First Step: Segmentation Analysis
Improving the efficiency of multifamily housing, such as Chadha’s building, requires stakeholders to understand the characteristics of the market. Elevate Energy, in partner- ship with the national Energy Efficiency for All 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’s multifamily sector. (Download the report.)
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’s 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’s multifamily buildings were constructed before 1942 and most likely lacked basic energy-efficiency improvements. Of the 15 types of Chicago’s multifamily housing, just three segments account for 92 percent of the city’s 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.
“The 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’ and owners’ needs,” Evens explains.
Motivating Building Owners
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’s important to consider the value from a building owner’s 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.
“Owners are less likely to invest in upgrades if they don’t see the benefits of energy savings, especially if there is a concern that the cost savings go to the tenant,” Evens notes. “Programs must clearly identify and communicate the benefits to owners.”
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 “non-energy benefits,” 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.
In Chadha’s 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.
Optimizing a Retrofit Program for Greater Impact
Elevate 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’s lack of capital or lack of interest.
“The multifamily research study confirms that we serve the most common, yet hard-to-reach type of Chicago multifamily building,” says Elevate Energy Research Manager Margaret Garascia. “These 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.”
Elevate Energy’s 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.
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.
Images: Elevate Energy