For Co-op and Condo Boards, Many Paths to Electrification

Less than six months from today, New York City's Local Law 97 goes into effect. Most co-op and condo boards already comply with the 2024 caps on their buildings' carbon emissions, and thus are not facing imminent fines. But the caps become more stringent in 2030 and in succeeding years, so boards need to start making long-term plans now. For many, those plans will involve some degree of electrification — powering heating, cooling and domestic hot water systems with clean electricity rather than dirty fossil fuels.

But one size does not fit all when it comes to electrification. Boards have many options, and choosing the right pathway will be a decision with far-reaching consequences.

"For most buildings, the place to start is not to jump straight to heating electrification," says Chris Halfnight, the senior director of research and policy for the non-profit Urban Green Council, which was a driving force in the adoption of the city's Climate Mobilization Act, which includes Local Law 97. "The place to start is energy efficiency," he adds, including such steps as improving roof insulation. "Electrification is typically a longer-term strategy. It's likely going to be more feasible for many multifamily buildings to start by electrifying hot water systems first and heating later, because the hot-water system technology is easier to work with."

Electrification is, for now, an expensive proposition. Along with replacing your oil or natural-gas boilers with electric ones and possibly replacing each apartment's radiators with heat pumps (which provide heating and cooling), there are various ancillary costs. These include electrical upgrades and new control systems to handle increased demand; possible structural upgrades to accommodate the new equipment; and upgrades to myriad mechanical components, including water pipes and electrical conduits.

"It could be $10,000 to $15,000 per apartment if you have three rooms you have to heat with heat pumps," says Michael Scorrano, founder and managing director of the energy consultancy En-Power. "Or it could be as much as $40,000 an apartment." En-Power is currently working with a rental building where the per-apartment conversion cost is about $25,000.

"We're seeing ranges of from $8,000 to $22,000" per apartment once incentives from Con Edison and from the New York State Energy Research and Development Authority (NYSERDA) kick in, says Robert Greig, manager of Con Edison's Customer Clean Programs. For example, the 100-year-old, six-unit rental apartment building at 122 29th St. in Brooklyn replaced its gas-fired boiler with eight heat pumps at a cost of $70,000, or more than $11,600 per apartment. But with $40,200 in Con Edison incentives, the outlay was only $29,800, or about $5,000 per apartment.

Those eight heat pumps pay dividends in several ways. "Because of the incentives," says Joel Englander, the building's general manager, "we’ve been able to achieve higher thermal comfort, lower operational costs and overall better heating and cooling performance."

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The incentives don't stop with Con Edison and NYSERDA. The recently passed Bipartisan Infrastructure Law and the Inflation Reduction Act, Halfnight notes, contain "significant sums of money to help support energy efficiency, electrification and building decarbonization, plus tax credits and other incentives available to multiple-family dwellings, though some details are still in the works.”

There's another reason why co-op and condo boards may want to choose the path of gradual electrification. Today's high costs will come down as  heat pumps and other electrification technologies become more common and economy of scale kicks in. "There needs to be early adopters for this electrification stuff that are excited about it for various reasons," says Marc Zuluaga, a co-founder of the energy consultancy Cadence OneFive. "Once that group of 10% or 15% of the market does it, other folks will have a blueprint to follow."

Whichever path your board chooses to take on the way to compliance with Local Law 97, start a capital fund now, advises energy consultant and educator Tom Sahagian. "Do the normal energy-efficiency stuff you should be doing to reduce your consumption," he says, "and within the next few years, there are going to be a lot more options available."