Affordable Housing Pushes Energy Efficiency

May 23, 2016 By Carl Weinschenk

multi-dwelling unitsIt may sound counter-intuitive, but the biggest mover in energy efficiency in the multi-family dwelling unit sector is housing for people with low incomes.

It actually makes perfect sense, however. People who live in affordable housing generally are charged rent via a formula that caps the amount charged to a percentage of the tenant’s income. A key variable in other landlord tenant relationships – the ability to charge market value for an apartment – is absent.

This fundamentally changes things. It’s clear that if rents can’t go up, costs must come down – and utilities are a fertile ground for such initiatives. Landlords and building owners know that saving on air conditioning, heat, water and other utilities means that more of that sum can flow to the bottom line, according to Andrew Chen, the CEO of WegoWise, a firm that, among other things, works with municipalities on leveraging a vast database of utility bills to drive efficiency in the multifamily housing sector.

Boston-based WegoWise, according to Chen, is involved in about a dozen affordable housing programs, including one announced earlier this month in Connecticut. The basic idea that capping of the amount of rent that can be charged makes it advantageous to cut costs through finding more efficiencies in the buildings holds true at the portfolio level as well.

The idea is that ability to finding financing for affordable housing projects will be easier, and the terms eventually settled upon more favorable, if the cash flowing from the investments are higher. Since rent cannot be increased beyond a certain point in order to create these favorable conditions, cutting utility costs becomes a key enabler.

WegoWise, which was founded in 2010, helps to identify these efficiencies. It does this, WegoWise said, by carefully assessing meter data and utility bills. It has access, Chen said, to data from about 42,000 buildings — more than 6 million bills — written by about 600 utilities. Chen says that the use of energy in a multifamily environment differs from the commercial sector in that water is more of an issue – as it is hotels, hospitals and other structures where people live as well as work.

On first glance, it may seem that assessing utility and meter data as a way to find efficiencies is at best a stop gap. After all, how much data can be revealed? Chen says that there is plenty. One thing to keep in mind is that multifamily dwelling units generally lack energy management systems, building management systems and similar platforms that are deployed to keep track of energy. Thus, in many cases low hanging fruit – easily realized efficiencies – can be found fairly easily.

In other words, utility bills are more likely to simply be paid, without oversight, in multi dwelling. Meter and utility data, therefore, can be the front line against wasteful use of energy.

The good news is that doing this can be more than a stop gap, according to Chen. Collectively, he says, there is a wealth of usable data in these bills. “Monthly utility bills are not dumb data,” he said. “Actually, they are very rich and nuanced.”

The new program in Connecticut is a good example of the initiatives that are gaining traction. The Fairfield County Business Journal reports that Benchmark CT, which is a partnership between The Connecticut Housing Finance Authority, the Connecticut Green Bank and WegoWise, now is available to 1,600 buildings in the state.

The participating buildings will receive free benchmarking for one year. The Wegowise software will determine whether the building is operating at peak efficiency or not. If not, it will enable quicker and better decisions on how to steps to increase efficiency. The software will track changes once they are made.

The bottom line, according to Chen, is that there are a lot of relatively easy gains to be made in the multifamily housing sector because, by and large, saving money in their energy use has not been deeply explored. In parallel, he says that the affordable housing sub-segment is particularly important because gaining efficiencies adds directly to the bottom line.

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