03/01/2013 11:36 am ET Updated May 01, 2013

A Feasible Step Toward Resilience

When Hurricane Sandy shut off lights throughout the metro region, New Yorkers got an alarming glimpse of what could be a polarizing energy future. Those with on-site generation and backup power systems, like Co-op City in the Bronx, had uninterrupted light and heat while many of their neighbors throughout the city were consumed by a cold darkness.

Outages will likely increase as severe storms strike with greater frequency and our 20th century infrastructure becomes more vulnerable. As the densest city in the nation, our dependence on the grid means even the slightest hiccup in service delivery has widespread consequences. By 2030, over nine million people are expected to call the Big Apple home, adding to our already voracious appetite for energy and increasing the fallibility of the grid.

Beyond being unreliable, our current energy generation system based around large centralized power stations is inefficient and costly. Nationally we lose 7-10 percent of all electricity put onto the grid through transmission which, according to a 2010 National Geographic study, is "enough juice to run 14 cities the size of New York." Meanwhile, grid failures cost the U.S. economy $80 to $180 billion annually.

Fortunately there is a way to reduce reliance on the aging grid and produce energy more efficiently and locally. Governor Andrew M. Cuomo highlighted a proven solution last week when he announced $20 million in state aid to support combined heat and power (CHP) projects, which will enable large buildings to generate at least a portion of their own heat and electricity on-site. CHP systems can automatically supply energy during grid outages and reduce energy losses from generation and transmission by up to 50 percent.

The idea that individual buildings and clusters of buildings might generate their own power is already taking place at large industrial, medical, and academic campuses, and even some high-end residential buildings. Unfortunately this innovative technology is seldom utilized in affordable housing developments in which hundreds of thousands of New Yorkers live.

The Women's Housing and Economic Development Corporation (WHEDco), a Bronx-based nonprofit, is proving that the installation of this energy technology is a feasible solution in large affordable buildings. On the heels of a successful cellar-to-roof energy retrofit of one of its buildings, which resulted in a 6.1 percent reduction in tenant energy bills, WHEDco has installed a CHP micro-turbine unit. The system will provide reliable electricity for common area lighting and elevators, and will heat 132 apartments' domestic hot water supply. In addition to reducing reliance on the grid, the CHP system decreases greenhouse emissions, decreases utility costs and improves the environment for tenants and staff.

Unless affordable housing owners choose to pass on to tenants the costs of purchasing and installing a CHP system, which tenants can ill afford, the price tag at first glance seems high. Yet, CHP systems are ideal for large multifamily buildings (from affordable to market rate) because they depend on economies of scale and significant thermal loads to be cost effective. WHEDco's CHP system will achieve $89,000 in annual energy savings, effectively paying for itself in less than six years.

Decentralized power generation is a pragmatic solution to a variety of problems that plague property owners and residents throughout New York, and other cities. Climate change and the expected storms and ensuing power outages are finally receiving attention at the national and local levels. WHEDco hopes to demonstrate a feasible step toward resilience in the affordable housing market. Investing in the multifamily housing stock is cost-effective for both owners and tenants, and it benefits the city as a whole through improved grid resiliency. The barriers to making capital investments of this nature are not insurmountable, but government needs to continue expanding its efforts incentivizing all property owners to take action.