COMMUNITY-BASED ENERGY EFFICIENCY INNOVATION:
MULTIFAMILY PROGRAM DESIGN FOUNDATIONS - TERMS OF REFERENCE, REFLECTION ON STRATEGIES
Brendan McEwen
Ryan Cook
Alexis Howland
Adi Nochur
Harvey Michaels, Principal Investigator
MIT Energy Efficiency Strategy Project
77 Massachusetts Avenue
Cambridge, MA 02139
617-253-2084 February 2013
http://web.mit.edu/energy-efficiency
Abstract
The MIT Energy Efficiency Strategy Project (EESP) critically examines energy efficiency as a resource strategy and
its potential to create societal, economic, and carbon benefits. As part of this project, students have collectively
addressed, through research and thesis, new approaches to increasing energy efficiency. Overall project goals
include:
 Discovery of opportunities to improve the impact of energy efficiency programs.
 Analysis of gaps and barriers limiting their performance.
 Key stakeholder needs and current gaps in meeting these needs
 Methods to enhance innovation in delivery of efficiency services.
This document summarizes the fall 2012 foundational study addressing persistent market barriers to energy
efficiency improvements in rented housing and neighborhood commercial facilities. We seek to develop innovative
strategies to mitigate the barriers to efficiency improvements in these underserved and “hard-to-reach” energy
consumers, and seek effective solutions involving city partnerships supported by efficiency funds provided by
energy utilities. This study provides foundation and terms of reference regarding current programs, community
and housing data, and reflects on three focal points for this research:
1. Program Design: utility incentives and financing
2. Recruitment: community-based marketing
3. Transparency: disclosure, benchmarking and GIS mapping
In the Spring semester 2013, the project sponsors are supporting a Practicum to further advance planning skills
through the design of a pilot program to drive energy efficiency retrofits in targeted Cambridge neighborhoods,
with enthusiastic support from the City of Cambridge Mayor’s office. 1 The intent of this research is to not only
design a pilot, but to complete a study to inform practitioners and policymakers on the opportunities for greater
success in this sector.
This research was carried out as part of the Energy Efficiency Strategy Project (EESP), based at the MIT Department of
Urban Studies and Planning and led by Harvey Michaels (hgm@mit.edu). We are grateful for the support for this work
provided by the U.S. Department of Energy and its National Renewable Energy Lab, NSTAR Electric and Gas, and Edison
Foundation Institute for Electric Efficiency,
1
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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Executive Summary
During the practicum 11.S948: Community Energy Innovations, MIT students will engage in the conceptual
development of a multifamily energy upgrade program in Cambridge, focused on achieving broad adoption of
deep energy retrofits installing energy efficiency measures and renewable energy in multifamily housing of
approximately 2-20 units. This Terms of Reference document prepared by the Energy Efficiency Strategy Project’s
(EESP) research team provides background information to support the design of the program. The document
suggests some further research opportunities and potential program design ideas, which the Practicum
participants can consider and expand upon.
Achieving high levels of energy upgrades in multifamily programs has proven challenging in most jurisdictions. A
variety of barriers hinder the uptake of energy efficiency and renewable energy, including: Split-incentives
between landlords and tenants; the lack of technical capacity amongst owners; the lack of access to capital; a lack
of transparency around energy costs for prospective renters and buyers; and other barriers.
These barriers particularly affect efficiency implementation in Cambridge’s housing market. Rental units dominate
Cambridge’s housing, with frequent turnover in units. Small-to-medium rental properties tend to be owned by
individuals with small property portfolios. The transitory nature of renters and the decentralized ownership of
properties will make a coordinated efficiency effort challenging. Additionally, 27 percent of housing units in
Cambridge are condominiums. The institutional barriers to implement energy upgrades in these homes are
separate from that of rental housing, but achieving condominium agreement to undertake comprehensive
upgrades is nonetheless imposing. This makes establishing a consolidated energy efficiency program that is able to
serve all of Cambridge’s multifamily market challenging.
A variety of utility and non-profit energy efficiency programs are available to multifamily buildings in Cambridge.
Utility program administrators offer the MassSave suite of programs. MassSave involves a common branding and
basic program structure. In Cambridge, the utility NStar, which provides both electricity and natural gas services in
the city, administers MassSave programs; different lead vendors manage the program, which contractors serve it.
Some non-profits offer efficiency programs as well. Programs available to different multifamily housing types
include:
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The MassSave Home Energy Services for market-rate properties with 1-4 units.
Low-Income Weatherization Assistance Program for low-income 1-4 unit homes. The Massachusetts
Department of Housing and Community Development administers the WAP programs, while different
weatherization service contractors administer it.
MassSave Multifamily Retrofit Programs for market-rate properties with 5+ units. A variety of
multifamily programs are available (weatherization, central HVAC systems, fuel switching, etc.), with the
Multifamily Market Integrator service referring buildings to a variety of programs.
The Low Income Multi-Family (LEAN) Program for buildings where >50% units are occupied by
households with <60% area median income, and which have 5+ units. The LEAN program is administered
by MassSave, but was initiated by a multistakeholder group convened by non-profit housing developers.
The energy firm New Ecology provides efficiency project management services for participating buildings.
Massachusetts Green Retrofit Initiative – A non-profit partnership between New Ecology and the Local
Initiatives Support Corporation (LISC). The GRI program is funded by a US Department of Housing and
Urban Development grant. It provides ‘turn-key’ project management for owners of lower-income
housing to participate in upgrades. The program is offered to buildings where >50% units are occupied by
households with <80% area median income.
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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A range of actors market these programs, including contractors, community organizations, and the City of
Cambridge’s Cambridge Energy Alliance. Community outreach and marketing staff note the need to receive
feedback from program vendors regarding what marketing techniques are leading buildings to enter programs.
Likewise, a variety of financing mechanisms are available to building owners, or unit owners in condominiums, to
finance upgrades, some with attractive financing. However, none of these financing mechanisms currently can
overcome the split-incentive whereby owners pay for upgrades and tenants realize energy savings.
Initiatives to facilitate energy data transparency are also evolving at the city, utility, and national scale. Notably,
the City of Cambridge is considering an energy disclosure policy; it would require commercial buildings above
50,000 SF to benchmark and disclose their buildings’ energy consumption publicly. Federal recognition of the
importance of energy data galvanized the creation of the Green Button Initiative, an industry-led effort to improve
availability of energy data. To date, 20 utilities have committed to the Green Button Initiative, including NStar.
Different firms, government agencies, and non-profit actors have developed a range of software applications to
rank buildings according to their energy performance, as well as those that use data about building assets to
remotely assess buildings’ energy efficiency potential. These initiatives present an opportunity to publicly disclose
information about buildings’ (and their units’) energy costs, and their potential to be upgraded.
Given this context, the researchers of the Energy Efficiency Strategy Project have identified some opportunities for
improving the function of efficiency markets, which the Community Energy Innovations practicum could consider.
These include:
Program design - The MassSave Homes program for 1-4 unit buildings is currently operating well. In contrast,
interviewees noted challenges in the MassSave >5 unit market-rate multifamily programs. Priorities for improving
programs for >5 unit building include: Better communicate with community and city outreach partners; provide
greater project management and “hand-holding” assistance to owners and property managers; provide
comprehensive upgrade services, as opposed to disaggregating upgrades into different contractors; and
integrating healthy home improvements to the greatest extent possible. Such efforts could be achieved by
tweaking the existing MassSave structure, or piloting a new program architecture allowing multiple lead
contractors. Regardless of the program structure, an ‘owners agent’ (similar to the MA Green Retrofit Initiative)
could be sponsored in some fashion for projects that wish to use their services.
On-bill tariff energy upgrade financing - An on-bill tariff repayment mechanism can facilitate the financing of
energy efficiency in multifamily housing, and other building types. On-bill tariffs overcome the split incentive
barrier, by associating repayments for upgrade work with the utility bill to which energy savings accrue. The
practicum could assess the potential to establish an on-bill financing mechanism, including identifying: A fund
management structure; capital sources; potential underwriting criteria; what billing systems NStar must adopt to
implement on-bill tariff financing; and the regulatory policy to enable on-bill mechanisms. The practicum could
test such concepts with NStar, lenders, owners, tenants, and other stakeholders.
Transparency – The City of Cambridge (or another stakeholder) could publish an Energy Map to benchmark and
disclose energy use, and convey information about buildings’ efficiency potential. The map would illuminate
differences in energy use among multifamily buildings, allowing prospective tenants and owners will be able to
make more informed decisions about which apartments they choose to rent, and increasing pressure on owners to
undertake upgrades. The map could also facilitate community based marketing, including neighborhood and
building energy efficiency competition. Energy data for the map could be crowd-sourced, leveraging the Green
Button Initiative; or, it could be provided by NStar on a semi-regular basis, with an agreement that sensitive data
not be revealed. An efficiency potential score could be developed using remote assessment techniques, using
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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building characteristic information available in city assessor databases, owner reporting, or other sources. The
practicum can develop a prototype of this mapping application.
Recruitment – Engaging stakeholders like owners, property managers and tenants is essential to developing a
strong program design and marketing plan. This practicum can investigate community-based methods to drive
participation in energy programs, testing concepts and strategies with these stakeholders. Practicum tasks
include: a “Stakeholder Analysis” to identify key informants to program design and marketing strategies; the
design of “Community-Based Social Marketing” strategies, including conducting focus groups with key
stakeholders to test and modify these designs.
Mandates – Ultimately, widespread uptake of energy efficiency in multifamily buildings may require regulatory
mandates. The City could consider an Energy Conservation Ordinance; however, the mechanism for them to adopt
and enforce such an ordinance is unclear. The Green Communities Division of the Massachusetts Department of
Energy and Environmental Affairs is well positioned to develop a model energy upgrade mandate for existing
buildings, which could comprise part of building codes. The practicum could explore the structure of such an
upgrade mandate, and what “winning political coalition” could advocate for its development.
Developing such strategies can provide a program design concept for NStar, the City of Cambridge, and other
partners, which would represent one of the most innovative efficiency programs in the country. It is important
that the practicum consider how these solutions could be scaled to other regions as well. The following pages
include background information on the issues noted above, and expand on the opportunities identified by the
Energy Efficiency Strategy Project.
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Table of Contents
Section 1. Introduction ........................................................................................................ 6
1.1 The Challenge of Achieving Efficiency in Multifamily Housing ...................................................6
1.2 Hypothesized Elements of Better Energy Upgrade Programs .....................................................7
Section 2. Background .......................................................................................................... 9
2.1
2.2
2.3
2.4
Characterizing the Cambridge Housing Stock ............................................................................9
Energy Programs – Past and Present ...................................................................................... 11
Outreach & Marketing for Local Energy Programs ................................................................... 13
Energy Data – The Opportunity to Leverage Big Data .............................................................. 13
Section 3. Program Components ........................................................................................ 17
3.1 Program Design – Administration and Management ................................................................ 17
3.2 Financing – An On-bill Tariff Repayment Scheme .................................................................... 19
3.3 Transparency – An Energy Map Benchmarking and Disclosure Tool ......................................... 21
3.4 Recruitment - Demand -Side Stakeholder Engagement & Marketing ....................................... 25
3.5 Upgrade Ordinances ............................................................................................................... 30
Appendixes ......................................................................................................................... 32
Program Summary............................................................................................................... 32
Appendix: Green Leasing ............................................................................................................. 34
Appendix: Stakeholder Analysis Approach ................................................................................... 35
Case Study – Cambridge Solar Map ............................................................................................... 39
Case Study – Next Step Living ....................................................................................................... 40
Case Study - Retroficiency ............................................................................................................ 41
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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Section 1. Introduction
During the practicum 11.S948 Community Energy Innovations, MIT students will engage in the conceptual
development of a multifamily energy upgrade program in Cambridge, focused on achieving broad adoption of
deep energy retrofits in multifamily housing of approximately 2-20 units. The program concept will be provided
for the consideration of the City of Cambridge’s and the local energy utility NStar. We aim to develop a viable,
transformational model that can realize deep energy savings and climate change pollution reduction in
Cambridge; moreover, the program will ideally be scalable to broader geographic regions.
This Terms of Reference document prepared by the Energy Efficiency Strategy Project’s (EESP) research team
provides background information to support the design of the program. The document suggests some further
research opportunities and potential program design ideas, which the Practicum participants can consider and
expand upon. This document is not meant to dictate the content of the Practicum. Rather, it presents a summary
of the EESP’s research and thinking during Fall 2012.
1.1 The Challenge of Achieving Efficiency in Multifamily Housing
A variety of opportunities to cost-effectively reduce energy use and integrate renewable energy systems exist in
multifamily housing. A recent analysis for the USA estimates that 15 percent of multifamily electricity demand,
and 24 percent of multifamily natural gas demand, can be cost-effectively met by energy efficiency by the year
2030.2 Indeed, multifamily housing tends to be more energy intensive than single-family.
However, achieving significant uptake of energy efficiency in multifamily housing has proven difficult. A literature
review and conversations with multifamily housing market participants during Fall 2012 suggest the following key
barriers to achieving energy upgrades in multifamily housing:
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Split-incentives - Many tenants pay utility bills, while landlords are typically expected to pay improvement
costs. Conversely, in cases where landlords pay some of the energy bill (such as heating), tenants have
little incentive to conserve. Indeed, landlords are hesitant to improve properties, even when costs are
low - Landlords and tenants often have a strained relationship, with tenants desiring property
improvements. Some property developers noted that any effort to improve properties may be viewed
with caution by landlords, regardless of whether it costs them money, as they fear tenants will demand
further improvements.
Owners lack capacity - Building owners, especially smaller property owners, often have minimal
understanding of the energy efficiency potential of their property, and the construction processes
necessary to achieve upgrades. They are often wary of committing to manage construction projects.
Owners require project financing – Few owners have cash on hand that they can spend to achieve energy
savings with greater than a few years simple payback (building owners have high “hurdle rates”).
Comprehensive building upgrades may cost thousands of dollars per unit.
Disaggregated owners - While data on ownership is incomplete, interviews with individuals experienced
with the market indicate that a large number of rental properties in Cambridge are owned by small-scale
property owners. Thus, programs must reach and sway many decision-makers, rather than a few
individuals responsible for large portfolios.
Lack of transparency around energy costs - Most tenants do not have a good understanding of the
energy costs and environmental impacts of the their rented units.
2
The Cadmus Group. May 2012. Massachusetts Multifamily Market Characterization and Potential Study. Volume 1. Final
Report.
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Difficulties of financing and managing the upgrade process with condominiums - Condominium
associations may face barriers to credit, and be difficult to coordinate to implement comprehensive
building upgrades.
A lack of incentives for building managers and operators to achieve efficiency - Building management
companies and building operators have limited incentives to facilitate upgrade projects. Upgrade projects
may entail additional work on their end, and they are rarely compensated for achieving energy or water
savings.
Technical challenges - While cost-effective energy efficiency options exist in multifamily buildings, they
are often pricier than the low-cost efficiency that can be achieved in larger commercial buildings. Deep
energy upgrade measures require specialized design skills in many instances. Systems found in many
older Cambridge multifamily buildings, such as ‘single pipe’ hydronic heating systems and cavity-less
masonry wall construction, can be difficult to make efficient, necessitating higher cost upgrades and
technological innovation. Lastly, upgrades should be performed in a manner that does not compromise
indoor health (indeed, which will improve health), nor reduce the longevity of the building; such strictures
require skilled contractors and designers.
Intrusive construction - Building owners are hesitant to disturb occupants in their unit; however, many
upgrades necessitate work in occupants’ space. Programs must undertake this work speedily, perform
deeper upgrades during re-tenanting periods when spaces are not occupied, and/or devise other means
of minimizing interruptions for tenants.
Convoluted, fragmented energy efficiency programs - Programs offered to multifamily buildings,
particular market-rate buildings, are not holistic; they offer only a few upgrade opportunities and do not
entail “whole building” upgrades. Moreover, navigating these programs can be cumbersome for building
owners - owners are responsible for managing contractors and sourcing financing for projects, tasks with
which they may lack experience. Additionally, the presence of various “pre-retrofit barriers” (hazards
such as knob-and-tube wiring or asbestos) can necessitate additional work which owners must
coordinate; this extra work increases the likelihood that a building owner or manager will drop out of
efficiency programs.
Poorly delivered energy programs - Some industry observers noted that utility program vendors do not
always provide optimal service.
1.2 Hypothesized Elements of Better Energy Upgrade Programs
This practicum is predicated on the notion that a well designed and executed partnership between utilities, local
government, businesses, community organizations and other actors can overcome many of these barriers, and
drive deeper uptake of energy efficiency in multifamily buildings. Together, these actors can serve to improve
programs and transform markets for energy services. There is potential to:
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Use energy data to identify buildings needing upgrades, and to inspire owners and tenants to take action
based on comparisons with their peers and a richer understanding of their buildings’ cost-effective
upgrade potential.
Engage stakeholders, to co-create energy efficiency program architecture, and provide more effective
program marketing.
Improve financing mechanisms, which can reduce split-incentives and barriers to capital, and thereby
enable the large investments required in the housing stock.
Maximize the value of engagement in a building, by providing opportunities for deep energy
improvements, addressing healthy homes issues, and implementing other environmental improvements.
Buildings may not necessarily have to undergo all upgrades simultaneously, but programs could connect
buildings with timely future improvements.
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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Improve building owners’ experience navigating programs, by providing a consistent point of contact and
improving the flow of information between contractors, utilities, and outreach actors.
By piloting and experimenting with these innovative approaches, Cambridge and NStar can develop replicable
models to improve the delivery of sustainable energy services in multifamily housing across the state and the
nation.
The Following section provides background on Cambridge’s multifamily housing market, energy programs in
Cambridge, and industry trends pertinent to program design. Subsequent sections explore the EESP research
team’s program design ideas.
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Section 2. Background
2.1 Characterizing the Cambridge Housing Stock
The prospects for a residential energy efficiency program depend in large part to the characteristics of the local
housing market, and Cambridge offers a unique market for several reasons. To develop a strategy that will
encourage local energy efficiency investments, it is crucial to understand the dimensions of this market. Several
aspects of the local housing market are examined below, including the nature of home ownership, resident
demographics, and physical characteristics of the home.
In addition to Cambridge as a whole, the practicum may target three distinct regions of the city: Mid-Cambridge,
Area IV, and Cambridgeport. We examined the specific nature of the housing market in these areas, but they did
not differ dramatically from Cambridge as a whole.
Home Ownership Rates
Cambridge’s housing stock is dominated by multifamily rental properties. In the city as a whole, only 35% of the
population lives in owner-occupied housing.3 Unsurprisingly, rental housing appears to be a more temporary living
situation in Cambridge than home-ownership. Under 40% of renters have lived in their current residence for more
than 5 years, compared to three quarters of homeowners.
In addition to a strong rental presence, many of Cambridge’s residential units are condominiums. These account
for 27% of the city’s housing.4 Some condominium owners rent out their units, creating an overlap in the rental
and condominium sectors.
Resident Demographics
Cambridge deservedly has a reputation as a young, student-oriented city. 27% of its adult population is currently
enrolled in school either as an undergraduate or graduate student. This is reflected in the rental market - 53% of
the primary householders in rental units are under the age of 35. Additionally, Cambridge’s rental market has a
low rate of family residence. While families make up just over half of owner-occupied housing, families rent only
33% of Cambridge’s rental properties.
Cambridge is also a predominantly White community. The head householder in 69% of Cambridge’s residences and
63% of rental residences is Non-Hispanic White. Among minority groups, Black and Asian communities each
account for 13% of rental residences, and Hispanics an additional 8%.
As of 2009, over 3,000 housing units in Cambridge were designated as affordable units and subsidized, accounting
for 9.6% of the local rental market.5
The vast majority (95%) of Cambridge’s rental households are located in multifamily housing. 33% of rentals are in
small buildings of with 2-4 units, and another 24% are in moderate-sized buildings of 5-19 units.
3
Unless otherwise noted, all statistics in this section are from the US Census Bureau 2010 Census and 2006-2010 American
Community Survey.
4 City of Cambridge Community Development Department, 2010 Housing Profile.
5 City of Summer Office of Strategic Planning and Community Development. Trends in Somerville: Housing Technical Report.
2009
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Physical Characteristics
The housing stock in Cambridge tends to be very old, though this is true more of owner-occupied residences than
rentals. 52% of rental units in Cambridge were built before 1940, compared to 72% of owned units. Despite the
general age of the units, there is a small but noticeably number of newer properties, with around 17% of units
among both rented and owned properties constructed since 1980.
The housing market throughout New England is unique for its reliance on fuel oil to provide space heating.
However, fuel oil is less prevalent in Cambridge, which boasts a well-developed utility natural gas network. 60% of
rental units are heated by natural gas, 21% by electricity (which includes both the old technology of resistance
heating and more efficient heat pump technology), and 13% by fuel oil. Among owner-occupied homes, there is a
slightly higher percentage of gas-heated homes, and a lower electric heating presence.
Property and Energy Management Characteristics
There are a number of useful metrics related to property management trends and energy use in Cambridge’s
rental market for which data is non-existent or difficult to obtain. While the identity of property owners is publicly
available through tax assessment data, it is difficult to confirm how many properties a given owner may own due
to the nature of available data. It is also difficult to identify landlords who live on-site in multi-family buildings.
Additionally, no good source of data exists on the number of small property owners who contract with
independent property management firms to conduct business with tenants. Finally, information on the number of
apartments that are individually or master metered is only available through NSTAR and is restricted for privacy
concerns.
Therefore, much of this information must be collected qualitatively through interviews with those familiar with the
local housing market. Preliminary discussions have indicated a fragmented market where part-time property
owners account for much of small-to-medium residential properties and a significant portion of landlords live onsite. While some of these owners contract with property management firms, most seem not to. Finally, most multifamily buildings in Cambridge are thought to be metered individually for both electricity and heat; however, many
units, especially in larger or oil-heated buildings, have heat provided central with tenants typically responsible for
electricity bills.6 In this case, landlords have greater fiscal incentive to undertake upgrades that reduce heating
costs.
Summary
The characteristics of Cambridge’s multifamily housing market pose serious barriers to an energy efficiency
program. Renters dominate the market, and the rental community is a social demographic in transition with less
incentive to encourage landlords to make upgrades, and less well-established relationships with landlords. Smallto-medium rental properties tend to be owned by individuals with small property portfolios. The transitory nature
of renters and the decentralized ownership of properties will make a coordinated efficiency effort challenging.
Additionally, a sizeable minority of housing units in Cambridge are condominiums. The institutional barriers to
implement energy upgrades in these homes are separate from that of rental housing, but also imposing. This
makes establishing a consolidated energy efficiency program that is able to serve all of Cambridge’s multifamily
market challenging.
Despite the difficulty of reaching this market, there is ample money to be saved and pollution mitigated by
upgrading buildings. Cambridge’s building stock is older, with less efficient energy systems. Also, although natural
gas accounts for the majority of space heating in the multifamily market, there is a significant presence of less
6
Personal communications with Peter Shapiro (Just-a-Start) and Meghan Shaw (Cambridge Energy Alliance).
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efficient oil heating. This indicates that there is much room for efficiency improvements in Cambridge’s rental
housing stock.
2.2 Energy Programs – Past and Present
A number of energy efficiency programs pertain to multifamily buildings in Cambridge. These programs are
described below, and also summarized in an Appendix. Many of these programs are part of MassSave, the suite of
energy efficiency programs administered by various Massachusetts utilities. These programs provide incentives for
energy upgrades, using funds from surcharges on utility ratepayers’ bills. MassSave essentially serves as a
common intake and basic structural framework for all Massachusetts utility programs; however, individual utilities
administer efficiency programs in their own territories for their own customers, and each utility structures their
program in somewhat different ways. In Cambridge, both electricity and natural gas are provided by the utility
NStar, and MassSave programs are thus administered by NStar. NStar typically contracts with ‘lead vendors’ to
implement programs, who may subsequently subcontract or administer other contractors in these programs.
Additionally, some programs, such as the MA Green Retrofit Initiative (see below) are sponsored by other entities,
who help building owners navigate the MassSave program process.
MassSave Home Energy Services – Market-Rate Properties with 1-4 Units
The MassSave Home Energy Services program provides no-cost home energy assessments and incentives for
efficiency upgrades in market-rate properties with 1-4 units. The program is available for whole buildings and/or
individual units within these properties, and potential upgrades include insulation, air sealing, and improved
heating, cooling and hot water systems. Financial incentives include rebates and an interest-free Residential HEAT
loan (up to $25,000 with terms up to seven years) for qualified energy efficiency improvements, as well as 75% off
insulation upgrades up to $2,000.
Multiple contractors may participate in the program as Home Performance Contractors. The entrepreneurial Next
Step Living serves much of the market. They provide extensive engagement with home owners, have innovated
financing tools for a range of upgrade measures (solar, envelope, etc.), manage contracting, and reportedly offer a
good customer experience.
Low-Income Weatherization Assistance Program
The federal Weatherization Assistance Program (WAP) is funded by the U.S. Department of Energy to provide
energy assessments, air sealing and insulation upgrades in low-income 1-4 unit properties. Households making
less than 60 percent of state median income, receiving supplemental Social Security income (SSI), or receiving
Transitional Aid to Families with Dependent Children (TAFDC) are eligible for WAP, and the average WAP grant
allocation per household is around $5,500. In Massachusetts WAP is administered by the state’s Department of
Housing and Community Development and implemented by weatherization service agencies across the state.
Households that qualify for WAP may also qualify for the other low-income programs described above.
MassSave Multifamily Retrofit Programs – Market-Rate Properties with 5+ Units
Utility program coordinators align their multifamily programs through the MassSave Multfamily Retrofit initiative.
Within this framework, NStar offers multiple different programs for different types of efficiency projects in the
multifamily sector, including programs focused on unit-by-unit weatherization, central HVAC retrofit programs for
whole buildings, heating fuel switching, and other programs. Since 2010, MassSave has introduced the Multifamily
Market Integrator (MMI) service, which aims to provide a single point of contact for building owners as they
connect with efficiency programs. The MMI can then suggest different assessments for upgrade opportunities
based on customers’ needs. The MMI coordinates between different utility program administrators, and within
program administrators’ programs different programs. However, the MMI currently acts predominantly to
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recommend program vendor contacts to building owners, leaving building owners to manage and coordinate
upgrade projects.
Similar to the Home Energy Services program, the MassSave Multifamily programs use utility funds to provide nocost home energy assessments, energy efficiency upgrades and related incentives in market-rate properties with 5
or more units. Through the MassSave Financing Program property owners can access interest-free loans up to
$100,000 with terms up to seven years to install qualified energy efficiency improvements.
Massachusetts Low Income Multi-Family (LEAN) Program – Affordable and Low-Income Properties with 5+ Units
The Low Income Multi-Family program (also known as the LEAN program) is another utility-funded program
available for housing developments of five or more units that are owned by a Public Housing Authority, a nonprofit or a for-profit entity. An additional qualification for LEAN is that 50 percent of development households
must be at or below 60 percent of area median income. LEAN provides building energy assessments and grants to
cover energy efficiency upgrades including hot water and heating systems, air sealing and insulation, lighting,
appliances and ventilation. It provides more comprehensive project management for building owners, helping
them prioritize construction, access financing, and measure buildings’ performance. LEAN was initiated in large
part due to demand by non-profit housing owners for an easier multifamily program to navigate; the Local
Initiative Support Corporation (LISC) and others’ convened building owners and utility representatives to design a
more holistic program for non-profit housing developers. LEAN is delivered by New Ecology.
Massachusetts Green Retrofit Initiative – Affordable and Low-Income Properties with 5+ Units
The Massachusetts Green Retrofit Initiative (GRI), a non-profit partnership between New Ecology and the Local
Initiatives Support Corporation (LISC). The GRI program is funded by a US Department of Housing and Urban
Development grant. It provides ‘turn-key’ project management for owners of lower-income housing to participate
in upgrades – these services include initial benchmarking of owners’ building portfolios; identification of promising
retrofit projects; brokering financing for owners; managing retrofit construction projects; and performing
evaluation and verification of energy savings. The GRI thus helps property owners navigate the various utility
energy efficiency programs, coordinating with utility PA vendors and contractors. It operates similar to LEAN, and
has the same project management firm, New Ecology. Unlike LEAN, however, the GRI is not a utility-sponsored
program (although it assists building owners access utility programs), and it has slightly different income eligibility
criteria; 50 percent of development households must be at or below 80 percent of area median income for the
GRI, versus 60 percent of area median income for LEAN. New Ecology has noted that it would like to offer the GRI
services to market-rate multifamily housing over time, perhaps on a fee-for-service basis.
Energy Performance Improvement Program – Financing for Lower-Income Upgrades
State programs are available to support financing for energy efficiency upgrades in affordable multi-family
properties. The Massachusetts Housing Partnership (MHP) has an Energy Performance Improvement Program
(EPIP) that provides loans of up to $15,000 per unit for a wide range of efficiency improvements in multi-family
buildings, including water conservation, air sealing and insulation and more efficient heating, cooling, ventilation
and hot water systems. The EPIP is intended to complement energy assessment grant programs like LEAN and the
Green Retrofit Initiative.
Healthy Homes Programs
It is important that any housing retrofit program not exacerbate home health issues, such lead exposure and
asthma, which affect some Cambridge residents; ideally, a program can ameliorate these issues. A number of
initiatives may be considered as the program is designed, to consider how healthy homes issues can be better
integrated into a multifamily program:
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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●
●
●
The Green and Healthy Homes Initiative (GHHI) is a national project of the Coalition to Prevent Childhood
Lead poisoning. In Maryland, GHHI is piloting a program that integrates family advocacy, resident
education, lead and other health hazard mitigation services, and home energy upgrades. GHHI offers a
Compact of Core Standards that regions’ home improvement programs are encourage to collaboratively
adopt, to facilitate the development of more streamlined program delivery. It also certifies cities in which
home improvement agencies have taken steps to align their delivery.
The EPA has developed Healthy Indoor Environment Protocols for Home Energy Upgrades. The EPA also
requires that home improvement contractors are properly certified in lead abatement.
A variety of home health improvement programs have operated in the Boston area over the years. The
Boston-based Asthma Regional Council of New England has resources on healthy home upgrades,
including their penetration, cost-benefit justification, and recommendations for implementing programs.
2.3 Outreach & Marketing for Local Energy Programs
Community engagement around the energy efficiency programs described above takes place through a variety of
channels. The City of Cambridge’s Cambridge Energy Alliance (CEA) and the citizen-lead HEET (Home Energy
Efficiency Team) Cambridge promote the MassSave programs to city residents. The CEA has found that the
landlords who are most engaged about energy efficiency tend to live in the relevant properties. Likewise, CEA
notes the importance of a motivated tenant with a good relationship with the landlord to recruiting buildings.
The utility program administrators collectively advertise MassSave. Additionally, individual program vendors
advertise their programs to building owners, property managers, and tenants. Different vendors undertake
different marketing strategies. Some have sought to form partnerships with non-profit and community
organizations, local businesses and municipal governments, to advertise programs on their behalf. Notably, Next
Step Living (the prominent contractor for MassSave Home Energy Service program) is strong at engaging
community based marketers to promote their program, who report that Next Step Living provides valuable
feedback on the success of their outreach campaigns and the status of different recruited properties.
In contrast, NStar and its >5 unit market-rate multifamily program vendors reportedly do not communicate with
community outreach partners frequently enough to provide valuable feedback on what outreach strategies work
to recruit multifamily buildings, nor which building have initiative upgrade projects. This has made community
organization to promote participation in these projects difficult.
Outreach for affordable and low-income multifamily programs like LEAN and GRI, on the other hand, tends to be
channeled via more specialized networks of affordable housing property owners, community development
corporations, and non-profit and community organizations serving low-income populations. Many of these actors
were involved in the actual design of these programs and have demonstrated a strong commitment to outreach
and implementation around them as well.
2.4 Energy Data – The Opportunity to Leverage Big Data
Utilities, businesses, governments, and non-governmental actors are increasingly devising innovative methods to
acquire, analyze, and present data about energy use in buildings. The practicum will explore ways to publicly
disclose energy data, and inferred energy efficiency potential data, in multifamily buildings. Such disclosure
facilitates greater transparency in renters and buyers decisions of their housing; can help pressure building owners
to engage in upgrades; and can provide an engaging means of educating the public about energy efficiency
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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opportunities in buildings. The subsections below outline background information and industry initiatives relating
to energy data.
Types of Data
Building energy data can be classified into two broad categories:
●
Energy data. Such data may include:
○ Monthly billing records for individual meters.
○ Smart meter interval readings, which may provide a data record of energy used every five
minutes, 15 minutes, or hourly. Having energy use profiles using this data can allow analysts to
infer what equipment exists in properties (they can “read” energy load profiles to infer the
efficiency of equipment, and what equipment is in use). Thus, it can act as a type of asset data
(see below).
●
Asset data, referring to information about a building. Asset data may be derived from:
○ User inputs - from building operators, tenants, etc.
○ Local government tax assessor records, which may contain information on building age, size,
heating systems, wall assembly, etc.
○ Representations of buildings’ size and massing, such as LIDAR data.
○ Thermal images of buildings, from which thermal fluxes may be inferred.
○ Onsite building assessments.
Energy data can indicate the energy costs and pollution associated with living in an apartment. Asset data can be
used to indicate the energy efficiency and renewable energy potential of a building. buildings can be benchmarked
against one another, as well as evaluated for energy improvements. These opportunities are expanded upon in
the following sub-sections.
Benchmarking and Building Rating
Two fundamental types of building ratings have been developed to benchmark buildings’ energy efficiency:
●
Operations ratings are based on the actual energy consumption data of buildings. Buildings with similar
uses and climates can be compared. EnergyStar Portfolio Manager is the prominent operations rating
nationally, used for commercial buildings and multi-unit building. Wego Wise is a platform developed by
New Ecology used in multifamily and single family buildings. The energy use of a building is influenced by
its constructions, systems operations and maintenance, and occupant behavior. Thus, an operations
rating reflects all three of these considerations.
●
Asset ratings assess the energy efficiency of buildings’ construction. Asset ratings may be quite complex,
such as Home Energy Score or ASHRAE compliant building energy model; these models input details of a
buildings construction and systems, and run energy simulations. Other asset models are based on fewer
inputs, which have particularly strong building energy use prediction abilities. Asset ratings can inform
potential building utility payers of how much energy the building may use under normal occupancy,
regardless of how it was operated conversely.
To give energy efficiency a greater role in the real estate market, home energy scorecards and labelling systems
are being given greater attention in the efficiency field, and the Energy Upgrade California program found that
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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energy efficiency certification can increase the resale value of a home. 7 One example is the DOE Home Energy
Score.8 Other programs offer more immediately visible recognition to participants through the use of yard signs. 9
Automated Building Assessments Driven by Engineering Models
Data and building energy modeling techniques are increasingly being used to rapidly assess potential energy
improvement opportunities based on relatively few data inputs. Such assessment strategies include:
●
●
●
Sourcing building information from building owners, operators, or expedited onsite assessments. Building
operators or assessment professionals can implement relatively few pieces of asset information. This
data is then used to develop a model of the buildings energy use, informed by prior detailed audit data.
Tax assessor records can indicate what buildings feature the highest energy efficiency potential, based off
of correlations with detailed audit data and assessor data.
Interval meter data can be subjected to algorithms that disaggregate energy consumption into different
end-use loads. A model of the buildings’ energy use may then be automatically constructed based on
these inferred loads, and upgrade scenarios tested in this model.
Such assessment tools are evolving rapidly. They promise to reduce the costs of auditing buildings’ energy
efficiency potential, and to allow for identification of the most promising energy efficiency opportunities across a
portfolio of buildings. The Appendix includes case studies of a range of building benchmarking and data-driven
assessment tools.
Energy Data Privacy and Disclosure
The US Department of Energy has convened stakeholders to articulate principles for smart meter interval energy
data. They found that most market participants believe consumers should have the right to disclose energy use
data to non-utility third-parties, and that this disclosure should be a streamlined, simplified process. They felt data
should not be disclosed unless consumers opted-in to the program, meaning consumers initiate an action to
participate in data disclosure. An opt-out program, where by default consumer data is released unless they
actively opt-out, would likely garner higher participation rates and more data.
Utilities have the right to use data for their business activities, including efficiency program delivery. Thus, utility
vendors reportedly have access to all buildings energy usage data, though they do not share this data. Typically
residential (and commercial) energy consumption data has not been publicly disclosed. Some opposition stems
from privacy and safety concerns. For instance, residents worry that with real time data disclosure, thieves could
identify when they are gone and break into their homes. Commercial and industrial entities fear that their energy
data could reveal they are significantly more or less efficient than competitors, which may reveal they are using
different technologies or business strategies. Furthermore, clandestine marijuana grow operations and other
participants in energy intensive illicit activity also oppose public disclosure of data fearing that authorities would
use the information to target and arrest them.
However, the largest obstacle to data disclosure seems to be utility inertia and a general institutional reluctance to
take aggressive stances on data disclosure. But, new programs, such as the Green Button Initiative are prompting
utilities to be more open with data disclosure.
Green Button Initiative
7
http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/stories_eu_california.html
http://www1.eere.energy.gov/buildings/residential/hes_index.html
9 http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/innovations.html?tab=2&list=10&div=10#grouped
8
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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Federal recognition of the importance of energy data galvanized the creation of the Green Button Initiative, an
industry-led effort to improve availability of energy data. Sparked by a challenge in September 2011 from U.S.
Chief Technology Officer Aneesh Chopra to give customers greater access to their energy data, industry
stakeholders worked together to officially launch the program in January 2012. 10 This voluntary program
encourages utilities to release personal energy data to customers in a standard format as an XML file. 11 To date, 20
utilities have committed to the Green Button Initiative. This amounts to 36 million residential customers gaining
digital access to their energy data (Innovation Electricity Efficiency 2012). 12
10
White House Office of Science and Technology Policy. "Administration Announces New Tools to Help Consumers Manage
Electricity Use and Shrink Bills." whitehouse.gov. January 18, 2012.
http://www.whitehouse.gov/administration/eop/ostp/pressroom/01182012 (accessed October 29, 2012).
11 EnerNex. Green Button Data. n.d. http://www.greenbuttondata.org (accessed October 29, 2012).
12 Innovation Electricity Efficiency. Green Button: One Year Later. Issue Brief, September, 2012.
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Section 3. Program Components
A variety of program components could be included in the ultimate design of this project. Promising opportunities
that the EESP team has identified are noted here.
3.1 Program Design – Administration and Management
Overview
The MassSave Homes program for 1-4 unit buildings is currently operating well. In contrast, interviewees noted
challenges in the MassSave >5 unit market-rate multifamily programs, including:


●
●
Programs provide insufficient “hand holding” and customer relationship development with owners, who
often lack technical capacity in upgrade decisions.
Programs are disaggregated into HVAC, Weatherization, Fuel Switching, and other programs, making
building owners less likely to undertake comprehensive upgrades. Program administrators have made
efforts to address these concerns, introducing the Multifamily Market Integrator (MMI) program in 2010
to serve as a “one stop shop” for multifamily buildings, and refer them to a variety of programs.
However, interviews with market participants suggest that the MMI acts primarily to refer building
owners to different programs; it does not adequately serve to diagnose what services buildings require,
nor assist with project management and sourcing of financing for different scopes of work.
Only one lead vendor serves the multifamily programs. Some suggest that this lack of competition
reduces the incentive to deliver high quality service. Additionally, this structure makes it difficult for
programs or firms that serve an “owners agent” role (such as the MA Green Retrofit Initiative) to
coordinate upgrade projects, as they must coordinate schedules with a single utility vendor.
Program management vendors do not communicate with outside program marketers (such as community
organizations or local government) about whether buildings enter into upgrade programs, making it
difficult for these marketers to learn about what marketing strategies are effective.
The November 2012 MassSave Program Administrators Three Year Plan suggests that they are attempting to
provide richer customer service, better recruitment of appropriate buildings into programs, and stronger
communication with community marketers. Nevertheless, a pilot program could experiment with other program
management structures.
Priorities for Improving Multifamily Programs
Based on the our interviews during the Fall, the EESP team believes the following should be priorities for a
multifamily program in Cambridge:
●
●
Better communication with community and city outreach partners. Improved communication could be
achieved by introducing a ‘customer relationship management’ system, wherein community based
outreach organizations enter building/owner details into an online application. Contractors would then
record the status of these buildings in real-time, which community outreach organizations can access.
This system would allow community groups to follow up with projects in a timely fashion, as well as
understand what outreach mechanisms are working.
Provide greater project management assistance to owners and property managers. This includes:
helping building owners benchmark buildings, and prioritize their buildings for upgrades; providing direct
management of which technical measures to implement (with ultimate owner/manager sign-off);
assistance in sourcing financing; and construction project management. Owners should be free to choose
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●
●
their own technical scope of upgrades, financing, and construction management, but ‘turn-key’ options
should be available to them.
Provide comprehensive upgrade services. Owners should be delivered a more complete assessment of
upgrade opportunities. They need not undertake all upgrades at one time, however. Rather, program
assessments could note a comprehensive list of upgrade measures, with recommendations for when
certain measures are appropriate (e.g. immediately, at re-leasing, when performing HVAC/envelop
maintenance, etc.) Programs should have information systems which allow buildings to understand when
they will be upgraded.
Integrate healthy home improvements to the greatest extent possible. Have the flexibility to
accommodate new healthy home initiatives, and sources of funding, as these come online. Integrate
basic healthy homes assessments into assessment protocols, and include upgrade recommendations.
Program Management Options – Whether to engage multiple vendors
The following are options for the management of a pilot in Cambridge:
●
●
Continue the current single principal vendor structure, mediated by the MMI.
Pilot a program structure that allows multiple lead contractors, providing they are pre-approved by the
program administrator. This structure is similar to the MassSave for Homes, which allows multiple lead
contractors.
Regardless of the program structure, an “owner’s agent” (similar to the MA Green Retrofit Initiative) could be
sponsored in some fashion for projects that wish to use their services. A pilot program in Cambridge could sponsor
such a service for building owners. The program could guarantee that these services are cost-effective for building
owners by associating program fees with their utility meters (see section 3.2 below), and charging less than
building owners’ program fees.
Potential Practicum Work Items




Develop a better understanding of the typical project management costs to deliver a ‘cradle to grave’,
turn-key energy management project.
Devise a program structure that could deliver turn-key project management to building owners at no
upfront costs, paid for via owners’ energy savings.
Determine principles for a workable inter-operable ‘customer relationship management’ system, to be
used by community outreach personnel, project contractors, and vendors.
Decide if a multiple contractor program structure is appropriate. If so, develop principles for its
implementation.
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3.2 Financing – An On-bill Tariff Repayment Scheme
Overview
The EESP team believes that an on-bill tariff repayment mechanism can facilitate the financing of energy efficiency
in multifamily housing, and other building types. On-bill tariffs can overcome upfront cost barriers to energy
efficiency by enabling customers to pay back the initial costs of upgrades over time via a charge on their utility bill.
They also address the split incentive barrier, by associating repayments for upgrade work with the utility bill to
which energy savings accrue.
Background
Financing challenges in large part have precluded the widespread adoption of energy efficiency measures. High
upfront costs for efficiency upgrades, as well as the split incentive problem between landlords and tenants, have
often dissuaded customers from making investments in energy efficiency. In addition customers often lack
information about financing programs, perceive them as costly or time-consuming or face credit barriers to
accessing financing. Effective financing programs for multi-family efficiency must proactively address these issues.
On-bill repayment presents a promising approach to tackle many of the aforementioned challenges. Under on-bill
repayment financiers make upfront investments in energy efficiency measures and the utility bill-payer then pays
back these initial investments over time via a monthly surcharge on his/her energy bill. As a result the upfront cost
barrier is largely eliminated, and the customer further benefits if the payback terms are structured such that the
resulting monthly energy savings exceed the monthly repayments.
There are two main types of on-bill repayment measures: on-bill loans and on-bill tariffs. On-bill loans are nontransferrable and stay with the borrower, so even if a tenant moves out of a unit or a building is sold before the
upfront efficiency investment is entirely repaid, the tenant or building owner in question is still responsible for
paying off the balance of the loan. On-bill tariffs, on the other hand, are tied to specific properties via utility
meters; when a tenant moves out or a building is sold, the new tenant or building owner assumes responsibility for
the monthly repayments where the previous tenant or owner left off. As a result on-bill tariffs present a powerful
strategy for addressing the split incentive challenge, as they ensure that landlords or tenants can benefit from
efficiency investments without facing a longer-term financial burden.
Important considerations for a on-bill financing pilot include:
Fund management – A Fund Manager is required to: determine underwriting criteria, including standards of
creditworthiness of its customers; source capital to subsequently lend to projects; engage in customer
management and communications; coordinate with other program partners; ensure compliance with lending laws;
and other responsibilities. Traditionally, utilities have been hesitant to take on these responsibilities, as they lie
beyond their scope of expertise. Some programs include third party fund managers (or multiple lenders) who
simply use a on-bill tariff as a repayment vehicle. MPower (profiled below) is one such example of a fund manager
and on-bill repayment system.
The source of funds - A variety of different sources of financing can be used for upgrade projects. Relying
exclusively on utility ratepayer funds precludes energy efficiency programs from achieving scale and can also put
utilities in the position of acting as financiers – a role beyond their traditional areas of expertise that can raise
overhead costs and expose them to liability under consumer lending laws. To address these issues, effective
programs must leverage outside sources of capital and enable utilities to act as capital intermediaries rather than
fund managers. Additional sources of capital include debt (e.g. from Community Development Financial
Institutions [CDFIs] and banks), equity (e.g. from federal New Market Tax Credits and mission-driven investors) and
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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foundation and government grants. These sources of capital along with existing utility ratepayer funds can be
pooled into a broader energy efficiency fund, which can be managed by a non-utility partner with relevant
financial expertise. The fund can then directly finance energy efficiency upgrades and recoup these upfront
payments via the monthly on-bill tariff.
Underwriting criteria - Customers’ creditworthiness and/or credit rating are also often barriers to financing. Some
efficiency programs using on-bill repayment systems have used customers’ utility bill payment history as a proxy
for creditworthiness.
Security – When a lender makes a loan, they typically want security – that is, a claim to some property if they are
not repaid. Typically, unsecured loans will have higher interest rates, as they present less risk to lenders.
However, households may be less likely to agree to assume debt, if a lender has a claim to their property. On-bill
repayment systems can use the threat of having utilities discontinued if payments are not made as a form of
limited security; repayment rates tend to be quite high in the few on-bill repayment systems introduced in North
America to date.
Establishing appropriate utility billing systems - On-bill repayment can often require complicated modifications to
utility billing systems, and NSTAR in the past has declined to implement on-bill repayment in Cambridge for
precisely this reason.13 However given the City of Cambridge’s and NSTAR’s current mutual interest in developing
a multifamily efficiency pilot that can be a model for long-term programmatic change, we believe the time is now
to revisit these issues and think critically about strategies to implement on-bill tariffs in the multifamily sector.
MPower – An Innovative On-bill Repayment Mechanism in the Multifamily Space
The example of MPower, a new energy efficiency program in Oregon that uses on-bill tariffs to target the
multifamily affordable housing sector, is instructive with respect to the financing issues outlined above. The
program currently draws 30 percent of its funding from utility incentives, 20 percent from U.S. Department of
Housing and Urban Development (HUD) grants and 50 percent from CDFI debt; in the long term the program seeks
to structurally supplant the HUD grants with equity from New Market Tax Credits to ensure sustained financing.14
The program fund is managed by the non-profit Network for Oregon Affordable Housing, and organizations such as
the CDFI Craft3, the Energy Trust of Oregon and Enterprise Community Partners provide additional support in
terms of funding, technical assistance and service delivery. The MPower model highlights the need for strong
partnerships and a deliberate stakeholder engagement strategy to ensure sustainable program design and
financing, and we encourage the City of Cambridge to play a leadership role in convening relevant financial players
who can support and manage an energy efficiency fund.
13
Cascadia Consulting Group. 2008. An Innovative Financing Mechanism: On-bill Financing. Prepared for Seattle Green
Building Taskforce.
14 Warner. 2012. Personal Communication.
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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Other considerations
In conjunction with on-bill repayment via a tariff mechanism, Cambridge and NSTAR can also consider several
other strategies to address financial barriers to energy efficiency. These include providing energy data before or at
the point of loan application to enable lenders to incorporate cost and savings projections into their underwriting,
using financing products to bundle together multiple energy efficiency measures to spur deeper retrofits, and
using public benefit and utility funds to provide credit enhancements or buy down interest rates. 15 Employing a
portfolio of these approaches will ensure that both customers and lenders can access important information,
reduce their overall financial risks and have stronger incentives for participation.
Potential Practicum Work Items
●
●
●
Develop guidance for establishing and managing a Fund through which on-bill repayment could be made.
This could include suggested terms for an RFP to engage a on-bill repayment fund manager.
Develop a pro-forma, suggesting what IRR of measures could be included in projects, given different
terms of financing; the blend of financing sources; and how the financing could be subsidized by utility or
government sources.
Articulating principles for dividing energy payments between different energy meters.
3.3 Transparency – An Energy Map Benchmarking and Disclosure Tool
Overview
In this practicum, building an energy map seeks to help overcome the landlord-tenant barrier in making efficiency
changes in multifamily buildings. By illuminating energy differences among multifamily buildings, prospective
tenants will be able to make more informed decisions about which apartments they choose to rent. By publicly
disclosing building performance, landlords may feel social pressure to improve their buildings. Moreover,
government agencies and other efficiency-related agencies could target lower performing neighborhoods and
buildings for upgrades.
Potential Impact
The Energy Map has the potential to influence the housing decisions of renters. Mapping tools for other types of
information are already commonly used, so there would be a very short learning curve for users. Presuming that
energy data is readily available through a government mandate, the next biggest obstacle may be creating
awareness of the map so that it becomes popularly used. Integrating social media could help to address this issue
and Walk Score could prove to be a model for diffusing rental information to other websites.
The Energy Map could be used to enable other community based social marketing campaigns. The visual display of
building performance in colors (e.g., green, yellow, red) may establish new social norms which encourage landlords
to upgrade their buildings. City agencies or utility departments responsible for implementing residential efficiency
programs could use the map to more effectively target their programs at buildings and communities most in need.
The map may also be used to develop other creative outreach strategies. For example, the Energy Map could be
used in an energy efficiency competition. Blocks, neighborhoods, or even friends living in disparate buildings could
15
ACEEE. 2012. On-bill financing for Energy Efficiency Improvements. http://aceee.org/research-report/e118
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 21
form teams to compete against each other to save the most energy. The Energy map could be used in a dynamic
web platform to monitor building performance and show how different teams are faring against each other.
By revealing the energy performance of buildings on the public Energy Map renters can make more informed
decisions about their housing decisions and this may ultimately encourage landlords to upgrade their buildings.
Moreover, the map could also provide the opportunity for more geo-targeted efficiency outreach and the
opportunity to develop other creative community-based social marketing programs.
The Landlord-tenant Barrier
Creating more transparent information on energy use and utility bills in rental units could open a door to
implementing more efficiency upgrades. For many tenants, utility costs are unknown when they sign leases and
can significantly increase their monthly living expenses. If prospective tenants were able to understand their
expected utility bills prior to making a housing decision, they would be able to choose apartments within their
budget or ones that they perceive to be more “green” if that is something they value. Landlords would realize that
tenants were selecting certain apartments over others because of energy performance. This could prod them to
invest in efficiency strategies so their rental units would become more desirable. Moreover, if energy information
on multi-family rental units is displayed publicly, landlords may feel some social pressure to make their buildings
more efficient.
Building an interactive map to help prospective renters identify high energy consuming apartments would create
social incentives for landlords to upgrade their buildings. Moreover, other interested parties such as government
agencies and energy contractors could use the map to target neighborhoods for energy efficiency outreach.
The Energy Map
Energy information could be displayed in an interactive energy map (the Energy Map) where renters can get
estimates of monthly electricity and gas bills. Buildings could be color coded for relative energy performance
compared to similar buildings in the area (e.g. red is a high energy user, yellow is moderate, and green is low).
Users could click on a building to see average monthly electricity and gas bills (in kWh, therms, and dollars) as well
as heating fuel type. Other information on the map could include: a benchmark or efficiency potential score,
recommended upgrades, available rebates with the appropriate links, and estimates of potential savings.
A map is the optimal energy display tool in this market for many reasons. Renters will likely be looking at a map to
determine whether the potential housing location suits them. Other online resources already use maps, so this is a
comfortable tool for many people. For example, Yelp - an online public review platform for restaurants, bars, and
other places - pairs entries with a Google Maps location. Moreover, using a map could enable city agencies or
energy contractors to identify neighborhoods which show the greatest need for energy efficiency upgrades.
Elements Needed for Energy Map
The following components are needed for the Energy Map, though this list is not exhaustive:
● Monthly energy use data from multifamily homes
○ Potential sources: acquired from the utility or residents voluntarily release data
● Building characteristic information
○ Potential sources: Tax assessor records, GIS records, user input, official audit
● Benchmarking and building rating
○ Uses energy data and building characteristic information to score individual buildings. An
appropriate benchmarking system that uses the information available needs to be developed or
selected. (The image below represents how different information sources may feed a rating for
an individual building.)
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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●
Database management
○ Building a database to manage utility energy data, building characteristics, and building ratings
and to communicate with the website.
Monthly energy use data
To build the Energy Map, monthly energy use is needed from rental units. Energy data is increasingly available,
though still difficult to access, especially in the residential sector. NSTAR has implemented Green Button
functionality and energy information can be downloaded as a CSV or XML file. The file includes the associated
address, the start and end dates of 12 previous billing periods, the KWH usage for each period, and the cost ($) for
each period.
Two different approaches could be used to collect data - either from the utility or from the tenants. For reasons
discussed earlier, utilities have been reluctant to release ratepayer consumption data. Recently in New York,
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 23
ConEd has agreed to release data for buildings with three or more tenants because end users cannot connect the
energy usage to a specific tenant. Perhaps this precedent could pave the way for other utilities to release energy
consumption data for multi-family homes in Cambridge, especially if energy data is presented as an average
representing a typical unit in the building. Utility-provided data would be ideal because it would be up-to-date and
access to data would not change as tenants come and go.
A way to enable the Energy Map and other groups to access data would be for states or the federal government to
mandate public disclosure of energy data. Some building owner may protest due to privacy or safety concerns.
One common safety concern is that if real-time data is publicly disclosed then it may be possible to tell when
buildings are unoccupied leaving them vulnerable to theft. Other concerns include individuals or organizations
simply wanting to keep their energy data private. Legislation could address the safety issue by requiring disclosure
only on a monthly basis so that real-time information remains private. And initial disclosure requirements could
focus on multi-tenant buildings where information could be aggregated to protect privacy and where there may be
support among tenant’s rights groups to give renters more information about units they lease.
If utilities are unwilling to provide data, tenants could voluntarily contribute their own data. Tenants could
manually enter usage from historic utility bills. Or tenants could provide their e-bill account information and the
mapping application could automatically screen scrape their data each month. The drawbacks to tenant provided
data are that not all tenants in a building may participate; manually entering data is tedious and users may stop
doing it eventually; as users move to new apartments e-bill accounts may change or deactivate, making it difficult
to keep up-to-date records; and there would need to be a marketing campaign encouraging renters to contribute
their data to reach a threshold participation rate that would make the map useful. To map close every building
with a reasonable approximation of energy use, more than 50 percent of multifamily unit occupants in the city
would likely need to be reached.
Building Characteristic Information
As seen above, Green Button downloads provide information on billing period start and end dates, KWH usage,
and cost in dollars of the usage. The building address is also provided. Using the address to search the Cambridge
tax assessor records (these are publicly available) could provide other information such as heat type, living area,
and whether there is central AC. GIS databases could provide information on parcel size and building height. The
building characteristics are needed to establish a building rating. Depending on the type of benchmarking system
selected, owner or tenant inputs may be required for more sophisticated evaluation. Ideally, a touchless audit
using the publicly available data could be given so that little or no user input is required for an initial rating.
Benchmarking and Building Rating
Benchmarking and building rating programs in residential buildings can improve the functioning of real estate
markets, allowing greater transparency in the anticipated energy costs of buildings. Such transparency can help
stimulate upgrade activity. The Energy Map could facilitate building rating by including a benchmarking score for
each building represented. Nadkarni and Michaels (2012) articulate that an optimal building rating and
benchmarking system for residential buildings would entail:
●
●
●
●
●
Requiring annual operational updates.
An asset rating of the building within a specified time (10 years), providing that cost-effective rating tools
were available.
Rating confidentiality, save for web-based disclosure to relevant stakeholders, like owners, tenants and
prospective buyers/lessees.
Public disclosure during time of listing for sale or lease.
A standardized process for building asset rating, delivered by a certified rating authority.
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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●
A consistent, easy to understand energy label, providing both asset and operational scores, comparable
within and between residential building types.16
The Energy Map needs to use a benchmarking system that can be applied to many homes, with possibly limited
data, and that is accurate enough to establish user confidence. The Energy Map should also make a distinction
between a building’s asset rating versus and its operational rating (e.g., a building may receive a score of 89/100
but the residents operate it at a score of 75/100), either by giving two scores or making it clear which rating is
being displayed. Distinguishing between an operational score and an asset score could alleviate concerns of
landlords that even if they upgrade their buildings, tenants would make poor energy decisions and negatively
impact their building’s rating.
Different building benchmarking and asset rating systems are available on the market today. Notably, Wego Wise
benchmarks multifamily buildings, while a variety of other building modeling platforms can develop building
efficiency potential scores with minimal inputs.
Potential Practicum Work Items
● Develop a strategy to access the necessary energy data information.
○ Decide whether it should be crowd-sourced or provided directly from the utility.
○ Develop an action plan to acquire the data.
● Evaluate different benchmarking models and select the best system given the data available.
● Reach out to existing energy efficiency firms like WegoWise or Next Step Living to see how to develop a
partnership and leverage their resources.
● Determine what information should be displayed on the map (what information would most inspire
action).
3.4 Recruitment - Demand -Side Stakeholder Engagement & Marketing
Overview
The goals of demand-side engagement and outreach are two-fold. First, we hope to directly recruit participants
into energy efficiency upgrade programs. Second, we hope to indirectly achieve energy savings by soliciting energy
consumption data from individuals, allowing us to create analytical tools that move the multifamily housing market
towards efficiency.
To achieve this, we will need to conduct a thorough outreach campaign to various stakeholders in the multifamily
housing sector. The Cambridge multifamily sector is a crowded space, including both a wide range of stakeholder
views and a number of distinct market segments. As such, it will be challenging to develop a single program with
broad appeal in the market.
Fortunately, several useful tools allow us to identify and deploy effective strategies to push the market towards
efficiency. Two of these are Stakeholder Analysis and Community-Based Social Marketing.
Below, we discuss the complexity of the multifamily sector and the basic principles behind each of these
methodologies. Additionally, a preliminary approach to conducting a stakeholder analysis in the Cambridge
multifamily context is included in the Appendix.
16
Michaels and Nadkarni. March 2012. A New Model for Disclosing the Energy Performance of Residential Buildings.
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 25
The Segmentation of the Multifamily Market
The multifamily housing sector is an heterogeneous mix of market segments, each with their own barriers to and
opportunities for energy efficiency. Some of these segments share a unique trait that may demand that program
administrators devote additional resources that target specific barriers. Others may present an unusual opening
for and efficiency program that is not present in the remainder of the multifamily sector. Below, we identify
several market segments that must be considered in any program design and outreach process.







Resident-Landlords. While it is difficult to determine their exact number, a number of Cambridge’s
landlords reside on-site in otherwise rental properties. Unlike most property owners, these individuals
share the same self-interest in efficiency upgrades as single-family owners and—if they can be
identified—could be targeted accordingly. Additional incentives could be designed to encourage landlords
to invest in efficiency upgrades for the other units in their property as well as their own.
Oil-Heated Homes. While smaller than in other parts of the state, a significant number of Cambridge’s
multifamily properties are heated by fuel oil. Because of the difficulty of metering multi-family tenants
individually for oil heat, it is likely that the property owner pays for space heat in these buildings. These
landlords may see energy efficiency improvements as an opportunity to reduce their operating costs
without losing revenue and could be targeted by traditional financial incentives.
Student Housing. Students account for a sizeable portion of Cambridge’s multifamily housing market. An
efficiency program could take advantage of this fact by creating student-specific program outreach
strategies, either through formal university channels or through informal social networks. Partnerships
with universities could result in co-branded marketing, student-specific webpages, and support from
student services offices that provide resources for students to advocate for efficiency with their landlords
or that advertise a list of preferred property owners. Alternately, a marketing campaign that encourages
tenants to share their energy data could take advantage of the unique social network of student
populations (and could also resonate with the open-data ethos of MIT’s student body specifically).
Major Employers. In addition to their broad student bodies, Cambridge’s universities are also major
employers in the city. They, along with other anchor institutions, such as the vibrant biotech community
in Kendall Square, could be targeted for partnerships that provide tailored program outreach to
employees, similar to the Michigan Saves program mentioned above.
Condominiums. Currently, there are very few efficiency programs that specifically target condominiums
and address the specific barriers that they pose to energy efficiency. Despite this difficulty, condominiums
compose a notable percentage of Cambridge’s housing market, and it may be necessary to develop
resources that specifically target these units. For example, program administrators could create a
marketing campaign encouraging condominium owners to discuss energy efficiency with their neighbors
and provide marketing materials that are intended to explain program benefits specifically to
condominium boards.
Property Management Firms. Many landlords in Cambridge contract with specialized property
management firms to take care of their properties and deal with tenants. This introduces an additional
level of complexity to an energy efficiency program design as there is little direct interaction between
landlords and tenants in these buildings. However, this could also be an opportunity to recruit property
managers to act as advocates for energy efficiency.
Vacant/Available Units. Units available on the rental or real estate markets can act as valuable points of
entry for efficiency program managers. Potentially working in partnership with realtors and property
brokers, a program that offered certification or recognition of energy efficiency improvements could be
effective in changing the rental market by increasing demand for efficient units.
While this list certainly does not account for the whole of multifamily sector in Cambridge, it includes some of the
markets segments that could realistically be given special attention in a program design process. Understanding
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 26
the specific needs and opportunities of these segments is a crucial step in sketching out the parameters of an
efficiency program. These parameters may be further set using the methodologies discussed below.
Stakeholder Analysis
Program administrators often make the mistake of designing a program based on what they think will work, rather
than on what targeted groups have told them will work. Unsurprisingly, understanding the perspectives and
interests of stakeholder groups and incorporating them into a program design can be very useful in building a
successful program. Stakeholder analysis provides a formal means of determining the categories of actors that are
relevant to a program as well as a methodology for mapping their interests.
In a stakeholder analysis, planners begin by assembling a preliminary list of the actors that they believe are
relevant to the problem at hand. In the Cambridge multifamily sector, stakeholder groups might include landlords,
tenants, property managers, property brokers, building contractors, and institutional actors. After identifying the
preliminary list, analysts reach out to the identified actors, gauge their interests and concerns on a given issue, and
ask what other groups may have a stake in the issue. This process is repeated until planners are left with an array
of stakeholders and issues that fully represents the range of perspectives and opinions on a given issue.
This array is an excellent starting point in the program design process, as it provides administrators with a means
of developing a program that speak to all parties’ interests. In this context, a stakeholder analysis would allow us to
determine which actors are likely to act as assets or roadblocks in a given program design. It will act as a resource
in proposing options that have high probabilities of success.
Community-Based Social Marketing
Another useful program-design methodology to consider in this project is Community-Based Social Marketing
(CBSM). CBSM draws heavily from social psychology and helps program administrators target the behavioral
changes that can help to achieve program goals. The formal CBSM process has 5 components: 17
1.
2.
3.
4.
5.
Selecting the behaviors to be targeted.
Identifying the barriers to changing these behaviors and the benefits of doing so.
Developing strategies for influencing the targeted behaviors.
Conducting a pilot program to test these strategies.
Implementing successful strategies at scale.
In the context of a multifamily energy efficiency program, the types of behaviors that might be targeted by a CBSM
program are those that would either help drive participants towards home retrofits or make energy data more
publicly accessible. These might include soliciting tenants to donate their energy consumption information to a
crowd-sourced data collection effort, asking condominium owners to make energy use an item of interest for their
homeowner associations, or encouraging landlords to sign up for a free energy audit through Mass Save. In a CBSM
program, these and other behaviors would be evaluated to determine which are most useful in achieving the goals
of a program.
Once the targeted behaviors have been determined, CBSM program architects investigate the barriers and
benefits of given behaviors. This step would entail an information-gathering campaign to help planners understand
17
McKenzie-Mohr, Doug. Fostering Sustainable Behavior: Community-Based Social Marketing. McKenzie-Mohr and Associates,
2010.
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 27
why targeted populations aren’t already adopting the desired behaviors, and what could be done to convince
them to switch. The methods included in this step could include focus groups, surveys, a literature review, or direct
observation.
After assessing the barriers, program designers then begin to formulate strategies for intervention. The strategies
selected in this step vary dramatically based on the local context and the problem of interest but there are several
general tactics that have proved useful in the past. These include: providing a large number of resources to early
adopters and relying on social networks to diffuse their behavior, advertising local community members who are
(and are not) adopting desired behaviors, and soliciting token commitments from community members before
asking that they engage in deeper behavioral changes.
CBSM principles can be useful in achieving the demand-side outreach goals declared above. Furthermore,
combining these methods with both a thorough understanding of the segmentation of the local housing market
and a robust stakeholder assessment would ensure that the outreach and marketing strategies selected through
the CBSM process are uniquely tailored to the local context.
Recent Activity in Energy Efficiency Program Outreach
In designing an outreach and marketing plan for Cambridge’s multifamily sector, it is useful to understand the
types of approaches that have been tried elsewhere. A number of program managers across the country are
experimenting with new ways of driving demand in for energy efficiency, and it is worthwhile to be familiar with
their work. In particular, DOE’s Better Buildings Neighborhood Program (BBNP) 18 has worked as an incubator for
new and innovative program design elements, and several of the approaches that have been tried though the
initiative are discussed below. However, the existence of these options does not preclude the necessity of the
program design methods discussed above, and program administrators in Cambridge should not merely replicate
methods that have been tried elsewhere.
●
●
●
●
Incentivizing Community Organizations. Currently, NSTAR’s multifamily energy efficiency program
conducts outreach through a number of community organization partners. However, these organizations
are not given a clear incentive to participate other than the opportunity to offer a service to their
constituents. Some energy efficiency programs, such as Los Angeles County’s Energy Champions
program,19 offer financial incentives to local non-profits that successfully recruit program participants. In
Massachusetts, Next Step Living is currently implementing a similar approach.
Deadline-Based Marketing. Some energy efficiency program implementers--such as Efficiency Maine20-use deadlines to more effectively market energy efficiency program. By offering a low-cost installation for
a limited period of time, these programs are able to motivate potential participants to take action.
Bulk Purchasing. Some programs coordinate the purchasing efforts of multiple participants with a single
contractor to achieve discounts from bulk purchases. Solarize Portland has been particularly successful in
negotiating low prices for solar panels through this approach. 21
Leveraging Anchor Institutions. Similar to community organization approaches, some programs leverage
trusted organizations in the target community to conduct program outreach through. For example, the
18 http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/
19 https://energyupgradeca.org/county/los_angeles/energy_champions_home
20 http://www1.eere.energy.gov/buildings/betterbuildings/neighborhoods/maine_profile.html#driving
21
http://www.portlandoregon.gov/bps/article/405686
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 28
Michigan Saves program partnered with Grand Valley State University in Grand Rapids to market and
implement their energy efficiency program.22
Potential Practicum Work Items
Obtaining buy-in from landlord and tenant groups and condominium associations will be a crucial element to the
success of any multifamily energy efficiency program. Over the coming months, we propose to conduct outreach
efforts to the many stakeholder groups involved in Cambridge’s multifamily housing sector in order gauge their
interests and concerns regarding energy efficiency. The methodological tools provided by stakeholder analysis and
community-based social marketing will be very useful in guiding this process. Specific actions that may be taken
are listed below, and a preliminary approach to a stakeholder assessment is laid out in detail in the appendix.
Stakeholder Mapping – A preliminary set of stakeholders is provided in the appendix. This is not, however, an
exhaustive list of the individuals who are concerned with a multifamily energy efficiency program in Cambridge
and who must be consulted in its development. We must reach out specific individuals in the identified groups and,
through discussions with those groups and individuals, identify additional stakeholder groups and develop a matrix
of interests and interested parties.
Focus groups - Due to the fragmented nature of the rental community in Cambridge, it will be prohibitively difficult
to conduct outreach to each stakeholder that would be impacted by a program. Instead, we plan to conduct focus
groups with representative samples of property owners, tenants, and other stakeholder groups. Through these
interviews and focus groups we discuss the concerns and interests of various stakeholders and identify one or
several program delivery mechanisms that could be used to implement an effective efficiency program in various
settings.
Interviews with building owners and managers - An important aspect of these discussions will be to identify and
interview multifamily properties fitting our target profile that have already implemented energy efficiency
upgrades. We intend to interview a sample of landlords and tenants in this group to understand why the decision
to invest in an upgrade was made, and what factors acted as important drivers in that decision. These findings
would be crucial in developing an effective program design.
Deployment of intervention strategies - The previous steps will be useful in revealing the potential levers—
behavioral or otherwise—that could be pulled by a multifamily program design in Cambridge. Based on these steps,
we will have a clearer idea of what interventions are both feasible and likely to succeed, and we will be able to
craft a program design that includes them.
22
http://bbmgr.org/wp-content/themes/Starkers/media/01172012BBMGR_GVSU_INFO.pdf
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 29
3.5 Upgrade Ordinances
Overview
Residential Energy Conservation Ordinances (RECOs) specify that as part of the purchase of an existing rental
housing unit, property owners must either fulfill a prescriptive set of mandatory upgrades or invest a set portion of
the purchase price in efficiency improvements. 23 The City should consider opportunities to implement energy
conservation ordinances. Likewise, the Massachusetts Green Communities Designation and Grant Program and
the Massachusetts Board of Building Regulations and Standards should provide a standard energy improvement
code for existing construction, which leading Green Communities can adopt.
This policy option overcomes the split incentive problem by mandating that one party--the property owner--make
efficiency improvements as part of a property sale. However, there are two substantial drawbacks to this policy
tool. The first is the political difficulty of implementing such an ordinance, and the second is its limited
effectiveness. Because the policy only comes into effect when a housing unit is sold, an upper limit is enforced on
the number of homes that would be retrofitted through this approach.
The EESP team believes that, ultimately, requiring upgrades may be necessary to realizing deep energy efficiency
across a broad range of properties. However, it is politically difficult to get such requirements established. Thus,
efforts to grow the voluntary market for upgrades are justified.
Background
RECOs have been used to advance energy efficiency since the 1980s and are in place in several cities across the
nation--including San Francisco, Berkeley, Austin, Boulder, Ann Arbor, Minneapolis, Burlington, and Roseville, CA-as well as statewide in Wisconsin. In other areas, such as Portland and San Diego, proposed RECOs were
abandoned due to opposition from real estate organizations and other groups. However, opposition from
commercial groups is not a given. Realtors in San Francisco and Berkeley use energy upgrades as a selling point for
buyers,24 and in Austin, realtor groups negotiated and support a watered-down ordinance that requires energy
audits, but not mandatory upgrades. 25
There are slight variations in program scope and administration that are worth discussing. While most programs
apply to the entire residential sector, the programs in Wisconsin, Ann Arbor, and Minneapolis specifically target
multi-family housing.26 This implies that they are intended to address--or rather, sidestep--the split-incentive
problem in rental housing. While most programs are run through a housing, building, or code department, the
ordinances in Burlington and Roseville are operated by local municipal utilities. 27
23
Beth Williams thesis.
ACEEE.
http://www.iamu.org/services/electric/efficiency/Attachment%20B%20Residential%20Energy%20Conservation%2
0Ordinances%20ACEEE.pdf
25
Pat Coleman thesis.
26
ACEEE.
http://www.iamu.org/services/electric/efficiency/Attachment%20B%20Residential%20Energy%20Conservation%2
0Ordinances%20ACEEE.pdf
24
26
27
ACEEE.
http://www.iamu.org/services/electric/efficiency/Attachment%20B%20Residential%20Energy%20Conservation%2
0Ordinances%20ACEEE.pdf
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 30
There are also differences in penalties for non-compliance. Most cities specify monetary penalties for
noncompliance that vary in severity. In Ann Arbor and Wisconsin, noncompliance has additional legal
consequences, and can actually lead to jail time. Conversely, Roseville and Berkeley do not have any established
enforcement mechanisms to deal with noncompliance. 28 In Boulder, landlords must be licensed by the city,
providing an additional leverage point for enforcement.
There has been a general failure to track and evaluate the impact of RECOs, and as a result, there is little
information available regarding their effectiveness in achieving energy savings. 29
Applicability to Cambridge
While implementing a RECO is difficult in any context, Cambridge is perhaps better situated than other most
municipalities to make a successful attempt. Cambridge’s participation in the Green Communities Act and its
implementation of stretch energy codes could provide a foundation for further actions around energy regulation.
However, any attempt to enact a RECO is likely to face opposition from landlord and real estate interests.
Additionally, the Cambridge city government lacks certain legal authorities over landlords—such as the ability to
withhold rental licenses—that have been assets to programs in other areas. Therefore, implementing a RECO in
Cambridge may be both politically and logistically difficult.
Potential Practicum Work Items
Time-of-sale upgrade ordinances present a unique means of addressing the split-incentive problem in multifamily
energy efficiency, largely by sidestepping the issue entirely. However, due to the great political difficulty in
establishing and implementing a RECO, it should not be assumed that Cambridge will be able to enact an
ordinance. Instead, through conversations with stakeholders occurring throughout the engagement process,
RECOs should be discussed as one possible solution for achieving energy efficiency in Cambridge. If a universally
beneficial solution can be found, an energy ordinance may indeed be implemented in Cambridge, but it should
only be considered as one of many potential solutions.
28
ACEEE.
http://www.iamu.org/services/electric/efficiency/Attachment%20B%20Residential%20Energy%20Conservation%20Ordinances
%20ACEEE.pdf
29 Beth Williams thesis, ACEEE.
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 31
Appendixes
Program Summary
Program
Technical measures & available
incentives
Income Criteria
Funding
Source
Administration &
Contractors
Associated financing
mechanism
Outreach Channels
MassSave Home Energy
Services Program (1-4
unit buildings)
Technical measures: Instant savings
measures (CFL’s, programmable
thermostats, faucet aerators),
insulation, air sealing,
heating/ventilation/HVAC systems
>60% of AMI
Utility ratepayer
funds
Administrators: NStar,
National Grid, other
utilities
0% HEAT loan for
qualified measures – up
to $25,000 with 7-year
payback
Utilities, contractors,
non-profit and
community
organizations, local
businesses
Loans
Utilities
Contractors: Next Step
Living, Co-op Power,
GreenTek, etc.
Available incentives: 75% off up to
$2,000 on insulation, no-cost air
sealing, rebates for heating equipment
MassSave Multi-Family
Program (5+ unit
buildings)
Technical measures: Energy efficient
lighting upgrades and controls,
occupancy sensors, water heating
equipment, domestic hot water
measures (low-flow showerheads,
aerators, and pipe wrap),
programmable thermostats, insulation,
air sealing, high-efficiency heating and
cooling equipment upgrades and
controls, ENERGY STAR® qualified
refrigerators and other eligible
appliances
>60% of AMI
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Utility ratepayer
funds
Administrators: NStar,
National Grid, other
utilities
Contractors:
Conservation Service
Group
Page 32
Low Income MultiFamily Program (LEAN)
(5+ unit buildings)
Massachusetts Green
Retrofit Initiative (5+
unit buildings)
Technical measures: Replacement or
repair of heating systems and/or
controls, replacement or repair of hot
water heating systems, building
envelope upgrades through air sealing
and insulation, lighting upgrades,
appliance upgrades, and ventilation
upgrades
50% of units at or
below 60% of
AMI
Technical measures: Benchmarking of
historical energy and water
consumption, on-site building
assessments, energy and water retrofit
project financing
50% of units at or
below 80% of
AMI
Utility ratepayer
funds
Administrators: Action
for Boston Community
Development, Action
Inc.
Grants
LEAN Advisory
Committee (property
owners, community
development
corporations, nonprofits and community
organizations)
Grants, loans
Community
development
corporations, non-profit
and community
organizations
Contractors:
Barr
Foundation,
Department of
Housing and
Urban
Development
Administrators: New
Ecology, Boston Local
Initiatives Support
Corporation
Contractors:
Available incentives: Coordination with
existing rebate or incentive programs
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 33
Appendix: Green Leasing
Overview
Green Leases are one policy tool that has been implemented to overcome the split incentive problem discussed
above. The term refers to a standard rental lease that includes a mechanism to finance energy efficiency
improvements in a home. Typically, a Green Lease includes language stating that if a landlord makes
improvements of a certain type, he may raise the rent immediately to begin to recoup the cost. If structured
properly, a Green Lease benefits both landlords—because repayment on capital improvements is guaranteed—
and tenants—whose increases in rent will be more than offset by decreases in utility bills. As part of defining a
scope for the Cambridge Multifamily Energy Program, we have investigated the viability of utilizing Green Leases
and related policy tools that target the split incentive problem.
Previous Use
While Green Leases are not uncommon in the commercial sector, 30 the practice has not yet gained a foothold in
the residential rental market. Late last decade, the Cambridge Energy Alliance began to consider advocating for
their use locally, but the initiative lost steam and has not been restarted.31
Applicability to Cambridge
Previous use of Green Leases in the residential housing market have generally been restricted to rent controlled
areas. In these situations, Green Leasing provides a convenient and mutually beneficial mechanism that allows
landlords to be compensated for making improvements to the home without causing an increase in total living
costs to the tenant. This benefit is not as clear in a rental market without rent control, where there is no legal
barrier to a landlord who wishes to raise rent upon expiration of a lease.
Cambridge currently has an uncontrolled rental housing market. Rent control had previously been established in
the 1970s, but the market was deregulated by a statewide ballot initiative in 1994. Predictably, opening the market
has led to both increased average rents32 and greater investment in rental housing33 in Cambridge.
Green Leases are structured to confront a formal barrier in the rental housing market, where landlords may be
unable to guarantee a revenue stream (in the form of increased rents) to recover the cost of capital investments.
However, because of the lack of rent control, the barriers to rent increases in Cambridge are informal rather than
formal. Landlords are hesitant to increase rents because of the extralegal protests raised by tenants. The key
barrier is the willingness of tenants to accept rent increases on principle. Green Leases are not intended to
confront this barrier, but instead present a legal mechanism for certainty and transparency once parties have
already agreed to the general concept.
Potential Practicum Work Items
30
See: http://www.imt.org/finance-and-leasing/green-leasing, http://www.greenleaselibrary.com/bestpractices.html, http://www.ci.berkeley.ca.us/uploadedFiles/Planning_and_Development/Level_3__Energy_and_Sustainable_Development/BEES2011FINALfullWeb.pdf
31
Beth Williams thesis, Jason Jay thesis.
32
New York Times, http://www.nytimes.com/2003/06/15/nyregion/when-rent-control-just-vanishes-both-sidesof-debate-cite-boston-s-example.html?pagewanted=all&src=pm
33
Henry Pollakowski, MIT Center for Real Estate. 2003.
http://www.nmhc.org/files/ContentFiles/ThirdPartyGuide/cr_36.pdf.
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 34
While Green Leases may be useful in providing a formalized mechanism of implementing efficiency improvements
in rental housing, we do not believe that they confront the most fundamental barriers to efficiency in multifamily
housing in Cambridge—that is, the agreement by all parties that efficiency improvements and resulting rent
increases are mutually beneficial for both landlord and tenant. In light of this, we believe that a focus on Green
Leases would a misallocation of this effort’s limited resources and political capital. Instead, we believe that our
efforts should focus on the informal barriers preventing energy efficiency in the multifamily housing market and
must entail a comprehensive outreach and educational campaign to the small landlord and tenant communities.
Appendix: Stakeholder Analysis Approach
Overview
There is a wide range of groups that must be consulted in as part of a stakeholder analysis. Because there is little
centralized representation within the city of Cambridge for the major stakeholder categories (landlords, tenants,
condominium owners), it would be prohibitively difficult to reach every individual with a stake in multifamily
energy efficiency. However, there are several existing groups that represent varying interest groups. Our
stakeholder analysis process should include conversations both with these formal organizations and with
individuals chosen to represent broad and unorganized groups.
Existing Groups
On the landlord side, there are several state and regional organizations of small property owners to conduct
outreach to. These include the Small Property Ownership Association,34 the Massachusetts Rental Housing
Association,35 the Greater Boston Real Estate Board,36 and the Boston chapter of the Institute for Real Estate
Management.37 There are also a number of condominium associations that represent property owner interests as
well.
While less organized, there are also established mechanisms that can be used to reach tenant groups. The focus of
tenant advocacy groups is typically on eviction and poverty, though it clear that energy savings has relevance to
this mission. The nonprofit Cambridge Economic Opportunity Committee38 serves as the local Community Action
Program. On the city side, the Environmental and Transportation Planning Division 39 within the Cambridge
Community Development Department is also an important actor in this space. Unfortunately, the majority of
tenant-engagement activities are restricted to subsidized housing, and there are few existing means of
organization among market-rate tenants. This is made more difficult by the transitory nature of Cambridge’s rental
population, particularly its students. One final group of interest that may advocate tenants’ interests in
stakeholder discussions are Heating Assistance Organizations that provide resources to support residents that are
unable to pay their energy bills during the winter.
Beyond landlords and tenants, there are a number of related industries with an interest in energy efficiency in
multifamily housing. These include, but are not limited to, property management firms, energy contractors, and
realtors.
34
http://spoa.com/
http://www.massrha.com/
36 http://www.gbreb.com/
37 http://www.iremboston.org/
38 http://www.ceoccambridge.org/
39 http://www.cambridgema.gov/CDD/etdiv.aspx
35
Community Energy Innovation – Foundation, Terms of Reference - February 2013
Page 35
Another relevant actor is Just-A-Start,40 a local organization dedicated to mediating landlord-tenant disputes in the
Boston area, with a heavy focus on Cambridge. Just-A-Start’s mediators have valuable experience navigating the
institutional context of landlord-tenant relationships, and it is likely that they will be able to act as an important
resource in conducting outreach and information to these groups.
Finally, NSTAR’s current multifamily housing program includes an outreach component conducted in partnership
with local community organizations and likely has established inroads into local communities that can be leveraged
for this project.
Potential Practicum Work Items
One approach to stakeholder analysis would take a three-tiered approach to gathering input. These steps would
include:



Interviews with Formal Organizations. Representatives could be easily identified through publicly
available information. Interviews with these representatives would be valuable both in determining their
interests and concerns relating to multifamily energy efficiency and their views on stakeholder groups
that should be consulted in the process.
Focus Groups with Representative Individuals of Stakeholder Groups. Ideally, this would be a random
sample of landlords, tenants, condominium owners, property managers, and other interested parties. It is
likely, however, that we will have to resort to less random methods of selection, relying either on open
marketing, personal relationships, or referrals from formal groups.
Interviews with Previous Program Participants. Previous program participants could be identified by
NSTAR and interviewed to understand both the factors that weighed on the decision to invest in efficiency
upgrades as well as the categories of actor that were involved in the process.
Case Study - WegoWise
https://www.wegowise.com/
Monitors energy consumption primarily in multifamily buildings.
● Building Type: multifamily/residential
○ Tweaked application so it could comply with NY Law 84 and function for commercial buildings
○ Developing commercial and single-family residential platform.
● Asset Data:
○ Basic building characteristics that can be discovered in about 27 questions.
○ Do not actively use Tax Assessor data, but are exploring possibilities.
● Operational Data: Accesses E-bill online payment systems most utilities have
○ Monthly reports of energy data
○ WegoWise is not as concerned right now about smart meters and receiving 15-minute interval
data.
● Visualization Tool:
○ Online dashboard
WegoWise is an online platform designed to monitor energy and water use of multi-family homes. Primarily
targeted at property managers, clients pay $5/building/month to have their electric, gas, and water consumption
automatically tracked each month.
40
http://www.justastart.org/
Community Energy Innovation – Foundation, Terms of Reference - February 2013
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As part of the energy assessment for each building, property managers respond to approximately 27 questions
regarding the physical characteristics of each property. WegoWise’s main value-add is in automatically tracking
monthly energy consumption and payments. Property managers share e-Bill account numbers and passwords with
WegoWise. WegoWise then screen scrapes data every 20 days to update energy consumption.
WegoWise offers their clients comprehensive analysis of building energy information. Users can build custom
reports to compare specific buildings and specific energy consumption. Generated charts show how the client’s
buildings perform compared to physically similar buildings in the same climate zone and with the same type of
heating system in WegoWise’s database. Users can also specify a geographic location for comparison. For example,
perhaps they only want to know how their buildings compare to buildings in Massachusetts, or even more
specifically in Boston. They are showed how their buildings compare to efficient buildings. This efficiency
threshold is based upon performance information of the top 25% of similar buildings in WegoWise’s database.
WegoWise also offers the option to compare the energy performance developments, not just single buildings,
which may be valuable to expansive property owners.
WegoWise offers a simple, easy-to-use energy monitoring tool to property managers. Automatically capturing
utility bill information saves the time of users having to enter information manually. Moreover, graphs and charts
help property managers understand which are their low- and high-performing buildings. WegoWise has been used
to show changes in building performance after retrofits, to help qualify a building for other energy funding, and to
verify LEED performance criteria.
A main obstacle with WegoWise is getting utility data if building tenants pay their own utility bills. Property
managers must have tenants sign releases of information and acquire their individual utility account numbers and
passwords. This can slow the process and some tenants do not want to release their information. However, if
property managers are able to obtain the permission of 50 to 60% of tenants, WegoWise can calculate an average
consumption pattern for units and then create a building estimate. Some buildings overcome this obstacle by
including a data release provision in leases.
WegoWise has developed and extensive network within Massachusetts, but is working nationally with presences in
New York, California, and other areas as well. WegoWise is looking to expand its market by developing a similar
online platform for commercial buildings and single-family homes. Online energy management is a young market
and WegoWise is one of only a few companies in the arena [EnergyScoreCards is a potential competitor].
Case Study - EnergyView
PDF Report
Community map of building energy performance and individual ratepayer comparison calculator.
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●
●
●
Building Type: Multifamily/residential/commercial
Asset Data:
○ Tax assessor records and geographic survey information
■ 35 features were collected from these data sets
Operational Data
○ Monthly electric and gas data from NSTAR
Visualization Tool:
○ Color-coded map which ranks building performance. This tool was only ever hypothetical and
never launched live.
○ Online calculator for an individual to enter household data outputs graphs on:
■ Monthly electricity use compared to similar homes
■ Electricity usage distribution
■ Monthly gas use compared to similar homes
■ Gas usage distribution
EnergyView was developed by an MIT PhD student and faculty member to model energy consumption in
residential and commercial buildings. Their approach used exclusively remotely available data, meaning no home
visit was necessary, nor did anyone need to collect descriptive information from building owners or tenants.
Using tax assessor records, geographic survey information, and monthly energy information provided by the local
utility NSTAR, the authors created models to predict energy usage for 6,500 buildings in Cambridge, Massachusetts.
These models were able explain about 75% of observed variance in energy consumption given building
characteristics.
From their models, the authors designed two potential tools. For utilities - which are able to access all of their
clients’ data without privacy restrictions - the authors developed a map which color codes buildings by energy
consumption; this tool enables utilities to readily see which buildings which are consuming more energy than
would be expected by their given features. For individual ratepayers, the others created an online calculator
where users can manually enter their monthly energy information and then see resulting charts which compare
their energy usage to the predicted energy usage of similar buildings.
The authors noted the difficulty in assigning specific utility records to buildings. If utilities were able to include a
Building ID code which matched with tax assessor parcel IDs, this would facilitate the analysis process. The authors
also stated knowing whether buildings were owner-occupied or tenant-occupied would be helpful, but that
information was not available in tax assessor records.
The authors faced another challenge when multiple meters were associated with one building. They didn’t
necessarily know which meters were attached to units and which were associated with common spaces. This
suggests a potential difficulty in conducting remote energy analyses; without tenant or owner input, it may hard to
know what space meters represent.
EnergyView faces limitations in that due to privacy restrictions, only utilities can use the mapping feature.
Moreover, utility energy data sets do not necessarily identify which meters are for occupied spaces and which are
for common spaces, making the analysis more complicated. However, even with these obstacles, EnergyView and
similar platforms have the potential to be scaled up and offer utilities mapping tools which could enable them to
target efficiency programs at high energy users.
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This relationship diagram explains how different data relates to each other in EnergyView.
Case Study – Cambridge Solar Map
http://www.cambridgema.gov/solar/
Academic Paper by Christoph Reinhart and Alstan Jakubiec
Ranks solar potential of roofs and provides info on solar potential, financial costs, environmental benefits, and
installation information.
● Building Type: Multifamily/residential/commercial - indiscriminate
● Asset Data:
○ LIDAR scan
○ RADIANCE/DAYSIM simulation
○ Standard local weather data
● Operational Data:
○ None
○ Potentially this could be added to make an even more convincing tool.
● Visualization Tool:
○ Interactive map which color codes solar suitability on roofs
■ Users can search for specific addresses or zoom and move map
■ Generates numerical breakdowns for individual roofs of solar potential, financial costs,
and environmental benefits.
■ Provides an installation overview.
While not an efficiency or energy consumption map, the Cambridge Solar Map demonstrates the power of an
interactive map for relating energy information to individual homeowners and to community groups. Developed
by MIT’s Sustainable Design Lab, the map color codes roofs for excellent, good, or poor photovoltaic potential.
The data used to build the map includes a LIDAR scan of Cambridge to establish urban geometries, a solar radiance
simulation model built by Christoph Reinhart, and local weather station data. The developers used the
specifications of a SunPower 185-watt panel to calculate the annual PV generation.
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Users are able to search a specific address or manually move the map and select buildings. Upon selection, the
“Solar Tool” generates PV related information for that building if it has a ranking of excellent or good. This
information generated includes estimates of potential PV size (kW), annual electricity generation, cost of
installation, tax credits and rebates, annual revenue, payback time, and environmental benefits. The map also
provides links to find out more about how to get a PV system installed.
The power of the Solar Map is that individual homeowners can quite quickly determine whether their home may
be suitable for solar power and see and estimate of financial benefits for installing a system. Installers or other
community groups can use the map to target specific homes or neighborhoods which would benefit the most from
PV installations. Individual homeowners may be able to convince neighbors to also install solar, and perhaps
negotiate a group discount on contractor cost. One of the map developers also noted that they compared the map
to an existing MIT solar installation. The solar installation seemed to be under producing based on what the map
predicts. The system is currently being analyzed, but this suggests that the map could also be used to verify
system performance after installation.
The Sustainable Design Lab is continuing to work on the map. In the future, they would like to develop a tool to
outline panels on a roof to get more specific information about system configuration. They also recognized the
potential of incorporating actual energy consumption data to enable house-to-house comparison and augment the
financial incentive calculations.
If possible to generate, a community efficiency map could benefit from leveraging similar features to the
Cambridge Solar Map. These include:
● Simple, easy-to-understand color coding
● User-friendly searching and moving
● Speaks to multiple user groups - individuals, community groups, contractors, utilities, and government
agencies
● Includes estimates of savings and financial incentives
Case Study – Next Step Living
http://nextstepliving.com
Next Step Living is a one-stop-shop for home energy assessments and weatherization.
● Building Type: Residential
● Asset Data:
○ Audits
○ Infrared Imaging
○ Blower Door Tests
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○
●
●
Tax Assessor Records
Operational Data
○ Utility bills
■ 12 months pre-installation and 12-months post-installation
○ Energy assessment database
Visualization Tool:
○ Heat Map compares tax assessor record characteristics to audits of similar homes in the NSL
database
Next Step Living (NSL) is a Massachusetts-based turnkey home energy assessment and weatherization provider.
NSL accounts for 90% of the home performance market in Massachusetts and will be expanding to Connecticut
and Maryland. The four-year-old company conducts 25,000 home energy assessments per year and expects that
number to continue to grow.
NSL collects twelve months of utility data from customers before they complete a weatherization of their home.
NSL also asks for 12 months of energy data post-installation. Using this information, NSL is building a detailed
database of home energy audits. Using 20,000 homes worth of data, NSL built a “Heat Map” of Somerville. They
used a handful of important data points pulled from tax assessor records to compare Somerville homes to similar
homes in their database of audits. They color coded homes so that “hot” homes were the ones with the most
potential for upgrade.
Next Step Living’s Heat Map is leveraging an increasingly popular method of analyzing home efficiency
performance by comparing remote, publicly available housing data (from tax assessor records) to historic energy
audits of similar buildings. This enables contractors to develop building profiles before contacting potential
customers. They can identify neighborhoods and communities that offer the greatest opportunity for savings and
target their outreach efforts there.
Case Study - Retroficiency
http://www.retroficiency.com/
Creates building audits with minimal information by using algorithms to model building performance and making
comparisons to prototypical buildings with same characteristics from historic audits.
● Building Type: Commercial
● Asset Data:
○ Builds increasingly accurate building profile, but starts with basic info and improve over time by
augmenting with more information.
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●
Operational:
○ 15-minute interval data
○ 12 months of historical energy data
Retroficiency developed two different tools to conduct remote energy assessments which are highly accurate.
Retroficiency leases their tools to energy auditing businesses or to utilities which are able to conduct audits in less
time and with less demand of inputs from property owners.
Retroficiency’s Virtual Energy Assessment (VEA) requires only an address and 12 months of historic energy
consumption data to identify end use loads such as heating, cooling, and lighting. (VEA may also use 15-minute
interval data from clients if they have smart meters installed.) VEA can identify building usage patterns and
recognize moments of inefficiency such high use during periods of low occupancy. From these analytics, VEA can
make recommendations for upgrades or performance measures to reduce energy use.
Retroficiency also offers an Automated Energy Audit (AEA) which uses limited building asset information to make
accurate energy profiles of a building. A building owner or property manager can enter in just a few building
characteristics and the AEA will compare that building to Retroficiency’s library of thousands of actual audits to
build an energy model of the building. As the property manager enters more information overtime, the model
becomes more accurate. Similar to the VEA, this is a remote energy assessment tool and it also makes efficiency
recommendations.
Retroficiency does not currently work in the residential sector though it has been building a database of multifamily [bigger than houses or garden-style apartments] energy models. In an interview, CEO Bennett Fisher
indicated that Retroficiency’s VEA and AEA tools could be modified to work for residential homes if demand
existed in that market.
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