1. Cambridge Multifamily Energy Innovation Project 11.S948 Terms of Reference Summary MIT Energy Efficiency Strategy Project Director: Harvey Michaels Researchers: Ryan Cook, Alexis Howland, Adi Nochur Manager: Brendan McEwen

2. INTRODUCTION PROJECT GOAL: ENERGY PROGRAM DESIGN FOR EXISTING MULTIFAMILY HOUSING TIMELINE FALL 2012 – BACKGROUND RESEARCH & PRELIMINARY CONCEPT DEVELOPMENT SPRING 2012 - PRACTICUM JUNE 2012 – DELIVERY OF DETAILED PROGRAM DESIGN

3. PROGRAM COMPONENTS ENERGY DISCLOSURE ENERGY MAP AND DISCLOSURE PLATFORM COMMUNITY BASED MARKETING & ENDORSEMENT IMPROVED COMMUNICATION BETWEEN UTILITY & PARTNERS ON UTILITY BILL FINANCING COMPREHENSIVE SCOPE EXPLORE UPGRADE REQUIREMENTS

4. OUTREACH Cities Community Groups Utility advertising CDC networks Etc. OUTREACH Cities Community Groups Utility advertising CDC networks Etc. MassSAVE Homes BACKGROUND ENERGY EFFICIENCY PROGRAMS MF Weatherization MF Market Integrator LEAN (low income MF) LEAN (low income MF) MA Green Retrofit Initiative MA Green Retrofit Initiative Commercial Fuel Switch MF HVAC WAP

5. OUTREACH Cities Community Groups Utility advertising CDC networks Etc. OUTREACH Cities Community Groups Utility advertising CDC networks Etc. BACKGROUND ENERGY EFFICIENCY PROGRAMS MF Weatherization MF Market Integrator LEAN (low income MF) LEAN (low income MF) MA Green Retrofit Initiative MA Green Retrofit Initiative Commercial Fuel Switch MF HVAC 1-4 unit market rate 5 – 20 unit market rate >5 Low Income MassSAVE Homes WAP

6. BACKGROUND ENERGY EFFICIENCY PROGRAMS

8. THE STATE OF HOUSING IN CAMBRIDGE HOUSING MARKET DOMINATED BY RENTALS RENTALS ARE 65% OF MARKET 95% OF RENTALS ARE MULTI-UNIT 33% OF RENTALS ARE 2-4 UNIT 27% OF HOUSING UNITS ARE CONDOS STUDENTS ARE 27% OF ADULT POPULATION 53% OF RENTAL HOUSEHOLDERS ARE UNDER 35 OVER 60% OF RENTERS HAVE LIVED IN CURRENT HOME LESS THAN FIVE YEARS 52% OF RENTAL UNITS BUILT BEFORE 1940 13% OF RENTAL UNITS USE OIL HEATING YOUNG RENTAL DEMOGRAPHIC IN TRANSITION HOUSING STOCK PRIME FOR EFFICIENCY

9. LOCAL BARRIERS TO EFFICIENCY MULTI-FAMILY HOUSING A HARD-TO- REACH MARKET IN ENERGY EFFICIENCY SPLIT INCENTIVES AND THE “LANDLORD- TENANT PROBLEM” TRADITIONAL ENERGY EFFICIENCY PROGRAMS HAVEN’T CRACKED THROUGH DESPITE POTENTIAL FOR GREAT SAVINGS, A MARKET FAILURE LOCAL RENTAL HOUSING MARKET PRESENTS SPECIFIC DIFFICULTIES NO COORDINATION AMONG MANY SMALL PROPERTY OWNERS YOUNG, MOBILE RENTAL DEMOGRAPHIC ADDITIONAL RULES FOR CONDOMINIUMS Creative Commons License, http://www.flickr.com/photos/bradywahl/3942246432/

10. RECOMMENDATIONS

11. DATA TOOL: ENERGY MAP FOR RENTALS ACCESSIBLE, UNDERSTANDABLE VISUALIZATIONS Energy data Building characteristics IMPACT Renters can assess energy costs Establish social norm and influence landlords Allow contractors/community organizations to target “gushers”

12. COLLECTING ENERGY DATA – 2 OPTIONS 1. UTILITY AUTOMATIC POPULATION ConEd in New York has agreed to release data for multi-tenant buildings 2. GET DATA FROM CURRENT TENANTS Manually enter Enter e-bill information Challenge when tenants move

13. COLLECTING ASSET DATA POTENTIALLY MULTIPLE SOURCES Building owner, manager City databases & tax assessor record Building energy models Quick audit data Audit matching from historical databases

14. NEXT STEPS: SPRING SEMESTER DETERMINE BEST DATA COLLECTION METHOD EVALUATE ASSET MODELS EVALUATE BENCHMARKING OR PERFORMANCE RATINGS COMPONENTS OF AN RFP DEMO MAP Different layers could include efficiency potential and savings, available NSTAR rebates Possibly build on Cambridge Solar Map platform

15. ORGANIZING STRATEGIES & MARKETING INVESTIGATING VIABILITY OF INNOVATIVE MARKET APPROACHES INCENTIVIZE COMMUNITY ORGANIZATION PARTNERSHIPS PROVIDE MECHANISMS FOR CERTIFICATION AND RECOGNITION UTILITIZE DEADLINE-BASED MARKETING ORGANIZE BULK PURCHASING CREATING ROOM FOR EXPERIMENTATION IN PROGRAM DESIGN WHAT ARE DIFFERENT STRATEGIES DESIGNED TO ACCOMPLISH? HOW MIGHT THEY BE LEVERAGED IN THE LOCAL CONTEXT?

16. NEXT STEPS - MARKETING MARKET RESEARCH FOCUS GROUPS WITH STAKEHOLDERS TO UNDERSTAND RANGE OF INTERESTS AND ISSUES INTERVIEWS WITH PREVIOUS PROGRAM PARTICIPANTS TO UNDERSTAND DEMAND DRIVERS LOOKING FOR FOOTHOLDS IN THE MARKET CREATE ENGAGEMENT STRATEGIES FOR DIFFERENT MARKET SEGMENTS

17. A MARKET SEGMENTATION APPROACH MARKET SEGMENTPOINT OF ENTRYPROGRAM DELIVERY MECHANISM ON-PREMISES OWNERS LANDLORD SELF- INTEREST TRADITIONAL INCENTIVE PROGRAM OIL-HEATED HOMESLANDLORD BILL- PAYERS TRADITIONAL INCENTIVE PROGRAM STUDENT HOUSINGANCHOR INSTITUTIONSTUDENT/UNIVERSITY-BASED MARKETING CONDOMINIUMSOWNERS ASSOCIATIONS RECRUIT ENERGY CHAMPIONS MANAGED BY THIRD- PARTY PROPERTY MANAGEMENT FIRMS PARTNERSHIPS AND INCENTIVES TARGETING PROPERTY MANAGERS VACANT/FOR-SALE UNITS HOUSING MARKETEFFICIENCY AS A SELLING POINT, DATA- DRIVEN APPROACHES “EVERYTHING ELSE”INFORMATION ACCESS DATA-DRIVEN PEER PRESSURE

18. FINANCING FINANCING CHALLENGES TO MULTIFAMILY EFFICIENCY INCLUDE: High upfront costs Split incentives between landlords and tenants Customer barriers to credit Lack of energy savings data for lenders EFFECTIVE PROGRAMS THEREFORE MUST: Create incentives for participation Reduce overall financial risks Provide access to energy savings data

19. ON-BILL FINANCING: A PATHWAY FORWARD ADVANTAGES Eliminates upfront cost barrier Ideal: monthly savings >= repayments Potential to reduce split incentive barrier Utility payments as proxy for creditworthiness Regularity of utility payments diminishes risk ON-BILL LOANS VS. ON-BILL TARIFFS Loans: non-transferable, stay with borrower Tariffs: Tied to property via the meter Only tariffs address split incentive

20. RECOMMENDATION: ON-BILL TARIFF POTENTIAL MODEL: MPOWER FUND (PORTLAND, OR) Focused on Multifamily market Pilot goal of retrofitting 30 buildings totaling 2,500 units by April 2014 Building owners and utilities enter into 10-year energy service contracts IMPORTANT CONSIDERATIONS Fund management – A non-profit SPE? The source of funds – Rate payer funds, CDFI, market-rate lenders Underwriting criteria Security Establishing appropriate utility billing systems - On-bill repayment can often require complicated modifications to utility billing systems. NSTAR resistant.

21. FACILITATING DEEP GREEN RETROFITS CHALLENGES Unit level rapid upgrades; optimize infrequent deeper renovations Expensive, emerging technical opportunities –Challenge insulating masonry walls TECHNICAL OPPORTUNITIES Potential for super-insulative, thin interior insulation Explore solutions to Multi-unit hydronic heating Improved controls Heat source conversion – Fuel cell? In-room electric heat pump?

22. FACILITATING DEEP GREEN RETROFITS POTENTIAL PROGRAM COMPONENTS Full cradle-to-grave project management Benchmarking & prioritization Contractor project management Financing Ongoing capital asset management assistance Energy information feedback & ongoing engagement Tune up existing HVAC systems (short term) Bench- marking Re-tenanting upgrades (~1-5 years) Capital asset maintenance (e.g. Exterior wall; many year time frame) Capital asset maintenance (e.g. Exterior wall; many year time frame) Occupant / building manager behavior change & information feedback Occupant / building manager behavior change & information feedback Potential basic program components. Ongoing project management

23. GOVERNANCE PROGRAM DELIVERY OPTIONS Extend & expand MA Green Retrofit Initiative Integrate into Utility Program Portfolio City led non-profit program – revamped CEA POTENTIALLY IMPORTANT ELEMENTS Energy disclosure – automated utility data population Upgrade mandate – grant legislative authority to require upgrades

24. Credit: Rockcreek. CC Rockcreek. THANKS!