5 Steps to Successful Multifamily Energy Management Projects

Posted on February 5, 2014

Locked away in the nation’s multifamily buildings are billions of dollars of energy savings potential. According to the National Academy of Engineering, 40 percent of the United States’ total energy is consumed by 81 million single-family houses, 25 million multifamily residences, seven million mobile homes and 75 billion square feet of commercial floor space.

And while energy usage stats can be jaw dropping at times, so can the potential for significant energy and cost savings for property management companies. That’s good news considering that many multifamily companies hold energy as their third largest annual expense.

Yet many companies aren’t ready to embark on energy conservation measures (ECMs) because they doubt whether these projects can yield verifiable results or they hear about perceived failures across the industry.

The truth is that well-designed ECMs are a product of math, science, and decades of success in multifamily and commercial real estate. By following these five steps to planning and implementing successful ECMs and energy management projects, property management companies can unlock these energy efficiency opportunities and see highly dependable returns on their investments.

Step 1: Create a Baseline for Current Energy Use and Costs

First and foremost, a baseline must be created in order to identify current use and costs, along with current rates. Generally, this is done through the review of at least 12 months of utility bills, maybe even older ones. Sometimes, a simple baseline is not always most effective. For instance, if you do not have the ability to weather normalize, and it was one of the crazy hot or cold years last year, your baseline may need further scrutiny that is impossible for some. Some multifamily energy management providers can assist in creating a reliable baseline for your ECMs. Some can go further and use weather normalization for superior accuracy. This shows your company exactly what your ECM efforts have saved.

Step 2: Find an Energy Management Partner

Working with an energy management partner who has been there, done that and has the tools and partnerships to get this and all jobs done is imperative. Make sure that your partners have a full complement of abilities and proven processes to fully analyze your energy use. Look for someone who provides things like baselining with weather, dependable cost avoidance, benchmarking, meter level trending, leak monitoring, and energy budgeting and forecasting.

Step 3: Determine the Right ECMs for your Property

It can be hard to know which ECMs are right for your property. A provider of these services should produce a very detailed, and easy-to-understand proposal with every aspect of the potential projects outlined from many angles to insure your being revenue positive the first year with little or no out-of-pocket expense.

Step 4: Consider all Potential Energy Cost Reductions

When it comes to costing out an ECM or ECMs, it is imperative to insure that all cost reduction methods have been fully considered. Many times local and Federal incentives are available to partially or fully pay for some ECMs.

Additionally, there are many tricks of the trade that can allow one or all ECMs to be proposed in such a way as to insure lowest cost while receiving the best overall energy conservation. A trusted multifamily professional, with all the necessary tools and reporting and insuring a reliable bid process can be utilized to insure all your numbers are matching up, can help.

Step 5: Ensure Positive Outcomes with Measurement and Verification

Measurement, verification, and cost avoidance practices are crucial to the success of any ECM plan. By teaming with a fully capable partner, your company will meet the protocols necessary to cover all the bases.

When an ECM is well thought-out, thoroughly analyzed and priced for the best possible outcomes, your company will be poised to take advantage of some of that $80 billion available in the U.S. multifamily industry. Just remember, any project that is not monitored from start to finish (even years after the initial return on investment) may be doomed to a perception of failure, whether it actually did perform or not.

Bonus Step: Get on the Same Page with your ECM Partner

Keep in mind the human factor and resident ingenuity. Residents can remove and relocate expensive LED bulbs and some automated systems may be more “fool-proof” that others. Even employees may stymie efforts, such as was the case in Toronto. Another example is that some automated thermostats can be hacked and adjusted. Just make sure you and your expert think things through, use your combined experience and you’ll likely have no issues at all.

There are revenue-creating opportunities all over multifamily that have the potential to save property management companies millions of dollars. The most import thing to remember is that the success of any ECM depends of the quality of your partners and hangs squarely on you and your partners’ ability to calculate and report on the success. Cost avoidance is a major key to success. Your efforts will be rewarded if you can show the savings easily.