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As inflation rises, building owners across the country grapple with high electricity bills. Costly electricity puts even greater pressure on building owners preparing to finance electrification retrofits. The city’s local laws mandating carbon emission limits on residential buildings inevitably means many owners in New York City will have to electrify HVAC systems by converting to cold climate heat pump technology. High electricity costs will undoubtedly act as another financial hurdle for building owners who may already be struggling with the upfront costs of heat pump retrofitting.
It is important to understand that the current electricity pricing trends reflect the impact of several key factors. The war in Ukraine has disrupted the global supply chain for natural gas and oil, forcing utility companies to pay more for the fuels they need to burn to create electricity. Secondly, our electrical grid is outdated, the electrical grid is crumbling and currently cannot withstand the high demands of our carbon free future, a portion of rising costs reflect an effort to finance the restoration and improvement of the grid’s current capacity. Lastly, as climate change produces hotter summer months, our cooling appliances usually hike up the demand, resulting in larger bills. All of these factors combined are the reason why New York’s electricity pricing is up about 15% from last year. Read more about the country’s current energy dilemma here. The aggressive building emission limits will increase the city’s electricity demand as more residential buildings will be converting to electric HVAC systems to avoid large fines. In order to prepare for the future electrical load in New York City, ConEd must modernize electrical transportation lines as well as holding stations. The state is slowly starting to generate more renewable energy from offshore and inland wind farms each year and you can keep up to date on the progress on NYSERDA’s clean energy standard page, but the city won’t have access to these renewable sources until the grid gets modernized equipping outer boroughs with the capability to transport and store this energy. The Reliable Clean City Project is allocating $800 million to ensure that NYC’s outer boroughs (Queens, Brooklyn and Staten Island) will soon be able to reap the benefits of clean energy capacity. All of these lines are expected to be completed by 2025, shortly after the 2024 initial phase in of LL97, you can read more about it each the specifications of the project and each line on the projects here and the projects info page. As mentioned before the reason we are experiencing particularly high electricity bills in New York is due to the financing of these large-scale grid projects. In an attempt to lower the financial burden of rising utility costs, New York State Governor Katy Hochul recently signed the advanced Building Code, Appliance, Equipment Efficiency Standards Act ensuring $15 Billion in saved consumer utility costs till 2035. The law will also enforce new efficiency standards for electronic equipment, phasing out outdated and inefficient appliance standards. These new standards are expected to save New Yorkers $6 Billion in utility costs down the road as well, but that will not be enough. The future of renewable generation for the city should mean cheaper electricity for consumers in the future, as renewable energy creation continuously lowers in cost and proves to be cheaper than fossil fuels. it will be interesting to monitor the timeline and growth of the city’s electric demand in the coming years alongside the implementation of stronger grid infrastructure, larger renewable generating capacity and the amount residential heat pumps installed. With the state’s and city’s ambitious climate act goals to reach large shares of renewable energy consumption in the coming decades paired with the Reliable Clean City energy project, city residents should be protected from soaring electricity bills in the future. However, this is all contingent on active and responsible policy management of the transition of utilities from fossil fuels to renewables. The cheaper price point should benefit the consumers, but only if utility companies are held accountable to price renewables fairly, a necessary step in assisting the financial burden placed on building owners in the coming years.
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Residential property owners across the city are seeking out ways to reduce their buildings utility costs and carbon footprints. Between energy efficient appliances, insulation, and solar, owners can patch together solutions, ultimately saving money in the long run. While the costs of new systems and installation may appear daunting at first there are ways to make these upgrades affordable through financing and city, state and federal incentives. Before jumping to any conclusions, it is imperative to conduct energy audits on your building(s). This will give you an idea of what solutions are most feasible based on energy consumption and building characteristics. The most common solutions will be composed of installing new efficient HVAC systems, solar panels and improving insulation.
Cold climate air source heat pumps are a relatively new technology and an integral component to the city’s carbon reduction plan. A study done by NYSERDA in 2019, estimated that 100,00 new residential heat pump systems would have to be installed by 2025 to stay on target with LL97 benchmarking. While heat pump tech has been around for some time, they have been subject to primarily southern regional use due to climate. Some northern building owners have been using geothermal heat pump for years but not every building has the luxury of space that those systems require. Upgrades in the technology have now made air source heat pumps compatible in the North. Similar to an A/C, air source heat pumps pull outside air into the home, manipulating the pressure of the refrigerant, either heating or cooling the air circulating through. Because the system is electric, your buildings footprint will decrease as it will no longer be dependent on oil or fuel. It is important to note that although your HVAC system is electrified, the electricity it pulls will not eliminate your footprint completely. Most of New York City’s energy is pulled from carbon emitting sources and the city currently lacks the infrastructure to bring in renewable energy produced upstate (NYISO). However, your gas bill will be eliminated and you should expect a rise in your electricity bill. Installation will be expensive if your building currently uses old heating tech like hot-water radiator systems. For a full list of heat pump possibilities and their specific considerations visit NYSERDA’s Heating & Cooling systems page here. Unlike cold climate heat pumps, solar technology has been around for a long time. Because the technology is consistently improving and proven to work, solar tech is becoming an increasingly reliable source of energy independence for home owners across the city. As the cost of energy continues to rise in the state, a home’s ability to offset energy spikes and variability is crucial for saving money on utility costs. To understand what personal solar production could look like for you, check out EcoWatch’s New York Solar: What to Expect 2022.When it comes to solar not every home is equal. From financing to sunlight exposure and roof space/access solar can be a viable solution for some homes but not all. Luckily community solar projects are becoming more accessible giving all homes the potential to reap the benefits of clean energy. To learn about community solar projects in your area and how to apply visit NYSERDA’s NY-Sun program. Lastly, insulating your home properly and updating your building envelope is the most cost-effective investment you can make. Without tearing apart your units you can save money by controlling the amount of air leaking outside. Air leaks are costly, contributing to higher than needed utility costs and tenant discomfort. To view NYSERDA’s Comfort Home Program click here. There are many benefits to living in a well managed condo or co-op in New York City. You may find a beautiful apartment with lots of light in a great neighborhood. It’s often more affordable than a building that stands alone in the same neighborhood while offering the same conveniences and culture one loves about this city. But, there are also challenges to living in a condo or co-op and they are increasing. For example, boards and management have recently faced the COVID-19 public health crisis and the challenges with this specific to residential community living. Hopefully we are emerging from this crisis but the impact it has left is significant. Elected officials are looking for increased revenues to offset the financial losses caused by COVID-19. Property taxes are being increased at the same time that tax abatements are ending. Also, the state is setting salary levels for employees in buildings where fixed income residents are hit hard by every common charge increase. Utility costs are skyrocketing and the city has imposed mandates that will require most condo’s and co-op’s to retrofit their entire mechanical set up in the next several years in order to avoid significant fines as part of the Climate Mobilization Act. These challanges are great. But, they also offer opportunities for those buidlings that plan and act in advance to set themselves apart. There are branding and marketing issues in play. 75% of buildings in the city receive a C or D rating for energy efficiency. Those who can improve thier energy efficiency and their rating stand primed to take advantage of a higher maket value. Not only does an energy efficiency rating of an A or B carry a certain “green living” cache the savvy real estate agent and buyer will soon recognize more frequently. It is a sign that common charges, as impacted by utility costs, will be lower over the long term and there will be more money available for other amenities and capital improvements. In 2019, the DiBlasio administration passed Local Law 97 under the Climate Mobilization Act. In attempt to drastically reduce carbon emissions in the city, LL97 is designed to place emission limits and benchmarking on buildings greater than 25,000 sf. With the city’s ambitious plans to reduce citywide carbon emissions by 40% by 2030 and 80% by 2050, building owners now must either choose to retrofit their buildings to make them more efficient, trade emission rights to meet caps or pay hefty fines.
New technologies, companies, incentives and costs makeup a whirlwind of complexities that factor into a manager’s current approach. Managers should immediately asses the financial feasibility of less intrusive efficiency procedures, such as green roofs or solar. Any amount of work that can be done to save now can go a long way or even save time as the greater 20% of emitters will be the first subject to penalties if they fail to meet standards or trade in phase 1 of the rollout in 2024. For a comprehensive breakdown on how this law will directly affect various property types you can visit Urban Green’s FAQ page here. Property managers around the city must insulate and electrify outdated and inefficient heating systems or closely monitor emission trading policy news as it slowly comes out. The city’s carbon trading program has yet to be solidified. With glaring costs and installation fees, intrusive work like electrifying your buildings HVAC system may simply not be financially feasible for most building owners. Luckily new technologies like cold climate heat pumps are becoming more efficient and affordable, and there is help. Startups at the forefront of this emerging market are supplying intermediary services bundling the entire service from start to finish, taking away the pain of contracting different engineers, installation crews, technologies and financing. While initial costs may seem steep financing these projects most likely will generate savings in the long run. Both the city and the state recognize the financial hardship LL97 places on property owners and managers. For both insulation and heating and cooling the city and state are providing incentives for buildings hoping to improve their energy envelope. NYSERDA has partnered with energy companies, to make obtaining efficiency projects such as green roofs, on site solar systems and heat pumps more affordable. it is imperative to keep up to date with NYSERDA and their offerings. Neighborhoods and areas around the city are continually subject to different and extra offerings based on collective energy demand in the area. Climate Mobilization Act
NYC has an initiative to reduce carbon emissions from buildings. The Climate Mobilization Act affects all building’s over 25,000 square feet in NYC. The goal of the act is to reduce carbon emissions by 80% by 2050. Energy and water usage at your condominium or co-op should be examined and benchmarking data filed with the city. Your building will receive a letter grade for its energy efficiency rating. Odds are it will not be great. 75% of buildings in NYC have received grades of C or D. The grade is determined by using the EPA’s Energy Star Portfolio Manager benchmarking tool to compare the buildings energy performance to similar buildings in similar climates. What is needed is a plan on how to improve energy efficiency at your building in order to avoid future fines related to the Climate Mobilization Act. These fines will start in 2025 and will be based on benchmarking data and carbon emissions. This additional analysis will provide your building with a plan on how to best improve energy efficiencies for the building. This analysis should also be tied into incentive programs with the state, con ed, and national grid which will help offset costs. Improving energy efficiency at the building will also help save money in the long term. Although there are no immediate negative consequences related to the grade a building receives. Improving it will help save money and possibly improve the building’s perception on the real estate market. The informed agent and buyer will begin to recognize that a poor letter grade means energy costs, and possibly common charges, will be higher than at a comparable property with a higher letter grade. |
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July 2022
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