Co-Op in Flatiron District Reduces Energy Bills with Hybrid Energy System

Call it a trifecta. With a $15 million phased electrification plan at The Victoria, a 495-unit co-op in Manhattan’s Flatiron district, the board is banking on three outcomes: minimizing a six figure carbon emission penalty in 2030, reducing operating costs and generating energy savings. “We are installing a hybrid system, which is electric in the summer and gas in the winter but can be all electric in the future,” says Corinne Arnold, the co-op’s board president. 

The first step in this decarbonization effort is to replace the building’s absorption chillers in the basement with 16 modular electric heat pumps. The old chillers used steam from the gas-fired boilers to generate chilled water for air conditioning via fan-coil units in each apartment. Switching this system to modular heat pumps — a project that’s currently underway — will improve efficiency almost ten fold, says Amalia Cuadra, senior director of engineering at En-Power Group, the engineering firm doing the infrastructure upgrades.

The modular heat pumps will be able to operate in both heating and cooling mode, but since the cost of electricity is currently more than gas, space heating with the heat pumps may not be cost efficient for a while. By phasing in electrification, the board can leverage the building’s system, using gas now but switching to electricity when it makes more economic sense — either when electricity is more affordable than gas or when the use of electricity will mitigate the co-op’s Local Law 97 emission penalties, currently projected to be around $280,000 in 2030. “We are staging the electrification like a 10-year plan,” Cuadra says. “Everything we are installing will be electric-ready so the chillers are heat pumps and can provide heat, but only when it’s more cost effective,” she says. 

In the next few months, the building’s gas-fired steam boilers will also be replaced with hot water boilers, further increasing efficiency. “Making steam is very energy intensive,” Cuadra explains. The new boilers will provide heat in the winter unless it makes more sense to use the heat pumps. The boilers also support the generation of domestic hot water as part of a hybrid system with a heat recovery component. “In the summer, instead of sending warm condenser water to the cooling tower, we are first going to send the water to heat pumps to help make domestic hot water,” Cuadra says. This means the boilers will use less energy to heat the water. 

The mechanical system upgrades are expected to shave $250,000 off the building’s $2 million annual energy bills. And while these upgrades have the biggest impact on energy consumption, further improvements will be made by upgrading the cooling tower, vent fans and replacing the entire piping distribution system to the apartment fan coils.  

This last project will take two to three years and be most disruptive to shareholders at the 60-year old co-op as the deteriorated pipes are replaced throughout the building. Arnold says it’s “all-in an effort to minimize financial risk” and prevent any catastrophic leak in the future. The cost of the re-piping is around $10 million. The combined result of these projects is expected to reduce future Local Law 97 emission penalties by up to 90%. 

The board was savvy enough to refinance the co-op’s mortgage when rates were low in 2020 and pulled out $20 million for these infrastructure costs. Thanks to rising interest rates, the building is now making money on the loan. “We are applying that to the projects,” Arnold says. The work is also eligible for around $500,000 in Con Edison incentives.