As energy utilities ramp up their decarbonization and grid reliability efforts, multifamily buildings are an untapped opportunity. That’s why utilities across the country are creating programs that support property owners in making energy efficiency upgrades.

According to the U.S. Department of Energy, more than 36% of Americans currently rent, and 60% of renters live in multifamily buildings. This is a tremendous opportunity for energy utilities to implement energy-saving measures to an underserved market. Improving energy efficiency in multifamily buildings also reduces demand on the electric grid, which is vital as adoption of electric transportation continues to grow.

“We need to continually improve energy efficiency in our community to accommodate the electrification load that's growing rapidly, especially in the transportation sector,” says David Jacot, Director of Efficiency Solutions at the City of Los Angeles Department of Water and Power (LADWP). “While California has a mandate to decarbonize the electric grid by 2045, here in Los Angeles we have a much more aggressive goal to do it by 2035. There’s a lot of moving parts to meet these goals, but every part, including multifamily energy efficiency, is essential to moving us forward.”

Barriers to building upgrades  

For property owners, energy efficiency upgrades have many benefits, including increased property value, decreased maintenance costs and greater tenant satisfaction. In fact, if all multifamily buildings in the U.S. made energy efficiency improvements, this would save $8 billion in energy costs. However, upgrades can be costly, and property owners can be resistant to change.

“Some property owners aren’t willing to take the chance on piloting energy efficient technologies without the certainty of saving energy,” says Joseph Fernandi, Director of Customer Energy Solutions at Seattle City Light. “They would rather replace existing equipment with something familiar that has worked in the past.”

According to Fernandi, the biggest barriers to improving energy efficiency in multifamily buildings is the overall cost, hesitation around new technology and reluctance to disrupt tenants. That’s why property owners are oftentimes more likely to invest in ongoing maintenance and simple upgrades versus major retrofits.

In Los Angeles, rent-controlled apartments have benefited tenants, but left property owners with less income to make energy efficiency improvements. According to Jacot, it’s essential to incentivize property owners through multifamily programs to mitigate some of the upfront costs.

“There's a lot of opportunity, but it's a challenging market, especially here in L.A. where we have a lot of old apartment buildings that have not been upgraded in a long time – if ever,” Jacot says. “Many property owners are struggling and don’t have the ability to invest in their properties.”

Reducing energy burdens, carbon emissions

Multifamily buildings are often the last to take advantage of energy efficiency upgrades and the latest renewable energy technologies. With rising rent costs, energy efficiency upgrades can offer much-needed relief to low-income families, helping them lower their monthly energy bills.

In the Midwest, Alliant Energy supports property owners of low-income multifamily buildings through air-source heat pump rebates. According to Kurt Sempf, Senior Portfolio Manager at Alliant Energy, the utility’s rebates reduce equipment costs by up to 40%. “As an energy provider, we try to lower the energy burdens for our customers,” Sempf says.  

Seattle City Light’s Multifamily Weatherization program incentivizes property owners to invest in insulation, window and exterior door upgrades. Additionally, the Retrofit Lighting and Lighting to Go programs enable property owners to retrofit lighting in common areas, which helps to reduce energy consumption and increase safety.

LADWP’s Comprehensive Affordable Multifamily Retrofits Program (CAMR) helps the city’s low-income multifamily property owners identify energy savings opportunities to reduce greenhouse gas emissions.

Launched in 2022, the program features a three-pronged approach: energy efficiency, building electrification (from natural gas to electric) and onsite solar through the utility’s virtual net metering program. Currently, LADWP has 8,000 multifamily buildings in the pipeline, with 5,900 verified as eligible for the CAMR program.  

Austin Energy’s Multifamily Income-Qualified Program covers a wide variety of efficiency improvements, including LED lighting, smart thermostats, solar screens and HVAC tune-ups. According to Cindy Berry, Environmental Conservation Program Manager at Austin Energy, the program has been successful at helping property owners increase tenant comfort and energy savings.

“While property managers and owners receive the incentive, tenants benefit from the energy efficiency measures,” Berry says. “We incentivize 100% for our income-qualified program for apartment buildings where 30% of the tenant population faces financial hardship. Tenants appreciate the upgrades, including the smart thermostats and solar screens, especially with the hot summers here in Texas.”

Making connections

To reach property owners about energy efficiency opportunities, energy utilities are partnering with different community partners. LADWP’s outreach efforts are handled by a third-party implementer, the Association for Energy Affordability (AEA), Jacot explains. The organization handles outreach efforts for the CAMR program, including enrolling participants and serving as technical service advisors.

Alliant Energy partners with The Energy Group, which specializes in customizable energy efficiency solutions, to identify potential low-income properties and conduct energy audits. Property owners receive a report with potential energy efficiency opportunities and a savings estimate. “The report gives property owners an idea of what a rebate might look like for them to offset the cost of making these improvements,” Sempf says. “It’s essentially a roadmap toward greater energy savings.”   

For Austin Energy, partnerships with third-party contractors have played a valuable role in their outreach efforts to property owners. The contractors will promote the utility’s multifamily program through word-of-mouth and other marketing tactics, helping Austin Energy to increase participation. “We hired a third-party contractor to do the outreach, and it’s gotten to the point that our contractors do a lot of the selling for us,” Berry says. “They help us to keep our pipeline strong. It really has been beneficial to the success of the program to have great contractor relationships.”

In addition to partnerships, energy utilities rely on traditional marketing efforts like sell sheets, mailers and website content to reach property owners about their multifamily energy efficiency programs. According to Berry, Austin Energy takes advantage of cold calling to connect with property owners as well as cobranding efforts with their contractors. To create leads and bring in new projects, contractors leave cobranded flyers with property owners. Austin Energy employees also hand out flyers at apartment association events.

While Alliant Energy is dependent on their partners to reach out to low-income multifamily apartments, the utility does provide rebate information on their website. The air-source heat pump rebate page includes key benefits, requirements and how to find a qualified dealer. The website also features a downloadable rebate claim form to make it easy for property owners to apply.

Ramping up renewables

Beyond energy efficiency upgrades, energy utilities are also encouraging multifamily buildings to take advantage of renewables like solar energy and EV charging.

In 2021, Seattle City Light launched the Green Up community program, which offers funding for new solar projects to affordable housing and low-income service providers. The program selected 18 affordable housing and community service sites, totaling 1.2 megawatts of new solar and $1.7 million in funding. This year, Seattle City Light is launching the Multifamily EV Charging program to provide support to affordable and market-rate housing properties for EV charging installation.

“Our business customers receive additional assistance through the program’s advisory services,” Fernandi says. “This helps to answer any questions that property owners might have about electric vehicles and charging. They can also set up helpful site assessments.”

According to Jacot, LADWP also helps low-income multifamily property owners install EV charging stations. The utility’s EV Charger Rebate Program covers the cost of materials and installation. For multifamily property owners, they can receive up to $5,000 for each EV charger purchased and installed. “This program is wildly successful,” Jacot says. “It’s a self-sustaining business model that has worked well to support EV charging infrastructure in our city.”    

A growing need

Multifamily building energy efficiency programs will continue to grow as energy demand and decarbonization goals intensify. It behooves energy utilities to implement these programs to reduce carbon emissions and strain on the electric grid. Property owners can take advantage of lower equipment and installation costs, while tenants experience greater comfort and lower energy burdens. It’s a win-win for everyone.