Energy Efficiency Solutions for Multifamily Housing Clark Energy Group LLC 1
Agenda About Clark Energy Group Energy Service Company (ESCO) Overview ESCO Services Utility Rate Forecasts Making the Decision to Retrofit Energy Conservation Measures (ECMs) Benefits to Your Portfolio Resident Engagement Securing Available Incentives Financing Typical Project Schedule Case Studies Questions / Discussion 2
Clark Energy Group Clark Energy Group (established in 2007) is an Arlington, VA-based energy service company (ESCO) that works with best-in-class partners to provide turnkey solutions for your energy needs. Clark Energy Group is a member of the Clark family of companies, which includes Clark Construction Group, Clark Realty Capital, & Clark Builders Group. Above and beyond typical ESCO capabilities, CEG has experience: Working in occupied facilities Performing energy savings projects in residential buildings Collaborating with property management companies to minimize disruption to residents About the Clark Family: Clark Construction Group: Largest privately held construction company in the United States; annual revenue over $4 billion; founded in 1906 Clark Realty Capital: Diversified real estate development company with approximately $5 billion in development projects completed or underway; founded in 1992 Clark Builders Group: 4 th largest multifamily builder in the United States; founded in 1992 3
What Is An Energy Service Company? An Energy Service Company (ESCO) provides holistic, custom, turnkey energy solutions. A reputable ESCO typically implements projects from start to finish by: Performing an analysis of facilities to determine which energy conservation measures (ECMs) are applicable and meet the customer s needs Engineering, designing, and implementing the energy solution for its customers Researching programs to obtain any available federal, state, local, and utility-based incentives or tax credits that may be applicable Discussing financing needs with the customer and developing a financing solution that makes sense for the project Providing post-installation performance monitoring to ensure the ECMs perform as planned 4
What Does an ESCO Handle? Energy assessment Savings calculations Coordination of financing options (if necessary) Review of programs to secure any available incentives applicable to project on the federal, state, and local utility level Cost reduction through leveraging size and relationships Subcontractor proposal and bidding process Project management and coordination with property manager Implementation of ECMs and on-site supervision of subcontractors Removal/disposal of old equipment Resident engagement* Warranty applications Post-implementation performance monitoring (if necessary) Preventative maintenance An ESCO provides a customized turnkey solution that meets its customer s energy reduction goals. 5
How Will Utility Rates Change in the Future? Water Rates: Predicted to continue rising ~10%/year or more DC has seen a 37% increase in water rates in 3 years Electric Rates: Predicted to rise at rate of inflation Gas Rates: Predicted to rise at rate of inflation +0-2% annually 6
What Should You Consider When Deciding To Retrofit? Does the retrofit provide a good return on investment and increase net operating income? Does the retrofit increase the value of the property? Will the retrofit free up money for other improvements that the building(s) need(s)? Will the retrofit reduce costly maintenance, repairs, and replacements? Does the retrofit address the comfort of the residents? Will the retrofit allow the property to make strides towards green certifications? Does the community want to showcase its leadership on environmental issues? 7
What Are Typical Energy Conservation Measures? Lighting and lighting controls Low-flow water fixtures In-unit control systems HVAC retrofits or retrocommissioning Building envelope modifications Central boiler and chiller improvements/ replacement Solar photovoltaic (PV), solar thermal, geothermal, and other renewable energy installations 8
What Are The Potential Benefits To Your Portfolio? Invest capital reserves wisely and efficiently by making smart energy upgrade choices Achieve an above-market return on investment for your reserves Reduce maintenance costs Lower energy costs and free up money for other uses Enhance market value of your property Provide newer and higher-performing equipment Address resident comfort Enhance community pride and reputation 9
Energy Efficiency/ Sustainability Points for QAP LIHTC Applications (Select Examples) Washington, D.C. (2012) LIHTC plans meet or exceed DC s Green Building Requirements (from Green Building Act of 2006) 10,000 feet of gross floor area fulfills Enterprise Green Communities 2006 standard/sustainability equivalent Virginia (2012) In-unit heat pump with SEER at least 15.0 & HSPF at least 8.5 OR AC with SEER at least 15.0 & gas furnace with AFUE 90% (Geothermal units qualify) Maryland (2011) 20%+ improvement over code efficiency levels (following EnergyStar code) OR 30%+ over code levels (not following EnergyStar code) Points Required Required Points Geothermal heat pumps for common area or in-unit HVAC 1 Solar energy for water heating, heat and cooling, lighting, electric generation Points Sub-metered water expense 5 WaterSense faucets & showerheads in baths 2 Water Heater EPA Energy Star qualified 5 10 5 1 Pennsylvania (2012) Points Solar Thermal (at least 5% of domestic hot water) 5 Solar PV (at least 5% of est. electrical demand) 5 Wind Power (at least 5% of est. electrical demand) 5 Geothermal Heating/Cooling (capable of satisfying heating and cooling requirements for whole development 10 5
Can Energy Efficiency Help You Receive Green Certifications? LEED Certification (National) Criteria include: Innovation & Design Process, Sustainable Sites, Water Efficiency, Energy & Atmosphere, Materials & Resources, Indoor Environmental Quality, Awareness & Education Energy Star (National) Criteria include: Appliances, Heating and Cooling Equipment, Heating and Cooling Distribution, Envelope, Garages and Sidewalks, Ventilation and Infiltration, Domestic Water Heating, Lighting, Pump Motor Efficiency EarthCraft (Virginia) Criteria include: Building Envelope Tightness, Improvements to Windows, Improvements to Walls, Improvements to Floors & Foundations, Improvements to Attics, Improvements/Replacement of HVAC Systems, New Walls, New Attics & Roofs, New Floors & Foundations, New HVAC, Ventilation, Indoor Water, Fixtures & Finishes, Waste Management Enterprise Green Communities Certification (required for affordable multifamily in D.C.) Criteria include: Integrative Design, Location, Improvements, Conservation, Energy Efficiency, Materials, Living Environment, Operations and Maintenance 11
How Do You Engage Residents During the Process? Give them opportunities to save Example: PEPCO Energy Wise Rewards (Air Conditioner Cycling) Resident can chose cycling level & receive a $30-80 installation credit + $6-$16/month from June through October cycling Train them on reducing energy usage Project kick-off & close-out meetings Flyers/ Educational materials Engage them before and during renovations Open house in sample unit Employment opportunities during renovation Community Meetings 12
How Do You Reduce the Overall Project Cost? Part of an ESCO s role is to help secure available federal, state, regional, and utilitybased incentives and programs for energy projects. Available incentives often exist for: HVAC upgrades Water upgrades Lighting upgrades Controls installations Renewable installations Other measures that enhance overall efficiency 13
Did You Know There Are Incentives Available in Your Area? Maryland District of Columbia Virginia Maryland is a leader in energy efficiency incentives LED Exit Sign: $25 Exterior LED Fixture: $150 Wall Mount Occupancy Sensor: $25 Refrigerator Recycling: $50 (approved case-bycase), +$100 for purchase of energy efficient refrigerator Smart Power Strip: $15 Vending Drink Machine Control: $75 The DC SEU offers rebates for installing energy efficient equipment in multifamily buildings (with some free measures for affordable properties!) The DDOE has monies available for weatherization measures for affordable multifamily (up to $6500) 14 Dominion Power requires an energy audit by a contractor on their preferred list before they will give you any energy incentives
What Are Some Options for Financing Your Energy Project? Upfront payment from property s cash reserves Payment through energy savings/ shared savings model Hybrid model partial payment upfront and additional payments over time through energy savings On-bill financing Grant monies Incorporate into refinancing or major renovation 15
Case Study: Hubbard Place Apartments The Community: Nine-story, mid-rise building containing 230 residential apartments, 100% of which qualify for HUD Section 8 rental assistance Three distinct retail/office spaces Units were fully occupied during implementation ECMs Implemented: Efficient toilets and showerheads Kitchen and bathroom sink aerators Efficient water boiler Service area and exterior lighting retrofits Common room & service area lighting controls Costs & Savings: Financial Cost: $283,550 Estimated Annual Savings: $80,000 Estimated Annual Savings: $80,000 Simple Payback Period: 3.54 years Projected Return on Investment: 28% 16
Case Study: Columbia Heights Village Phase II The Community: 406-unit, 31-building apartment complex in Columbia Heights in Washington, D.C. Project was completed in 2011 Units were fully occupied during implementation ECMs Implemented: Energy-efficient lighting Water upgrades to toilets, showerheads, & faucets 20-kilowatt solar photovoltaic (PV) system CFL giveaways to residents Costs & Savings: Financial Cost: $456,553 Total Rebates/Incentives: $78,457 Cost after Rebates & Incentives: $378,096 Estimated Annual Savings: $228,000 Simple Payback Period: 1.7 years Projected Return on Investment: 59% 17
Questions? Contact: Morgan Blackwood Development Executive, Clark Energy Group Morgan.Blackwood@clarkenergygroup.com 703.294.4618 Mark Donig Associate, Clark Energy Group Mark.Donig@clarkenergygroup.com 703.294.4619 18