If you build it, they will come

By Lana Stern, Gerard O’Sullivan, Jacob Lopez, and Elly Bunzendahl

This article was previously published in AESP’s Energy Intel Third Quarter 2022 publication.

Once a fringe utility program offering, Strategic Energy Management (SEM) is now prevalent across North America and spans multiple sectors. Multifamily SEM (MFSEM), on the other hand, is surprisingly still a novelty despite documented successes and proven synergistic benefits to multiple stakeholders and programs. Understandably there are various barriers to design and implement a new program – hopefully the following details plant seeds of curiosity that help expand the number of MFSEM offerings in coming years.

Strategic Energy Management (SEM) Overview

Not all readers are familiar with SEM, let alone MFSEM, so let’s start with some basics.

What is SEM?

SEM is a set of processes for which an organization can adopt to achieve continuous energy performance improvements over a long period of time. The processes themselves are wide ranging and include practical applications for change management and energy and operational improvements.

SEM is deeply rooted in both change management and continuous improvement to improve energy performance and drive operational efficiency while maintaining the core business operation. Organizational change is achieved through guided policy development and strategic planning assistance. Energy and operational improvements are driven by activities such as ongoing capacity building with staff at all levels, onsite energy assessments (also known as “treasure hunts”), and an increased focus on energy tracking and operations and maintenance (O&M) activities. Engagement typically starts with a one-year commitment with an option to continue indefinitely. SEM often utilizes energy coaches to help guide participating organizations. They initiate the work, act as connectors within and across the multiple stakeholders, and help teams become self-sufficient in identifying new ways to reduce energy, greenhouse gas emissions, and overall costs.

What is MFSEM?

MFSEM programs are built on a similar foundation with modifications that address the unique needs, challenges, and specifics of multifamily properties. Most notable, MFSEM provides multiple layers of engagement. SEM coaches directly serve owners and operators of multifamily properties, who are the primary and ongoing audience for workshops, curriculum, monthly check-ins, activity tracking, and more. Resident engagement varies from program to program, and the model we find most successful incorporates multidimensional tactics, including a ‘train-the-trainer’ approach where SEM coaches empower onsite staff to provide monthly topic-specific materials to residents, combined with a partnership approach where community-based organizations deliver education, engagement, and rewards directly to residents.

Participant incentives vary from program-to-program, but cash is king, and helps drive participation at both the organizational level as well as among residents. We’ve observed the savings percentage to be higher with common area (owner) savings, while the aggregated residential unit savings are much higher from an absolute standpoint. Centering equity, achieving cost-effective energy savings, and supporting customers’ total greenhouse gas emissions reduction efforts can be achieved simultaneously.

Why invest in MFSEM?

A look at energy industry conference agendas and proceedings provides proof that multifamily initiatives are on most people’s minds. So why invest in MFSEM, and what’s in it for stakeholders?

The time is right

Thankfully the term “hard to reach” is on the chopping block, being rightfully scraped aside by “underserved.” The recognition that multifamily owners, operators, and residents have historically been underserved, coupled with an imperative to reduce the energy burden for residents and greenhouse gas emissions in all sectors, layered with an influx of federal infrastructure and inflation reduction funding, illuminates the urgency for increasing MFSEM offerings.

For decades the industry has heard the cries of ‘split incentive,’ ‘savings attribution,’ ‘cost effectiveness criteria,’ and more as excuses for not (fully) serving multifamily. Indeed, there is merit in identifying real concerns, and there is justification in questioning previous mindsets while crafting creative approaches that address pertinent concerns.

Energy savings opportunities abound, with co-benefits

We could list pages of citations documenting the energy savings opportunities within the multifamily sector (thank you ACEEE, who already has). So why wait? MFSEM provides a combination of approaches that can sustainably harvest efficiency opportunities while simultaneously positively addressing occupant comfort, health, and affordability.

The multifamily housing sector offers unique opportunities for decarbonization over the next decade. Thirty-six percent of U.S. households now rent, and more than 60% of the rental market is in multifamily buildings, accounting for 27 million households. Uptake of energy efficiency measures in multifamily housing has lagged other types of housing, leaving significant unrealized energy savings on the table. U.S. Department of Energy Better Buildings

Who benefits from MFSEM?

Benefits of MFSEM are plenty, and extend to residents, owner/operators, and utilities and/or municipalities.

Residents

When housing providers join MFSEM programs, residents benefit from increased engagement with staff, empowerment, and rewards.

Engagement: Treasure hunts, resident engagement workshops, and events provide new and unique opportunities for residents to both learn and to share. On a recent treasure hunt, a resident shared details of in-unit comfort and humidity concerns the property staff were previously unaware of. The resident felt heard, and the staff member was grateful to identify an opportunity to address efficiency, comfort, and health all at once.

Empowerment: Change management and behavior change are pillars of successful SEM programs. We know from both research and practical experience that readiness for behavior change is influenced by a blend of how important the change is and how confident a person is that they can make the change. To increase the readiness, MFSEM programs can communicate importance and build residents’ confidence in their ability to impact energy use.

Rewards: MFSEM also provides frequent reminders and can utilize immediate rewards to sustain desired energy efficiency-focused behaviors. Coaches help organizations and individual properties create and follow engagement plans, and can help support activities such as friendly competitions, energy fairs, lunch-and-learns, etc.

Key resident considerations

• Partner with community-based organizations that already know and have the trust of the residents you plan to serve.
• Always compensate residents for their time attending workshops and engaging with staff – pull out all the stops: provide food from local restaurants, give gift cards, distribute energy efficiency-centered swag, and provide childcare for events at properties with families.
• Know your audience and adjust your approaches, collateral, and delivery accordingly to consider abilities, language, culture, literacy, and access to technology.

Owner / operators

“Too good to be true.” When asked for impressions of their MFSEM participation, a current participant reiterated this statement multiple times, which is music to an implementer’s ears. This participant stated immediate benefits without upfront capital investment as the number one reason they are so excited to participate. This, along with staff education and empowerment, improved engagement with residents, team building, and long-term project planning assistance, are some of many benefits touted by actual participants.

Staff empowerment: Coaches help property staff bridge the communication gap with residents related to energy efficiency. We’ve witnessed firsthand property staff feeling more empowered to serve their residents when they can connect energy-using equipment to durability, resident health, and utility bills.

Staffing: One of the most common challenges multifamily property management and operations teams face – and which is even more pronounced since the COVID-19 pandemic – is staffing concerns – including frequent staff turnover, open positions, and heavy workloads (and therefore unaddressed O&M tasks). While MFSEM requires time investment from already-burdened staff, the returns are real and immediate. When staff are constantly playing whack-a-mole, it’s hard to notice and/or implement the easy wins, and SEM coaches offer fresh eyes and ears to find the ‘treasures’ – the no- or low-cost opportunities that can reduce ongoing O&M burdens. SEM coaches can also help document building systems and O&M details to mitigate the impacts of staff turnover by capturing institutional knowledge of key staff.

Team building: As mentioned in the SEM Overview, coaches work with multidisciplinary teams at all levels of an organization. Especially during the COVID-19 pandemic, many organizations have not been able to foster internal team building on their own. MFSEM participation provides an opportunity for team members to learn what other’s strengths, challenges, and realities are. Teams can then use this information to enhance their energy management and resident services.

Future proofing: MFSEM participants form an energy team, develop an energy policy and annual energy plan, and increase their focus on ongoing energy performance and tracking. These activities help organizations plan for and prioritize larger upgrades, efficient equipment replacement, and also improve the ease and cost effectiveness of meeting current or future benchmarking and performance requirements.

Key owner / operator considerations

• Have patience and compassion during recruiting – understand their day-to-day realities and know that persistence matters.
• Incentivize actions that lead to savings – yes, the split incentive is real, so consider rewarding prescriptive behaviors that lead to change at both the common area meter as well as residential meters, rather than waiting on measuring performance and rewarding outcomes down the road.

Utilities / municipalities

Part of SEM includes building a cross-disciplinary energy team. Requiring and incentivizing team formation and reporting increases progress toward SEM goals and builds relationships with numerous team members at all levels of an organization. This team building connects finance, asset management, facilities, and resident services staff around energy-focused priorities, which can provide a vehicle to catalyze, support, and sustain the benefits of non-SEM incentive programs, while simultaneously enhancing organizational diversity, equity, and inclusion (DEI) efforts.

Catalyze: In all cases of prior MFSEM experience, participants have taken advantage of one or more non-SEM program offerings in the first year of participation, such as direct install measures in residential units, common area lighting retrofits, central hot water electrification, and weatherization projects.

Support: As you engage with SEM participants, you build trust and rapport with both staff and residents, which can positively benefit other program offerings. For example, thinking of a smart thermostat program for multifamily? SEM participants are a captive audience, can help with installation rates and help sustain savings, especially with unit turns and new residents long after the initial installation project is complete.

Sustain: Ongoing SEM engagement helps educate and empower employees to sustain the benefits of upgrades. Have you ever celebrated a direct install project only to return to the property soon after and find the stock room contains only incandescent bulbs for replacements and unit turns? Engaged SEM participants are well-versed with purchasing and replacement policies and practices and can keep an eye out to prevent this oversight. Benchmarking, energy performance tracking, and an ongoing focus on O&M are important cornerstones of SEM; therefore, SEM participants can help track and celebrate the benefits of other program offerings and focus on ongoing maintenance of new equipment and systems.

There seems to be a trend of utilities within jurisdictions with benchmarking and performance requirements funding accelerator or early adopter programs, some of which include SEM-like enhancements. This is reassuring since coaches can help organizations improve and sustain performance over time.

Synergize with DEI efforts: Many practitioners in the utility world are (finally) acknowledging an urgency for rapid growth and continuous improvement related to DEI outcomes in energy program work. Thankfully, this is a time of abundant sharing and outpouring of resources, lessons learned, frameworks, and more.

SEM coaches walk and talk continuous improvement and instill a curiosity among participants to identify where an organization and its buildings are on an energy management continuum. They can help identify where an organization is heading, how to bridge that gap, and remind teams to rinse and repeat. This process, coupled with the mantra of “you can’t manage what you don’t measure” provides a framework that energy coaches, who are already working as change agents, can utilize for simultaneous and synergistic DEI efforts.

Key utility / municipality considerations

• Consider community needs – multiple programs have focused initial efforts to serve affordable multifamily housing first, with consideration to extend the offering to market rate housing in the future.
• Activate cross-program collaboration from the beginning – our experience is that SEM participation increases participation in other utility programs, so prior to launch, introduce program representatives and establish mechanisms for cross-pollination and resource sharing.
• Partner, and compensate appropriately; this includes with community-based and workforce development organizations, DEI experts, and non-energy utilities.
  • Embrace the workforce development opportunities, including credentialling organizations, such as Building Operator Certification, which just launched a Multifamily version: https://www.boccentral.org/multifamily.
  • Could Strategic Utility Management be the next frontier? Consider co-funding opportunities with water and sewer utilities to further catalyze savings for MFSEM participants and their residents.
• Who pays? The non-energy benefits (NEBs) can potentially exceed the energy benefits, so consider strategic partnerships and co-funding opportunities.
  • Marketing: you have a captive audience of owners and operators, all who can help directly distribute educational, engaging, and rewarding materials to residents.Health care: if you serve affordable housing, consider partnering with mission-driven health care

Conclusion

SEM has been a driving force for continuous energy improvements within buildings, agencies, and governments. SEM for multifamily was, in the past, labelled as a model that was too difficult to implement successfully. However, the benefits of expanding the SEM model to this underserved sector are too good to ignore. Residents can experience lowered utility bills, increased thermal comfort in their homes, and renewed engagement with staff. Owners can expect immediate benefits such as team building and project planning assistance without upfront capital investments. Utilities and municipalities can utilize MFSEM to strengthen a portfolio of energy management programs within their territories, expanding on key initiatives such as DEI.

The return on investment for a well-positioned, well-maintained, and well-executed MFSEM program will guarantee that such an offering will be here to stay. The multifamily sector was not originally top of mind for SEM initiatives; however, the practical benefits of implementing MFSEM are becoming harder to ignore.

Resources

Northwest SEM Collaborative

North American SEM Collaborative

U.S. Department of Energy Better Buildings Multifamily

The Multifamily Energy Savings Project | ACEEE

Energy Burden Research | ACEEE

Map of current benchmarking policies, including multifamily

Example of health care and housing partnership

Founded in 1994, Alternative Energy Systems Consulting, Inc. (AESC) is an energy engineering and consulting firm that drives solutions in energy efficiency, renewable energy, distributed energy resources, and software for utilities, governments, and the private sector.