NYSERDA Primes the Pump

One hundred and fifty million dollars paves the way for a lot of energy conservation.

That’s the pool of money the New York State Energy Research and Development Authority (NYSERDA) is offering in a new incentives program, announced May 8, to encourage property owners to reduce their energy consumption by at least 20 percent. The Multifamily Performance Program will offer financial incentives and low-interest loans to improve energy efficiency in existing buildings and new construction with at least five units. Buildings will sign on with a NYSERDA-certified partner, which then evaluates the building’s current condition, creates a plan to reach that 20 percent goal, and then makes the necessary changes.

But the approach is also a fairly radical shift from the way that NYSERDA had worked with multifamily buildings before. For the past eight years, the organization offered three programs for condos and co-ops that offered other ways to be more environmentally friendly. One way was the ResTech program, which connected buildings to firms that provided energy audits and a list of changes that would make the building more energy efficient. Buildings received the low-interest loans to do the work, and the cost of the assessment was refunded by NYSERDA if the properties went ahead with the changes.

The new Multifamily Performance Program uses a more holistic approach – aiming toward that 20 percent goal – compared to the former general list of potential energy-saving projects. It’s also one that takes a building through the process from start to finish. “We had to prime the pump until we could get to the point where we are today,” says Mike Colgrove, NYSERDA project manager, who adds that they needed not only to get a stable of qualified firms, but also to spread the word among the building community. “Now we’re taking all the experience of our previous programs and combining that into a single program that will serve the multifamily sector with this qualified network of professionals.”

So what will it cost you to participate? It’s difficult to give an average cost that a building would have to pay to be in the program. A 50-unit building that needs a small amount of environmental upgrade is wildly different from a 2,500-unit complex that needs a lot of work.

But NYSERDA project manager Luke Falk says the agency predicts that cash incentives will cover about 25 percent of the cost of the work. Then, top that with the money saved in energy efficiency. “All the improvements they will be making will pay for themselves anyway,” says Falk. “The building is going to come out way ahead.”

Combine that with the fact that buildings can pay for upfront costs using NYSERDA’s low-interest New York Energy $mart Loan Fund. That program reduces the interest rate on a bank loan: in Con Edison service territory, loans are reduced by 6.5 percent. “Say you take out a $100,000 loan and you’re paying $500 a month and you’re saving $500 a month in energy costs,” Falk says. “It’s really a zero sum affair.” The bottom line is that buildings will see a payback of their investment within two or three years through energy efficiency and cash incentives, predicts Richard Leigh, senior engineer with Long Island City-based Community Environmental Center, a NYSERDA partner.

So how does it work?

First, buildings pick one of the NYSERDA partners that will create the building’s energy reduction plan. Falk says a technical review panel vets the partners but that each building might have unique needs that would cause them to choose a different partner. One partner might have more experience in older buildings, another might be better suited for high rises, he says. The partner will then craft the energy reduction plan, a process that takes about 12 weeks. “The energy reduction plan will contain a list of recommendations that will get you to that 20 percent,” Falk notes. “It will have a detailed discussion of who will do the work, when they will do it, the cost timeline, and how to measure and verify the energy savings.”

Around the same time, the partner will also secure a so-called “benchmarking score” for the building. This compares the building to other similar buildings in a nationwide database, adjusting for factors like geography and weather so that NYSERDA can make comparisons, Falk says. The higher the number, the better the building performs: one with a 20 benchmark score performs better than only 20 percent of comparable buildings, he says.

Once the benchmark score and the energy reduction plan are submitted by the partner to NYSERDA, the building gets the first incentive payment. For a market-rate building with up to 30 units, that first payment is $2,500; for buildings with up to 100 units, it hits $5,000. Affordable housing rates are higher at $5,000 for up to 30 units and $10,000 for up to 100 units. (For additional units, tack on an extra $20 per unit for affordable housing and $10 per unit for market rate.) After that point, the partner goes to work on implementing the changes suggested in the energy reduction plan. That process can take up to a year, says Leigh. One of the biggest delays can come from working with the building to get financing in order, he says.

One common upgrade is to go to bi-level lighting for hallways and stairwells, says Leigh. Instead of standard hallway lighting, the company will install lights that are very dim when no one is in the hallway but kick up to normal lighting when motion sensors indicate movement. “Those cut lighting and electrical use by up to 50 percent,” he says.

Another example is an energy management system that can be installed in a steam-heated building that more accurately controls internal temperature. Temperature gauges are installed in a small sampling of units – say, 10 percent – and those gauges send information back to a computer in the basement that factors in outside temperature and other variables. This allows the boiler to heat units adequately without overheating. “This will often guarantee a 10 percent savings on heating bills. If you’re paying $40,000 a year, that’s $4,000,” says Leigh, who expects his company will take on about two Multifamily Performance Program projects per month. He launched his firm in 1993 and started working with NYSERDA in 2001.

When the job is half done, NYSERDA disperses its second payment, which is $300 a unit for market-rate buildings and $800 a unit for affordable-housing buildings. When it is 90 percent completed, the building gets the third payment of $300 per unit for market rate and $400 per unit for affordable housing. “After completion, we’ll see how much better the building is performing at the end of the process,” Falk says. “If you hit your 20 percent target, we’ll disperse a fourth payment that will be tiered depending on your initial benchmark.”

Buildings that were performing poorly at the start will get even more money than those who were initially better off, he says. And, those buildings that achieve energy efficiency higher than 20 percent see even more cash. For example, a market-rate building with a benchmark score of less than 25 points that meets the 20 percent goal will get $200 per unit. A market-rate building with a benchmark score of 75 points or higher would get $125 per unit. For each percent over 20, those market-rate buildings would get an additional $20 per unit. Additional incentives are available for so-called advanced measures, such as a Combined Heat and Power System. Installing the system would net a market-rate building $750 per kilowatt and an affordable-housing building $1,000 per kilowatt.

Both Falk, at NYSERDA, and Leigh, with Community Environmental Center, admit that it’s too soon to say how many buildings will want to participate in the new Multifamily Performance Program. The $150 million pool is available on a first-come, first-served basis until the money runs out or the program is renewed. Leigh says there has always been great interest in NYSERDA’s programs. “I expect that interest is going to continue or even increase.”