There are plenty of opportunities to reduce energy consumption in multifamily residences and improve the bottom line for your properties and clients. According to the US Department of Energy (DOE), utilities typically are 25% to 35% of overall operating costs, making energy usage the largest controllable cost in multifamily housing (figure 1).

Figure 1: Energy consumption by end use

Space heating is the biggest energy consumer in multifamily buildings.
A pie chart showing energy end uses for multifamily residences: space heating, 41%; lights and appliances, 26%; water heating, 20%; air conditioning, 8%; and refrigeration, 5%.

When it comes to reducing energy consumption in common areas, property managers face a simple situation: they need to get the support of either the building owners or their investors. Reducing energy consumption in individual units is more complex and requires different strategies depending on whether energy costs are included in the rent. This is the case in more than a quarter of US apartments, according to the National Bureau of Economic Research.

In buildings where rent includes utility costs, property managers have a clear interest in investing in efficient building-shell components, heating and cooling equipment, and appliances. Energy use in these units represents an uncontrolled expense for managers because there are few limits on the energy their tenants may consume. In buildings where tenants pay their own energy costs, you can get tenants to share the costs of those energy-efficiency upgrades that they benefit from by offering green leases (see the Get Tenants Involved section).

A good place to start with any energy-reduction program is to observe how your building systems and tenants use energy (figure 2). When you’re armed with this knowledge, you can improve how you manage:

  • Common areas
  • Lighting
  • HVAC
  • Parking areas
  • Vacant units
  • Pools
  • Hot tubs

For example, schedule common area services to be fully functional during peak demand and reduce their availability during low-demand periods.

Figure 2: Multifamily load patterns exhibit early and late peaks

The electrical load profile of a typical multifamily residence has two distinct peaks. The first, which is smaller, occurs in the early morning and tops out around 9:00 a.m. The second, which is longer, is much higher, lasting until about 8:00 p.m.
Illustration of a load pattern for a multifamily building from midnight to midnight. The first peak is in the morning, and the second peak, which is larger, is in the evening. The load decreases closer to midnight.

Quick fixes

To ramp up your energy management program, take advantage of opportunities that don’t cost a lot. For example, turning off equipment that provides little or no benefit to residents is simple and inexpensive. Once you’ve built momentum and experience, you can move on to more-expensive and complex strategies.

Start with the basics

Educate your residents Let your residents know there are no-cost and low-cost actions they can take to save money on their energy bills. Ask tenants to:

  • Turn off the lights. Turn off lights when they leave a room. Turning off just one 60-watt incandescent bulb that would otherwise remain lit for an additional eight hours a day can save more than $15 per year.
  • Replace incandescent bulbs with LEDs. An LED uses 90% less energy than a traditional incandescent bulb, can last 25 times longer, and saves about $80 in electricity costs over its lifetime, according to ENERGY STAR.
  • Prevent waste in water use and water heating Minimize hot shower time. Scrape food off dishes instead of rinsing them, and wash only full loads of dishes and clothes. Install faucet aerators and low-flow showerheads to reduce hot-water use, and use cold water for laundering. Ask the property manager to fix leaky faucets, showerheads, pipes, and toilets and lower the thermostat on the water heater to ensure the temperature is no higher than 120° Fahrenheit (F) at the hot-water fixture that’s farthest from the water heater.
  • Avoid overdrying clothes. Clean out the dryer’s lint trap before drying clothes, and dry only full loads.
  • Control plug loads. Plug-load devices such as microwaves, televisions, laptops, and video game consoles can draw power even when they’re turned off. A no-cost solution is to unplug these devices when not in use. Other options include plugging appliances into a switched power strip that can be turned off when the appliances aren’t in use, or using a smart power strip that automatically turns off plug loads when not in use.
  • Clean refrigerator coils and check the gaskets. Ask the property manager to vacuum dust from the vent beneath the door and from the coils behind the fridge every two months or so; vacuum more often if the household has pets that shed. Check for leaks around the refrigerator door; if there are gaps, ask the property manager to repair the gasket or install a new one.
  • Seal gaps. Ask the property manager to use caulk and weather stripping to seal gaps around windows, doors, chimneys, and other structural elements.
  • Open or close window coverings. During cold months, open drapes or shades on windows that receive direct sun. Let the sun’s heat help warm the home during the day, but close the shades for extra insulation when the sun goes down. In warmer months, close drapes or shades to prevent heat gain from the sun and lighten the load on any air-conditioning units.
  • Use fans in hot weather instead of air-conditioning. Ceiling fans and portable fans use less energy than air conditioners. If it’s too hot to use only a fan, use a ceiling fan together with an air conditioner. The combination lets the tenant turn up the air conditioner 4° to 5°F without decreasing comfort. Consider an ENERGY STAR–qualified room air conditioner. According to ENERGY STAR, these air conditioners use at least 10% less energy than standard models. In arid or semiarid climates where nights are cool, open windows at night and close them during the day to retain the cool air.
  • Tune up the furnace and replace the filter. Ask the property manager to tune up the furnace at the beginning of winter and change the filter at least twice each heating season.
  • Don’t block air vents. Check air vents in the unit to make sure they aren’t covered or blocked by furniture, curtains, or other objects, so air can circulate without restraint. Shut off registers in unused rooms.
  • Install smart thermostats. Have the property manager install smart thermostats to automatically alter the unit’s temperature settings when the tenant is asleep or away.

Educate your team According to the DOE, educating employees to be diligent about energy use is one of the most effective means for reducing energy bills. Instruct building staff to:

  • Turn off unnecessary lights
  • Minimize the use of heating and cooling when possible
  • Turn off computer equipment and appliances that aren’t in use
  • Make sure they’re efficiently operating model and vacant units
  • Take notice of malfunctioning controls such as broken or maladjusted photosensors

Educate your vendors and any contractors working on the property of the steps you’re taking to save energy.

Remove excess lamps Reduce lighting in public and common spaces by removing lamps in areas where natural lighting is available or by dimming lights in proportion to how much sunlight is available. Think about automating dimming with daylighting controls. Measure lighting levels and compare them to the recommendations of local building codes and national standards. You can find a list of recommended lighting levels in the lighting chapter of the US Environmental Protection Agency’s (EPA’s) Building Upgrade Manual. If you have lighting levels that exceed recommendations, remove some lamps and measure again.

Turn equipment down or off

Manage vacant units Go through vacant units to:

  • Turn off breakers where freezing and security aren’t a concern
  • Turn heating and cooling off or down to minimal temperature settings
  • Adjust refrigerators and freezers to their warmest settings

You can also consider turning off water heaters, but turn them back on and run the showers before occupants come in to reduce health risks from Legionella bacteria buildup.

Regularly review vacant units’ energy bills to identify unnecessary energy use. Walk through them to ensure that lights and thermostats are off and that windows and blinds are closed.

Set accurate garage temperatures and ventilation rates Lower the thermostat setting in heated garages (and other low-use areas, such as service or mechanical areas) and set the ventilation rate accurately. Calculating the appropriate ventilation rate requires data collection, including the average rate of car emissions, the number of moving cars, the average travel time within the garage, and the average speed of cars in the garage. Hire an engineer to collect the data and do the necessary calculations.

Install a timer on hot-water circulation pumps Shut off hot-water recirculation during times of low use (for example, 11:00 p.m. to 7:00 a.m.). Think about tenant habits when determining low-use times. Some tenants might need a shower after returning late from a night out or a late shift.

Adjust pool and hot tub temperature The American Red Cross recommends 78°F as the optimal pool temperature. In warmer months, turn the heater off altogether. Set hot tubs to 96°F during warmer months and no higher than 102°F during cooler months.

Cleaning and maintenance

Clean and maintain HVAC equipment Cleaning and maintaining heating and cooling systems can yield energy savings of upward of 15%, according to ENERGY STAR. Conduct regular preventive maintenance on heating and cooling equipment, including:

  • Checking and replacing filters regularly
  • Cleaning dampers, blower units, housing units, and motors
  • Inspecting fans, bearings, and belts
  • Making sure that terminal fan coil units and baseboards aren’t blocked

Keep lights clean and calibrate sensors According to the DOE, cleaning light fixtures can boost light output by 10% indoors and up to 60% outdoors. Replacing discolored lenses will increase output by up to 20%. Calibrating occupancy sensors and photocells to ensure correct operation reduces lighting energy use by up to 50%.

Longer-term solutions

Tune up building systems and O&M programs

Track your energy use Use a tool like the ENERGY STAR Portfolio Manager to track your buildings’ energy consumption. Once you’ve entered basic data such as building floor area and utility bill data, the Portfolio Manager calculates an index of energy consumption per square foot that lets you compare individual buildings, either across your portfolio or against their past performance. Armed with such comparisons, you can identify and prioritize the buildings with the biggest energy consumption problems, or track your progress for those buildings in which you’ve implemented energy-efficiency measures. The ENERGY STAR Score for Multifamily Housing in the United States provides more information on how multifamily energy ratings are calculated.

Upgrade your operations and maintenance (O&M) program One simple, inexpensive way to improve the energy efficiency of buildings is to make sure that you properly operate and maintain the building shell and the expensive systems within it. You’ll need the buy-in of senior management and O&M staff to implement a rigorous O&M program. Make sure you document O&M activities and train and equip your staff.

Commission your building Commissioning is the process of verifying that systems are designed, installed, and tested and can be operated and maintained according to your operational needs. It uses building inspections and systems testing to make sure building systems are performing as intended. Commissioning improves the efficiency and operation of building energy systems, particularly HVAC and air-distribution systems. In addition to saving energy, commissioning often increases comfort for occupants. According to the EPA’s Rules of Thumb for Energy Efficiency in Buildings (PDF), retrocomissioning existing buildings saves about $0.27 per square foot, reduces energy usage by 15%, and has an average payback of 0.7 years. Our retrocommissioning page can guide you through the process and help you decide whether commissioning is right for your building.

Take control of lighting and temperature

Replace incandescent bulbs with LEDs Lighting offers some of the shortest simple payback periods of any energy-efficiency upgrade, often less than a year. LEDs consume about 10% of the energy that incandescent bulbs do, put out less waste heat for the air-conditioning system to remove, and require less maintenance because they last 20 times longer than incandescent bulbs.

Install lighting controls Install timers in areas where occupancy is predictable and occupancy sensors where it’s not. See our lighting controls page for other efficiency ideas. Install two-level lighting—which lowers light levels during low-usage times, when less light is sufficient—for corridors, stairways, or other areas that need to always have the lights on. Check with building codes to determine which areas require 24-hour lighting.

Install cloud thermostats Lower the temperature settings in common areas during times of low or no use. Setting temperatures back by 10° to 15°F for eight hours per night may reduce heating costs by 10%, according to ENERGY STAR. A cloud thermostat helps you make easy adjustments, monitor settings remotely, and ensure benefits persist over time.

Install new equipment or replace old equipment

Reduce pool losses Install a pump timer so the pool pump doesn’t run during times of low usage. A pool cover helps maintain pool temperature and achieve energy savings of 50% to 70%, according to the DOE. For indoor pools, reduce energy costs by installing a humidistat to control the pool exhaust fan so that it doesn’t run continuously.

Upgrade HVAC equipment as you replace it Think about how you’ll replace failing HVAC equipment. Heat pumps have improved dramatically over the years and are good options for heating and cooling common areas. Ask suppliers to recommend high-efficiency replacements for aging equipment so that, when the time comes, you’ll already know which equipment you want. New cooling equipment sometimes can be sized smaller than the original equipment if efficiency measures have reduced energy consumption and heat loads. Have an engineer calculate sizing. Document the specifications for replacement equipment so that you can readily access them and update them every few years.

Upgrade water heaters as you replace them Plan for replacing water heaters as you would plan to replace HVAC equipment. For multiunit systems with gas heating, consider upgrading to condensing water heaters, which can reduce water-heating bills by about 30%, according to the DOE. For single-unit installations, a tankless water heater is a good option. If you use electric water heating, a heat pump water heater can cut hot-water energy consumption in half. You can find different water heater types on the ENERGY STAR’s Energy Efficient Products page; you can also find estimates of how much you can save with ENERGY STAR–qualified products.

Replace old appliances with ENERGY STAR appliances An ENERGY STAR–qualified refrigerator uses at least 9% less energy than required by current federal standards and 40% less than units older than 15 years. An ENERGY STAR–qualified clothes washer can reduce energy costs by more than a third and water costs by more than half. An ENERGY STAR–qualified dishwasher uses at least 41% less energy than conventional dishwashers. ENERGY STAR created a Calculate returns on energy efficiency investments page to help you estimate how much an ENERGY STAR–qualified product can save you.

Reduce demand for hot water You can install low-flow showerheads and aerator faucets in common areas and individual units to reduce the flow of hot water and the demand on water heaters. According to the DOE, low-flow showerheads are available for $10 to $20 apiece and can achieve water savings of 25% to 60%.

Take control of hot-water recirculation loops Install controls on recirculation pumps so they don’t run continuously. Heating water and electricity to run the pump all the time can waste lots of energy. Temperature-controlled systems are better, although you can improve systems that measure the water temperature at the return to the water heater by moving the sensor to the last supply line (figure 3). After all, there’s no reason to keep the return pipe after the last supply line warm. Insulate the recirculation loop to minimize losses and keep the pump off longer. And you can eliminate even more energy waste by installing demand controls, which make sure that the recirculation pump only runs when hot water is needed. Indicate demand at major hot-water system end points with buttons, motion sensors, or flow switches, and mount a temperature sensor at the last riser to turn off the pump.

Figure 3: Controlling recirculation pumps

Where recirculation loops are controlled by temperature, the sensor is frequently located near the pump and backflow preventer, where water is returned to the water heater. A better way to control such loops is to locate the temperature sensor near the apartment supply line that’s farthest from the water heater. Such a location will let the pump turn off when heated water reaches the sensor location, and allow the portion of the recirculating loop that doesn’t serve any supply lines to remain relatively cool. Insulate the heated portion of the recirculation loop so that it stays warm longer after the pump has shut off.
Illustration of a controlling recirculation pump. Cold water comes in and goes to the water heater. Water then goes through supply lines to the different apartments. The water then goes through a pump and a backflow preventer into the water heater.

Get tenants involved

Make green leases Green leases are a way for building owners to invest in efficiency improvements in tenant space and recoup the costs by raising the rent in the middle of the term. For example, if building owners invested in an efficiency upgrade that reduced a tenants’ utility bill by $20 per month, they could increase the rent by $18 per month. They would then recover $216 a year to pay for the investment. The tenants would enjoy a small reduction in overall costs as well as any additional benefits from the upgraded property. Because they’re more complex, green leases are used more often in commercial properties than residential properties so far.

Meter individual units According to the New York State Energy Research and Development Authority (NYSERDA) case study Capturing the Value of Energy Upgrades in Affordable Multifamily Homes (PDF), advanced submetering can result in whole-building savings of 18% to 26%, with paybacks ranging from 2.5 to 5.0 years. Submetering can lead to energy savings that persist over time.

Installation costs for typical submeters (such as the one shown in figure 4) can range from $150 to $700 per unit, depending on the meter and how and where it’s installed. According to NYSERDA, electricity consumption usually drops by about 18% to 26% when master-metered buildings are converted to individual submeters. However, switching to submeters can be complex and costly, so talk with your utility to see if submetering makes sense for your building.

Figure 4: Submeters empower tenants to manage their energy costs

This submeter, manufactured by E-Mon D-Mon, is an example of a typical product for a multifamily building. You can retrofit these kinds of submeters into existing buildings using a wireless mesh communication network.
Photograph of a submeter.

Some tenants have resisted submetering, especially if their units were retroactively converted. You can minimize resistance with green leases that let you and your tenants improve the building shell and replace energy-consuming equipment together with installing submetering.

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