Getting the Most out of Energy Performance Contracts
Jersey City Housing Authority (JCHA) develops and manages Housing of Choice of the highest standards, which is safe, affordable, sustainable and accessible; and, through partnerships with outside organizations, foster resident responsibility and self-sufficiency. As part of its mission, JCHA established a sustainability plan in 2008 to implement portfolio-wide energy efficiency measures while increasing resident comfort and reducing utility expenses. The agency’s first step was to enter an $8.5 million energy performance contract (EPC) and expand its energy efficiency program. Adhering to overlapping, and occasionally conflicting, EPC requirements from multiple legislative bodies was one of the largest challenges JCHA overcame throughout the process.
State of New Jersey and U.S. Department of Housing and Urban Development (HUD) policies defined the EPC’s terms and structure. For example, in accordance with the New Jersey State Energy Savings Improvement Plan, public bidding was required for subcontracts and material purchases. JCHA ensured that its selected contractor followed the agency’s internal policies on procurement, construction, and labor. Additionally, JCHA made sure that all conducted energy efficiency work met HUD’s Section 3 hiring goals. When guidelines from different agencies conflicted, JCHA followed the most stringent one and communicated with all involved parties to ensure that they met its intent. JCHA’s EPC was approved by HUD, which involved reviewing the contract’s scope, utility baselines, and project value.
The EPC included the following goals to meet state and federal policies:
- Upgrade apartment units to be energy and water efficient
- Modernize the HVAC and lighting systems in residential properties
- Finalize an agency-wide energy conservation plan
- Become a sustainability and energy efficiency leader among NJ public housing agencies
- Use funding from the American Recovery and Reinvestment Act (ARRA)
- Foster growth in the local economy
After issuing a public request for proposals, JCHA selected Siemens as its energy services company (ESCO). JCHA collaborated closely with the ESCO to create a preliminary list of energy efficiency measures, making sure to set a broad initial scope and outline price estimates for each improvement. The final project scope included energy efficiency measures to improve infrastructure, upgrade heating systems, replace boilers that were beyond their useful life, and install efficient lighting fixtures. This combination of measures included upgrades with attractive short-term paybacks to maximize the impact of JCHA’s investments and enable the project to be financially self-sustaining.
JCHA obtained funding from several sources, including $500,000 from the New Jersey Clean Energy Program for energy improvement performance incentives. An additional $1.4 million from the American Recovery and Reinvestment Act covered costs for heating controls, solar hot water heaters, insulation, and weather stripping at the agency’s Holland Gardens property. Federal disaster relief funding administered by the New Jersey Housing and Mortgage Finance Agency paid for improved electrical infrastructure and new boilers at the Booker T. Washington property, which had been damaged by flooding from Hurricane Sandy.
The energy efficiency measures were completed in three phases, largely determined by the different funding sources:
- (2010-2011) American Recovery and Reinvestment Act project at Holland Gardens
- (2010-2012) EPC project Phase I
- (2016-present) EPC project Phases II & III
At each property, JCHA provided clear and consistent communication with residents and building staff prior to implementing energy efficiency measures. The agency worked with its ESCO to train building staff, hold resident workshops, set expectations, clarify the upgrade process, and address concerns. The ESCO also directly engaged with property managers at each development. JCHA designated an on-site project superintendent at each property that met daily with staff and residents and provided updates on project status. This allowed JCHA to anticipate and address issues quickly.
As stated in their goals, improving residents’ comfort and standard of living was at the forefront of JCHA’s energy efficiency initiatives. Project managers were sensitive to the construction and changes to residents’ homes, and minimized disruption as much as possible. JCHA held strategy sessions with ESCO staff, and building managers to find ways to maximize resident comfort.
Tools & Resources
JCHA received funding from various sources, including a Local Utility Incentive and Federal Disaster Relief Funding.
- Local Utility Incentive: http://www.njcleanenergy.com/commercial-industrial/programs/nj-smartstart-buildings/nj-smartstart-buildings
- Federal Disaster Relief Funding : http://www.nj.gov/dca/divisions/sandyrecovery/
Through this project, JCHA has upgraded equipment, reduced energy costs, and improved resident comfort, bringing it closer to fulfilling its mission as a housing authority. The utilization of the EPC created the foundation for JCHA to improve housing for the residents of nearly 1,700 housing units, and to save more than $5 million in the first 2 years of implementation.
These energy efficiency measures have also helped JCHA make progress toward achieving its Better Buildings Challenge goals.
Training facilities staff at each development ensures that the equipment and costs savings last for years to come. Moving forward, JCHA will be leveraging Hurricane Sandy relief funds for further energy efficiency improvements and resident education on efficiency strategies. JCHA plans to advance utility billing accuracy, carbon reporting, Better Buildings Challenge requirements, and other related energy activities.
JCHA collected data prior to construction, throughout construction and following construction. Construction savings represent those savings that occurred during the construction process prior to the project completion. Savings are summarized in the chart below. Year 1 and Year 2 cumulative savings significantly surpassed the amount guaranteed in the EPC with the agency saving more than $5,000,000 since the beginning of the project. In addition, an ongoing monitoring and verification program helps maintain the equipment and energy performance. Each year, JCHA reviews energy savings in an annual report to the housing authority and guarantees that they will continue for the remainder of the contract.
There are currently no tools for this implementation model.
Jersey City Housing Authority established a sustainability plan in 2008 to implement portfolio-wide energy efficiency measures while increasing resident comfort and reducing utility expenses. The agency’s first step was to enter an $8.5 million EPC and expand its energy efficiency program.
Public Housing Authority
Combination of rising utility costs and reduction in annual federal funding
Leveraging energy performance contracts to fund projects and train staff
Reduction of $5 million in energy costs and enhanced organizational expertise in energy efficiency