For years, energy strategy in multifamily buildings was relatively straightforward: design to code, keep owner-paid energy use low, and let tenants pay for the rest. Today, that approach is becoming less effective. Rising utility costs, increasing pressure on the electric grid, and changing tenant and investor expectations are forcing owners to think differently about energy strategy.
One reason many are looking towards a new energy strategy is the rise of data centers and their impact on energy costs and existing infrastructure. The U.S. Department of Energy estimates that data centers used 4.4% of U.S. electricity in 2023 and could account for 6.7% to 12% by 2028. Meeting that growth requires more generation, transmission, substations, and local distribution capacity, often when the grid is already under strain.
Those infrastructure costs are often passed on to consumers in the form of higher utility bills. As utilities invest in expanding the grid to meet growing electricity demand, multifamily owners and their tenants may face rising rates, greater price volatility, and new questions about risk mitigation from outages. That doesn't mean every building will benefit from solar panels or battery storage. It does mean every owner should reevaluate their energy investment decisions. A comprehensive approach can help reduce operating costs, improve energy efficiency, better manage utility expenses, and support long-term asset value.
Why Yesterday’s Energy Strategy No Longer Works
Rising utility costs are only part of the story. Today's multifamily owners must also consider grid reliability, tenant expectations, operating expenses, and long-term asset value. Energy strategy has become a business decision—one that can directly affect a property's financial performance and competitiveness.
Property owners are directly exposed to rising energy costs in two ways. First, electricity used in common areas, elevators, parking, central HVAC, and amenity spaces can directly increase operating expenses, particularly where those loads are owner-paid. Second, high utility costs at the building may deter renters.
Utility rate volatility also creates a planning challenge. Higher energy costs can pressure operating budgets and make it harder to forecast expenses over the life of an asset. For residents, those same increases can contribute to higher utility bills or rent pressure, pricing them out of otherwise affordable rental options.
Investors are paying closer attention as well. Buyers are increasingly incorporating energy performance, resilience, and regulatory exposure into underwriting. Buildings with high utility exposure or limited resilience may face less predictable long-term performance, making energy planning increasingly relevant to asset value.
As electricity demand continues to grow, managing energy is becoming less about controlling utility bills and more about developing a long-term strategy that supports operating costs, resilience, and asset value.
Metering is the Foundation of an Effective Energy Strategy
One of the first decisions in developing an effective energy strategy is understanding how a property is metered. A multifamily building may have individually metered apartments, separately metered common areas, a central plant, or a master-metered utility structure. Each arrangement affects operating costs, tenant billing, utility rates, and the financial value of future energy investments.
A master-metered building with tenant sub-meters moves the majority of the building’s energy use out of the residential rate structure into the commercial rate structure. Under a master-metered framework, building owners often benefit from bulk purchasing discounts, usage-based billing, and avoided residential rate caps. They often can help stabilize Net Operating Income by shifting over-use to offending tenants, which in turn often improves reporting of maintenance issues and minimizes waste.
A master-metered framework can also make future energy investments more effective. By reducing the "split incentive" created by individually metered units, owners are better positioned to benefit from efficiency improvements, renewable energy, battery storage, reduced demand charges, and time-of-use utility rates.
Building an Effective Energy Strategy
No two multifamily properties have the same energy profile. Building age, utility structure, operating characteristics, and ownership goals all influence which strategies make the most sense. That's why developing an effective energy strategy begins with understanding how a building uses energy today—and how it is expected to use energy in the future.
For existing multifamily buildings, an energy audit and utility analysis establish that baseline. They identify major cost drivers, evaluate current building energy performance, and help owners determine whether improvements should begin with energy efficiency measures, changes to the metering strategy, renewable energy, battery storage, or a combination of approaches. Through the energy modeling process that follows an audit, owners can compare different scenarios against the property's actual energy profile, utility costs, and resilience needs before making significant investments.
For existing buildings with individually metered units, the evaluation of switching to a master-metered structure can also be addressed through the energy audit and subsequent engineering analysis.
For new construction, these decisions can be made much earlier through energy modeling. Understanding future energy needs, electrical infrastructure, and long-term operating costs during design allows project teams to evaluate the interaction between the building envelope, HVAC systems, metering strategy, renewable energy, and battery storage before construction begins.
Ultimately, there is no one-size-fits-all solution. The right energy strategy depends on the building, local utility rate structure, available incentives, and the owner's long-term financial goals.
Where Solar and Battery Storage Fit
The increasing energy risk profile for multifamily buildings makes solar and battery storage worth evaluating for both new and existing properties. While they are not the right solution for every building, they can play an important role in broader energy planning when supported by the building's utility structure, operating profile, and business objectives.
The case for solar and battery storage extends beyond a simple payback calculation. Solar can reduce reliance on grid-supplied electricity and, when paired with battery storage, help reduce peak-demand exposure. Together, they can improve energy resilience, support lower-carbon operations, and make a portion of energy costs more predictable.
That performance can also strengthen a property's leasing appeal. In a 2025 renter survey, 69% of respondents said energy efficiency could influence their decision to sign or renew a lease, and 33% said they would pay more for an energy-efficient unit that delivers consistent savings. Plus, LEED-certified multifamily properties in major U.S. markets achieve average rents 3.1% higher than comparable non-certified assets. Solar and battery storage do not create that premium alone, but they can reinforce the energy performance, resilience, and sustainability story that increasingly matters to renters and investors.
Ultimately, the financial value of solar and battery storage varies by project. Economics depend on the building's location, utility rate structure, available incentives, and how these technologies fit within the property's overall energy strategy.
Before selecting a system size or financing approach, teams should review utility data, peak demand, available electrical capacity, roof condition, interconnection requirements, and local tariff rules. Controlling energy costs is not only about reducing total consumption. It also requires understanding when a building uses electricity and what drives the highest-cost periods. As utility infrastructure becomes more constrained, these considerations are becoming increasingly important during project planning rather than after a building is complete.
Incentives and Financing Can Improve the Business Case
Available incentives can materially improve the economics of many energy strategy investments, but eligibility and timing matter. Many energy investment decisions qualify for financial incentives. Evaluating those opportunities early helps owners maximize return while ensuring incentives support the project rather than drive it.
The federal Clean Electricity Investment Credit provides a 6% base credit for eligible projects, which may increase to 30% when prevailing-wage and apprenticeship requirements are met. However, projects need to be fully operational before 2028. Certain projects under 5 MW may also be eligible for the Low-Income Communities Bonus Credit, including qualified low-income residential building projects, although an allocation is required.
In many states, PACE financing may provide another option for financing eligible energy efficiency and renewable energy improvements through property-based repayment. These programs should be evaluated early, alongside system design and ownership structure, so incentives support the project rather than drive it.
Many states and local jurisdictions offer other capital incentives to reduce the cost of energy efficiency improvements, renewables, and storage systems. For example, Ohio’s OAQDA CAIP program rewards projects that achieve 15% and 50% energy improvements through efficiency measures, renewables, or storage.
A Smarter Energy Strategy Starts With the Right Evaluation
The energy landscape for multifamily buildings has changed. Rising utility costs, increasing pressure on the electric grid, and evolving tenant and investor expectations are making energy strategy a more important part of long-term asset planning.
There is no single solution for every property. The right approach depends on factors such as metering structure, utility rates, building systems, ownership goals, and available incentives. Evaluating those variables together helps owners make informed decisions that improve operating performance, strengthen resilience, and support long-term asset value.
Emerald Built Environments, A Crete United Company, helps multifamily owners and developers evaluate energy strategies for both new and existing multifamily buildings through engineering consulting, energy audits, energy modeling, and building performance consulting. Rather than recommending a predetermined solution, we help clients identify the strategies that best support their financial and operational goals.
