Strengthening Retrofit Markets for Comprehensive Savings in Multifamily Buildings (Interim Final Report)
Energy efficiency is vitally important in Maine. Nearly 70% of Maine households rely on fuel oil as their primary energy source for home heating, a higher share than in any other state. Coupled with the state's long, cold winters, Maine's dependence on oil renders homeowners particularly vulnerable to fluctuating fuel costs. With $\$$4.5 million in seed funding from the Energy Department's Better Buildings Neighborhood Program, the Governor's Energy Office (GEO), through Efficiency Maine Trust (the Trust), is spurring Maine landlords to lower their monthly energy bills and improve comfort for their tenants during the state's cold winter months and increasingly warmer summers. Maine's aging multifamily housing stock can be expensive to heat and costly to maintain. It is not unusual to find buildings with little or no insulation, drafty windows, and significant air leaks, making them ideal candidates for energy efficiency upgrades. Maine modeled its Multifamily Efficiency Program (MEP) after the state's highly successful Home Energy Savings Program (HESP) for single-family homes. HESP provided cash incentives and financing opportunities to owners of one-to four-unit structures, which resulted in thousands of energy assessments and whole-house energy upgrades in 225 communities. Maine's new MEP multifamily energy efficiency upgrade and weatherization initiative focuses on small to medium-sized (i.e., five to 20 units) apartment buildings. The program's energy efficiency upgrades will provide at least 20% energy savings for each upgraded multifamily unit. The Trust’s MEP relies on a network of approved program partners who help move projects through the pipeline from assessment to upgrade. MEP has two components: benchmarking and development of an Energy Reduction Plan (ERP). Using the ENERGY STAR® Portfolio Manager benchmarking tool, MEP provides an assessment of current energy usage in the building, establishes a baseline for future energy efficiency improvements, and enables tracking and monitoring of future energy usage at the building— all at no cost to the building owner. The ERP is developed by a program partner using either the Trust’s approved modeling or prescriptive tools; it provides detailed information about the current energy related conditions in the building and recommends energy efficiency, health, and safety improvements. The Trust's delivery contractor provides quality assurance and controls throughout the process. Through this effort, MEP's goal is to establish a self-sustaining, market-driven program, demonstrating the value of energy efficiency to other building owners. The increasing value of properties across the state will help incentivize these owners to continue upgrades after the grant period has ended. Targeting urban areas in Maine with dense clusters of multifamily units—such as Portland, Lewiston- Auburn, Bangor, and Augusta—MEP engaged a variety of stakeholder groups early on to design its multifamily program. Through direct emails and its website, program officials invited lending institutions, building professionals, engineering firms, equipment distributors, and local property owners associations to attend open meetings around the state to learn about the goals of the multifamily program and to help define its parameters. These meetings helped program administrators understand the diversity of the customer base: some owners are individuals with a single building, while other owners are groups of people or management companies with an entire portfolio of multifamily buildings. The diversity of the customer base notwithstanding, owners see MEP as an opportunity to make gains in their respective properties. Consistently high turnouts at stakeholder meetings fueled greater customer interest as awareness of the program spread through word of mouth. The program also gained traction by utilizing the program partner networks and building on the legacy of the Trust’s successful HESP for single-family residences. MEP offers significant incentives for building owners to participate in the upgrade program. Wholebuilding benchmarking services are available to most multifamily housing buildings free of charge. The service provides the building owner with an assessment of the building's current energy efficiency as compared to other multifamily buildings on a national scale, establishes a baseline to measure future improvements, and enables owners to track monthly energy consumption using the ENERGY STAR Portfolio Manager. Once the benchmarking process is complete, the program links building owners with approved program partners (e.g., energy professionals, home performance contractors) to identify and implement specific energy-saving opportunities in the building. Program partners can also provide project quotes with estimated financing incentives and payback period calculations that enable building owners to make informed decisions. What's more, the Trust provides two financial incentives for successful completion of program milestones. The first is a per-unit incentive for completion of an approved ERP (i.e., $\$$100 per unit if a prescriptive path is followed, and $\$$200 per unit for a modeled ERP). Upon final inspection of the installed project scope of work, an incentive of $\$$1,400 per unit or 50% of installed cost—whichever is less—is paid. The Trust originally established a $\$$1 million loan-loss reserve fund (LLRF) to further enhance financing opportunities for qualified multifamily building owners. This funding mechanism was designed to connect building owners with lenders that retain the mortgages for their properties and encourages the lenders to offer financing for energy efficiency improvements. However, there has been no interest in the LLRF and therefore the LLRF has been reduced. Ultimately, MEP plans to build an online tool for building owners to assess opportunities to make upgrades in their multifamily units. The tool will include a performance rating system to provide a way for building owners to more easily understand energy use in their building, and how it could be improved with energy efficiency upgrades. Prospective tenants will also be able to use the rating system to make informed decisions about where to rent. Furthermore, the rating can be incorporated into real estate listings as a way for prospective home buyers and the real estate financial community to evaluate a home's operating costs. The Trust’s MEP has identified the state's most experienced energy professionals, vendors, suppliers, and contractors that install energy efficiency equipment in the multifamily sector to be qualified program partners. To be eligible for partnership, energy assessment professionals and contractors are required to have demonstrated experience in the multifamily sector and hold associated professional certifications, such as Building Operator Certification (BOC), Certified Energy Manager (CEM), Professional Engineer (PE), or Building Performance Institute (BPI) Multifamily Building Analyst. Widespread program interest has enabled the Trust to redirect funds that might otherwise be needed for program promotion to building capacity through contractor training. In addition to boosting professional training and certification opportunities, MEP teaches its partners how to market the multifamily program to prospective multifamily homeowners.