The Real Estate Board of New York to The New York State Public Service Commission Regarding Their Energy Efficiency and Building Electrification Report

Download the Testimony

REBNY appreciates this opportunity to comment on the Public Service Commission’s Energy Efficiency and Building Electrification Report.

REBNY members have been significant users of NYSERDA and utility energy efficiency and other incentive programs. For example, our members are participants in several leading programs including NYSERDA’s Empire Building Challenge, a $50 million initiative that seeks to transform New York’s buildings. Many of the key lessons of this initiative were recently unveiled as part of Empire Building Playbook initiative, which is based on the successful efforts of companies including Empire Realty Trust, the Durst Organization, Vornado Realty Trust, and Hudson Square Properties.

Investments that encourage energy efficiency and building decarbonization are a prudent use of funding and should be prioritized. As multiple studies have shown, many of the benefits of cutting pollution accrue to society in the form of curbing climate change and extensive health benefits associated with reducing pollutants such as particulate matter, NOX, and other toxins associated with fossil fuel consumption.

With this in mind, and based on our members’ experience with these programs, going forward, incentive programs will need to be both generous and flexible. Generous because buildings will require significant support, and direct assistance if we are going to meet our greenhouse gas (GHG) emissions reduction targets. As noted in NYSERDA’s Carbon Neutral Building’s Roadmap, decarbonization projects in larger multifamily and office buildings have substantial upfront costs that do not offer reasonable paybacks through operation savings, if those savings materialize at all.

Flexibility is crucial because of the diversity of buildings, both in terms of building types and in individual buildings’ systems and circumstances. There is no one-size-fits-all in such a complex environment. Flexible incentives should not be overly determinative of the technologies that can be employed, nor should they be overly restrictive in terms of the conditions they set that go beyond reducing overall emissions or increasing overall energy efficiency across systems.

Based on these principles, we offer the following recommendations.

Recommendations
In general, utility incentives (Con Edison in the case of New York City) should focus on near-term emissions reductions approaches, while NYSERDA should focus on longer-term, major projects, such as many of the strategies that the Empire Building Challenge has shown to be effective.

Con Edison should, among other things, focus on incentivizing early adoption of building electrification, including partial electrification, via cash incentives. There are a number of reasons this is an important strategy. Encouraging early electrification will help prevent a bottleneck down the road if buildings wait to electrify because of costs and other issues. Instead, it will spread out resources such as labor and equipment. It will also help Con Edison develop an efficient building electrification approach. As of now, the process for applying to electrify a building is long and arduous, in part due to the difficulty of producing large numbers of load letters. Developing a simplified, step-by-step approach will be critical to increasing electrification later as more buildings look to do so.

Further, utility incentives should apply to engineering and other studies needed to take on this complicated work. The Empire Building Challenge can be used as a precedent and model for paying for these studies.

Con Edison incentives should also focus on replacing fossil fuel burning in buildings. These incentives should include the evaluation, engineering, and construction costs related to shutting down and removing these systems. Increases in electricity consumption should not count against incentives that are for removing high-carbon-consuming infrastructure, and should instead be based on achieving long-term emissions reductions and building decarbonization.

In addition, all incentives, including for steam efficiency, should look at total emissions reductions, without being overly restrictive. For example, Con Edison’s current incentives for reducing steam use do not apply if a building’s electricity use increases. This means that projects with major steam savings but slight increases in electricity do not get funded. This is especially true as the grid should be rapidly greened. The focus should be on total emissions reductions or total increases in energy efficiency.

There should be robust incentives for tenant spaces, and those incentives should go through the building owner. In particular, BMS technology in tenant spaces is a useful tool in reducing energy consumption, but the data from those systems must be shared with building management to be most effective. This is the case because building owners and managers are more equipped to interpret the data across an entire property and make proper changes to save energy. The ability for building management to secure funding would likely help tenants feel more comfortable sharing their BMS data.

Incentives should generally be technology neutral. For instance, although electrification will be a key part of building decarbonization, there may be other technologies, such as clean hydrogen, that have a role to play. This is particularly important for buildings, especially large ones, that may not have the space for all the equipment needed to electrify. In addition, having more than one means of generating energy my provide important redundancies. Similarly, important incentives for peak shaving should consider the overall results of potential actions rather than stipulate specific technologies, such as batteries, that must be used.

In addition, and especially for large, complex buildings, it may not make sense to fully electrify in the short term. For this reason, partial electrification projects should also be eligible for incentives. This concept, Resource Efficient Electrification, will help buildings transition over time with incremental changes, and has been endorsed by NYSERDA based on their experience from the Empire Building Challenge. The incentives should also pay for studies of measures, such as heat capture and reuse and better heat delivery systems, as well as the measures themselves, that can complement partial electrification by increasing energy efficiency.

Thank you again for this opportunity to comment on these critical issues.