Does Billing Tenants for Their Energy Usage Incentivize Greater Efficiency?

Approximately 26% of the U.S. population lives in multifamily properties, such as apartments or condominiums according to the 2019 American Community Survey (ACS) conducted by the United States Census Bureau. This represents approximately 41 million multifamily housing units.

The owners and managers of these multifamily properties are facing increasing pressure to improve the efficiency of their properties, both to achieve sustainability and decarbonization goals, as well as to reduce operational related expenses. Given the dependence on tenants to help achieve efficiency improvements, it’s important for property residents to be aligned with the owners and management on their behavior impacts the overall building usage.

The percentage of multifamily properties in the U.S. that are submetered can vary significantly by region, property age, and type. According to a 2017 report by the National Multifamily Housing Council (NMHC), approximately 41% of apartment units in the United States were submetered, while the remaining 59% were not.

Studies show that tenants who are billed directly for their energy usage tend to consume less energy compared to those who are not. This is because conserving energy has a direct financial incentive in the form of reduced energy bills.

According to a study conducted by the National Renewable Energy Laboratory (NREL), residents in multifamily buildings who are individually metered for their energy consumption use 20-30% less energy than those who are not individually metered. The study also found that individual metering can lead to a reduction in overall energy consumption in the building by up to 15%.

Another study published in the journal Energy Policy found that individual metering and billing can reduce energy consumption in multifamily buildings by up to 35%.

Given the evidence that individual metering and billing can lead to significant energy savings in multifamily buildings, you may ask why nearly 60% of apartments are still not individually metered? While submetering regulations can vary by state or even city, the cost to retrofit energy monitoring and metering technologies is often the primary consideration in whether or not to pursue submetering. In addition to hardware costs, the engineering, permitting and labor costs can exponentially increase the cost of projects to hundreds of thousands or even millions of dollars for many properties.

Solutions like Vutility’s non-intrusive, wireless, and self-powered HotDrop technology are helping make submetering cost effective and scalable. By providing residents with a direct financial incentive to conserve energy, they are more likely to adopt energy-saving behaviors and reduce their energy consumption.

By reducing the cost-of-ownership related considerations of submetering up to 90%, every multifamily property can reap the efficiency, sustainability, and OpEx benefits of aligning their tenants costs with the energy they use.  To learn more about Vutility’s products and services, email sales@vutility.com.