Co-ops Pioneer Energy Efficiency: Residencia Esperanza & Two Charlton Owners Corp. Lead the Way

Being the first to adopt emission-reducing technology can place your board and building at the forefront of innovation. That’s not without risk, of course, but the risk is often mitigated by financial incentives. Nevertheless, it takes vision and courage to proceed with new ideas. It also takes money, and without that it’s all just a dream.

We’re highlighting the stories of two co-ops whose boards had all three — vision, courage and money (or the ability to get it). Residencia Esperanza partially electrified its hot water supply while Two Charlton Owners Corp. is on the road to combine submetering, EV batteries and solar into a true energy ecosystem.

Whether the innovation involves creative engineering or simply strategic thinking, energy efficiency pioneers are vital if the city is to meet its emission targets.

AN AFFORDABLE BLUEPRINT

The path to sustainability at Residencia Esperanza, a 25-unit pre-war HDFC co-op in Hamilton Heights, was paved with financial challenges. Just two years ago, emergency facade repairs depleted the building's entire reserve fund, and to replenish it the board secured a Small Business Administration loan as part of the Covid-era relief program. While it increased annual expenses, the loan provided crucial financial breathing room. 

The financial planning had to be strategic because the co-op faced two critical issues — outdated infrastructure and carbon emissions. Initially the board was considering an ambitious electrification project, but upon learning the cost would have been $800,000 it concluded “that it was way past our budget,” says David Stoler, the board’s co-treasurer. The NYC Accelerator, the city’s sustainability assistance program, helped the board navigate more feasible alternatives.

Scalable Solution

The resulting plan focused on three key improvements: a pioneering heat pump design, roof replacement and solar panels. The heat pump innovation, developed through a NYSERDA pilot project and facilitated by Steven Winter Associates, aims to meet between 50% and 70% of the co-ops domestic hot water needs while maintaining the existing oil-fired boiler. This means it will still run its oil-fired boiler but alleviate some of its reliance on fossil fuels. “We need to be as creative as we can to lower emissions affordably,” remarks Stoler. 

When heat pumps deliver all of a building’s domestic hot water, the work involves costly engineering plans and expensive safety and backup systems that often sit idle. A more limited approach makes the system much simpler and cost effective to size and design, says Nicole Ceci, principal mechanical engineer at Steven Winter Associates. “You are not purchasing backup capacity, or capacity that is only needed less than 1% of the time,” she says. The return on investment remains high because you are not adding more equipment to cover smaller and smaller portions of the load.

NYSERDA’s goal with this pilot project is to create a blueprint for contractors to more easily install heat pumps for domestic hot water and eliminate the need for costly individualized engineering plans. “We are not trying to meet all the domestic hot water load,” notes Ceci. This eliminates the need for “high-cost design engineers on every project,” making these types of projects more attractive and affordable, she says. The incentives for the pilot program are based on installation costs and projected energy savings, but typically work out with NYSERDA covering between 80% and 90% of the costs. For Residencia Esperanza, the pilot heat pump project cost around $106,000 with incentives covering $85,500. 

Finding Funds

The three measures Residencia Esperanza is undertaking are being financed by a $236,000 loan from the New York City Energy Efficiency Corp. through their Multifamily Express Green (MEG) program. The MEG loan process, known for its standardized documents and condensed due-diligence, proved remarkably efficient. "It was fast once we identified what we were doing and had the project lined up," Stoler says of the process. "The roof and boiler are well past their lifespan,” he notes, “so it gives us an opportunity to take care of Local Law 97 and address some underlying infrastructure issues." The roof's condition has been particularly problematic: "We have to pay for repairs all the time due to leaks," he says.

While HDFCs have some flexibility in meeting Local Law 97 emission thresholds, they still must implement energy conservation measures. The planned improvements are expected to generate significant savings, with the solar installation fully offsetting energy consumption in common areas. "Our maintenance, even with the loan, is going to be less," Stoler projects.

MANAGING THE LOAD

Electrification is the goal of many boards, but the financial benefits of this switch kick in when you can manage your building’s load to take full advantage of discounts during peak demand periods. Should the Buildings Department approve some type of battery storage for solar, switching from fossil fuels to electricity will become all the more attractive.

Two Charlton Owners Corp., a 175-unit co-op at the crossroads between Soho and Greenwich Village, has seen the future and begun this process. "We've created a brand new electrical infrastructure," says co-op board member Chris McGinnis, who began planning these initiatives several years ago when he saw electrification on the horizon. Taking a three-pronged approach, the board has invested $850,000, with half of this covered by Con Ed’s Power Ready program.

To accommodate the co-op’s vision, the board had to modernize its electrical room. This created the foundation necessary to support both current improvements and future innovations, ensuring the building's electrical system could handle the demands of 21st-century energy management.

Submetering

The first step in the upgrade was transitioning to a master meter, which allowed the co-op to immediately benefit from lower commercial electricity rates. This step consolidated 183 direct-metered accounts into a single master-meter commercial account, and enabled the co-op to access ConEd’s bulk rates which are lower than what an individual resident would pay. Shareholders continued to pay their previous rates, while the co-op pays a lower master meter rate and keeps the difference. It then partnered with DaisyChain, a submetering and decarbonization company, to manage submetering for all the units. Doing so reduced monthly meter charges to $7 from ConEd’s $22. With submetering, says DaisyChain co-founder Alex Blumberg, the financial benefits are clear. “If a building pays for the upgrades themselves, the payback is two to four years, and after that they are generating income for themselves."

The Big Prize

While submetering is vital to energy management because it allows precise tracking and control of energy usage, it’s not the whole picture. Submetering alone won’t bring down the building’s electric usage during high demand periods, even though building staff can alert residents to turn off lights and other appliances during these episodes. In order to significantly reduce electricity consumption, Two Charlton would have to do more.

The building’s infrastructure and DaisyChain’s software offered an immediate solution. Two Charlton has a garage, operated by iPark, and the board took advantage of Con Ed incentives (Con Ed’s SmartCharge program) to add 38 EV charging stations. “The system is designed to establish charging patterns that can be adjusted when needed. For instance, if ConEd requires us to temporarily reduce consumption, we can interrupt charging as part of a curtailment agreement,” says McGinnis. Immediately, though, the co-op can earn money from the program: 10 cents per kilowatt-hour when charging occurs during off-peak hours, from midnight to 8 am. Additional incentives reward the building for avoiding peak summer charging during weekday afternoons and through Con Ed’s SmartCharge Commercial program, provides another 3 cents per kilowatt-hour for off-peak charging. 

The car charging program, paired with DaisyChain software, offers a look into the future. “The goal is software that alerts residents to a demand peak and asks if their idle EV batteries can be used to shift the building’s electric load,” Blumberg says. “That’s a way of getting much more value out of EV chargers,” he adds. By accepting the invitation to use their EV battery as a power source, shareholders earn rewards from DaisyChain and save their building money by avoiding peak electricity charges.

The board plans to add a solar array on the roof, and once that is done electric load management gets really interesting. "When you combine solar and EV chargers with submetering, those three things together are greater than the sum of their parts," says Blumberg. This is because solar panels will generate electricity, EV batteries can provide storage capacity, and DaisyChain software can optimize electric load management.

BOTTOM LINE

Before embarking on your own energy efficiency journey, be sure to explore all the financial incentives offered through NYSERDA, Con Ed and the city. Everyone is looking for magic bullets to help buildings achieve energy efficiency without falling into a financial abyss. If your building aligns with what is being offered you may find that the risk/reward ratio is in your favor. Not only will your building benefit from new technology when trying to meet carbon emission targets, so, too, will your building’s budget.