Transforming Multi-family and Mixed Use Buildings: Recent Experience in British Columbia

Ken Tiedemann and Iris Sulyma, BC HydroMarch, 2009

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Overview

Challenge of multi-family / mixed use buildings

Energy use in the multi-family / mixed use sector

Power Smart Product Incentive Program - PIP

Economics of market transformation

Market outlook

Lessons learned

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Market Adoption Curve

Emerging Technologies

Early Market AdoptionUtility Incentive Programs

Building Energy Codes and Voluntary Standards (LEED, etc.)

Mar

ket P

enet

ratio

n

Time

Mainstream Market Adoption: Diffusion of practices throughout the market

Education and Training

Leverage Existing Market Initiatives

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Challenge of Multi-family and Mixed Use Buildings

Split Incentives Market Failure. Developers typically sell the buildings after construction so they don’t capture the benefits of energy efficiency

Information Market Failure. Developers are conservative and reluctant to use unfamiliar technologies

Buildings and the units in them sell on the basis of visible features (granite countertops) and not on the basis of invisible features (efficient furnaces or lighting)

Market is competitive so developers are usually reluctant to spend a lot on innovative designs

Building cycle is very tight so that energy efficiency features need to be included from the concept phase or they will not be included at all

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Energy Use

We undertook two sets of baseline studies of newly constructed buildings in 1995 and 2005

Site visits collected information on building geometry, shell, HVAC and other mechanical systems, lighting, occupancy and hours of use, some end use meteringBuilt individual DOE 2.1 models calibrated to the billing data, normal weather, normal occupancy End uses modeled included ventilation, interior lighting, miscellaneous, heating, air conditioning, domestic hot water, refrigeration and exterior lighting

Average consumption fell from 117.4 kWh per square metre per year in 1995 to 109.0 kWh per square meter per year in 2005,

or by about 7%, driven mainly by a reduction in electric space heating saturation

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Multi-family and Mixed Use Buildings

0 5 10 15 20 25 30 35

Ventilation

Interior Lighting

Miscellaneous

Heating

Air Conditioning

D. Hot Water

Refrigeration

Exterior Lighting

1995 2005

kWh per m2

End Use Consumption

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Product Incentive Program

Product Incentive Program is BC Hydro’s flagship prescriptive program for commercial firms

Offers simple, online applications – rebates for a wide variety of energy efficient products

Multi-family/mixed use sector = the greatest participation of the program at over 25%

Strengths: easy to participate; incentive levels seem acceptable; high customer satisfaction; free riders almost matched by spill over

Limitations: 90% of savings have come from lighting; narrow participation outside of two sectors

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Market Barriers Addressed

Affordability. When a product needs to be replaced, an energy efficient product may be more attractive on a life-cycle cost basis, but still not chosen because of high first costs Awareness. Customers are often unaware of the existence of more cost effective alternatives when they're making product replacement decisionsAvailability. If energy efficient products are not available when the customers need to make the replacements, many customers will choose a less efficient product rather than delay replacementCost Effectiveness. Cost effectiveness depends both on the relative costs of alternative products and the value of energy savings, and these latter are lower in BC than in some jurisdictions, because electricity is relatively inexpensive

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PIP Applications by Sector

0 5 10 15 20 25 30

Multi Family

Hotel

Office

School

Retail

Industrial

Recreation

Hospital

Warehouse

Percent (%) of Applications

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Economics of Technologies: Notation

kWbase = unit load for standard replacement technology

kWefficient = unit load for efficient replacement technology

CF = cross effects for cooling of 0.069 (lighting only)

I = installed cost

CCE = cost of conserved energy

d = discount rate of 0.06

n = useful life of 10.0 years

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Economics of Technologies: Equations

(1) ΔkW = (kWbase – kWefficient) * (1 + CF)

(2) ΔkWh = ΔkW * (Annual full load hours)

(3) I = Full technology cost + Installation cost

(4) CCE = (I/ ΔkWh) * (d / (1 – (1 + d)-n))

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Economics of Technologies: Data

Baseline surveys were undertaken for lighting and for mechanical products

to understand base technologies, viable efficient technologies, unit prices, product availability

Cross effects were based on customer surveys on the share of space cooled by building type and by space type

assuming a COP of 2.5 for air conditioning systems and cooling mode for six months of the year

Full load hours of use for technologies were based on metering of about 400 data points for the multi-family and mixed use segment

whole data set has some 2,600 data points for the period covered here

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Economics of Lighting Retrofits

0.06720213.50High wattage CFL

0.088523340.00High bay fluorescent

0.02423942.70ES T8 & ballast

0.05483.00Energy saver T8

0.04817360.20Photocells

0.02344375.00Occupancy sensor

0.0445818.50Halogen infrared

0.048296104.90Pulse start metal halide

CCE ($/kWh)

Savings (KWh/yr)

Installed cost ($)

Technology

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Economics of Mechanical Retrofits

0.02928861.50Switch plate timer

0.0342,970747.70CO sensor

0.0301,080239.40HVAC occupancy sensor

0.050135,00050,000Harmonizers

0.0537027.30Transformers (per kava)

0.01414014.80Synchronous belts

0.060900400.00ASDs (per HP)

0.01642,3005,000.00Pony pump motors

CEE ($/kWh)

Savings (kWh/yr)

Installed cost ($)

Technology

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Market Outlook

Effects of Current Economy. British Columbia is being significantly affected by the decline in the demand for lumber for the U.S. housing market and copper, coal and paper for the Chinese marketBuilding Trends. Following the dramatic upward trend since 2000, building permits for multi-family and mixed use buildings appear to have dropped in 2008, and they are expected to be well below trend for 2009, 2010 and 2011Savings Opportunities.

The above factors will limit opportunities for incremental energy savings in the new multi-family and mixed use construction sectorMain opportunities for incremental energy savings in the multi-family and mixed use sector will probably come from retrofits

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Major Project Building Permits, Lower Mainland

0

1000

2000

3000

4000

5000

6000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Residential MultiFamily / Mixed Use

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Lessons Learned: Program Planning

Recognize that the multi-family residential and multi-use market has its own characteristics and conduct adequate market research to understand market barriers and drivers,

identify and build contacts with key market players and align the goals and interests of market players and the program.

Develop a program plan with a clearly articulated program logic that clearly states the program objectives, operational outputs and resources required,

so that stakeholders know what the program seeks to accomplish and why it has the stated objectives.

Ensure that program objectives are clear, well defined, measurable and achievable,

and that they are supported by realistic schedules.

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Lessons Learned: Program Delivery (1)

Leverage scarce marketing dollars through partnerships and cooperation with other market players,

including manufacturers, wholesalers, mass market chains and specialized retailers

Use appropriate retailer outreach to ensure that product is stocked and available and to ensure that point of purchase materials are clear, accurate, persuasive and visible

Understand product features, product availability, probable energy and demand savings and product price before including in the eligible product list

Verify the accuracy of procedures for rebates to ensure that the program is operating efficiently and effectively

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Lessons Learned: Program Delivery (2)

Assess customer satisfaction through program evaluation surveys,

and address substantive and material issues and concerns that are raised through appropriate modifications to program design and delivery

Ensure that incentive levels are appropriate to buy down first costs to the point where the efficient product is competitive ona life cycle cost basis

and/or meets payback period requirements

Keep program procedures, including applications, credit checks and verification, as simple and transparent as possible to maximize participation and energy savingsProvide internet program information and use online applications where feasible

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Lessons Learned: Monitoring and Evaluation

Conduct baseline research on product awareness, product attitudes, and product purchase behaviour before a program is in the field,

and replicate this research as required to understand and document changes in the market as well as market effects that can be ascribed to the program

Establish systems to track sales levels and market shares(and possibly other metrics) as well as their changes over timeReport program progress against program objectives, and make suitable corrections if key objectives are not being metEstablish appropriate algorithms to estimate energy and demand savings

and collect suitable data through surveys, site visits and metering to ensure that the algorithms can be applied