Promoting Energy Efficiency in Multi Family Housing in US

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How to promote installation of renewable capacity generation devices at multi-family housing?
How to maximize the subsidy offered by US Department of Energy for this objective?

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Promoting Energy Efficiency in Multi Family Housing in US

  1. 1. WELCOME HOME TO SAVINGS TEAM BEEC POTENTIAL DHRUV VARMA ASHWIN MYSORE AMAN MEHRA SHANKAR DAS
  2. 2. The problem Solution Implementation Summary AGENDA 2
  3. 3. The problem Solution Implementation Summary The problem Solution Implementation Summary 3
  4. 4. ENERGY CHALLENGES IN MULTI FAMILY HOUSING SPLIT INCENTIVE • Cost - owners • Benefits - tenants, HUD FINANCING • Risk-averse • Complex approvals AWARENESS • Cost savings 4
  5. 5. TARGET LARGEST SEGMENT Market Based Rent Budget Based Rent Utility cost not included in rent amount Quadrant 1 Quadrant 2 Utility cost included in rent amount Quadrant 4 Quadrant 3 • 2/3rd of the rent agreements do not include utilities • Market Based Rent represent majority 5
  6. 6. The problem Solution Implementation Summary The problem Solution Owner Tenant Others Implementation Summary The problem Solution Implementation Summary Adopt Distributive Generation Promote Energy Efficiency 6
  7. 7. The problem Solution Implementation Summary The problem Solution Owner Tenant Others Implementation Summary The problem Solution Implementation Summary 7
  8. 8. No incentive Investment difficulty THE CHALLENGE WITH BUILDING OWNERS No incentive Investment difficulty ESCOs No incentive Owners running new utility business Investment difficulty ESCOs 8
  9. 9. HOW IT WORKS FOR BUILDING OWNERS CURRENT Totalcostofoccupancy 9
  10. 10. Totalcostofoccupancy 10 HOW IT WORKS FOR BUILDING OWNERS PROPOSED
  11. 11. HOW IT WORKS FOR BUILDING OWNERS Totalcostofoccupancy 11
  12. 12. PROFITABILITY FOR BUILDING OWNERS MONTE-CARLO SIMULATION 12 Owner’s profitability in utility business
  13. 13. TOTAL PROFIT FOR BUILDING OWNERS MONTE-CARLO SIMULATION 13 Total annual profit from utility business
  14. 14. The problem Solution Owner Tenant Others Implementation Summary 14
  15. 15. Energy conservation Energy efficiency THE CHALLENGE WITH TENANTS Energy conservation Separate utility expenditure from subsidy Energy efficiency Energy conservation Separate utility expenditure from subsidy Energy efficiency Alignment of savings provides motivation 15
  16. 16. HOW IT WORKS FOR TENANTS CURRENT Totalcostofoccupancy 16
  17. 17. Totalcostofoccupancy 17 HOW IT WORKS FOR TENANTS PROPOSED
  18. 18. HOW IT WORKS FOR TENANTS Totalcostofoccupancy 18
  19. 19. UPDATED SUBSIDY CALCULATION METHOD (OLD VS NEW) •TTP (Total Tenant Payment) = 30% * Adjusted income •TRP (Total Rent Payment) = 30% * Adjusted income – UtilityBenchmark Tenant minimum contribution •Using payment standard •Using rent standard (=payment standard – UtilityBenchmark) Benchmark rent •HAP = MIN[(Rent + Utilityallowance – TTP) , (payment standard – TTP)] •HAP = MIN[(Rent – TRP) , (rent standard – TRP)] HUD Subsidy •TTP •TRP + UtilityActual Actual tenant contribution •TTP (Total Tenant Payment) = 30% * Adjusted income •TRP (Total Rent Payment) = 30% * Adjusted income – UtilityBenchmark Tenant minimum contribution •Using payment standard •Using rent standard (=payment standard – UtilityBenchmark) Benchmark rent •HAP = MIN[(Rent + Utilityallowance – TTP) , (payment standard – TTP)] •HAP = MIN[(Rent – TRP) , (rent standard – TRP)] HUD Subsidy •TTP •TRP + UtilityActual Actual tenant contribution 19
  20. 20. The problem Solution Owner Tenant Others Implementation Summary 20
  21. 21. BENEFIT FOR OTHER STAKEHOLDERS • Increased adoption of distributed generation • Share the savings in the long-term HUD • See benefits practically • Reduced risk aversion to financing Financers • Reduced dependence eases capacity constraints • Can move into on-bill financing Utility Companies 21
  22. 22. The problem Solution Implementation Summary The problem Solution Implementation Summary 22
  23. 23. SITE SELECTION CRITERIA PICK LOW HANGING FRUIT AND BUILD ON SUCCESS Map Cheapest Technology to Region Prioritize by Potential Savings – LCOE Choose Easily Replicable Pilot Projects Ease of Implementation – Net metering, Subsidy 23
  24. 24. KNOWLEDGE SHARING Savings Calculator Open Collaborative Platform Success Stories 24
  25. 25. The problem Solution Implementation Summary The problem Solution Implementation Summary 25
  26. 26. ECOSYSTEM CURRENT OWNER Rent Subsidy Utility Subsidy HUD TENANT 26
  27. 27. OWNER Rent Subsidy Utility Subsidy HUD TENANT 27 ESCO ECOSYSTEM ESCO
  28. 28. OWNER Rent Subsidy HUD TENANT 28 ESCO ECOSYSTEM SUBSIDY REALLOCATION
  29. 29. OWNER Rent Subsidy HUD TENANT 29 ESCO ECOSYSTEM TENANT SAVINGS
  30. 30. Thank You 30 THANK YOU
  31. 31. APPENDIX
  32. 32. MONTE-CARLO SIMULATION DETAILS AND ASSUMPTIONS  Dataset from HUD website (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housi ng/mfh/presrv/mfhpreservation)  Used records with  Actual rent within ±40% of fair market rent  Rent plus utility higher than 30% of income  Utility expense equal to or greater than $10 per month  At least 1 assisted housing unit  Simulation input Assumptions 1 Based on 2014 median income schedule as published by HUD (http://www.huduser.org/portal/datasets/il/il14/index.html) 2 Based on Deutsche Bank report of average cost of electricity vs LCOE in California Income Distributed generation Actual Maximum for subsidy1 Power contribution Cost reduction2 Minimum $8,000 $8600 30% 19% Average $20,000 $25268 45% 25% Maximum $48,000 $49650 60% 31% 32
  33. 33. MONTE-CARLO SIMULATION (SUBSET USED FOR SUMMARY DATA) BedroomCount NumberofCases AvgContractRentAmt AvgFairMktRentAmt AvgUtilityAllowanceAmt 0 6162 $689.92 $722.80 $17.91 1 31201 $687.69 $730.56 $33.25 2 20196 $770.69 $911.22 $58.66 3 11624 $873.43 $1,220.60 $81.56 4 3302 $1,011.62 $1,461.08 $98.53 5 363 $1,447.42 $2,080.01 $120.37 6 25 $1,638.00 $2,182.76 $98.04 33
  34. 34. CALCULATIONS – BUILDING OWNER Tenant information Adjusted income $700 Minimum TTP $210 Maximum TTP $280 High level cost information Payment Standard $450 Gross Rent $430 Utility expenditure $50 Rent to owner $380 Utility cost information Reduction is cost for onsite generation 40% Percentage of energy from onsite generation 50% Payment to Utility Company $25 Cost for onsite generation $15 Price for onsite generated power $25 Who pays and who gets paid No Distributed Generation Distributed Generation - current system Distributed Generation - proposed system Sources Tenant (TTP) $210 $210 $210 HUD (HAP) $220 $210 $220 Uses Owner $380 $380 $380 Owner - onsite energy generation $0 $15 $25 Utility - traditional sources $50 $25 $25 34
  35. 35. CALCULATIONS – TENANT Tenant information Adjusted income $700 Minimum TTP $210 Maximum TTP $280 High level cost information Payment Standard $450 Gross Rent $430 Utility expenditure $50 Rent to owner $380 Proposed system - high level cost information Utility Benchmark $50 Minimum TRP $160 Maximum TRP $230 Gross Rent independent of utility cost $380 Rent Standard $400 Utility cost information Old energy expenditure $50 New energy expenditure $40 Who pays and who gets paid No Energy Savings Energy Savings - Current System Energy Savings - Our Proposal Sources Tenant (TTP/TRP plus energy cost) $210 $210 $200 HUD (HAP) $220 $210 $220 Uses Owner $380 $380 $380 Utility $50 $40 $40 35
  36. 36. STATES THAT HAVE REACHED PARITY Grid Parity at $3.00 ($2.10 w/ ITC) LCOE ($/KWh) Average Cost of Electricity ($/KWh) Differential Hawaii 0.12$ 0.37$ (0.25)$ California 0.12$ 0.16$ (0.04)$ New York 0.15$ 0.18$ (0.03)$ Connecticut 0.15$ 0.17$ (0.02)$ Nevada 0.10$ 0.12$ (0.02)$ New Hampshire 0.15$ 0.16$ (0.01)$ New Jersey 0.15$ 0.16$ (0.01)$ Vermont 0.16$ 0.17$ (0.01)$ Arizona 0.11$ 0.11$ -$ New Mexico 0.11$ 0.11$ -$ Source: Deutsche Bank, EIA (January 2014)36
  37. 37. WORKS FOR ALL QUADRANTS 37 Market Based Rent Budget Based Rent Utility cost not included in rent amount Quadrant 1 Quadrant 2 Utility cost included in rent amount Quadrant 4 Quadrant 3
  38. 38. WORKS FOR ALL QUADRANTS Owner Has access to additional profits Has access to additional profits Tenant Gets to keep savings from efficiency and conservation HAP kept constant, budget reduction leads to lower TRP 38 Market Based Rent Budget Based Rent Utility cost not included in rent amount Quadrant 1 Quadrant 2 Utility cost included in rent amount Quadrant 4 Quadrant 3
  39. 39. WORKS FOR ALL QUADRANTS Owner Has access to additional profits Has access to additional profits Tenant Gets to keep savings from efficiency and conservation HAP kept constant, budget reduction leads to lower TRP 39 Market Based Rent Budget Based Rent Utility cost not included in rent amount Quadrant 1 Quadrant 2 Utility cost included in rent amount Quadrant 4 Quadrant 3

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