New Construction: Estimating Electricity Usage & Why It Matters
By Isaac Baker
As we move to electrify our society and introduce onsite clean energy generation to create greener, more efficient buildings, one of the key places where evolution is needed is for development teams (including developers, architects, consultants, etc.) to have a clearer understanding of how the design choices they make will impact ongoing energy consumption. This will be the first post in a new series on new construction which will examine how development teams are making design choices that impact energy consumption and in turn, create tradeoffs for how solar PV can be introduced to offset that consumption. Because Resonant Energy focuses on affordable multifamily housing, this series will focus specifically on some of the nuances of multifamily – but it’s worth noting that many of these learnings are broadly applicable to all new construction.
Early Design Considerations
When it comes to optimizing energy usage on new multifamily buildings, there are two key factors for developers to consider. Since the value of electricity is reduced if it is spread across multiple meters, the highest priority is to have as much electricity load behind a single utility meter as possible. The second-best scenario is to have as much property owner-paid load as possible across meters (as opposed to tenant-paid load). This is all part of addressing the infamous “split incentive” issue between landlords and tenants in multifamily rental housing, where property owners invest in energy efficiency improvements, but only the tenants benefit. To address this issue and design a building where solar PV will integrate most effectively, there are three choices that developers make early on that have an outsized impact on how solar PV can be used at the site:
Electric Utility Metering - Will it be Master Metered or Will there be Individual Tenant Meters?
In our experience, nearly all of the buildings we work with will have individual tenant meters. While it is technically possible to have a master meter with submeters for individual units (which you might see for a senior housing facility where tenants are not expected to be responsible for the bills), the building can be more flexibly used over time if it has individual meters from the start – regardless of the intention regarding who will pay the bills directly (see below). If a building does have the statutory ability to be master metered in the state and utility framework that a building will operate in, this will be the best outcome from a solar integration standpoint. If not, as is often the case, items #2 and #3 offer alternate solutions.
If Separating out Tenant Load - Can Load be Moved to the House Meter?
The key load in question is heating and cooling, which typically represents the largest form of energy usage for a building. Opting for a central electric VRF system tied to the house meter instead of using gas or individual air source heat pumps for each unit is the clearest way to eliminate the split incentive issue and ensure that you have enough centralized electricity load for solar to offset on a single meter. This comes with the other benefit of lowering the number of compressors on the roof that solar has to be designed around, which in turn increases the capacity of the roof.
Regardless of Metering - Who Pays the Bills?
Some of the more forward-thinking developers we work with are addressing the split incentive issue by still having individual tenant meters – for statutory or long-term strategic purposes – but then paying for those bills and rolling electricity costs into the rent. While this is not quite as ideal as centralizing load behind a single meter – many states will allow for cost-effective crediting from the house meter to other meters paid by the same entity on-site, meaning there is a cost-effective strategy available for exporting value produced on the house meter to other meters on site.
For building types with limited common area spaces and load (e.g. triple-deckers or townhouses), this strategy is vital for having a pathway forward for solar with a decent return on investment (ROI). Note: Developers almost never in our experience change the strategy for how this works once the building is operational due to the difficulty of updating all of the agreements with tenants, so this strategy needs to be adopted out of the gate.
Calculating a Building’s Estimated Usage
Once you’ve solved these strategic questions regarding the setup of the building’s energy systems, the next question that you need to solve is: how much energy will the building actually use in a given year? Independent of solar, this is an important step that all developers should be taking as many pieces of equipment that are more efficient come with a higher upfront cost. If developers don’t take the time to understand the picture for the operational savings, they will continue to buy the lower upfront cost pieces of equipment and plug-in guesses for energy usage for the building based on the number of units. An example of this upfront investment can be seen in the recent trend in police departments switching to Tesla cars based on operational savings). More sophistication is needed here for the industry and for underwriters to help us modernize our approach. To address this, Resonant Energy has developed a worksheet template. The inputs you’ll need are as follows:
Loads: A list of all of the loads for a given meter that the developer will pay for and their associate kVa or kW rating. This is typically generated by the electrical subcontractor who prepares the load sheets with this data for the new service application process with the utility that will ultimately size the service to the building. As an aside, service is usually sized to deliver the maximum instantaneous load that the building could theoretically draw if all systems were running full blast.
Estimated Runtime as a % of the Year: This is the most challenging piece of the puzzle. In order to get from the rated capacity of the equipment to the quantity of power it will use, you need to know the runtime in hours per year. We generally come to this number through common sense math – interior lighting is on almost all of the time, exterior lighting closer to half the time, heating and cooling based on the local climate, etc. – but a more intensive process could be used to review studies of operational data for the relevant pieces of equipment.
Note: Runtime has been particularly challenging to estimate for clients who are installing new EV charging stations for multifamily housing because it’s entirely unclear to what extent the chargers will be used, which can be influenced by many factors – including if the charger is publicly available, behind a paywall, etc.
Load Factor: You also need to derate the total rated capacity of the equipment because it’s unlikely that the equipment will be running at its maximum capacity most of the time (if ever). We use somewhere in the 60-70% range, but it should be noted again that this is a guess at an average across all of the equipment and could have a more rigorous process applied as well by studying normative draw for each individual load type.
Note: Our team will complete this calculation for you for projects we’re assessing – so if you’re overwhelmed, or simply whelmed, no need to worry!
Typical Usage Profiles by Building Type
After two years of data collection from this usage modeling, we have created a summary of the three typical types of buildings that we’re seeing in terms of common area load:
*In all of the cases above, we are assuming a 40-70 unit building, which is typical of what we see being developed in MA given current sizing strategies regarding the low-income housing tax credit (LIHTC) and other funding targets. Solar sizing can change dramatically based on how well roof space is defended and allocated for it, so that is a guess.
How Can Solar Systems Benefit Tenants or Others in the Community?
In most cases, onsite solar can only produce enough power to cover common area loads and that is by far the easiest thing to do contractually and logistically. However, under the current policy in MA, we do have a few pathways to direct value directly to tenant-paid bills in the event a site can produce more than the onsite, owner-paid usage (which based on policy is the highest financial value pathway for the property).
Townhouses & Triple Deckers (< 25 AC): For smaller projects like this, Resonant Energy has successfully advocated for a policy pathway that allows us to tie the project into the house meter with very nominal usage for these types of buildings. From there, we request that the utility direct the majority of the rest of the excess each month to other owner-paid bills in the development. Developers also have the option to give away 15% of the output to qualifying low-income residential bills (R-2 rate class, or R-1 rate class in an income-qualifying state EJ Census Tract) via our Solar Equity Platform, making the entire project eligible for increased SMART incentives. Resonant is open to collaborating with housing developers to distribute these benefits to tenants, or we can handle it separately and direct the benefit to others in the community. You can learn more about this new, award-winning program here.
Larger Scale Community Solar (> 25 AC): Additionally, larger projects can be set up on a standalone meter and operated as a community solar project. This we most often pursue where onsite production dramatically exceeds onsite usage (this is especially the case for sites with good parking canopy potential, e.g. > 80 unshaded parking spaces). In this setup, we can direct the utility to send up to 50% of the output to a central meter and then the remaining must be sent to accounts in < 25 AC allocations (approximately 41,000 kWh/yr). This is standard community solar and can work with any type of offtaker – e.g. a small business, a church, etc.
Low-income community solar comes with a higher incentive under the SMART program and requires that the remaining 50% of the power be allocated only to qualifying low-income bills (as defined in the section above). In this case, the experience for the offtaker is more similar to standard community solar because the community solar credits must be sold to them. For example, a participant might receive $100 as a credit on a bill in a given month. If they sign a contract for a 20% discount, they will then receive a separate invoice for $80 from the owner of the solar array. Their net benefit for the month will be the $20 gap. Because of the billing complexity, this process can be more difficult and may not be the preferred route for many housing developers – noting that they would not need to be involved directly in the billing workflow.
It’s worth noting that any time a tenant moves, that will typically trigger the need to find a replacement, have them sign a participation agreement, and provide their new account information. This is applicable for any of the options noted above in MA and it’s important to discuss upfront how responsibility for this workflow will fall over the life of a solar system.
Under current policy in NY, there is a move towards consolidated billing for community solar wherein the utility can facilitate the bill credits & energy savings showing up on tenants' bills without adding the separate billing process, which is currently required in MA. This is a fairly recent policy development as of 2022, so more details to come!
Designing a new building to be solar-ready may seem like a complicated process but the lifetime energy savings will make the upfront work well worth the effort. You can learn more about solar options for new construction here and if you’re ready to discuss solar for your project, please fill out our new construction interest form.