Attempting to upgrade all building systems to their newest and most energy-efficient version can have a prohibitive cost. A better approach is to prioritize measures in terms of payback period or return on investment, and start with those that produce more yearly savings per dollar spent upfront.
Any upgrades that are mandated by NYC laws and building codes should also be prioritized, regardless of their payback period. However, legally required building upgrades are often cost-effective, since their energy saving potential is one often one of the reasons why they are mandatory in the first place. Finally, measures with a long payback but high energy savings can also be very promising if they earn a Con Edison rebate, which can cover up to 50% of the upfront cost, effectively reducing their payback period by half.
This article will provide a general overview of how different energy-efficiency measures compare. Of course there can be exceptions, but this article provides a general idea of what to expect when upgrading each type of building system.
How Measures Compare by Energy Source: Electricity and Gas
Assuming the same energy use in both cases, running appliances that consume electricity is more expensive than running appliances that consume gas.
- Consider that electricity prices in NYC normally exceed 20 cents/kWh for commercial users, and may even exceed 30 cents/kWh in some small commercial and residential tariffs.
- On the other hand, gas has a price below $1.5 per therm, which is equivalent to around 5 cents/kWh.
For example, an electric resistance heater is around 3 times more expensive to operate than a gas heater of the same capacity. The most efficient electric heat pumps can compete with the running cost of gas heaters, but consider that their operating cost per kWh consumed is the same; they compensate expensive electricity by using it efficiently.
As a result of the energy cost difference, measures that save electricity tend to have a faster payback period than measures that save gas. This does not mean that upgrades for systems running on gas should be ignored; it’s just that electricity-saving measures are a better starting point for a large building upgrade. The savings achieved from measures with a high ROI can then be used to help cover the cost of measures with a slower payback.
Large NYC buildings have been benchmarked and audited as part of the Greener, Greater Buildings Plan. The results have revealed that electricity represents 59% of energy consumption in buildings, followed by natural gas at 24%.
Selecting the Best Upgrades for Each Building Type
The most promising upgrades change depending on the type of building. Consider that most large buildings in NYC are multifamily and office buildings, but their energy consumption patterns are different. Therefore, if the same upgrade is applied to a multifamily building and an office building, results will be different. Consider the two following examples:
- Lighting upgrades are almost always a cost-effective measure, but the financial return tends to be slightly better in multifamily buildings, especially when common area lighting is upgraded. In the first place, residential lighting in NYC is generally older and less efficient than commercial lighting. Also, common area lighting operates for more hours than office lighting each day.
- Mechanical ventilation upgrades tend to perform much better in office buildings, where these systems are required by NYC building codes. Mechanical ventilation requirements are much less demanding in residential spaces, and in most cases only bathroom and kitchen extractors are needed.
These are just two examples, but they illustrate how results differ for each type of building upgrade. The NYC Urban Green Council gathered data on energy audits for large buildings. They have compared the expected performance of some of the most common upgrades in multifamily and office buildings, in terms of how many BTUs per square foot per year they can save.
Multifamily Building Savings
Office Building Savings
Process and Plug Loads
Domestic Hot Water
HVAC Controls and Sensors
In terms of energy saving potential, the top five measures for residential buildings are on-site generation, fuel switching, domestic hot water upgrades, space heating upgrades, and the use of HVAC controls and sensors. For office buildings, the top five are on-site generation, ventilation upgrades, heating system upgrades, conveying system upgrades and fuel switching.
It is important to note that this analysis only considers energy savings, but not financial performance. However, many building upgrade incentives from Con Edison are calculated based on expected performance: 16 cents per kWh for measures that save electricity, and $2 per therm for measures that save gas. Based on the results above, it is possible to find the measures that can earn the highest rebates from Con Edison.
Comparing the Payback Period of Different Measures
As previously mentioned, measures that save electricity tend to have a faster payback period. According to the Urban Green Council, electricity-saving measures with a cost below $290 per million BTU saved annually achieve a payback period below 5 years. On the other hand, the threshold is reduced to $50 per million BTU saved annually for gas-saving measures.
The following categories of building system upgrades can normally deliver a payback period below 5 years in both multifamily and office buildings:
- Distribution system
- HVAC controls & sensors
- Domestic hot water
- Fuel switching
- Heating System
In the specific case of office buildings, the following measures can also achieve a payback period below 5 years. They are also viable in the residential sector, but their payback is longer:
- Process and plug loads
- Cooling system upgrades
It is important to note these are general trends after analyzing hundreds of buildings, but each case is unique. An energy audit is the best way to determine the most promising upgrades for a specific buildings. After Local Law 87, these audits are mandatory for buildings above 50,000 ft2 and groups of buildings above 100,000 ft2 (under the same tax lot or condominium ownership). However, energy audits are highly recommended even when not legally required, since they can help property owners optimize their capital used for building upgrades.