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?
4. ENERGY CHALLENGES IN MULTI FAMILY HOUSING
SPLIT
INCENTIVE
• Cost - owners
• Benefits -
tenants, HUD
FINANCING
• Risk-averse
• Complex
approvals
AWARENESS
• Cost savings
4
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
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. HOW IT WORKS FOR TENANTS
CURRENT
Totalcostofoccupancy
16
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
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
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
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. 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. 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. 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. 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. 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