Lessons Learned through Piloting Energy Upgrade California ... · 10/30/2013 · Diego, City of Chula Vista, and SDG&E for upgrade incentives to participating property owners and

Lessons Learned through Piloting Energy Upgrade California™ Multifamily Programs July 2013

11211 Gold Country Blvd. #103

Gold River, CA 95670 Phone:(916) 962-7001

Fax: (916) 962-0101 e-mail: [email protected]

website: www.trcsolutions.com

Heschong Mahone Group, a TRC company Piloting EUC Multifamily Programs

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TABLE OF CONTENTS 1. INTRODUCTION ......................................................................................... 3

2. ENERGY UPGRADE CALIFORNIA PROGRAMS ................................................ 4

2.1 Energy Upgrade California™ San Diego County ........................................................ 4

2.2 SMUD Home Performance Program - Multifamily - Sacramento ............................... 7

2.3 Energy Upgrade California Multifamily - Alameda County ........................................ 8

3. ENERGY UPGRADE CALIFORNIA - MULTIFAMILY PROGRAM DESIGN ............. 9

3.1 Consultant/Whole-House Rater Model and Training ................................................... 9

3.2 Indoor Air Quality and Combustion Safety ................................................................ 12

3.3 Expanding Eligible Energy Upgrade Measures ......................................................... 13

3.4 Program Implementation Timeframe ......................................................................... 15

3.5 Quality Assurance ...................................................................................................... 15

3.6 Rater and Measure Incentives .................................................................................... 16

4. MARKETING AND OUTREACH ................................................................... 17

4.1 Grass Roots Marketing ............................................................................................... 17

4.2 Program Collaboration ............................................................................................... 18

5. REALIZED ENERGY SAVINGS ..................................................................... 20

5.1 Benchmarking and Billing Data Calibration .............................................................. 20


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TABLE OF FIGURES

Figure 1: Diagram of Coordinated and Overlapping Programs in the San Diego Region ............... 5

Figure 2: Summary of San Diego Region Whole Building Program Participation 2012 ................ 6

Figure 3: Summary of Energy Efficiency Upgrades Completed in San Diego Region ................... 7

Figure 4: Program Process Summary ............................................................................................. 10

Figure 5: Summary of Participating HERS Rater Experience ....................................................... 11

Figure 6: Energy Upgrade California™ San Diego County Program Incentives by Partner ......... 16


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1. INTRODUCTION Traditionally overlooked, the multifamily market has been served primarily by prescriptive (single-measure) or direct install energy efficiency programs, and small scale, whole building programs. In 2001, HMG launched the first whole building, performance-based retrofit program in California: Designed for Comfort (DfC). DfC offered the multifamily market a whole building option to augment utility prescriptive and direct install programs. The program relied on the new construction infrastructure: Title 24 energy consultants and compliance software and California Field Verification and Diagnostic Testing (HERS) raters to conduct assessment and verification for program participation. DfC lived on at various levels throughout the state and has influenced the design of California’s current multifamily whole building retrofit programs.

The emergence of the California Energy Commission’s HERS Whole House program and influx of federal American Recovery and Reinvestment Act (ARRA) funds presented an opportunity to evolve the infrastructure for multifamily retrofit programs. The Multifamily Subcommittee of the California Home Energy Coordinating Committee (MF HERCC) was convened by EPA Region 9 for the purpose of coordinating development of multifamily whole building programs statewide. The committee’s recommendations are summarized in the report titled Improving California’s Multifamily Buildings: Opportunities and Recommendations for Green Retrofit & Rehab Programs. As a result of MF HERCC coordination, the Energy Upgrade California (whole building) programs, implemented through government entities across the state, were largely consistent in program design.

In order to leverage local government outreach efforts in San Diego, SDG&E launched their multifamily pilot program ahead of schedule and in advance of the other Investor-Owned Utility Companies (IOUs). This allowed them to jump-start their program and also set an example for the other IOUs in California.

This report summarizes HMG’s lessons learned that culminated not only from implementing SDG&E’s Energy Upgrade California - Multifamily Pilot, but also represents common themes we have encountered during the implementation of 11 similar programs over the course of 12 years. It provides an overview of program participation, and summarizes the successes and challenges of SDG&E’s program, from an implementer (HMG-TRC) perspective, with hope to influence the development of emerging multifamily whole building programs in California.


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2. ENERGY UPGRADE CALIFORNIA PROGRAMS

2.1 Energy Upgrade California™ San Diego County In the San Diego region, HMG-TRC coordinated four whole building programs and the local utility’s low-income direct install program, implementing the first single point of contact approach for cross-agency multifamily programs. Three local governments, The County of San Diego, City of San Diego, and City of Chula Vista, and one local utility, San Diego Gas and Electric, collaborated to provide a streamlined and seamless experience for building owners.

1. The Energy Upgrade California in San Diego County (EUCSDC) program, through the County of San Diego provided marketing and outreach; assessment and verification protocol development, HERS Whole House Rater training, and technical assistance to whole building retrofit projects. The EUCSDC program did not provide incentives, and relied on programs by the City of San Diego, City of Chula Vista, and SDG&E for upgrade incentives to participating property owners and HERS Whole House Raters.

2. The San Diego Home Energy Upgrade (SDHEU) program, funded through the City of San Diego, also provided outreach and technical assistance, specifically to the low- and moderate-income communities. In addition to implementing the whole building program, under SDHEU, HMG also piloted the California Utility Allowance Calculator on applicable participating properties to demonstrate the tool’s ability to serve retrofit projects in addition to new construction projects.

3. San Diego Gas and Electric (SDG&E) leveraged the EUCSDC and SDHEU outreach and training efforts, bringing incentives to projects participating in the EUCSDC program. SDG&E’s collaboration resulted in integration of the Energy Savings Assistance Program with the EUC program process, and the introduction of a health and safety component to the program.

4. Carbon Upgrade Energy Downgrade program through the City of Chula Vista matched SDG&E incentives for multifamily properties located within the City of Chula Vista.

The programs collaborated to streamline and combine (where possible) applications, quality assurance and quality control, and other program processes. The four whole building programs in the San Diego region all required a minimum 10% improvement above existing building conditions for program participation, due to the mild climate zone, and used the list of EUCSDC-trained HERS Raters. The original program required minimum was revised from 20% to 10% due to the collaboration with SDG&E and integration of the Energy Savings Assistance Program (ESAP) and the requirement to separate savings and incentives between the programs. Figure 1 illustrates the program layering in the San Diego region.


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Figure 1: Diagram of Coordinated and Overlapping Programs in the San Diego Region

At the December 2012 close of the pilot program, 1,755 multifamily dwelling units consisting of 31 properties were assessed in the San Diego region, many influenced by the assessment incentives offered by the County of San Diego and City of San Diego programs. Of these, 429 dwelling units applied for SDG&E incentives and completed upgrades before the close of the pilot program in December 2012. Nearly 700 additional units remained in the SDG&E pipeline, with intent to complete upgrades in 2013

The San Diego Home Energy Upgrade Program pipeline included 465 units that chose not to leverage incentives and participate in the SDG&E program. The primary reasons property owners chose not to participate in SDG&E’s program included:

Inability to claim solar-thermal Domestic Hot Water (DWH) preheat as a measure in the whole building program (solar-thermal was an eligible measure in the City program, but not in SDG&E)

Perceived cost and liability associated with required health and safety testing

Ineligibility of Single Room Occupancy (SRO) buildings in SDG&E’s multifamily program

Figure 2 summarizes the projects able to complete construction before the close of SDG&E’s multifamily pilot program in 2012. Projects in the pipeline for completion in 2013 are not included in this table. As suggested in the table, the average incentive per dwelling unit, when combining SDG&E and local government incentives was just over $1,000 per unit and covered approximately one fourth of the total upgrade costs per unit.


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Proj ID Units SDG&E

City of San

Diego

City of Chula Vista

Annual kW Savings

Annual kWh Savings

Annual Therm Savings

Percent Improvement (site)

Total Building Owner Incentives

Upgrade Costs Covered by Incentives

11_015 119 X x 5.49 42,458 2,266 17% $130,834 50%

11_017 52 X 19.71 77,776 -125 16% $ 62,400 14%

11_033 81 x 16.26 168,345 2,132 11% $ 81,000 41%

11_001 60 X 29.36 91,079 1,390 27% $ 51,200 7%

11_049 64 x 0.00 0 4,595 21% $ 32,000 24%

11_010 198 X x 8.81 112,632 4,723 11% $257,400 16%

Completed 2012

574 429 343 119 79.63 492,290 14,981

Average Unit

0.14 858 26 17% $ 1,071 25%

Figure 2: Summary of San Diego Region Whole Building Program Participation 2012

Building characteristics of properties assessed in the pilot period had a large degree of variability. The majority of participating properties were low-rise, garden style apartments, consisting of small 4- to 12-unit buildings. The average property size was 57 units. Domestic hot water systems were all natural gas, but there was a mix of individual and central systems. Space heating systems included a wide range of electric and gas systems, both wall units and ducted systems. Some properties had cooling systems, others did not. There were no noticeable trends for mechanical systems.

Figure 3 summarizes the measures installed in the six completed projects in the San Diego region.

Energy Upgrades Selected % of Participating Projects No. of Projects

Domestic Hot Water (DHW) 100% 6

Windows 50% 3

Space Heating 50% 3

Lighting 50% 3

Attic/Roof Insulation 33% 2

Space Cooling 33% 2

Refrigerators 33% 2

Duct Sealing 17% 1

DHW Recirculation Controls 17% 1

Solar Thermal DHW 17% 1


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Figure 3: Summary of Energy Efficiency Upgrades Completed in San Diego Region

The majority of participating properties were affordable housing properties. Those that were not designated affordable housing also housed low- and moderate-income tenants, and were able to prove income-eligibility for the City of San Diego’s incentive program.

2.2 SMUD Home Performance Program - Multifamily - Sacramento In the Sacramento region, HMG served as the program implementer on behalf of the stimulus grantee Sacramento Municipal Utility District (SMUD). To qualify for whole building incentives in the SMUD Home Performance Program – Multifamily (HPP-MF), properties had to improve energy efficiency levels by a minimum of 20% over existing conditions. To encourage deeper energy savings, the program provided escalating incentives starting at $2,300/unit (for 20% improvement in energy efficiency including both gas and electric), increasing at $50/unit for each additional percent improvement, up to $3,800/unit (for up to 50% improvement). Within the short 9-month stimulus-funding period, the program provided incentives for energy assessments of over 11,000 multifamily dwelling units, and whole building upgrades to 2,513 dwelling units from 48 properties. Due to the short program timeframe and limited program funds, not all assessed units were able to receive upgrade incentives, but were placed on a waitlist for the next SMUD program cycle. The HPP-MF program provided energy assessment and upgrade construction incentives. In order to best manage prevailing wage requirements, upgrade incentives were paid to the contractor on the project, rather than the building owner, and were paid at two points in the construction process (50% construction completion, and 100% completion) to help projects with cash flow. HERS Whole House Raters were also eligible for incentives at two points in the project process (upon completion of assessment, and verification).

The average predicted energy savings across all upgraded properties was 28% (measured in TDV - Time Dependent Valuation, which places a higher value on energy saved at peak demand times). The average incentive per dwelling unit was $2,600, which covered approximately 68% of the energy upgrade costs on an average project. The stimulus-funding cycle completed in March 2012, however, SMUD continues to fund a similar program with ratepayer funding. Error! Reference source not found. shows the most common upgrade measures installed in the SMUD HPP-MF program.

A few trends emerged in the SMUD-HPP program, from which HMG gained some insight:

High market rate participation in a short timeframe: The market rate sector was able to respond and retrofit properties very quickly (within the 9-month program timeframe), and the SMUD incentives were high enough to draw attention from the market rate building owners. Affordable housing owners typically need a longer timeframe to line-up their scope of work and financing, so were unable to act quickly enough. Market rate building owners are focused on the bottom line (profitability), so high incentives (covering the majority of their cost) were key to their participation.

Contractor preference for incentive to go to building owner: Several contractors expressed preference that the program incentives go to the building owner instead of the contractor. Offering the incentive payment to the building owner would make for a simpler transaction for the contractor, but was not an available option in the SMUD-HPP program.

Maximization of program outreach through incentives to trade allies: Because both contractors and raters were eligible for program incentives, projects were also recruited into the program by contractors and raters, and not just through implementer outreach activities.


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2.3 Energy Upgrade California Multifamily - Alameda County HMG provided technical assistance on behalf of StopWaste.Org to multifamily project teams striving to earn the GreenPoint Rated (GPR) Multifamily Existing Building rating. HMG’s approach focused on a ‘concierge level of service l’ for technical assistance, financial analysis, tracking and monitoring tools, and leveraging other resources. This technical assistance included facilitating the progress toward GPR certification, offering energy upgrade design and implementation strategies, providing assistance with benchmarking, conducting financial analysis and resource recommendations, and conducting quality control on building simulations. Despite the absence of incentives, HMG’s technical support to date assisted over 1,700 multifamily dwelling units from 52 properties, and helped 12 projects achieve the GPR rating. Key takeaways that may be applied to the SDG&E program include:

Upgrade incentives are most influential, but not the only benefit multifamily building owners find value in. Though few projects were able to proceed with upgrades due to the absence of incentives, building owners did take advantage of technical assistance, including benchmarking and cost analysis, which may influence energy upgrade decisions in the future.


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3. ENERGY UPGRADE CALIFORNIA - MULTIFAMILY PROGRAM DESIGN Throughout the state, HMG implemented various multifamily programs under the Energy Upgrade California - Multifamily umbrella. Each program varied slightly; however, the HERS Whole-House; consultant model (third-party energy analysis and verification) platform was the common denominator. Following are themes and lessons learned common to the various programs.

3.1 Consultant/Whole-House Rater Model and Training The Energy Upgrade California (EUC) Multifamily programs used a consultant model by which a third-party conducted an energy assessment and analysis of each multifamily property, and assisted the building owner in developing an energy upgrade scope of work to meet program criteria. Once the scope of work was reviewed and approved for participation, the property owner could proceed with installation of the upgrades with a contractor of their choosing. HERS Whole House Raters (energy auditors) were program-trained and qualified, although contractors were not required to be, allowing property owners to leverage existing relationships with contractors they trust. These EUC Multifamily Raters (EUC - MF Raters) also served as third-party quality assurance for the program and the property owner, returning to the site upon construction completion to verify that the upgrades approved for participation had been installed to the appropriate specifications. Figure 4 outlines the program process used in the San Diego and Sacramento programs. The process was very similar in other regions throughout the state.


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Figure 4: Program Process Summary

The EUC-MF Rater was intended to be the foundation of the program, as the energy auditor or assessor, energy modeler, third-party verification agent, and building owner liaison to the program.

Incentive Payment

Incentive checks sent to building owner/contractor/HERS Rater (per individual program incentive structure).

Verification Review

Program implementer conducts quality assurance and quality control on completed energy upgrades and approves project for incentive payment.

On-Site Verificaiton

HERS Whole-House Rater verifies installation matches approved energy upgrade scope of work and program requirements.

Energy Upgrades

Building owner selects a contractors and completes property upgrades in approved scope of work.

Assessment Review

Implementer conducts quality assurance on submitted project information (modeled existing conditions and upgrade scope of work), approves project for participation, and reserves incentives (where applicable).

Energy Assessment

HERS Whole-House Rater conducts an energy assessment and analysis of the property, offers upgrade recommendations, and negotiates an upgrade scope of work with the property owner.

Application

Building owner contracts with a qualified HERS Rater, and submits an application for participation in the program.

Property Prequalification

Basic building data (reported by the building owners) allows the implementer to determine whether a whole building approach is appropriate. If not, the property is redirected to other appropriate programs.


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Recognizing that the HERS Whole-House certification is designed to serve the existing single family homes sector, EUC developed additional training curriculum to more specifically address multifamily building energy assessment and verification. This 5-day training combined classroom instruction with field experience to train Raters in assessing, modeling and verifying a multifamily property. The intent of this training was to develop supplemental multifamily curriculum to the Whole-House Home Energy Rater training, for ultimate adoption by the California Energy Commission (CEC). The curriculum drew from the best practices of existing certifications, including Building Performance Institute (BPI) Multifamily Building Analyst (MFBA), applying these to the California building context. Approximately 45 raters were trained to support the San Diego and Sacramento programs. Approximately 15 of these raters were active in the program, with 5 of these raters supporting approximately 80% of the properties.

Figure 5 summarizes EUC-MF Rater experience prior to attending the Energy Upgrade California Multifamily Rater training (the dark bars illustrate active raters who contributed to EUC projects, whereas the full bar includes all raters trained)

Figure 5: Summary of Participating HERS Rater Experience

The vast majority of trained Raters had very little (if any) prior experience with multifamily buildings. Therefore, HMG invested heavily on training EUC-MF Raters and offered mentorship in program participation and building simulation. All participating project documentation was submitted to HMG for review prior to submission to the QA/QC provider. HMG assisted participating raters with improving the accuracy of simulation files and ensured that all documentation was complete and correct. HMG was also on-call to answer program questions throughout the process. As raters gained more program experience, less mentorship was required to bring projects through the programs, but no project has yet come through the programs without needing some level of mentorship. The HERS Whole-House Rater training provided some building simulation, but not nearly enough for the raters to be functional with building simulation because both the software and multifamily buildings are complicated. Therefore, HMG included additional software training in the EUC-MF Rater training.


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Consultant/Whole-House Rater Model and Training Lessons Learned The consultant (rater) driven model works effectively for the multifamily sector. The HERS

Whole-House framework provides a mechanism for objective third-party assessment and recommendations aside from the installing contractor. This model has been tested since 2002 and throughout the state. Further, multifamily property owners continue to prefer this third party ‘consultant model.’

The programs and raters need consistency and longevity to develop the rater market. ARRA funding intended to retrain and create jobs for unemployed by funding training and retrofit programs. Many trainees came from non-construction related fields. Consequently, the complexity of multifamily buildings, the steep and long learning curve, short timeframe and program retrofit goals, the challenge of developing a population of experienced raters spills over into the utility-funded programs.

Rater development requires an intensive upfront investment, through training and mentorship, but leads to improved quality of project submissions and greater program efficiency. Ratio of raters trained to raters supporting projects is low. Though many raters were trained to support the EUC programs, few of these raters supported upgrade projects. Yet fewer of these raters submitted multiple projects. Active participation by experienced raters will need to be increased as the EUC programs plan to scale-up and upgrade a larger number of multifamily dwelling units.

Programs should differentiate rater training and support by high-rise and low-rise multifamily building rater. High-rise buildings and systems are more complex and require more expertise. By staging training and qualifications, raters can build their expertise with low-rise and self-select to developer high-rise expertise.

Market rate multifamily owners see value in energy and green ratings, both from a marketing and tenant retention perspective. Affordable housing owners see the value of ratings to provide energy efficient homes to low income families. Therefore, it is imperative that the Energy Commission refine and adopt rating requirements for multifamily building energy ratings. The current HERS asset-based rating would be well received.

The CPUC, CEC, and HERS Providers need to collaboratively champion HERS II as a platform across multifamily programs to create consistency for property owners and raters.

A HERS professional organization, or business courses would help provide HERS raters with needed professional and business skills (soft skills) and other needed support. While there is a great need, there is currently no trade organization to support raters. Either a new organization or expansion of an existing organization (such as the California Association of Building Energy Consultants (CABEC) could provide additional workforce development such as training in business management, contracting and client agreements, small business etiquette, soft skills, etc.

3.2 Indoor Air Quality and Combustion Safety SDG&E’s multifamily pilot required participating projects to undergo ventilation and combustion safety testing per Building Performance Institute (BPI) Building Standards. This resulted in several program challenges:

Not all program-qualified raters had BPI credentials to conduct Indoor Air Quality (IAQ) and combustion safety testing


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No multifamily-specific IAQ and combustion safety standards or diagnostic protocols are included in the BPI standards

Additional diagnostic testing adds cost to the rater assessment required for program participation

Multifamily building owners were concerned about the added liability of knowing that there were health and safety problems in their buildings, without knowing in advance what the problems might be and if there was sufficient budget to correct any problems.

SDG&E required combustion safety testing on 100% of gas appliances at both test-in and test-out, and ventilation testing whenever pressure dynamics within a dwelling unit were influenced by the EUC-MF path scope of work. All IAQ and combustion safety reports had to be signed by a BPI Multifamily Analyst. Only a portion of participating EUC-MF Raters held the BPI Multifamily Analyst certification. Additionally, the BPI standards for IAQ and combustion safety do not specifically address multifamily buildings. To-date there is no consensus on blower door testing methods for multifamily buildings, making ventilation testing problematic.

With ARRA funding, the County of San Diego was able to pay CalCERTS for IAQ and combustion safety testing on the majority of projects in SDG&E’s multifamily pilot pipeline. This solved the problem of having BPI Multifamily Analyst certification, and prevented additional testing costs to participating building owners. From June 2012 forward (once County funding expired), EUC-MF Raters without appropriate BPI credentials were required to partner with a BPI Multifamily Analyst that could sign-off on the IAQ and combustion safety report.

Though multifamily building owners were not, at first, comfortable with knowing testing results, strict definition of the testing and remediation requirements helped to manage their expectations and encourage participation.

Indoor Air Quality and Combustion Safety Lessons Learned Health and safety testing is a sensitive topic for property owners, who take on liability and

disclosure requirements when threats to health or safety are discovered. Property owners and managers are risk averse to perform IAQ testing, unless they have budget to correct any discovered problems immediately.

Incentives need to reflect cost of combustion appliance zone (CAZ) testing to help offset the additional costs of test-in and test-out which is borne by the property owner. Property owners have suggested that the IOUs provide this as a program service.

An alternative to blower door testing methodology would help to determine if ventilation requirements are met and allow building envelope measures to be included cost-effectively into the programs.

Strict definition of program health and safety testing and remediation requirements is needed to sell program benefits to property owners and solicit program participation. To effectively manage property owner expectations, these requirements need to be recorded in a central document supported by program funders.

3.3 Expanding Eligible Energy Upgrade Measures In California coastal climates, in particular San Diego, deep energy upgrades are difficult, as in many cases utility bills are already lower compared to other climate zones in the state. Substantial retrofit


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scope of work, as would be included in a larger rehabilitation, is necessary to reach the minimum 10% improvement threshold (the common entry threshold for EUC programs throughout the State). By contrast, in other regions, such as Sacramento, a 20% reduction could be achieved, in some cases, through replacement of HVAC equipment alone. In either circumstance, reaching 30% or deeper energy savings is a significant challenge. For the State of California to reach the rigorous California Strategic Plan “Big Bold Energy Efficiency Strategies” and Energy Commission AB 758 goals, properties will need to achieve deeper retrofits. One way to encourage deeper retrofits is to expand the number of energy upgrade measures for a property owner to choose from, expanding opportunities to whole-property, and to combine programs whereby savings are additive.

For example, there are currently limitations to the energy savings claim potential for domestic hot water, though these measures generally have the largest impact on multifamily energy savings, especially in coastal climate zones, where heating and cooling loads are very small. However, the list of upgrade possibilities to DHW systems was limited due to energy modeling constraints and incentive program limitations. Projects with poorly insulated domestic hot water pipes and tanks were not able to claim full savings for increasing insulation because the energy modeling software assumes minimum values above zero for pipe and tank insulation. The software also underestimates savings from demand controls, treating them equally with time and temperature recirculation controls. These cost-effective measures were often overlooked because sufficient savings could not be counted towards the threshold 10% reduction.

Solar-thermal installation was not an eligible upgrade measure in SDG&E’s pilot program, and some projects could not reasonably (cost-effectively) reach a modeled 10% improvement without it. Properties wanting to install solar-thermal systems gravitated to the CSI solar-thermal program and did not consider additional upgrades, representing a lost opportunity.

The EUC program identified a number of other measures which should be considered for inclusion in future programs such as: water saving plumbing fixtures, elevators, outdoor lighting, pool measures, window coverings/films, common area laundry, and kitchen facilities.

Expanding Eligible Upgrade Measures Lessons Learned Integrate the CSI solar-thermal program with the whole building program to encourage

packaged upgrades, and avoid lost opportunities from projects choosing one program or the other. Property owners do not want to participate in more than one program at a time. Creating a seamless and additive path to truly apply whole building principals of performance would facilitate expanded energy upgrade scopes of work.

Develop work papers to support additional energy efficiency measures such as domestic hot water pipe insulation, demand controls, building air sealing, water saving plumbing fixtures, elevators, outdoor lighting, and pool savings measures. Developing a mechanism to calculate and incorporate measures that are not modeled by California approved software can capture additional savings.

Improve energy modeling capabilities to allow for more accurate energy savings of an expanded measure list, including domestic hot water measures, among others.

Expand programs to include full property rehabilitation and common area measures such as pool pumps, common area laundry and facility measures, and outdoor lighting to capture more savings through a single program channel.

Create a mechanism to quantify savings on a continuum. Allowing property owners to combine savings from direct install programs to count toward a cumulative % savings over a


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given period, can help to measure progress toward meeting California’s net zero goals. For example, in order to best leverage the array of retrofit programs available for multifamily buildings, promote cross participation, and encourage deeper energy retrofit, offer a flexible incentive structure that can build upon a variety of existing retrofit programs, without exceeding total retrofit costs or double-counting energy savings. An example of this incentive structure is described in the Measure and Rater Incentives section.

3.4 Program Implementation Timeframe Because whole building upgrades are similar to new construction, the EUC-MF programs need time for a market to develop. Raters must be trained and gain experience, property owners need to identify funds for greater investments, and a mechanism to track pre- and post-upgrade energy usage are critical to market transformation. During the program, HMG-TRC lost some projects due to the program time constraints as indicated below.

Program Implementation Timeframe Lessons Learned Multifamily projects take a long time to complete. Similar to new construction, a whole

building retrofit takes planning, financing, audit, analysis, and construction. On average, HMG-TRC found a project takes 7.6 months to complete - from pre-qualification to incentive payment. Similar to the new construction programs, the allowable construction timeframe could roll from program to program with a 12 or 18 month completion timeline. Many projects get caught in the short program cycle of 1-3 years and self-disqualify because of the construction timeframe.

Financing is not easy to obtain and takes a long time to coordinate, especially for affordable housing projects. Because of limited funding, it can oftentimes take several years to obtain financing for a retrofit.

Longer timeframes are needed in order to track actual utility usage. A key component of success and selling the program is the ability to demonstrate projected versus actual energy savings. HMG-TRC has long envisioned a program and program timeframe that incorporates at least 12 months of pre- and post-retrofit billing data. To date, the program timeframes and corresponding incentive structures as well as the lack of access to property level aggregated utility data have been insurmountable barriers.

3.5 Quality Assurance Through the SDG&E program, 100% of participating multifamily projects were reviewed and field-verified at both test-in and test-out. HMG, when possible, coordinated the QC inspections with assessment, health and safety, or verification inspections so that multiple parties touched the property on the same day. These coordinated visits were much appreciated by property owners, tenants, and management, but required that boundaries be set to minimize inappropriate communication between Raters and QA/QC inspectors. Because there were no written protocols for the multifamily pilot, the EUC-MF Raters often had questions of the QA/QC inspector, in order to ensure all expectations were met. Having written protocols would have made the boundary between rater and QA/QC more easily enforced, and better managed both rater and building owner expectations.

For the SMUD program, 100% of the audit/test-in building simulations were reviewed, with 70% undergoing a full review. 10% of the installed projects were field verified.


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Quality Assurance Lessons Learned Building owners/managers and tenants appreciate fewer touches to multifamily dwelling

units and properties. Coordinated EUC-MF Rater assessment and QA/QC inspections reduce the number of touches.

Written quality assurance and quality control protocols are necessary in order to properly manage participant expectations, and streamline the program process.

Percent of quality assurance and quality control checks can be matched to rater experience and past performance in order to minimize program costs, and provide the optimal level of mentorship without sacrificing quality.

3.6 Rater and Measure Incentives SDHEU distributed incentives to the rater as well as the property owners. The rater incentive was paid directly to the rater to buy down the assessment cost. The measure incentive was paid to the building owner.

Rater incentive are intended to offset the rater cost to perform an assessment, build energy models, recommend the energy upgrades, and verify that the measures are installed to the energy efficiency specifications. In the San Diego Home Energy Upgrade program, the incentive is based on the percent improvement margin predicted by the energy modeling software, escalating at $25 for every 5% increase in predicted savings above the 10% baseline. The full incentive was paid upon construction and verification completion to avoid payment for assessment services without guarantee that the property will proceed with upgrades. The availability of the incentive drove HERS raters to recruit projects into the programs for both the City of San Diego and SMUD. Because SDG&E’s program did not explicitly offer a rater incentive, raters were less motivated to conduct program outreach, leaving the majority of program recruitment to HMG.

Measure incentives were paid directly to the owner upon retrofit completion. SDG&E, the City of San Diego, and the City of Chula Vista offered incentives for completed projects in their respective jurisdictions. SDG&E began at $550 per unit for 10% improvement and escalated up to a cap of $1,500 for 40% improvement at 5% increments. The City of Chula Vista matched the SDG&E incentive. The City of San Diego followed a similar tiered structure, originally offering $350 at 10% improvement and $1,400 at 40% but later increased the owner incentive to $500 at 10% improvement and $2,000 at 40%. The following is a table summarizing the program incentives.

Figure 6: Energy Upgrade California™ San Diego County Program Incentives by Partner

Percent (%) Improvement SDG&E ($/unit)

City of San Diego ($/unit)

City of Chula Vista ($/unit)

10% $550 $500 $50015% $625 $750 $75020% $800 $1,000 $1,00025% $1,000 $1,250 $1,25030% $1,200 $1,500 $1,50035% $1,350 $1,750 $1,75040% $1,500 $2,000 $2,000


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Rater and Measure Lessons Learned Incentives need to offset a portion of the rater and energy upgrades to motivate property

owners. Due to the split incentive issue whereby property owners are reluctant to invest in upgrades in individually metered units, greater incentives are required to overcome this barrier.

Rater (energy assessment) incentives should be called out separately from upgrade incentives and paid directly to the qualified rater. Buying down the cost of the assessment helps to overcome the upfront financial barriers and reduces property owner risk to enter the program. Program rater incentives also motivate raters to recruit properties for participation. However, the agreement between the rater and the property owner should illustrate the discounted price as a result of the rater incentive.

Paying all incentives (assessment and upgrade) at project completion reduces project drop-out rates, but may also limit participation for projects with little upfront funds to invest in energy upgrades.

A whole building-based pre-packaged or menu approach would provide some transparency for property owners questioning their ability to meet the program improvement threshold, and reduce participation costs associated with a comprehensive energy assessment. The goal would be to establish pre-packaged measures that would incorporate the pre-modeled interactive effects for prototype buildings by climate zone. This approach is being further developed by HMG-TRC in 2013 for the Energy Upgrade CaliforniaTM Multifamily path (on behalf of SDG&E).

4. MARKETING AND OUTREACH

4.1 Grass Roots Marketing Previous experience in the Designed for Comfort program and California Multifamily New Homes has confirmed that a grassroots marketing approach, when combined by a strong incentive/financing package is most effective for program recruitment:

Nearly half of the participating owners heard of the program either by encountering a program staff person at a conference/workshop or through their own internet searches for incentives opportunity.

One-fourth heard about the program through other outreach activities like e-mail blasts or phone call recruitments made by program staff.

Over half of the participating building owners cited the need for financial support as a reason for joining the program. Lack of capital is a major barrier for them to implement energy efficiency.

Around one-fourth of the respondents cited a desire to reduce tenant energy costs and to increase tenant comfort.

HMG implemented grass roots marketing strategy for project recruitment in both the San Diego and Sacramento regions, achieving similar results to those listed above. Involvement in local apartment associations, e-mail blasts to their member lists as well as past HMG program participants, and presentations at events and conferences drew in a large number of participants, without use of flashy promotional materials. Others came to the program by word of mouth, as they heard success stories


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from other program participants. This peer-to-peer marketing was most effective. In the SMUD program, this peer marketing approach resulted in interest from over 20,000 multifamily dwelling units.

Parallel to HMG’s outreach efforts, HERS Raters and contractors also marketed their services to potential clients at discounted costs, with the expectation that the participating HERS Rater or contractor would receive program incentives for the work. Though a few contractors and Raters were successful in this approach, gaining property owner trust was a barrier.

Lessons Learned: Established relationships and trust among the building owner community are critical to

program marketing success.

Peer-to-peer communication is more effective through association marketing channels.

High-cost marketing collateral is not critical to program success, as long as program information can be communicated accurately.

4.2 Program Collaboration Program collaboration and leveraging among utility companies, city and county government agencies, non-profit organizations and financial institutions can have a substantial impact on the success of a program, from both the participation and administration perspective. Benefits of such collaboration include: deeper energy savings, increased cost-effectiveness for both participants and implementers, and program cross-promotion. The challenges carry equal weight, however, and include: alignment of program timelines, eligibility requirements, management of distribution of cost and energy savings attribution, prevention of double-counting, and implementation of streamlined participation. With incentives designed to offset only a portion of the installed cost of energy upgrades, owners appreciate the opportunity to layer programs to minimize the funding gap, and maximize energy savings and cash flow.

In addition to collaboration of EUC (whole building) programs, the EUC programs worked closely with several rate-payer-funded programs, including Energy Savings Assistance Program (ESAP), California Solar Initiative (CSI) Solar-Thermal program, Multifamily Affordable Solar Housing (MASH), and Multifamily Energy Efficiency Rebate (MFEER) Program.

Application to SDG&E’s Energy Savings Assistance (ESAP) Program is a prerequisite to participate in Energy Upgrade CaliforniaTM Multifamily (EUC-MF) path. An ESAP Property Owner Waiver is collected for each project interested in EUC-MF participation and forwarded to ESAP program implementer for preliminary property screening. All eligible units are targeted, giving qualified low-income customers the opportunity to participate in this free direct install program. Once all ESAP installations were complete, the baseline (existing) conditions could be set for participation in EUC-MF.

While this coordination allowed the owner to leverage no-cost measures, it also involved extra touches to dwelling units, and required qualification of each tenant rather than qualifying at a property level. There were initial concerns about the ESAP program prerequisite causing project delays and lost opportunities for EUC-MF participation. In the pilot program, ESAP did not cause substantial project delays, for several reasons:

Not many dwelling units were eligible for ESAP participation. In the San Diego region, the ESAP program has nearly saturated the multifamily low-income market.


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Program raters were allowed to begin property assessment prior to ESAP completion. Raters typically began onsite data collection before all eligible ESAP units were completed, with the understanding that any measures installed through the ESAP program would need to be modeled in the baseline conditions and submitted for program review. Information about ESAP upgrades completed would be passed through the building owner to their rater upon ESAP completion.

In the pilot and 2013 program a few challenges have arisen. The following additions would remedy these challenges:

Clear communication channel between ESAP contractor and EUC-MF Rater. In order for program raters to include ESAP-installed measures in baseline conditions, ESAP program upgrades completed must be communicated to the rater. There is no prepared document or communication channel through which to convey this information. Though requested by property owners and EUC-MF program implementers, information about installed ESAP measures at a property level was difficult to acquire. This might be easily solved through a standardized summary of ESAP upgrades issued to the property owner and/or EUC-MF implementer.

Transparency in how ESAP eligibility is determined. Information about ESAP processes and eligibility seems to be internal only. Property owners would like to understand the details of how a dwelling unit qualifies for ESAP participation, but have difficulty acquiring this information. An ESAP fact sheet for property owners would be a nice touch, including how eligibility for specific upgrades is determined.

Protocols for ESAP coordination in gut rehabilitation projects. In gut rehabilitation projects, many of the measures that would be installed by the ESAP program would be:

1) removed during gut rehab, and/or 2) installed at the property owners expense whether or not a dwelling unit qualified for the ESAP program.

Concerns about longevity of energy savings and free ridership surface with discussion of rehab projects. Additionally, tenant relocation can occur during gut rehabilitation projects, which renders dwelling units ESAP program-ineligible. An alternate solution is to serve gut rehab projects post-EUC-MF construction, when tenants are in-place, there is no longer risk of ESAP measures being removed, and free ridership is a less likely scenario.


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5. REALIZED ENERGY SAVINGS

5.1 Benchmarking and Billing Data Calibration According to Multifamily Utility Usage Data: Issues and Opportunities, a study conducted by Recap Real Estate Advisors, current benchmarking databases operated by federal, private, and mission-oriented organizations are capturing data from only 2 percent or 3 percent of all multifamily units nationwide. Furthermore, the study found that the lack of large and robust data sets, common data taxonomy, and accepted industry standards for data collection is inhibiting a number of areas, including the meaningful benchmarking of multifamily properties, the identification of appropriate energy conservation measures, and the development of large-scale retrofit financing programs.

Benchmarking and Calibration Lessons Learned There is a large opportunity and interest among building owners/asset managers to benchmark

multifamily buildings, and measure actual energy savings.

For the purpose of providing more useful information to multifamily building owners/managers, building simulation tools developed for California home asset rating should be further developed with the ability to calibrate to actual utility usage and report operational use in addition to an asset rating.

Longer program timeframes are needed to track post-retrofit energy usage.

The challenge of collecting tenant-paid utility data is great, but may be overcome if utilities are obligated to release of aggregate data, using the 15/15 data aggregation rule.

More data is needed of asset and operational energy use of multifamily buildings. HMG-TRC would like to better understand energy use and savings opportunities by multifamily building vintage and style to improve program delivery and achieve sustained energy savings.

Documents

Lessons Learned through Piloting Energy Upgrade California ... · 10/30/2013 · Diego, City of Chula Vista, and SDG&E for upgrade incentives to participating property owners and