Public Housing Can Drive a Clean Energy Market Transformation
By Sonal Jessel
This piece is part of a series of CCI substack posts and a policy brief exploring why the United States needs a Green Industrial Policy for Housing. This series will continue to feature CCI researchers, labor experts, and housing practitioners in the coming weeks.
Public housing—home to 1.7 million people in the United States—is one of the last remaining truly affordable options for low-income households, and decades of federal disinvestment and neglect make the repair and retrofit needs of this housing stock especially urgent. The public housing system, which includes 900,000 homes across the country, has the market power to create the demand for technologies that are far cheaper and easier to install.
By leveraging the purchasing power of the public housing system, we can support the development of inexpensive clean energy technologies while directly improving the lives of public housing authority (PHA) residents. These new technologies can then be used by millions of homes throughout the United States. In order to achieve this, state and local governments must scale up collaboration with their public housing authorities to support programs and purchasing, build in-house capacity, and stabilize its governing power.
At the Building Power Resource Center (BPRC), where I work, we are experimenting with models for PHA decarbonization. We provide support for “inside-outside” campaigns between community-labor coalitions and partners in government to push cities and states to develop ambitious policies that deliver tangible benefits to working class communities– lower energy bills, reduced pollution, and good jobs. In Pennsylvania, we are working with a community-labor coalition and local government to create a political, financial, and technical roadmap for decarbonizing and electrifying all PHA buildings countywide. In working with a small PHA, the challenges are clear, but the opportunities are even clearer.
Because of the urgent need for repair, there is an opportunity to upgrade these homes with efficient, affordable, and clean appliances. Heat pumps and induction stoves allow homes to use electricity instead of gas, propane, or kerosene. And while they can reduce utility costs overall, these technologies can have high upfront costs for purchase and installation. While the Inflation Reduction Act (IRA) has been critical for shifting the economics of clean energy for homes—drastically reducing the cost to put solar on roofs and install new efficient heat pumps—its incentives are more applicable for owners of single-family homes, rather than renters and apartment-dwellers.
Retrofitting public housing is one critical opportunity to rectify this cost conundrum. Manufacturers are more likely to invest in mass-producing and commercializing new technologies when they can be more certain that their finished product has abundant consumer demand.
Public Housing Agencies (PHAs) are already experimenting with publicly-backed green industrial policy to reduce emissions and increase wellbeing for its low-income residents, and these efforts present an exciting blueprint for what is possible. In 2022, the New York City Housing Authority (NYCHA) announced the Clean Heat for All challenge, where they launched a request for proposals (RFP) from heat pump manufacturers to make an all-in-one heat pump that met NYCHA’s unique needs. NYCHA was looking for heat pumps compatible with a standard 120 VAC/15 amp outlet, designed for cold climates, and that could be installed easily in existing windows. The winners of the challenge were guaranteed the sale of 30,000 heat pumps to NYCHA and be connected with other public housing authorities (PHAs) for more bulk purchases. The opportunity offered a quadruple win, where the developer had de-risked development and manufacturing conditions, NYCHA had a low-cost opportunity to improve their housing assets and lower utility costs, residents received improved temperature comfort with minimal disruption from installation, the installation cost was about a third, and the technologies could significantly mitigate the carbon footprint of the buildings. NYCHA recently completed this challenge, naming Gradient and Midea as recipients of the large contract. Both firms manufactured window heat pumps that were easy to install, under $3,000, and highly efficient. Meanwhile NYCHA saw a massive 87% decrease in energy use, a 50% decrease in energy cost, and 89% resident satisfaction when they piloted the heat pumps in 24 apartments.
Beyond these immediate savings are the unquantifiable benefits of energy security and thermal comfort. Relatedly, these companies now have a proof of concept and market-viable product to scale up their production and deliver more inexpensive, easy-installation heat pumps to market, a scenario which should lower the cost of decarbonization for millions of homes beyond the housing authority.
New appliances that are compatible with existing, more common wirings, have an enormous potential to accelerate home decarbonization. A 2024 study of more than 5,000 homeowners found that price and compatibility with their home’s current set up are the top barriers to electrification. A majority (77%) of the participants said they’d consider switching to electric appliances next time they needed to make an upgrade, and 84% of participants said cost was the biggest barrier in their decision. With the new lower cost, easy to install (no compatibility upgrades required) heat pumps made by Midea and Gradient coming to market, not only could NYCHA’s challenge lead to millions of heat pumps bought by other housing authorities, but millions of homeowners across the United States could also decide to make the switch.
PHAs have the power to support the development of new technologies that have high public demand to transform the market, and NYCHA’s success with heat pumps is only one example. In partnership with the state and public utility in the 1990s, NYCHA held a challenge that led to the creation of the first energy-efficient, apartment-sized refrigerator, which cut costs for NYCHA and then for apartment dwellers across the country. And in 2023, NYCHA replicated the bulk purchasing for market development program model, launching the Induction Stove Challenge, with the prize also being the purchase of at least 10,000 stoves that meet their criteria such as cost and using a 120-volt/20-amp outlet. Copper Stoves won this challenge, cutting the cost of their $6,000 range to half and making the stove compatible with the electric capacity of older homes.
Because PHA’s are the singular owner-operators of large portfolios of residential buildings, they have the purchasing power to create their own markets, and they should be supported to replicate programs that develop new technologies like in the Clean Heat for All Challenge. However, public housing portfolios are being privatized, creating individual landlords per complex through Permanent Affordability Commitment Together (PACT) and Rental Assistance Demonstration RAD) programs. This is an obstacle for launching challenges and bulk purchasing. Individual landlords cannot coordinate a capital plan like a PHA, so despite being a public housing portfolio, the fragmentation of management prevents market development activities like bulk purchasing. Additionally, NYCHA is the nation’s largest PHA. Without adequate staff capacity, purchasing power, and funding, smaller PHAs could struggle to have the same success in leading market transformation. It is therefore critical to apply the following methods to unlock the power of PHAs to transform our clean energy economy.
1. Smaller PHAs need capital planning capacity and bulk purchasing power through partnerships with local governments to achieve energy market transformation.
PHAs that do not have the capacity in-house to lead challenges can be directly connected to the manufacturers that partnered with larger PHAs to make bulk heat pump purchases that could also be compatible with their housing stocks. Furthermore, smaller PHAs can partner with their city or county on activities such as creating challenges or bulk purchasing products across governmental agencies. Where a small PHA may have only one or two staff overseeing capital improvements, a city, county, or even a state may have many more. Importantly, local governments can help small PHAs finance capital upgrades by partnering on financing and grants, creating bond measures, or appropriating general funds.
2. Stabilize the public housing stock and the governance power of PHAs
To ensure that manufacturers rise to the occasion in the production of clean energy technologies, public entities need to both demonstrate their long-term stability as customers and have sufficient purchasing power to leverage economies of scale. However, PHAs have seen consistent reductions in federal support for over a generation, minimizing their in-house capacities to maintain their vital assets, let alone invest in strategic capital planning. And PHA's governing power over their portfolios is being splintered as the result of programs to privatize campuses to individual private landlords. State and local governments must recognize the power of public housing on the local economy and provide capacity and program funding, coupled with political power by prioritizing PHAs with public support over many election cycles to get the work done.
Public housing, a besieged bulwark of truly affordable housing, is both facing an urgent need and has a massive opportunity for transformation. By working with their state and local governments for capital planning and bulk purchasing capacity, keeping PHA’s public, and stabilizing governing power, PHAs can flex their market transformation capabilities that can help every household in the United States achieve safer, healthier, and cleaner homes.
The author thanks Julia Wagner, Kira McDonald, and Ruthy Gourevitch for their contributions to this piece.