Bulk Energy Procurement Initiative Provides Affordable Energy for Affordable Housing
Cities like Denver are exploring partnerships with solar energy providers to procure low-cost, sustainable energy for affordable housing units. Image courtesy of the White House, Wikimedia Commons. As cities nationwide prepare for summer heat waves, many housing providers are concerned about rising utility bills in the months ahead. For managers of supportive and affordable housing developments, seasonal spikes in energy demand can trigger burdensome fluctuations in their utility expenses.
An initiative launched recently in New York offers providers of supportive and affordable housing the opportunity to negotiate lower energy prices. The Bulk Energy Procurement Initiative (BEPI) is a partnership among Bright Power, Housing and Services, Inc. (HSI), and the JPMorgan Chase Foundation. The initiative, the first of its kind, allows providers of supportive and assisted housing to enter a pool and negotiate stable, lower cost energy contracts as a group.
According to HSI’s Mary Galbally, paying for electric and gas service can be a huge challenge for organizations that house low-income and formerly homeless individuals. “The margins are so slim for affordable housing. Every penny matters.” In 2013, Galbally began working with Richard Meister of Bright Power to negotiate better energy prices for HSI’s supportive housing. Meister, a former energy broker, is well aware of the detrimental effects the volatile energy market can have on affordable housing providers and low-income families.
Nonprofits and housing providers may find that their energy bills vary greatly from month to month depending on the weather, natural gas prices, and economic trends. Bright Power and other procurement agencies foster competition among energy service companies (ESCo) to obtain lower rates.
The idea for a larger bulk purchasing project came about after energy prices spiked during the Polar Vortex of 2014. Galbally approached Bright Power about the possibility of expanding the purchasing pool to obtain better prices, arguing, “If we can negotiate good prices for our 3 buildings, imagine what we could negotiate for 300 buildings.” Meister liked the idea, noting that many smaller organizations such as shelters or nonprofits might not be able to hire a professional energy consultant to arrange such pools on their own.
To demonstrate the financial gains possible with bulk purchasing, HSI took a snapshot of the savings the organization saw at their affordable properties over a period of 4 months. At the Cecil, a building with 89 single-room occupancy units for the formerly homeless, HSI saved an average of $5,000 in electric costs, a 38 percent reduction from January to March 2014. At Kenmore Hall, a building with 326 units for homeless veterans, individuals with HIV/AIDS, and adults leaving the shelter system, HSI saved more than $3,000 in gas costs over 4 months, a reduction of more than 13 percent.
Bulk purchasing programs have become increasingly common as a means for communities and businesses to lower their energy costs. As a report from the National Renewable Energy Laboratory states, bulk purchasing also “save[s] buyers the time and effort that would be required to navigate the purchasing process individually.” Several group purchasing models have emerged on the West Coast. In Portland, Los Angeles, and Santa Barbara, the city government acts as the primary organizer, overseeing the bulk purchasing of solar energy and assisting local neighborhood associations with purchasing. An alternative model hinges on finding a representative from the local community to seek partnerships with state, local, and private entities to negotiate affordable rates for residents and businesses. In California, the Bay Area Climate Collaborative collaborated with the city of San Jose, and the San Jose Credit Union started a solar group buy program called SunShares. The program was supported by a Solar America Cities Special Projects grant from the U.S. Department of Energy.
Like SunShares, BEPI is also the product of collaboration — in this case, of nonprofit housing organizations, an energy procurement company, and private support. Because a bulk purchasing program could help affordable and supportive portfolios mitigate risk and operate more sustainably, Bright Power sought assistance from the JPMorgan Chase Foundation, which provided BEPI with an initial grant of $120,000.
In Colorado, the Denver Housing Authority partnered with several renewable energy leaders, including Oak Leaf Energy Partners, Enfinity America Corp. (now SunEdison), and Namasté Solar, to provide solar energy to 387 public housing buildings in the city of Denver. This partnership is estimated to reduce the Denver Housing Authority’s carbon footprint by 25 percent. Chicago recently launched a similar partnership with Kyocera Solar and VGI Energy to provide solar power to affordable multifamily housing units.
While the Denver Housing Authority was able to procure low energy prices for a large number of public buildings, nonprofits and supportive housing providers typically do not have access to group bargaining initiatives. New York’s BEPI makes sustainable energy procurement accessible to organizations of all sizes. Although BEPI currently does not focus on solar power, Bright Power is interested in procuring low-cost solar energy for New York housing providers in the future.
The final step housing providers must take to reduce long-term energy costs is to monitor their properties’ month-to-month energy consumption. BEPI participants have access to EnergyScoreCards, an online tool that helps housing providers monitor their properties’ energy consumption. The user-friendly template allows housing providers to compare their properties’ energy usage to that of 1,500 other buildings in the software’s database. The tool removes some of the mystery of electric and gas bills and helps providers budget and adjust for long-term sustainability.
With summer months ahead, the BEPI represents an innovative approach to helping affordable housing providers reduce their energy costs and protect against market fluctuations. Bright Power hopes that this collaboration can be replicated in other U.S. cities. Meister states, “Up until now, there has really been nothing done to bring together affordable housing providers. I cannot state enough what a noble objective [it] is to assist organizations that serve New Yorkers.”
BEPI launched on June 12, 2014, at the New York Nonprofit Press’ Nonprofit Facilities Management conference. Bright Power will be holding informational workshops in the Bronx, Brooklyn, and Manhattan during mid-July.
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