by Ravi Malhotra, Founder & President, ICAST
Originally published in NH&RA’s Tax Credit Advisor Magazine, December 2022
While the federal, state and local governments are picking up the pace in their decarbonization efforts, very few of those programs, and even fewer utility rebate programs, specifically target multifamily housing. Unless the multifamily sector acts, it runs the risk of missing out on generous incentives for high efficiency heat pumps and other efficiency solutions that drive decarbonization through electrification of multifamily properties, while also improving the value and profitability of the properties.
Luckily, there are a few programs that offer a pathway to a successful multifamily program. A leading example is Utah’s Rocky Mountain Power (RMP) utility demand-side management (DSM) program. RMP’s custom multifamily program launched in 2018 and is one of the most successful programs nationally for electrification in multifamily properties. It covers the entire multifamily market, including mixed-use, serving both affordable and market-rate properties and both new construction and retrofit projects. It focuses on holistic, deep energy savings, paying incentives tied directly to energy savings and offering greater incentives for heat pump installs. Multifamily affordable properties get an even higher incentive. RMP offers a one-stop-shop service model that includes free design assistance and energy modeling services, design-build services, upfront rebates, a single point of contact for the customer and other services, all designed to make the customer engagement hassle-free and easy. RMP worked with its stakeholders and policy advocates to launch this program because its multifamily clients were a neglected segment. RMP believed its multifamily program, if designed right, could grow significantly, as it has: Almost 400 percent from its launch and has installed ~5,000 heat pumps in the last two years, after receiving state approval to incentivize fuel-switching from natural gas to electric systems. The growth rate for electrification and efficiency in Utah has been phenomenal with the right program design and implementation. The incentives are designed to compensate for any cost increases for the selection and installation of very high-efficiency equipment.
Two case studies from the program include a retrofit of Stansbury Condos and a new construction, Project Open, both in Salt Lake City.
Retrofit: Stansbury Condos, Salt Lake City. Stansbury Condos is a nine-story apartment building with 75 owner-occupied units. The building had an old and inefficient central boiler and chiller system, with high repair and utility costs paid by the owners through their Homeowners Association dues. With the help of rebates from RMP, each unit was upgraded to high-efficiency cold-climate air-source heat pumps (ccASHPs) to replace their central boiler and chiller. Average annual heating and cooling energy savings from the retrofit were calculated at 65 percent. Estimated cost savings over the lifetime of the ccASHPs were estimated at $927,223, abating ~9.9 million lbs. of carbon emissions, and achieving over 5.3 million in kWh savings.
New Construction: Project Open, Salt Lake City. Project Open is an all-electric development comprising three buildings with 207 mixed-income units; it was built in two phases in 2018 and 2020. This development is the first in Utah designed to be net-zero. RMP provided ~$330,000 in rebates to facilitate the installation of very high-efficiency ccASHPs and heat pump water heaters, plus other energy efficiency measures. Over the lifetime of the upgrades, the project will create ~$1.4 million in utility savings, cut ~16 million lbs. of carbon emissions and achieve ~8.8 million in kWh savings. Project Open was designed with several goals, including combating climate change (air pollution is a significant concern for Utahns) and demonstrating that an all-electric high-performance new construction can be less expensive than ‘business as usual’ designs with gas infrastructure. This latter point is backed by numerous studies in Utah and elsewhere.
Additional Programs Across the Country
Other promising electrification programs include Efficiency Vermont, which launched its first heat pump rebate program in 2014. Citing the economic and environmental benefits of these technologies, Efficiency Vermont worked with the state government to get legislation passed that would allow it to promote and subsidize heat pumps. Through 2020, it incentivized over 19,600 installs across all buildings, including multifamily. Sacramento Municipal Utility District’s (SMUD) Go Electric program is another successful example for multifamily properties. SMUD recently started incentivizing fuel switching for space and water heating, as well as cooking in existing multifamily properties. And ComEd is another utility that has recently launched a program focused on multifamily housing with generous rebates that will spur large-scale adoption of heat pumps and is working to launch a fuel-switch-focused program for the multifamily market.
Multifamily affordable housing owners can achieve similar savings and impacts to those described in the case studies if they leverage their influence to advocate for multifamily-focused electrification programs through their utilities and states. The recently passed Inflation Reduction Act (IRA) now offers a lot more funding and many more opportunities to multifamily affordable housing developers, and depending on which state you are in, you may be able to point out that the social and environmental benefits of electrifying multifamily affordable housing aligns with the goals of the Justice40 Initiative. The IRA has a $369 billion allocation to advance clean energy and environmental justice. It is time that the multifamily affordable housing sector makes the case that it should receive a fair share of this investment because not only will it reduce carbon emissions and increase grid reliability and create jobs, but it will lower utility and healthcare costs for the low-income tenants (i.e., social equity), and environmental justice because it will increase low-income renters’ access to green solutions.