Energy Efficiency Saves Dollars, Makes Sense

Every penny counts when it comes to affordable housing. This is especially true when it comes to the often-high cost of energy. The need for cost containment may explain a growing interest in energy efficiency among affordable housing developers and owner-operators. Yet, much more work needs to be done to reduce energy use in affordable housing.

Research on energy use in U.S. buildings has found that public housing uses almost 40 percent more energy per square foot than privately owned housing. Why? The short-term priority of getting more units built as soon as possible led to poorly constructed units from the outset. Over time, these properties have not aged well, and federal funds for basic maintenance, capital repairs, and energy-efficiency upgrades have been lagging. The resulting costs of such inefficiencies can be enormous, especially when considering the constrained budgets of public housing.

And it’s not just public housing that needs work. The supply of affordable housing in the United States, whether subsidized or unsubsidized, also is aging. And the owner-operators, just like the families who call their buildings home, operate on thin margins. When budgets are viewed solely on a short-term perspective, investments in energy-efficient features may not make the cut. But this view of budgets is self-defeating.

“Money is being thrown out the window by not creating and capturing energy efficiencies that would save landlords and tenants of affordable housing a great deal of money,” says Sarene Marshall, executive director of the ULI Center for Sustainability of the Urban Land Institute.

The U.S. Department of Housing and Urban Development spends billions annually on energy for affordable housing, including heating, lighting, and cooling, says Marshall. Practical solutions that reduce costs and benefit the environment include energy-efficiency upgrades and innovations that strive toward net-zero energy, which is when a building uses the same amount of energy as it generates on site. Interest in striving for net-zero energy has led to advanced certification programs, such as Passive House and the Living Building Challenge.

What Works

The U.S. Environmental Protection Agency has a series of recommendations that can help developers build more energy-efficient buildings. Relatively modest improvements and upgrades—such as better insulation, high-performance windows, and energy-efficient appliances—can substantially reduce energy costs. And since only a small share of the affordable housing supply is newly constructed in any given year, retrofits are essential for controlling costs and reducing energy use. A network of large affordable housing owners and operators, Stewards of Affordable Housing for the Future, has developed extensive retrofit tools for multifamily developers to support its members’ commitment to reducing water and energy consumption in their often-aging portfolios.

A more cost-effective approach, when available, is to invest in more efficient construction before the foundation of a building is even set.

Research conducted by the Rocky Mountain Institute, a Colorado-based nonprofit organization that works to foster the efficient and sustainable use of resources, says just that. The upfront energy-efficiency features can dramatically reduce overall mechanical and electrical systems costs over time, the group says. Over the life of a house, the long-term savings cover early investments.

Such efficiencies are not just about money, either. At a time when climate change is a rising concern, sustainability is woven into the fabric of mission-driven organizations like ULI and Enterprise Community Partners. ULI’s Center for Sustainability is focused on helping the real estate industry reduce building energy use and associated carbon emissions through its Greenprint Center for Building Performance, a voluntary tracking and benchmarking program started by industry leaders. More targeted to the affordable housing field, Enterprise’s Green Communities program offers expertise and a comprehensive green building framework specifically aimed at enhancing the environmental sustainability of affordable housing developments.

Developments that incorporate green building criteria and energy benchmarking create a smaller, perhaps even positive, impact on the environment. And the cost of achieving ongoing energy savings? It is negligible. Recent data from Enterprise found that implementing energy-efficiency and sustainability measures at the front end of a project—such as achieving a Home Energy Rating System (HERS) score of 85, or 15 percent better than code—adds just 2 percent to typical development costs.

Models of Success

A growing number of new affordable housing projects—either completed or soon to be—around the country aim for energy efficiency and, thus, lower energy costs:

  • Belfield Avenue Townhomes in north Philadelphia offers subsidized housing that achieves net-zero energy consumption and net-zero carbon emissions annually. All energy required for heating, cooling, lighting, and hot water is generated on site.
  • The Rose mixed-income multifamily development in Minneapolis is set to open in the fall, built by Aeon, a nonprofit Minnesota affordable homes developer. The efficient design will result in 70 percent less energy consumption than buildings constructed to standard codes.
  • The East Harlem Center for Living and Learning has 89 units, abuts a charter school, and shares its gym during nonschool hours. Its sustainable design improves indoor air quality while reducing water and energy use.

These and other projects are test cases that developers can look to when gauging whether energy-efficient housing makes sense for the bottom line as well.

“Not only is this an economically smart approach for our residents on limited incomes, it’s good business,” says Gina Ciganik, an energy-efficiency consultant who formerly was Aeon’s vice president of housing development. “It’s our responsibility to curb the extremely high energy use that property managers like us will see over a lifetime of operations.”