“How much am I going to have to pay in fines for operating an old, inefficient, steam-heated apartment building?”

“What will my boss think if we replace our heating plant in kind and then have to rip it out in 10 years to comply with energy laws?”

“How can I keep my new construction developments on track when I can’t get gas?”

These questions speak to the rapid pace of change occurring at the nexus of the real estate and energy industries. Once posed to us perhaps twice a year, we are now hearing variations on these themes daily. New York City’s Local Laws 84/133, 87, and 97, New York State’s Climate and Community Protection Act, and ongoing gas moratoriums in Westchester County, the Bronx, and Queens are all creating business cases for electrification that didn’t exist even five years ago.

Many technologies are enabling the shift to all-electric buildings. Here are some of the most promising energy solutions and how we think they fit here in the Northeast:

Air-Source Heat Pumps

In the last 10 years, we’ve seen air-source heat pumps—particularly variable refrigerant flow (VRF) systems—go from being nonexistent to a well-understood, common design choice in multifamily new construction. Performance data has shown that VRF systems use much less heating energy than nearly any other conventional heating system. The systems also facilitate airtightness, allowing for improved envelope performance in new developments and existing buildings. As a result of these benefits, VRFs are frequently deployed in buildings designed to Passive House standards.

Air-to-Water Heat Pumps

Air-to-water heat pumps can be used to retrofit buildings that are currently heating with hot water. Where fan-coil and PTAC units provide heat from a loop of circulating hot water at 140 degrees Fahrenheit or higher, air-to-water heat pumps can provide heat to resident rooms from circulating water that is at 120 degrees Fahrenheit or less, while using more electricity to move heat out of the water and into the rooms. Careful engineering is needed to ensure that the existing terminal equipment, distribution system, and selected heat-pump units will be adequate under all conditions, or to specify a new distribution system that can work with lower water temperatures.


With the right site, geothermal can be a promising alternative to air-source heat pump systems for the electrification of heating and cooling systems. While capital costs are generally higher, greater efficiencies are possible, and in some places incentives are available to help offset the high first costs. With thoughtful design, careful construction, and thorough commissioning, extremely high levels of performance are possible. However, the cost and feasibility of a geothermal system depend on the specific conditions at a particular building. Because of its potential for extremely low energy use, geothermal can be an excellent technology for heating and cooling buildings built to Passive House, net-zero, or other ambitious standards.

However, we recommend caution when utilizing geothermal systems for domestic hot water (DHW): The constant, year-round extraction of heat and high temperatures (110 F to 140 F) needed for DHW service can cause problems.

Heat Pump Water Heaters

Heat pump water heaters are a key technology enabling the electrification of buildings, as they can produce hot water with two to three times less energy than conventional electric or gas water heaters. While Passive House and other high-performance building strategies effectively reduce heating and cooling energy usage, occupancy and resident behavior are the main drivers of domestic hot water load reduction. A certain amount of hot water will always be used for cleaning and bathing, so it is important to generate that hot water as efficiently as possible. Heat pump water heaters have been widely used in Europe and Asia but are newer in the U.S. Recently, larger units have become available to meet the needs of multifamily buildings. These units can perform at lower outdoor temperatures, which is important for buildings located in the Northeast. Heat pump water heaters also cool the air around them, which can be useful to cool down a hot boiler room, a garage, or other spaces.


Many are asking whether cogeneration (also known as combined heat and power or CHP) is still a good idea given that CHP systems use gas and the city and state’s ultimate climate goals are to eliminate fossil fuel usage. It’s an excellent point, and we applaud that forethought; but there are several factors to consider.

  1. Even if progress toward installing renewable energy to replace carbon-emitting power plants in New York state happens on a linear course toward 2040 (the year that the state government has mandated a carbon-free electricity system), it will be at least five years before emissions from the electric grid will reach parity with CHP systems. While the state’s electricity grid as a whole may get cleaner, transmission constraints in the downstate area may further extend that time frame.
  2. As New York continues to develop its landmark Value of Distributed Energy Resources (VDER) compensation framework, we expect new value streams, such as demand reduction and electric infrastructure deferment, to be explicitly compensated for the first time.
  3. With two NYC blackouts and a heat wave this past July, resiliency continues to be an important consideration as well.
  4. There is the potential of non-fossil gas being created and used in the future.

All of these factors may make CHP a valuable investment for owners and society, even as the grid gets cleaner and moves toward decarbonization. But it is something worth continually re-evaluating as policies and infrastructure changes.

Solar PV + Energy Storage Systems

The combination of solar photovoltaics (PVs) and energy storage (batteries) will be instrumental in decarbonizing electricity. With energy storage costs rapidly falling, the technologies can provide economic and resiliency benefits when paired with new solar PV systems or installed as retrofits to accompany existing systems.

With gas moratoriums limiting design teams’ options for heating and DHW, we also see a renewed interest in solar thermal systems. Solar thermal can harvest more energy per square foot of roof area. However, it has not seen the same cost declines and industry development as solar PV. Our analyses show that solar thermal beats PV if you are using electric resistance to make hot water. On the other hand, solar PV makes more sense if you’re using a heat pump to make hot water.