{"id":42482,"date":"2018-03-12T08:00:02","date_gmt":"2018-03-12T12:00:02","guid":{"rendered":"https:\/\/retrofitmagazine.com\/?p=42482"},"modified":"2023-07-31T14:04:18","modified_gmt":"2023-07-31T18:04:18","slug":"segmentation-analysis-strives-improve-energy-efficiency-programs-serve-huge-hard-reach-multifamily-market","status":"publish","type":"post","link":"https:\/\/retrofitmagazine.com\/segmentation-analysis-strives-improve-energy-efficiency-programs-serve-huge-hard-reach-multifamily-market\/","title":{"rendered":"A Segmentation Analysis Strives to Improve Energy-efficiency Programs that Serve a Huge but Hard-to-Reach Multifamily Market"},"content":{"rendered":"

There is a clear connection between our environment and our buildings. Efforts to mitigate climate change in the U.S. must focus on the built environment, which uses the most energy and produces the most carbon emissions of any sector, including transportation. In particular, multifamily buildings\u2014defined as residential buildings with two or more units\u2014need attention.<\/p>\n

\"A<\/a>
A segmentation analysis found 75 percent of Chicago residents reside in a multifamily building.<\/figcaption><\/figure>Approximately 25 percent of U.S. households reside in a multifamily building, but utility- and government-run efficiency programs to date have had limited success serving this sector. As a result, more than 16 million households pay more to heat and cool their homes than necessary.<\/p>\n

The Challenges of Serving the Multifamily Sector<\/h4>\n

Elevate Energy, a non-profit organization based in Chicago, designs and implements programs to help building owners and managers navigate the complex process of completing energy-efficiency upgrades that reduce energy use and ensure long-term savings for properties. To date, the organization has improved almost 35,000 multifamily units.<\/p>\n

\u201cWe\u2019re no strangers to the unique set of challenges that multifamily buildings present,\u201d says Anne Evens, CEO of Elevate Energy. \u201cA multifamily building can have several different types of utility service within the same building. There are numerous ownership models. And many cities don\u2019t have data about what their multifamily housing stock is like.\u201d<\/p>\n

Because multifamily properties have qualities that are similar to commercial and residential facilities, energy-efficiency programs in the past have rarely been tailored to the specific needs of a multifamily building. Programs are often designed to serve a different type of building altogether.<\/p>\n

Additionally, multifamily ownership structures vary widely. Whereas single-family energy-efficiency programs target individuals who own and occupy one property, multifamily programs must target decision-makers who may be owner-occupants, investor-owners, or building managers with very different motivations and resources.<\/p>\n

One such case study in Chicago exemplifies many of the challenges in serving multifamily buildings. In 2013, Monica Chadha, LEED AP and founder of Civic Projects LLC, Chicago, contacted Elevate Energy to perform an energy assessment of a multifamily building in the city. Energy experts from Elevate Energy assessed her property, provided recommendations, connected Chadha with qualified contractors and helped her apply for a low-cost loan from Chicago- based Community Investment Corporation (CIC) to finance the improvements.

\"Elevate<\/a>
Elevate Energy has had success making multifamily buildings more efficient in Illinois.<\/figcaption><\/figure><\/p>\n

But three years later, in 2016, Chadha reached out to Elevate Energy once again with a significant problem. Her gas bills for heating the building were escalating each month, culminating at $10,000 for the month of January\u2014roughly 10 times the typical bill for a building its size. Chadha suspected the gas meter was providing inaccurate readings, but when she called the utility to request an inspection, the gas provider told her no crews were available and she should call back in a month.<\/p>\n

Elevate Energy staff inspected the building several times and determined there were two issues causing the high gas bill. First, analysis of remote readings on the gas bill compared with actual read- ings taken by Elevate Energy staff showed that the remote reading device on the gas meter was malfunctioning. Team members communicated this to the gas company and were able to schedule a meter change for the following day.<\/p>\n

Additionally, the power burner on the steam boiler was severely out of adjustment because a contractor Chadha had contacted herself had been unable to correct the condition following repeated service calls. The Elevate Energy team recommended a boiler clean-and-tune by one of its vetted contractors, who discovered that a missing burner component was creating a dangerous carbon-monoxide condition, in addition to causing the boiler to burn 20 percent more than the rated amount of gas.<\/p>\n

Images:<\/strong> Elevate Energy
\n<\/p>\n

First Step: Segmentation Analysis<\/h4>\n

Improving the efficiency of multifamily housing, such as Chadha\u2019s building, requires stakeholders to understand the characteristics of the market. Elevate Energy, in partner- ship with the national Energy Efficiency for All<\/a> initiative, constructed a database of 143,000 multifamily buildings in Chicago and segmented them based on age, size and other traits to better understand the city\u2019s multifamily sector. (Download the report.<\/a>)<\/p>\n

\"Of<\/a>
Of the 15 types of Chicago\u2019s multifamily housing, just three segments account for 92 percent of the city\u2019s building stock.<\/figcaption><\/figure>The Chicago segmentation analysis was the first of its kind. It found that 75 percent of Chicago residents reside in a multifamily building. Of the city\u2019s 1 million multifamily units, only 91,000 were subsidized; more than 440,000 units were lower cost but unsubsidized. The analysis showed that more than 75 percent of Chicago\u2019s multifamily buildings were constructed before 1942 and most likely lacked basic energy-efficiency improvements. Of the 15 types of Chicago\u2019s multifamily housing, just three segments account for 92 percent of the city\u2019s building stock. The three segments represent nearly 500,000 units and the potential to avoid 6.5 million metric tons of carbon-dioxide emissions through energy-efficiency improvements.<\/p>\n

\u201cThe takeaway from the segmentation analysis is that program implementers have to really understand the market they serve to be able to identify opportunities to better align and customize energy-efficiency services to buildings\u2019 and owners\u2019 needs,\u201d Evens explains.<\/p>\n

Motivating Building Owners<\/h4>\n

Most contractors and program implementers understand the benefits of energy-efficiency retrofits, including lower utility bills, lower maintenance costs and a more comfortable home. But it\u2019s important to consider the value from a building owner\u2019s perspective, as well. Owners have tight profit margins and are likely receiving constant offers from other providers for alarm systems, masonry work, landscaping and pest control. Even if an energy-efficiency program is free to a building owner, the program administrator still needs to establish a connection with the owner and explain the benefits to the customer.<\/p>\n

\u201cOwners are less likely to invest in upgrades if they don\u2019t see the benefits of energy savings, especially if there is a concern that the cost savings go to the tenant,\u201d Evens notes. \u201cPrograms must clearly identify and communicate the benefits to owners.\u201d<\/p>\n

Examples of benefits that have helped Elevate Energy get in the door include tenant retention and safety, reduced time and cost for proactive (versus reactive) maintenance issues, and positive cash flow. Additionally, Elevate Energy promotes some of the \u201cnon-energy benefits,\u201d which refer to the positive consequences of upgrades outside of the owner and their building. These include utility benefits, like reduced stress on the grid and avoided disconnections, as well as societal benefits, like job creation and improved air quality.<\/p>\n

In Chadha\u2019s case, her motivation was related to health and safety. When Elevate Energy returned to her building in 2016, analysts again inspected the building and found numerous concerns, including an extraordinarily high reading of 2,000-parts-per-million carbon monoxide in the exhaust gases of the boiler, which previously had been worked on by a contractor hired by the building owner.<\/p>\n

Optimizing a Retrofit Program for Greater Impact<\/h4>\n

\"Owners<\/a>
Owners are less likely to invest in upgrades if they don\u2019t see the benefits of energy savings.<\/figcaption><\/figure>
\nElevate Energy draws from its nearly 10 years serving the multifamily segment to design and implement effective programs. The results and learnings from the segmentation analysis have also helped the organization recognize its own service delivery model challenges and refine its process to overcome key obstacles, like an owner\u2019s lack of capital or lack of interest. <\/p>\n

\u201cThe multifamily research study confirms that we serve the most common, yet hard-to-reach type of Chicago multifamily building,\u201d says Elevate Energy Research Manager Margaret Garascia. \u201cThese buildings serve as the backbone of market-rate affordable housing in Chicago, and our program is designed to address a diverse set of needs related to heating, cooling, health and safety, and tenant comfort.\u201d<\/p>\n

Elevate Energy\u2019s multifamily program addresses the motivators and challenges these building owners typically face. First, the program serves the unsubsidized lower-cost multifamily market. It follows a six-step service delivery model that begins with targeted outreach. Access to data is key at this stage to effectively target low-income areas with a high concentration of key building types, as identified in the segmentation analysis. Elevate Energy uses trusted messengers to engage building owners and strives to make it easy for owners to complete the work.<\/p>\n

Strategies include providing a single point of contact for the owner from initial outreach through construction oversight and ongoing monitoring, as well as maintaining a focus on quality through consistent feedback and accessibility. Also, through the segmentation analysis and its own experiences, Elevate Energy has recognized a need to improve collaboration and leverage the influence of key market players.
\nImages:<\/strong> Elevate Energy
\n<\/p>\n

What is the Segmentation Opportunity in Your City?<\/h4>\n

Segmentation analysis is a complex but valuable tool to understanding a city\u2019s housing stock. Case in point: Elevate Energy\u2019s analysis drew from 13 disparate data sources to create a composite representation of the multifamily market. While Elevate Energy\u2019s analysis focused exclusively on the Chicago area, many of the results and recommendations may be replicable and relevant to program designs in other geographies.<\/p>\n

The unsubsidized lower-cost multifamily market needs tailored efficiency programs. In a given geography, market segmentation can reveal the most prevalent multifamily market segments and distinct retrofit approaches. Outreach should be targeted to low-income areas with a high concentration of key segments. Lastly, there is a significant opportunity to improve collaboration with other disciplines and utilities.<\/p>\n

\"Elevate<\/a>
Elevate Energy draws from
its nearly 10 years serving
the multifamily segment to design and implement effective programs.<\/figcaption><\/figure>There are tools to help building owners and facility executives get started. As part of its segmentation analysis, Elevate Energy developed a companion \u201chow-to\u201d framework<\/a> to help researchers in other cities complete their own segmentation analysis. It includes tips, like how to understand privacy for energy and housing data, how to engage experts outside of the field and how to assess affordability in different markets. A detailed description of the methods for constructing the database of buildings<\/a> can also be found in Cityscape, the U.S. Department of Housing and Urban Development\u2019s journal on housing and community development issues. <\/p>\n

Other cities have undertaken multifamily segmentation analyses. For example, Building Energy Exchange in New York completed a segmentation analysis of different aspects of the multifamily market in New York City and added energy-use data to understand the energy-efficiency opportunity. A segmentation analysis of the Los Angeles multifamily market also will be available in 2018.<\/p>\n

As for Chadha, the 2016 upgrades to her building included roof cavity air sealing and insulation, domestic hot water heater replacement, steam boiler replacement and steam-pipe insulation. The improvements are expected to save 40 percent annually on natural gas costs.<\/p>\n

\u201cElevate went well above and beyond any support that we could have anticipated,\u201d Chadha says. \u201cWe\u2019re confident that our building is now operating efficiently.\u201d<\/p>\n

Most importantly, her building is now more stable and viable, which serves as a beacon of quality, affordable housing in a neighborhood traditionally plagued with disinvestment.<\/p>\n

More Information<\/h3>\n