Multifamily Market Analysis

Transcription

1 10680 White Rock Road, Suite 100 Rancho Cordova, CA, Multifamily Market Analysis May 18, 2018 Submitted To: Kelly Cunningham Pacific Gas and Electric Company 202 Cousteau Place, Suite 150 Davis, CA

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3 TABLE OF CONTENTS 1. INTRODUCTION... 5 Purpose and Background... 5 Current State of the Market and Project Future Trends... 5 Identify Energy Savings Opportunities for Services and Programs... 5 Limitation of Project Scope... 6 Summary of Findings DATA SOURCES... 7 American Communities Survey... 8 Building Permit Survey... 8 HUD State of the Cities Data Systems (SOCDS)... 8 Low-Income Housing Tax Credit (LIHTC) Project List... 8 CalCERTS HERS Registry... 8 PG&E California Advanced Homes Program (CAHP) Data... 8 PG&E California Multifamily New Homes Program (CMFNH) Data... 8 PG&E Multifamily Upgrade Program (MUP) Data... 9 SDG&E Energy Upgrade California Multifamily (EUC-MF) Program Data... 9 SCE & SoCalGas Energy Upgrade California - Multifamily Pilot Process Evaluation... 9 NEEA 2013 Residential Building Stock Assessment (RBSA): Multifamily Characteristics and Energy Use Docketed Codes and Standards Enhancement (CASE) Reports... 9 PG&E 2019 Title 24 Work Plans High-rise Multifamily Building Code Change Improvements and Research to Maximize Energy Efficiency (HRMF study) MARKET ANALYSIS FINDINGS Market size Market Composition Units per Building Occupancy Building Vintage Affordable Housing New Construction Trends and Opportunities Statewide Low-Rise Multifamily New Construction Data per CalCERTS PG&E New Construction Incentive Program Participant Data i TRC Energy Services

4 Existing Buildings Trends and Opportunities Property Types and Sizes Retrofit Measures Barriers to Increase Code Requirements and Compliance Code Structure and Software Limitations Code Development Process Lack of Data Additional Barriers Energy Savings Opportunities for Utility Program Offerings Multifamily Building Prototype Fuel Switching and Electrification Two- to Four-Unit Buildings Code Readiness for Windows Advancement of Wall Insulation Central DHW Systems TRC Energy Services ii

5 TABLE OF FIGURES Figure 1: Table Summary of Data Sources... 7 Figure 2: Volume of Existing Multifamily Units by County Figure 3: Volume of Multifamily New Construction Permits by County Figure 4: Existing Building vs. New Construction Development Shift Figure 5: Volume of New Construction - Single Family vs. Multifamily Figure 6: California Existing Residential Units by Building Size Figure 7: Average Number of Units per Building in Multifamily New Construction Figure 8: Owner Occupied vs. Renter Occupied Units by Building Size Figure 9: Multifamily Building Stock by Vintage Figure 10: Number of Households Served by Affordable Housing Subsidies Figure 11: Multifamily Low-Rise New Construction Distribution of Dwelling Unit Sizes Figure 12: Multifamily Low-Rise New Construction Volume by Climate Zone Figure 13 Average Compliance Margin (TDV) by Climate Zone and End Use Figure 14: Average Standard Design TDV Energy by Climate Zone and End Use Figure 15: Low-Rise New Construction Wall Assemblies Figure 16: Low-Rise New Construction Window Specifications Figure 17: Low-Rise New Construction Average U-Factor and SHGC by Climate Zone Figure 18: Low-Rise New Construction Space Heating System Types Figure 19: Low-Rise New Construction Space Cooling System Types Figure 20: Low-Rise New Construction HVAC Distribution Figure 21: Low-Rise New Construction DHW System Types Installed Figure 22: Low-Rise New Construction Central DHW System Recirculation Controls Figure 23: PG&E CMFNH Building Participation by Climate Zone Figure 24: PG&E CMFNH Building Participation - High-rise vs. Low-rise Figure 25: PG&E CMFNH Wall Insulation Figure 26: PG&E CMFNH Window U-Factor and SHGC Figure 27: PG&E CMNFH Roofing Product Specifications iii TRC Energy Services

6 Figure 28: PG&E CMFNH Space Heating Types Figure 29: PG&E CMFNH Space Cooling Types Figure 30: PG&E CMFNH Duct Location Figure 31: PG&E CMFNH DHW Types Figure 32: Low-rise vs High-rise Whole Building Retrofit Participation by CA IOU Figure 33: Market Rate vs. Affordable Whole Building Retrofit Participation by CA IOU Figure 34: MUP and SDG&E EUC-MF Participation by Climate Zone Figure 35: Retrofit Measures by Utility Figure 36: Average Window Replacement Specifications by Climate Zone Figure 37: Existing Heating Systems in MUP and EUC Projects Figure 38: Existing Cooling Systems in MUP and EUC Projects Figure 39: Comparison of 2013 Low-Rise Standard Design to Multifamily Practices TRC Energy Services iv

7 1. INTRODUCTION The multifamily market analysis overlays energy savings opportunities with the current and projected state of the multifamily new construction and existing building markets. The analysis provides a descriptive overview of the new construction and existing building multifamily market, including the relative proportion of market segments by location. This report summarizes opportunities for energy savings through codes and standards advancements and methods of utility program intervention that are specific to the trends and barriers for the multifamily market. Purpose and Background Pacific Gas & Electric (PG&E) contracted with TRC Energy Services (TRC) to provide a market analysis of multifamily (MF) construction trends and opportunities for energy savings, for both existing buildings and new construction. The overall goals of the market analysis are to identify future code development opportunities, support energy efficiency program enhancements in advance of codification, and advance the CPUC Strategic Plan objectives for achieving Zero Net Energy. The objective of the multifamily market analysis is two-fold: 1. Describe the current state of the multifamily market and project future trends 2. Identify energy savings opportunities for utility services and program offerings. Current State of the Market and Project Future Trends For the purposes of this study, TRC reviewed new construction and existing building data separately. For new construction, TRC reviewed project data from participants in PG&E s California Multifamily New Homes Program (CMFNH) from 2016 to All of these projects were permitted under the 2013 Building Energy Efficiency Standards. TRC compared project details from participating multifamily projects to single family projects participating in PG&E s California Advanced Homes Program (CAHP) over a similar timeframe, and to the entire population of new construction projects in California, as documented through the CalCERTS database. Where possible, TRC documented differences between high-rise and low-rise buildings, and market rate and affordable ownership. For existing buildings, TRC documented existing building stock as recorded through the American Communities Survey, and reviewed retrofit project details from whole-building upgrade programs throughout the state. Program participant details include information about existing conditions, in addition to upgrade measures. In the short timeframe for this analysis, TRC was unable to acquire details about prescriptive and direct install retrofit programs in California, which serve a different portion of the market and may show differences in upgrade trends. Similar to new construction, TRC looked at differences between high-rise and low-rise buildings, as well as market rate and affordable housing. The data sources available did not include information about commercial or mixed use spaces associated with multifamily properties. Based on urban infill trends, TRC suspects that mixed use construction is common and suggests that further research be done in this area. The data sources used to define the current market and future trends are described in more detail in the Data Sources section below. For the purpose of this report, affordable housing refers to subsidized housing for low-income households, further described in section Identify Energy Savings Opportunities for Services and Programs For this objective, TRC analyzed market trends and compared to previously published studies that have identified opportunities for the multifamily building sector. TRC assessed the opportunities for utility services and programs that are specific to the barriers and needs of the market, and identified new 5 TRC Energy Services

8 opportunities. The analysis differentiates opportunity by market sector, as feasible and appropriate, such as high-rise, low-rise, affordable and market rate projects. TRC identified methods that PG&E and the other California Investor Owned Utilities (CA IOUs) San Diego Gas and Electric (SDG&E), Southern California Edison (SCE), and Southern California Gas Company (SoCalGas )) can use to provide these energy savings opportunities to the market, including: Utility services and programs for whole building new construction and retrofits Technology research and development Codes and standards program opportunities for Title , 2025, and 2028 Limitation of Project Scope The most readily available data to TRC is whole-building incentive program data, which may not be representative of characteristics for the entire statewide market across all climate zones. Although this data is useful to identify energy savings opportunities, because participants are typically early adopters and can provide insight to the direction of the future market, it may not fully depict the types and magnitude of barriers that non-program participating projects experience. Statewide data leveraged from the CalCERTS database represents only low-rise multifamily construction, leaving a significant data gap for high-rise multifamily construction. Additionally, data for existing building stock and retrofit projects is limited, as it is not always captured in programs or through permitting procedures. TRC has noted some data gaps in the analysis report, for both new construction and existing buildings. The future multifamily new construction and retrofit markets may be influenced by several factors, such as population growth in specific regions, rebuilding after 2017 California wildfires, and local or state policies regarding construction, such as affordable housing bills and Zero Net Energy or Zero Carbon goals. For this reason, it may be a challenge to accurately predict the direction of the statewide market. TRC MF incentive program managers and staff have provided insight into incentive program initiatives that may shape the multifamily market. Summary of Findings Based on trends in new construction and retrofit projects completed in the state of California between January 2013 and December 2017, TRC identified the following: Multifamily builders are trending toward thicker framing and increased cavity insulation, and could increase efficiency further through additional exterior insulation. Both new construction and existing multifamily buildings reveal increased interest in electric space heating options. Residential standard design and building prototypes used for code compliance are misaligned with multifamily building characteristics. Two to four unit existing multifamily buildings are primarily renter occupied and therefore may be better served through multifamily programs. In order to improve installed window specification, cost and product availability must be addressed. Each finding is discussed further within the new construction and/or existing buildings sections of this report, as well as in section 3.6 toward the end of the report. TRC Energy Services 6

9 2. DATA SOURCES In analyzing the multifamily market trends and opportunities in California, TRC gathered data from utility programs, the California Home Energy Rating System (HERS) registry, and Census Bureau databases. TRC also referenced various reports and collected anecdotal data related to the state of the multifamily market and utility program participation. Data sources referenced in the California multifamily market analysis are summarized in Figure 1 and described in further detail below. SOURCE DATA OVERVIEW DATE RANGE American Communities Survey Building Permits Survey HUD SOCDS Database LIHTC List of Projects CalCERTS HERS Registry Database CAHP Project Database CMFNH Project Database MUP Project Database SDG&E EUC-MF Project Database SCE and SoCal Gas EUC-MF Evaluation Existing building housing information, including number of units in structure, building vintage, and occupancy Number of housing units permitted by building size and state Number of housing units by permitted by building size and county LIHTC project data, including rehabilitation vs. new construction, location, and date placed in service. Building code compliance characteristics from low-rise multifamily new construction projects under the 2013 code. Single family new construction projects built better than 2013 code within PG&E service territory Multifamily new construction projects built better than 2013 code within PG&E service territory Whole-building multifamily retrofit projects completed in PG&E service territory Whole-building multifamily retrofit projects completed in SDG&E service territory Summary of projects retrofitted under the SCE/SoCal Gas EUC-MF pilot 5-year estimates 2012 to 2016 Annual history since 1980 referenced to through 2017 July 2016 through November 2017 January 2016 to November to and 2017 September 2013 to March 2016 NEEA 2013 RBSA: MF Trends in appliances and electronics in multifamily units. Survey conducted in CASE Reports Code opportunities and market barriers Analysis performed in 2016 and Title 24 Work Plans HRMF study Code and program opportunities, data collection needs, market barriers Code opportunities and structure improvements, software update recommendations, market barriers Figure 1: Table Summary of Data Sources 2015 work plans Analysis performed in TRC Energy Services

10 American Communities Survey The American Communities Survey is conducted nationwide on an annual basis by the United States Census Bureau. TRC collected information on housing characteristics from the most recent five-year estimate. This included number of housing units by building size, vintage, occupancy type, and heating fuel type. Building Permit Survey From the United States Census Bureau, TRC gathered information on the number of housing units permitted by building size annually since 1980, as well as the average number of units per multifamily building. HUD State of the Cities Data Systems (SOCDS) The SOCDS provides data for individual metropolitan areas, cities, and suburbs. TRC accessed the building permits database for a breakdown of new construction permits by building size and county. Low-Income Housing Tax Credit (LIHTC) Project List The California Tax Credit Allocation Committee keeps a public-facing list of LIHTC projects and tax credit award details. TRC used this list to map LIHTC projects and also estimate number of new construction units added annually. CalCERTS HERS Registry The CalCERTS HERS Registry Database includes 19,068 multifamily units in 5,587 low-rise buildings, permitted under the 2013 California Building Energy Efficiency Standards. Because all residential buildings were subject to mandatory HERS measures under the 2013 code, this database includes all low-rise multifamily buildings permitted. The database captures details from building energy simulation models, including envelope, space heating and cooling, and domestic hot water (DHW) systems. It also captures climate zone, utility companies, conditioned floor areas, and compliance margins by end use. Though the CalCERTS database includes single family and multifamily low-rise properties under various code years, TRC looked only at multifamily building data under 2013 code for the purpose of this analysis. PG&E California Advanced Homes Program (CAHP) Data The California Advanced Homes Program is a statewide whole-building new construction incentive program designed to encourage better than code building design and energy savings. TRC accessed data from PG&E participants only, for the purpose of comparison between single family and multifamily design choices. The data set included 145 projects, totaling 8,572 lots. PG&E California Multifamily New Homes Program (CMFNH) Data The California Multifamily New Homes Program is a whole-building new construction incentive program designed to encourage better than code building design and energy savings in buildings of three or more attached units. TRC compiled the data for 59 projects participating in CMFNH in 2016 and The data set includes around 189 buildings and 7,194 units. TRC Energy Services 8

11 PG&E Multifamily Upgrade Program (MUP) Data Multifamily Market Analysis Pacific Gas and Electric Company PG&E s Multifamily Upgrade Program provides incentives for whole building upgrades to existing multifamily buildings (five or more attached units, or campuses of 4-unit buildings) that achieve a minimum ten percent reduction in modeled building energy use. This data set includes 98 projects and 9,157 units. SDG&E Energy Upgrade California Multifamily (EUC-MF) Program Data SDG&E s Energy Upgrade California provides incentives for whole building upgrades to existing multifamily buildings (five or more attached units, or campuses of 4-unit buildings) that achieve a minimum ten percent reduction in modeled building energy use. There are 28 properties and 4,854 units included in the analysis from this program. SCE & SoCalGas Energy Upgrade California - Multifamily Pilot Process Evaluation Southern California Edison (SCE) and Southern California Gas Company s (SoCalGas) Energy Upgrade California Multifamily Pilot (EUC MF) Program pilot ran from September 2013 to March 2015 and was designed to offer incentives and technical assistance for whole building energy efficiency upgrades to multifamily properties. The pilot served 1,919 units across 15 properties, with a minimum ten percent modeled whole building energy savings. NEEA 2013 Residential Building Stock Assessment (RBSA): Multifamily Characteristics and Energy Use As stated in the study, The primary objective of the RBSA multifamily survey was to develop an inventory and profile of existing multifamily residential building stock in the Northwest. The RBSA multifamily study was designed to provide an overview of the principal characteristics of the buildings (size, insulation level, heating ventilation and air conditioning (HVAC) systems, and other features of each building s common area) and the principal characteristics of the individual units and their energy use patterns (e.g., lighting, appliances, electronics, and water heating). The study is based on field data from a representative, random sample of existing multifamily units and buildings. A total of 230 buildings and 552 units were included in the multifamily sample. Due the differences in building code requirements and historical building practices, TRC only uses the RBSA study for appliances and electronic (e.g., plug load) data. In the RBSA report, trends in saturation and number of devices per multifamily unit is compared to those found in the single family survey Docketed Codes and Standards Enhancement (CASE) Reports TRC reviewed the draft and final docketed CASE Reports for 2019 Title 24, Part 6 residential code updates, focusing on adjustments in stringency between draft and final proposed requirements, as well as barriers identified through the CASE analysis. The 2019 Building Energy Efficiency Standards were adopted May 9, The 2019 residential CASE topics include: Indoor air quality (IAQ) High performance attics (HPA) High performance walls (HPW) High performance windows and doors Quality insulation installation (QII) Drain water heat recovery (DWHR) Compact hot water distribution (CHWD) 9 TRC Energy Services

12 PG&E 2019 Title 24 Work Plans During the initial analysis phase to identify 2019 CASE Reports, TRC developed work plans that provide an overview of code opportunities and barriers. Some of these work plans transitioned into 2019 CASE work, while other work plans remain opportunities for further development. The work plans that did not become 2019 CASE Reports likely have market barriers to address prior to becoming code proposals; therefore, there may be opportunities for PG&E and the utilities to address these through code readiness efforts. High-rise Multifamily Building Code Change Improvements and Research to Maximize Energy Efficiency (HRMF study) This CEC-funded study characterizes challenges for high-rise multifamily based on the split of code requirements and software capabilities between residential and nonresidential. The report provides several recommendations on merging low-rise and high-rise multifamily requirements, improving software capabilities, and increasing the stringency of code requirements. The analysis also includes modeled energy savings for some of the recommended code updates. TRC Energy Services 10

13 3. MARKET ANALYSIS FINDINGS The following describes TRC s findings regarding the state and trends of the multifamily market in California. Unless otherwise noted, multifamily is defined as buildings of three or more attached units. Market size Of the estimated 13,911,737 (total) housing units in California, 30 percent (4,006,580 units) are in buildings of three or more attached units. 1 Los Angeles County contains 35 percent of multifamily units statewide. San Francisco County is the only county to have more multifamily homes than single family homes, with 58 percent of homes in buildings of three or more attached units. Figure 2 illustrates the concentration of multifamily units by county in California, showing greatest volume around large metropolitan areas in Alameda, Orange, Los Angeles, San Diego, San Francisco, and Santa Clara counties. Figure 2: Volume of Existing Multifamily Units by County 2 Multifamily new construction continues in similar geographic pattern. Figure 3 illustrates the volume of multifamily new construction, with greatest concentration in Alameda, Orange, Los Angeles, San Diego, San Francisco, Santa Clara, and San Mateo Counties. These seven counties make up 85 percent of multifamily new construction. Los Angeles alone permitted 29 percent of all multifamily new construction permits in United States Census Bureau, 2016 American Communities Survey 11 TRC Energy Services

14 Figure 3: Volume of Multifamily New Construction Permits by County While only 30 percent of existing housing units (excluding mobile homes, boats, and RVs) in the state are multifamily homes, the margin between single family and multifamily unit volume is much smaller in new construction, as shown in Figure 4. Nearly half of the units permitted from 2015 to 2017 are multifamily. New construction is currently on-pace to add 1.25 percent per year to the number of multifamily dwelling units in California, with an average of 49,919 units permitted annually from 2015 to Figure 4: Existing Building vs. New Construction Development Shift 3 HUD SOCDS Building Permits Database TRC Energy Services 12

15 Figure 5 further illustrates the trend toward equal proportions of single and multifamily unit construction. It shows permitted units by building size over the last 15 years. Figure 5: Volume of New Construction - Single Family vs. Multifamily 4 Market Composition In this section we break down building types and sectors within multifamily properties in California, with particular focus on affordable housing, building size, and building vintage. Few data sources contained a field for the number of floors. Therefore, mapping high-rise vs. low-rise properties to occupancy types, geographies, etc. was not possible. Units per Building Figure 6 show the breakdown of existing residential units in the state of California by building size. Figure 6: California Existing Residential Units by Building Size 4 United States Census Bureau, Building Permit Survey 13 TRC Energy Services

16 Distribution of building sizes varies only slightly from one geography to another. The vast majority of counties have fair representation across all building sizes. Low-rise buildings of 20 or fewer units are prevalent across all counties. Based on the assumption that a high-rise building (four stories or higher) has a minimum of 20 units, TRC estimates that 75 percent or more of multifamily units in California are in low-rise buildings. With regard to new construction and major rehabilitation, low-rise buildings are subject to the residential building energy efficiency standards, and high-rise must comply with a combination of commercial and residential standards. Figure 8 shows that the number of units in newly constructed multifamily buildings has grown in recent years, as housing density increases. With the millennial generation s interest in living in urban areas and getting around without personal cars, we expect this trend to continue. 5 Occupancy Figure 7: Average Number of Units per Building in Multifamily New Construction Of all occupied multifamily units in the state, 88 percent are renter occupied. 6 As shown in Figure 8, this includes two- to four-unit buildings that are often served through single family residential energy efficiency programs rather than multifamily programs. The potential program participant of two- to four-unit buildings may be better targeted through multifamily programs, where the value proposition takes into consideration split incentives, and the participation process accommodates owner participation for renteroccupied units. 5 According to an article published by the National Association of Realtors, millennials prefer to walk over other modes of transportation, and prefer biking and public transportation more than previous generations. 6 United States Census Bureau, 2016 American Communities Survey TRC Energy Services 14

17 Building Vintage Figure 8: Owner Occupied vs. Renter Occupied Units by Building Size As shown in Figure 9, most of the multifamily building stock in California was built between 1960 and With a range from 19 to 58 years old, this building stock has a diverse mix of systems and efficiencies, likely upgraded over time instead of all at once. For this reason, targeting buildings by vintage may not be a logical approach. We have found little correlation between building vintage and retrofit program participation and energy savings. Affordable Housing Figure 9: Multifamily Building Stock by Vintage In California there are approximately 491,000 rent-assisted households, and an additional 350,000 units supported by Low Income Housing Tax Credits (LIHTC). Figure 10 summarizes the subsidy types. Assuming these are shared proportionately across single family and multifamily rental units, there are conservatively 15 TRC Energy Services

18 457,000 designated multifamily affordable housing units in the state of California. This represents at least 12 percent of the multifamily building stock in the state. Figure 10: Number of Households Served by Affordable Housing Subsidies 7 For the purposes of this report, the term affordable is used to describe subsidized housing up to 80 percent of the area median income. Low-income may be used to describe households meeting income requirements for affordable housing, and applies to a larger population than is actually living in affordable housing. The Center on Budget and Policy Priorities estimates that another 1,189,000 low-income households are severely cost burdened and not served by federal affordable housing programs. Again, assuming a proportional split across single family and multifamily, TRC estimates a conservative 30 percent of multifamily households in California qualify as low-income. If affordable housing subsidies cover only 12 percent of the multifamily market, that leaves 18 percent of the multifamily market qualified as lowincome, but without access to the federal housing programs that support energy efficiency retrofits in housing. New Construction Trends and Opportunities TRC analyzed two new construction data sets for the purpose of identifying common energy efficiency practices under the 2013 Building Energy Efficiency Code. The first is the statewide HERS registry database for all new residential construction in California (CalCERTS) and shows what the low-rise multifamily market is doing as a whole. The second is the multifamily new construction program administered by PG&E, which reveals the options early adopters are taking to distinguish themselves in the market place, and also identifies barriers to code enhancements. The findings from each are described in detail below. Statewide Low-Rise Multifamily New Construction Data per CalCERTS The CalCERTS data for 2013 code compliance includes 19,068 multifamily dwelling units, built over a threeyear period. This is 13 percent of the units permitted over this period, according to United States Census Bureau, Building Permit Survey. The database does not include high-rise or mixed use projects, which represent a substantial gap in information available for multifamily new construction projects. Multifamily buildings may be modeled unit-by-unit or as whole buildings under the 2013 Building Energy Efficiency Standard, and the database includes a mix of unit-by-unit and whole-building data. Of the 7 Center on Budget and Policy Priorities, California Fact Sheet: Rental Assistance, March 30, TRC Energy Services 16

19 projects modeled as buildings, the average building has eight dwelling units. Unit sizes range from 250 to 2,789 sq. ft., with an average of 1,575 sq. ft. per unit and median of 1,634 sq. ft. per unit. Figure 11 illustrates the distribution of average dwelling unit sizes in low-rise multifamily new construction. Figure 11: Multifamily Low-Rise New Construction Distribution of Dwelling Unit Sizes Figure 12 shows the volume (in dwelling units) of multifamily low-rise new construction by climate zone. Figure 12: Multifamily Low-Rise New Construction Volume by Climate Zone Common Compliance Options Across all climate zones, water heating makes up the majority of the code compliance margin for low-rise multifamily construction. In many climate zones, efficient water heating offsets negative space heating and cooling compliance margins. Figure 13 illustrates this compliance trend. Bars below zero indicate end uses that do not meet prescriptive compliance. Bars above zero represent end uses exceeding prescriptive standards. 17 TRC Energy Services

20 Figure 13 Average Compliance Margin (TDV) by Climate Zone and End Use The high compliance margins in water heating are not proportionate with the end use energy budget in the standard design. As shown in Figure 14 water heating is a significant portion of the total energy budget in Climate Zone 1, but is not dominant in most of the climate zones. Although gas and electric appliances, cooking, lighting, and plug loads account for roughly half of the energy budget in the 2013 Building Energy Efficiency Standards, compliance credits are not available for these end uses, thus no building detail is collected and no compliance margins exist for these end uses. Each of these end uses offers opportunity for further study. Figure 14: Average Standard Design TDV Energy by Climate Zone and End Use Envelope Specifications The majority (62 percent) of low-rise multifamily buildings built under the 2013 Building Energy Efficiency Standards have 2x4 framing, 16 inch on center (o.c.), with R-13 or R-15 cavity insulation, and no continuous insulation. Less than one percent of buildings had continuous insulation. The standard design is R-13 cavity insulation with R-5 continuous insulation or R-15 with R-4 continuous insulation. The 37 percent of buildings built with 2x6 framing would also need continuous insulation to meet the prescriptive U-factor of TRC Energy Services 18

21 0.65. Wall assemblies are therefore responsible for some of the negative space heating and cooling compliance margins included in the averages illustrated in Figure 13. Figure 15: Low-Rise New Construction Wall Assemblies Windows installed in low-rise multifamily buildings present a wide range of specifications, both more efficient and less efficient than the 2013 prescriptive standards of 0.32 maximum U-factor, and 0.25 Solar Heat Gain Coefficient (SHGC). The range of window specifications is shown in Figure 16, where darker markers represent a concentration of windows with identical specifications. Figure 16: Low-Rise New Construction Window Specifications 19 TRC Energy Services

22 In half of the climate zones, the average window specifications were in compliance with prescriptive standards. Figure 17 lists the average specifications by climate zone. Climate Zone Average U-Factor Average SHGC Figure 17: Low-Rise New Construction Average U-Factor and SHGC by Climate Zone Quality insulation installation (QII) was a fairly common compliance credit, claimed in 42 percent of multifamily low-rise construction projects. Only 18 of the 5,588 buildings (total of 52 units) in the CalCERTS database claimed high performance attics, and eight buildings (total of 129 units) claimed to be solar ready. Combined, high performance attics and solar ready projects account for less than one percent of low-rise multifamily new construction. HVAC Specifications Central gas furnaces are the dominant heating type in multifamily dwelling units, consistent with the standard design. Heat pump technology makes up 30 percent of installed space heating systems. Figure 18 shows the number of buildings in the CalCERTS database by space heating system type. Figure 18: Low-Rise New Construction Space Heating System Types TRC Energy Services 20

23 Central split air conditioning systems are present in 69 percent of new low-rise multifamily buildings. Consistent with the space heating data, 30 percent of buildings are cooled by heat pumps. Less than one percent report having no space cooling. Figure 19 shows the breakdown of cooling systems types from the CalCERTS database for multifamily low-rise new construction. Figure 19: Low-Rise New Construction Space Cooling System Types HVAC distribution in multifamily low-rise buildings is primarily ducts in an unconditioned attic. This is contrary to the belief that most multifamily ducts are within the conditioned space. Only 23 percent of systems have ducts within conditioned space, or are ductless. This leaves significant opportunity for improved energy efficiency through HVAC distribution and high performance envelope measures. Figure 20 shows the breakdown of HVAC distribution as recorded in the CalCERTS database. Figure 20: Low-Rise New Construction HVAC Distribution DHW Specifications Because the standard design for multifamily low-rise buildings includes individual storage water heating, multifamily low-rise construction gains advantage through installation of central water heating with a recirculation loop. Because central systems serve higher loads throughout the day, as compared to individual water heaters, they save energy through reduced standby losses. Figure 21, however, illustrates that instantaneous and small storage water heaters are more popular than large storage water heaters. Only 16 percent of multifamily low-rise buildings install central water heating (large storage or boiler water heater). The majority of buildings (89 percent) rely on natural gas fuel for domestic hot water. 21 TRC Energy Services

24 Figure 21: Low-Rise New Construction DHW System Types Installed Central domestic hot water systems, have a fairly even distribution of demand, continuous monitoring, and temperature modulation recirculation controls, as shown in Figure 22. Figure 22: Low-Rise New Construction Central DHW System Recirculation Controls PG&E New Construction Incentive Program Participant Data Because they offer incentives for better-than-code energy performance, projects in PG&E s multifamily (CMFNH) and single family (CAHP) incentive programs reveal greater building energy efficiency when compared to statewide new construction averages. The program evaluates buildings based on an energy model output score called the Energy Design Rating (EDR).To qualify for incentives, participants must demonstrate that their proposed efficiency (Proposed Efficiency EDR) is better than standard efficiency (Standard Efficiency EDR) for their building. The difference between these two metrics is called the Delta EDR. Participants must achieve a Delta EDR of at least three to qualify for incentives. A Delta EDR of three is roughly equivalent to an energy use reduction of 15 percent from the code requirement. Participants can increase their Delta EDR and raise their incentives by increasing the energy efficiency of their buildings. This pool of new construction program projects represents early adopters of new technologies and code advancements, and can carve the path for the larger multifamily market. The CMFNH data set includes projects from Climate Zones 2, 3, 4, 12, and 13. Participant distribution by climate zone, shown in Figure 23, is in close alignment with the new construction permit trends shown above in Figure 2. TRC Energy Services 22

25 Figure 23: PG&E CMFNH Building Participation by Climate Zone Of the projects that came through the CMFNH program in 2016 and 2017, 20 percent of properties and 78 percent of units were high-rise. This is proportionately high, with an average building size of 99 units, as compared to the statewide permitted average of 24 units per building. As shown in Figure 24, the majority of the low-rise buildings and roughly half of the high-rise buildings contain affordable units. Affordable housing units represent 64 percent of projects and 34 percent of units in the program, across both low-rise and high-rise buildings. CMFNH has nearly saturated the new construction Low Income Housing Tax Credit (LIHTC) projects within PG&E service territory. Low Income Housing Tax Credit program awards competitive points for energy efficiency, and require energy efficiency assessment and modeling, which aligns well with whole-building energy efficiency programs. Figure 24 illustrates the number of buildings that participated in CMFNH under the 2013 code, as well as the breakdown of market rate and affordable housing participation. Figure 24: PG&E CMFNH Building Participation - High-rise vs. Low-rise Envelope Specifications The 2013 standard design for exterior wall insulation in 2x4 framed residential buildings is either R-15 cavity insulation with R-4 exterior insulation, or R-13 with R-5 exterior insulation. CMFNH participants, across all climate zones, were more likely to opt for 2x6 walls, 16 inch o.c., with 90 percent of projects selecting cavity insulation of R-19 or higher, as shown in Figure 25. Exterior insulation is less common, with 73 percent of 23 TRC Energy Services

26 projects having no exterior insulation. There may be opportunity in high performance buildings to push towards even lower U-factor (higher R-value) for multifamily walls with added exterior insulation. Multifamily builders of high performance buildings are adopting more advanced wall assemblies more readily than high performance single family builders. CAHP project data for single family new construction in the same time period shows a trend toward 2x4, 16 inch o.c., with 82 percent of walls having R-13 or R- 15 cavity insulation. As shown in the CalCERTS data, advanced envelope assemblies are also uncommon in the general multifamily new construction market. Figure 25: PG&E CMFNH Wall Insulation Most CMFNH buildings are just meeting the standard building design for windows, with an average U-factor of 0.32 and Solar Heat Gain Coefficient (SHGC) of 0.25, though there is a considerable range of values. This is consistent with single family program trends. The challenges to improve the fenestration further are cost and market availability. There may be opportunity through code readiness efforts to promote manufacturing of additional window products and/or offer incentives to create market demand. Figure 26 graphs the window specifications of participating projects. Figure 26: PG&E CMFNH Window U-Factor and SHGC Roof/attic insulation of CMFNH buildings was also above standard design in many cases. Of projects in Climate Zones 2, 3, and 4, where standard design is R-30, 41 percent installed R-38 or higher insulation. Similarly, 46 percent of projects in Climate Zones 12 and 13 installed insulation of R-46 or higher. The TRC Energy Services 24

27 CMFNH database does not track roof/attic assembly types, so TRC could not analyze those trends within the program participant population. Few CMFNH projects were subject to roofing product requirements, due to climate zone and roof slope. Figure 27 is a graph of the specifications recorded across all CMFNH projects. Figure 27: PG&E CMNFH Roofing Product Specifications HVAC Specifications The space heating and cooling systems for CMFNH new construction multifamily buildings are dominated by heat pumps as shown in Figure 28 and Figure 29 below. The CalCERTS data, which represents all permitted low-rise multifamily buildings, shows dominance of central gas furnaces in the multifamily market. CMFNH participant data thus suggests that higher performance buildings are more likely to have heat pump space heating, as they approach net zero energy use. The same trend does not exist in the PG&E CAHP data, where split system ACs were installed in 89 percent, and central furnaces in 90 percent of participating single family homes. The trend towards electric space heating warrants consideration of an electric baseline in future updates to the Building Energy Efficiency Standards. Figure 28: PG&E CMFNH Space Heating Types 25 TRC Energy Services

28 Figure 29: PG&E CMFNH Space Cooling Types The majority of CMFNH buildings have either ductless systems or ducts in conditioned space, as shown in Figure 30. This trend was not seen in the statewide CalCERTS data. Figure 30: PG&E CMFNH Duct Location Domestic Hot Water Specifications While the heating and cooling systems were largely dominated by heat pumps, large 8 instantaneous gas water heaters are most common for domestic hot water (27 percent). Central DHW systems collectively make up 46 percent of DHW systems in CMFNH buildings. This percentage is nearly triple the percentage found across all low-rise multifamily buildings. The proportion of buildings with heat pump water heating (23 percent) is also higher than in the statewide CalCERTS data. This may, again, suggest a trend for high 8 Instantaneous gas water heaters are considered large, under the California Building Energy Efficiency Standards, if greater than 200,000 Btu/hour. TRC Energy Services 26

29 performance buildings selecting electricity over gas systems. Figure 31 shows the number of high-rise and low-rise buildings that installed each type of water heating system. Figure 31: PG&E CMFNH DHW Types Lighting Specifications Because lighting requirements are mandatory in the Building Energy Efficiency Standards, the CMFNH program does not track lighting details. There is an incentive bonus, in addition to whole-building incentives, for 100 percent high efficacy lighting. The CMFNH program has seen has seen little uptake in the multifamily market, while 16 percent of single family CAHP projects have claimed credit for 100 percent high efficacy lighting. Understanding the barriers to installation of 100 percent high efficacy lighting, and whether there is additional opportunity for energy savings in this area will require further investigation. Additional opportunity may also exist with lighting controls, both interior and exterior. Security is a primary concern for owners and occupants of multifamily buildings, and is often addressed through an increase in outdoor lighting. Energy Management Control Systems (EMCS) may serve multifamily buildings well for lighting and security, limiting operating time of fixtures and cameras through motion sensor controls. TRC suggests further research in this area. Appliances and Miscellaneous Electric Load (MEL) Because appliances are typically added to a home post construction, CMFNH does not have data about appliances. TRC reviewed the NEEA 2013 Residential Building Stock Assessment: Multifamily Characteristics and Energy Use report. The report suggests that there are differences in MEL saturation and usage patterns between single family and multifamily residences. Those specifically identified in the report are: Laundry: 44 percent of multifamily buildings have common area laundry and 15 percent have no laundry on-site. Multifamily tenants report using in-unit washing machines twice as often as those with common area laundry Refrigerators: average 1.0/household in multifamily and 1.3/household in single family Dishwashers: 78 percent of multifamily units compared to 90 percent of single family homes Televisions: average of 1.5/household in multifamily and 2.3/household in single family Set-top boxes, gaming systems, and audio equipment have a saturation in MF that is one third of that in single family 27 TRC Energy Services

30 Computers: 51 percent of multifamily units (unknown number of computers/household) compared to 90 percent of single family homes with an average of 1.67/household. 9 In 2017, DNV-GL was awarded a contract to complete a Residential Appliance Saturation Survey (RASS) that should help to close the gap in knowledge about the state of appliances in multifamily units. Existing Buildings Trends and Opportunities Analysis for existing building stock and retrofits is based on a combined dataset of PG&E Multifamily Upgrade Program participants in Climate Zones 2, 3, 4, 5, 11, 12, and 13; and SDG&E s Multifamily Energy Upgrade California program participants in zones 7 and 10. Climate Zones 5 and 7, and 11 through 13 were combined due to similar climate conditions. TRC also mined project data from the SCE/SoCalGas EUC-MF pilot process evaluation, thus covering all four California IOU territories. In total, 141 unique properties that completed upgrades between 2012 and 2017 are included in the dataset. This data set represents comprehensive, whole-building retrofit projects and may not be representative of the average California building stock. Because each property must undergo an energy assessment, install a comprehensive package of upgrades, and the upgrade measures are flexible and customized to each property, these properties in aggregate are likely to expose a large number of the energy savings opportunities in the multifamily sector. In each program, incentives offset partial upgrade costs for achieving a minimum ten percent modeled reduction in building energy use. Property Types and Sizes As shown in Figure 32, nine percent of projects and 17 percent of units are from high-rise properties. This is a slightly lower proportion than estimated for the California multifamily building stock. Figure 32: Low-rise vs High-rise Whole Building Retrofit Participation by CA IOU Though the represented programs did not specifically target affordable housing properties, 30 percent of projects and 51 percent of total units were affordable housing. The high percentage of affordable 9 Study included desktop and laptop computers. TRC Energy Services 28

31 properties can be explained by the layered funding sources with energy efficiency requirements or competitive points for energy efficiency (with the Low Income Housing Tax Credit program in particular). Figure 33 shows market rate and affordable housing participation in each utility program, in number of units. Figure 33: Market Rate vs. Affordable Whole Building Retrofit Participation by CA IOU Figure 34 shows the number of properties that participated in the PG&E and SDG&E programs by climate zone. Climate zone information was not included in the evaluation report for SCE and SoCalGas. The greatest participation came from Climate Zone 12 in PG&E service territory and Climate Zone 7 in SDG&E territory. TRC found the correlation between participation and building population rather than climate zone. The BayREN also recruits multifamily projects in the Bay Area region. This may explains why coastal climate zones with higher population density are less represented in the MUP data set. Analysis of BayREN project characteristics may yield additional insight. In Climate Zone 7, being a mild coastal climate, ten percent building energy use reduction is particularly challenging, and typically not cost effective, yet the EUC-MF program has sustained participation within the climate zone. 29 TRC Energy Services

32 Retrofit Measures Figure 34: MUP and SDG&E EUC-MF Participation by Climate Zone The most common retrofits across the state are windows, lighting, refrigerators, DHW, and attic insulation. In aggregate, heating systems also make the list of top retrofits, as do DHW recirculation pumps and controls. Central systems associated with a house meter (as opposed to individual meters), such as gas and water, are priority projects. In-unit upgrades are more challenging to include in retrofit scope, because the owner often does not see the payback from those upgrades if the property is individually metered. In-unit upgrades also disrupt tenants, and are sometimes best accomplished during unit turnover. The structure and timeframe of these whole-building programs does not accommodate upgrades as tenants turnover. Duct sealing and wall and floor insulation are uncommon. Duct sealing is limited due to the number of existing ductless systems. Wall and floor insulation are largely untouched, because the retrofits are invasive, costly, and difficult to complete with tenants in place. Figure 35 summarizes the common upgrade measures by utility program, in order of total number of projects that installed the measure. TRC Energy Services 30