Electrification: Not a ‘One and Done’ Deal

Electrification may not be an electrifying topic, but it’s a good bet your board has been discussing it. With carbon-emission deadlines for New York City’s Climate Mobilization Act looming, many buildings are wondering whether switching their heat and hot water from natural gas or oil to electricity is a viable option — not only because of the expense and potential intrusiveness into every apartment to do so but also because of the unsettling question about supply. If a building spends all this money now, will there be enough electricity to go around?

That’s a challenge that Con Edison, the area’s main provider of electricity, faces. But it’s not a new challenge, says Marc Zuluaga, a co-founder of the energy consultancy Cadence OneFive. Prior to the 1950s and ’60s, he says, there wasn’t a significant amount of air conditioning in apartments. “When it took off,” he continues, “there was more demand, and there was a plan to keep up with it. I don’t think we’ll need to worry about a winter-peak capacity until well into the 2030s. We have a lot of headroom right now. Peak is 40% higher in summer than in winter, so the grid has a lot of room to grow for winter use. The grid has responded in the past and will respond in the future.”

That response is being closely watched by many in the energy industry. The New York Independent System Operator, the organization responsible for managing New York’s electric grid, issued a report in 2022 that tracks electric demand. It projects that while “transmission security margins are tightening across the New York grid, a scheduled hydroelectric addition in 2026 is forecast to reverse the trend through 2032.” After that, the organization assesses that margins will again tighten. Con Edison, according to a spokesperson, has been “investing in transmission, such as our Reliable Clean City project, to carry renewable energy and enable the retirement of older, less-efficient peaker plants” — gas- or oil-fired power plants that go on line only during times of peak demand. Reliable Clean City is a roughly $800 million project that already has been upgrading electric substations and installing new transmission lines to carry renewable power.

Taking the Leap

A few buildings have taken the leap into total electrification. In one notable pilot project, Tom Sahagian, a veteran energy consultant, worked with a 10-unit, five-story co-op on the Upper West Side that electrified. It went from oil-fired heat to individual apartment heat pumps — a combination air conditioner and heating unit. The switch reduced the co-op’s utility cost by only a couple of hundred dollars, but it reduced its greenhouse gas emissions by nearly 60 percent. A side benefit of the project, Sahagian says, is that residents now have a direct incentive to conserve heat and cooling. “It’s tied into their own electric meter so everyone gets monthly feedback” on their usage and the cost for it, he says.

But electrification at the moment is an expensive proposition. Along with replacing your oil or natural-gas boilers with electric ones and possibly replacing each apartment’s radiators with heat pumps, there are costs for electrical upgrades and possibly new control systems to handle increased demand; possible structural upgrades to accommodate the new equipment; and upgrades to a myriad of mechanical components like water pipes and electrical conduits.

“It could be $10,000 to $15,000 per apartment if you have three rooms you have to heat” with heat pumps, estimates Michael Scorrano, the founder and managing director of the energy consultancy En-Power Group. It could also range to “as much as $40,000 an apartment,” he says. En-Power Group is currently working with a rental building of “300, 350 units” where the per-apartment conversion cost is about $25,000.

“We’re seeing ranges of from $8,000 to $22,000” per apartment once incentives from Con Ed and from the New York State Energy Research and Development Authority (NYSERDA) kick in, says Robert Greig, the manager of Con Edison’s Customer Clean Programs. For example, the 100-year-old, six-unit rental apartment building at 122 29th St. in Brooklyn replaced its gas-fired boiler with eight heat pumps at a cost of $70,000, or more than $11,600 per apartment. But with $40,200 in Con Edison incentives, the outlay was only $29,800, or about $5,000 per apartment. 

The changes are notable. Joel Englander, the building’s general manager, says, “Because of their incentives, we’ve been able to achieve higher thermal comfort, lower operational costs and overall better heating and cooling performance.”

Help Is on the Way

NYSERDA has programs available to co-op and condo boards, such as Low Carbon Pathways, which provides funding for energy-saving retrofits through incentive packages focused on the building’s envelope, ventilation, hot water, heating and cooling (see page 12), and the Affordable Multifamily Energy Efficiency Program, which offers incentives for installing energy-efficient equipment and technology in buildings that quality as affordable housing.

Policy experts expect a variety of incentives will follow. “That’s front and center in federal, state and city policy-making,” says Christopher Halfnight, the senior director of research and policy for the nonprofit Urban Green Council, who notes that the recently passed Bipartisan Infrastructure Law and the Inflation Reduction Act contain “significant sums of money to help support energy efficiency, electrification and building decarbonization plus tax credits and other incentives available to multiple-family dwellings, though some details are still in the works.”

Besides incentives, there are other ways to finance the daunting cost of electrification. The Climate Mobilization Act “is not a one-and-done kind of situation — it doesn’t mean people have to electrify today,” says Luke Surowiec, the program manager of NYC Accelerator, an information clearinghouse and resource of the Mayor’s Office of Climate and Environmental Justice. “It should make economic sense.”

Where to Begin

Indeed, says Halfnight, “for most buildings, the place to start is not to jump straight to heating electrification. The place to start is energy efficiency” with things like roof insulation and other low-hanging fruit. “Electrification is typically a longer-term strategy. It’s likely going to be more feasible for many multifamily buildings to start by electrifying hot-water systems first and heating later, because the hot-water system technology is easier to work with.”

Adds Grieg, “If you’re replacing an existing fossil system with a new fossil system, that’s a baseline cost a building will have to bear.” 

NYSERDA has a variety of programs supporting energy efficiency and electrification, a spokesperson says,“including support for building owners to evaluate and implement plans over time as part of their capital improvements and in conjunction with the end-of-life cycle for existing equipment.”

And costs will go down as heat pumps and other electrification technologies become more common and economy of scale kicks in. “There needs to be early adopters for this electrification stuff that are excited about it for various reasons,” says Zuluaga of Cadence OneFive.“Once that group of 10% or 15% of the market does it, other folks will have a blueprint to follow.”

Whatever path you take on the road to 2050, start a capital fund now, advises Sahagian. “Do the normal energy-efficiency stuff you should be doing to reduce your consumption,” he says, “and within the next few years, there are going to be a lot more options available.”