility bills, and so garner the savings from the upgrades.”

Utilities, by offering and expanding energy efficiency programs to multifamily buildings, may capture savings of up to $9 billion annually, and with multifamily buildings offering a “well-organized, local pool of program participants,” utilities have some compelling reasons to pursue energy efficiency in the 16 million renter-occupied apartments and condominiums in the U.S.

Dan Kandy
Exploring the environmental and climate impact of buildings and the built environment, MPA candidate in Environmental Science & Policy at Columbia

Related resources and references

Engaging as Partners in Energy Efficiency  ACEEE, CNTenergy