Utility Support of Energy-Efficient Multifamily Construction

Why Support Multifamily Housing?

The multifamily sector provides an opportunity for utilities to capture energy savings as well as support affordable housing in their service territories.

  • There is significant potential for energy savings in the multifamily sector. The United States has more than 18 million occupied apartments and condominiums in buildings with five of or more units. These building owners and tenants spent almost $22 billion on energy in 2009 of which $15.4 billion was spent on electricity, $5 billion on natural gas, and more than $1 billion on fuel oil.i Energy expenditures in rented multifamily units are also on average 38% higher than in owner–occupied single family homes.ii With over 300,000 permits filed for new multifamily units in 2012, the energy savings potential for multifamily new construction continues to grow.
  • Multifamily housing has been traditionally underserved by utility–sponsored energy efficiency programs. A limited number of utilities have developed whole–building new construction multifamily energy efficiency programs. Existing multifamily programs are funded at rates far less than other programs given the market share of the multifamily sector.iii It can be difficult for utilities to provide incentives for mid and high rise multifamily buildings for a number of reasons including: multifamily buildings have a wide variety of architectural characteristics and energy usage characteristics; many different actors are involved in designing, constructing, and commissioning multifamily projects, and multifamily owners and developers face split incentive barriers when investing in energy efficiency, among other challenges. The ENERGY STAR Multifamily New Construction Program helps overcome some of these barriers to assist utilities in reaching this market.
  • A majority of low-income households live in multifamily housing and spend a higher proportion of their income on energy expenses compared to the average household. Over 27 million low–income households live in multifamily housing. Households that earn $50,000 or more spend just 3% of their income on energy expenditures while households than earn $10,000 or less spend 33% of their income on energy related expenses.iv Utilities looking to support affordable housing initiatives or programs can make a significant impact by incentivizing energy efficient construction of multifamily buildings through the ENERGY STAR Multifamily New Construction Program. 

Benefits of Incentivizing Multifamily Buildings with ENERGY STAR

Utilities can capitalize on the energy savings potential in the multifamily sector by incentivizing mid and high rise buildings through the ENERGY STAR Multifamily New Construction Program. As a sponsor, utilities can also leverage the following resources:

  • Use of the ENERGY STAR brand to promote utility partnership and engage multifamily developers and other key stakeholders.
  • Established program requirements and verification protocols reduce the burden on utilities to set up their own programs.
  • Technical and marketing support from the ENERGY STAR program.

i CNT Energy and The American Council for an Energy–Efficient Economy (ACEEE), “Engaging as Partners in Energy Efficiency: A primer for Utilities on the Energy Efficiency Needs of Multifamily Buildings and Their Owners,” March 2013.

ii The National Housing Trust, “Partnering for Success: An Action Guide for Advancing Utility Energy Efficiency Funding for Multifamily Rental Housing,” March 2013.

iii Kate Johnson and Eric Mackres, ACEEE, “Scaling up Multifamily Energy Efficiency Programs: A Metropolitan Area Assessment,” March 2013.

iv The National Housing Trust, “Partnering for Success: An Action Guide for Advancing Utility Energy Efficiency Funding for Multifamily Rental Housing,” March 2013.