Ed Connelly, New Ecology, Inc.

Partners In Innovation-Case Studies

The Cost Barrier in Achieving Deep
Energy Retrofits:
58th 7th St. Cambridge, MA
Edward F. Connelly
President,
New Ecology, Inc.
Founder,
WegoWise, Inc.
Boston, MA

Gauging the Cost of Greening

New Ecology, Preserving Affordable Rental Housing Through Energy Efficiency April 14, 2010

Cost Benefit at 1460 House
Median Cost of Gas Multifamily Affordable Housing Built after 1995: $.85/SF

1460 House: $.463/SF

Savings/SF (45% reduction) $.387

Savings over 31,122 SF/YR $12,037

Simple payback on cost of $70,629 5.87 YRS

Gas Savings over 15 years $180,547

NPV 15 YEARS $142,806

Annual Cash Flow (assuming $70,629 borrowed at 5% for 15 years) $ 5,334
Cumulative Cash Flow 180,547-100,535= $80,012
Could have borrowed $127,000 and cash flowed ~$3/SF


58 7Street Cambridge, MA
th

Deep Energy Retrofit Case Study

Award-winning Community
Development Corporation


Project Description


7th Street Deep Energy Retrofit


7th Street Deep Energy Retrofit-
Background


Background
March 2007 Fire

All Tenants Displaced
from 6 unit building

Owner explores goal
of Net Zero Energy

Design Charrette


Design
Multiple versions of Annual Energy Use (kBtu)

REM modeling 2004 IECC Energy Code (Left), Modeled (Middle),
and With Solar (Right)

Cooling (none) Lights/Appliances Heating Hot Water
New Goal: Deep
400,000
Energy Retrofit 350,000
300,000
154,150
250,000

Funding for PV 200,000
150,000
83,010
126,961
100,000 16,491
71,171
71,171
50,000
Self-fund Solar Thermal 0
62,341
0
62,031
0
31,997
0


Design
Final Strategies:
• Tight envelope, foam, tyvek and airtight drywall
• Enhanced insulation
• Good windows
• 95% eff. Boiler
Model:
• Consumption modeled 216,211 kBTU v. 343,452
code = 44% reduction
• w/ solar, off site energy use reduced to 119,658 --
65% reduction from baseline (HERS 32)


Design
Annual Energy Cost
2004 IECC Energy Code (Left), Modeled (Middle),
Savings Modeled: and With Solar (Right)

Water/Sewer Lights/Appliances Heating Hot Water
$1,299 saved in hot water heating
$907 saved in water bills $12,000
$1,487 saved in electricity
$10,000
$1,195 saved in hot water heating $2,815

$1,013 saved in heating energy $8,000
$2,396 $1,516
$16 saved in electricity
$6,000 $1,383
$321
$1,383
Total saved= $5917/yr $4,000 $3,664
$3,648
Base modeled cost $11,268 $2,000
$2,161

52% Savings $2,393
$1,486 $1,486
$0


7 Street Cambridge Case
th

Construction Challenges

Framing
Adding Insulation
Multiple Insul Types
Window Costs
Contractor and Subs


7th Street Deep Energy
Retrofit-Costs
58 7th Street
6030 gross sq ft
w/PV, After
With PV w/o PV & Thermal Rebates
Total Construction costs $928,848.00 $815,547.00 $880,548.00

Cost/SF $154.04 $135.25 $146.03

Incremental Greening Costs $183,019.00 $69,718.00 $137,519.00

Green Premium/SF $30.35 $11.56 $22.81

Green Premium as % of TCC 20% 9% 16%

Simple Payback: $137,519/5733=24 years ($5914 modeled-23 yrs)


Cost/Benefit Analysis



median gas use btu/ all energy star 49725

7TH (35.7% of Energy Star median) 17,767

difference = 7th savings/sf 31,958

change btu to therms 0.320

Savings per SF @ 1.60/therm 0.511328

SF at 7th 7,620

savings per year 3,896.32



projected DHW therms/sf using median of 25000 btu/br 11811

7TH 5,905

difference = 7th savings/sf 5,906

change btu to therms 0.059

savings per SF @ 1.60/therm 0.094496

SF at 7th 7,620

savings per year 720.06



add electric savings

cost/yr first year from WEGO 650

expected cost per year

1kwh/ft 7620

historic 8785kWh used before fire

at 0.2 1757

savings 1107


water

cost/g cost/yr

previous 60gbd 219000 0.01 2190

now 40gbd 146000 0.01 1460

savings 20gbd 73000 0.01 730

#br 10

200g/d

73000gpy


Cost/Benefit Analysis w/
PV and Solar Thermal
Savings over 7,620 SF/YR $ 5,733

Simple payback on cost of $ 137,517 23.99 YRS

Gas+Common Elect+Water Savings over 15 years $ 86,000
NPV of Utility savings $101,644

NPV 15 YEARS $(35,855)
NPV 20 YEARS $ 8,879

Annual Cash Flow (assuming $137,517 borrowed at 5% for 15 years)
(13,050-5,733) $ (7,317)
Cumulative Cash Flow (no utility inflation) $(109,750)
With Energy Inflation at 5% $( 72,040)
Could only borrow $61,000 and cash flowed (10.6 yr simple payback)


Cost/Benefit Analysis w/o
PV and Solar Thermal
Savings over 7,620 SF/YR $ 3906

Simple payback on cost of $ 137,517 17.85

Gas+Common Elect+Water Savings over 15 years $ 58,594
NPV of Utility savings $ 69,265

NPV 15 YEARS $( 453)
NPV 20 YEARS $ 30,025

Annual Cash Flow (assuming $69,718 borrowed at 5% for 15 years)
(6,616-3,906) $ (2,710)
Cumulative Cash Flow (no utility inflation) $ (48,649)
With Energy Inflation at 5% $ (14,954)
Could only borrow $41,000 and cash flowed (10.5 yr simple payback)


how could we pay for this?

annual loan cost 24 yrs 0% 5,730
total annual savings 5,733.32
cash flow 3.32
15 year cash flow 50

annual loan cost 30 yrs 1.5% 5,695
total annual savings 5,733.32
cash flow 38.32
15 year cash flow 575


Beyond Energy Star
How Much is Left to Save?
GAS (HEAT and DHW) 49,725 btu/sf
.49 therms/sf
@ $1.60/therms
$.79 /sf/year

WATER 50 g/br/d
@$.01 per gallon
$.50 /br/d
$183/br/year


Paying for Performance


Beyond Energy Star
Compare to German Standards:

Measured at 7th Street 5.29 kWh/SF
Convert to meters 56.92 kWh/SM
Add tenant electric (guess) 30.50 kWh/SM

Total 87.42 kWh/SM

German Standard 70.00 kWh/SM
6395 HDD vs. 5343


So, What Does It All Mean?
• Need to Lower the Cost of Achieving Deep Energy Savings

• Bundle Savings From a Base of Code?

• Finance Over Long Term/Subsidize Financing

• Not Expect Project Savings to Pay For Upgrades
• More reasons than cost savings to do this
• Risk, Climate, Volatility
• German Model-Regulatory


Partners In Innovation-Case Studies

Addressing The Cost Barrier in
Achieving Deep Energy Savings in
Housing – 58th Street, Cambridge, MA

connelly@newecology.org

Ed Connelly, New Ecology, Inc.

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