The classic example of old, energy-wasting buildings in New York is residents opening their windows in winter to let the heat out. Landlords must set the thermostat high enough to keep the coldest apartment warm, which makes the warmest units hot.
Some folks call this the “lowest common denominator problem.”
Many newer apartment buildings, however, have a different energy-wasting issue that’s not so obvious: Their HVAC systems are running all the time, even when they are not needed.
These systems have various features that prevent units from getting too hot or too cold, so nobody’s opening windows. But energy is being wasted nonetheless — behind the walls and out of sight.
Startup founder Brad Pilgrim offered an analogy:
“Let’s say you drink coffee once or twice a day. What if the coffeemaker runs 24-7-365? That’s kind of how a building runs.”
Pilgrim launched a Toronto company called Parity in 2017 to fix this problem. Then he looked for cities with cold winters and hot summers, high energy costs and many of the buildings in which Parity’s product would work best.
New York, with its pricey utility rates and bounty of high-rise rentals, co-ops, condos and hotels, was the motherlode. The city added a third factor when it passed Local Law 97, creating an emissions cap for large buildings. “It’s sort of like a triple threat,” Pilgrim said.
Today, Parity does more than half of its business in New York. It also operates in Boston, New Jersey, California, Toronto and the Washington, D.C., metro area.
The company targets mid-rise multifamily to high-rise luxury buildings of roughly 75,000 square feet where the equipment is not working together to efficiently control the temperature. Its platform reads what that equipment is doing and then constantly sends back new operating instructions to reduce (or increase) production to meet demand.
Essentially, it aims to ensure the HVAC system uses as little power as possible to maintain comfort. If a piece of equipment cannot be controlled by Parity’s platform, the company finds something off-the-shelf to make that happen, rather than sell buildings a custom product.
“Our typical customers see a payback of 2 to 2.5 years,” Pilgrim claimed, pointing to case studies on Parity’s website. The company charges a fee for installation and for monthly service.
To reassure skeptical building owners, it guarantees energy savings and cuts them a check if it falls short. But even that is not enough to convince some of them.
I asked Pilgrim why.
“Energy is invisible, it’s not tangible. It’s not like a lobby retrofit,” he said. “HVAC optimization and energy management is complicated, and you don’t see it. So it’s more difficult for someone to tie value to it.”
He added, “Real estate tends to be a very pragmatist vertical,” where people invest in the familiar. To some, his product — which only became possible with the advent of cloud computing — “sounds too good to be true.”
Venture capitalists have bet on Parity, which raised $19 million last year in a Series B funding round led by Idealist Capital. It has fewer than 50 employees and a customer portfolio of nearly 100 million square feet.
Extreme weather is not the company’s sweet spot, because it doesn’t deliver savings when an HVAC system is firing on all cylinders, such as during a heat wave. However, it does pre-condition buildings in anticipation of peak consumption hours, to reduce a building’s consumption when the grid is stretched to its limit.
Last June, when a blackout was narrowly avoided, Parity helped about 30 buildings reduce their electricity consumption by about 1 megawatt as part of a “demand response” program, Pilgrim said, adding that Parity is not a demand response aggregator. It can also tailor usage to reduce consumption when rates are highest.
Many proptech firms, consultants and contractors are marketing ways for buildings to reduce their power use. Their selling point is to save property owners money, but effective products and projects also help the state meet its climate goals and, perhaps more urgently, reduce demand on a grid that is getting closer to being unreliable during peak-use periods.
In fact, the New York Independent Systems Operator recently warned that the city’s grid might not be reliable as soon as next year. “Strain on the grid,” Pilgrim said, “is becoming a real problem.”
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