Energy Efficiency Projects (Maximizing ROI & LL97 Compliance)
It always has and will make sense for property owners and managers to reinvest capital to preserve, de-risk, and improve their investments or assets. One major bucket of capital improvement projects includes those which generate a strong return on investment, or “ROI.” Simply put, this means the dollars saved or earned will quickly pay back the cost of the project, with that threshold adjusted for risk. However, it is not so simple to decipher which projects are worthwhile for your building.
We would like to share with you some energy efficiency measures with enticing risk/reward and a proven track record of reducing your energy usage. Not only will they save you money on your utility bills, but they will also reduce your LL97 carbon fine exposure. Many of these efforts can still be implemented in 2024 to reap the rewards of lower cooling costs this summer or heating costs in Q4, which can minimize or eliminate potential LL97 carbon fines this year.
To calculate ROI and understand just how impactful energy efficiency projects can be on your bottom line, make sure you know your building’s LL97 compliance pathway. If you have not prepared a plan yet, we can guide you through your building’s compliance strategy. If you received an energy audit within the last few years, feel free to share with us so we can help you interpret which projects are worthwhile.
All of those outlined below are also part of the 13 measures required under the LL97 Article 321 pathway for affordable buildings. The city specifically chose these projects because of their strong ROI and proven effectiveness. Whether your building is subject to Article 321 or not, these projects are worth considering, though further investigation may be required to understand whether your building is a good fit.
#1 – Indoor/Outdoor Temperature Sensors
Most buildings run their boiler system more frequently and longer than is necessary to provide a comfortable temperature for residents, wasting a ton of energy in the process. This is because 20th century systems require manual operation to turn on and off, or they integrate with outdoor temperature sensors only. Technology exists to solve this problem.
A boiler control company can install a network of outdoor and indoor sensors which, through a series of self-learning algorithms, communicate to the building’s heating system when to turn on and off. Rather than having the boiler run constantly because of outdoor temperature, the system knows when apartments are at the desired temperature and can shut the boiler down accordingly. The system can also provide real-time data and identify issues such as heating imbalances, unexpected spikes in consumption, etc. Payback period for this upgrade is typically 2 years or less. Incentives may be available through the utility company to subsidize the installation cost, though incentive programs are subject to change over time.
#2 – Lighting Upgrades
Lighting in commercial spaces and residential building common areas should be converted to LED and motion sensors installed in certain areas. This is for two main reasons. First, most buildings over 25,000 square feet must comply with LL88 by January 1, 2025, which requires lighting power density to be below a certain threshold and for motion sensors to be installed in some common areas. Buildings will be subject to a fine for non-compliance. Second, payback period is typically very short for LED conversions, around 2 years or less. For limited job scopes, your building’s super may be able to handle the work. For larger projects, we recommend contracting an electrician or lighting engineer.
#3 – Master Venting & Steam Traps
These measures are only applicable to steam buildings. Master venting and steam traps are used in steam heating systems to improve the efficiency and balance of steam distribution throughout a building. In such systems, steam is generated in a boiler and travels through a network of pipes to radiators, which release heat into rooms. Broken, missing, or old vents and traps will lead to wasted energy and should be repaired or replaced. Faster venting reduces the amount of time the boiler needs to run, saving energy, lowering utility costs, and extending the life of the boiler and other system components. Additionally, properly functioning vents and traps ensure even heat distribution across all radiators. Contact a plumbing company or engineering firm to audit and repair or replace your nonfunctioning steam components.
#4 – Low-Cost & Simple Upgrades
This group of projects includes pipe insulation, weatherization of windows and exterior doors, adjusting heat and hot water temperature set points, and repairing heating system leaks. All of these are simple, low-cost fixes and can be completed in-house to reduce energy consumption.
Market Analysis
Electricity
NYISO Zone J was a game of two halves in June. Through the first two and a half weeks, pricing sat in the $0.02 to $0.03 per kWh range, as it has for most of the year. Then NYC’s first heat wave of the year arrived and persisted for just over one week. As temperatures soared, so did demand. Consequently, electric costs roughly doubled in that timeframe. This will likely be short-lived, as it was entirely a weather-driven event.
Natural Gas
Similar to NYC, much of the country experienced above average temperatures in June. With natural gas being a primary input to electricity generation and electricity powering most of the country’s cooling demand, natural gas followed the wave as well. NYMEX surpassed $3 per MMBTU by mid-month, which is a first since late 2023. Ample supply and moderating temperatures eventually settled the NYMEX back down in the high-$2 range later in the month.
Crude Oil
Oil swung lower to open the month around $72 per barrel when eight OPEC members led by Saudi Arabia and Russia announced they would phase out voluntary production cuts. The volatility did not disappear, as futures later climbed to nearly $80 per barrel amid continued concerns over political unrest in the Middle East.
💡 Mitchell’s Tip: Know your LL97 compliance pathway.
