Turning energy conservation chores over to specialized firms in return for a share of the energy cost-saving is the best way for condominiums, cooperatives and apartment landlords to cut utility bills, according to a study by the Department of Energy.
The lower bills are achieved at relatively little risk to the building owner because under the shared-savings program the energy service company selects, finances, installs and maintains whatever conservation equipment is needed, the report said.
"Shared savings doesn't require any capital investment by the multifamily building owner. That's important because so many owners don't have the capital. It also gives you one company to provide the several services" instead of contracting a separate firm for each service, said Martin Klepper, a lawyer with Lane and Edson, a District law firm that prepared the study for DOE.
The report, which analyses several proposals for privately financing energy conservation in multifamily, commercial and industrial buildings, is the first part of a $245,000 project. Lane and Edson later will develop and field test its recommended financing methods.
The study is in line with the Reagan administration's philosophy that the marketplace can adequately finance energy conservation measures without government help. As a result, the administration budgets have slashed or ended DOE conservation programs.
Although a 1979 DOE study found a multifamily building's energy bill could be cut by as much as 40 percent, building owners generally are reluctant to buy energy conservation equipment, the Lane and Edson report said. Some owners face financial constraints, while others find it easier to pass higher utility costs on to tenants in the form of rent or fee increases or tenants are directly billed for their energy use, the report said.
The shared-savings approach gets around these barriers by being relatively risk free, the study said. "Ideal candidates" for shared savings are buildings with owners in weak financial shape or where energy use is recorded on a master meter, it said.
"Buildings that are individually metered or where there is a separate heating unit for each unit in the building, such as a series of town houses, present less attractive opportunities for both energy savings and a shared-savings program," the report said.
"In those structures, the owner does not have an adequate savings incentive unless an arrangement can be structured with the tenants whereby the owner receives a share of savings in return for having arranged" the energy conservation.
For condominiums and cooperatives, while they provide "a model group of individual owners with the ability to significantly reduce their energy costs through common efficiency investments," the difficulty of reaching a consensus within the association to make such an investment can be a problem, the report said.
Under a shared-savings program, an energy service company analyses a building's energy use to judge how much utility bills could be cut and whether the savings would be profitable enough for it to make the in.estment. Once the equipment is in place, the building owner pays the lower bills plus a share, usually 50 percent, of the cost of the energy saved to the service firm, the report said.
The report found that among disadvantages of the program for building owners are being "locked in" with one company because of a several-year contract, sharing control of the building's operation and splitting the energy savings when they could have it all for themselves if they had installed the equipment.
In the Washington area, the report listed Steuart/STM Associates and Diversified Energy Systems, both of the District, and Guardian Corp. of Silver Spring. Spokesmen for Diversified and Guardian said their companies offer shared-savings programs for multifamily buildings, while a Steuart/STM spokesman said his firm provides a guaranteed savings program.