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AvalonBay saved big and cut pollution by outfitting apartments with tech that runs HVAC equipment more efficiently. Now the firm is scaling the strategy nationwide.
New York City’s biggest buildings face a huge change: By 2050, they must reduce their planet-warming pollution to net-zero, thanks to the metropolis’s Local Law 97. In other words, tens of thousands of structures will need to yank out fossil-fueled systems that heat water and spaces, and replace them with zero-emissions electric versions.
But that doesn’t mean buildings can’t start using their existing natural gas boilers and furnaces more efficiently in the meantime, both to cut utility bills and to comply with Local Law 97’s interim emissions-reduction targets. That’s the approach taken by AvalonBay Communities, one of the country’s largest multifamily real estate investment trusts.
The company partnered with startup Parity in 2022 to install indoor temperature sensors across three of its buildings in Midtown Manhattan, and to hook up the buildings’ heating, ventilation, and air-conditioning controls to a digital platform created by Parity. The software takes in data from the sensors, weather forecasts, and other inputs, and uses it to minimize gas and electricity consumption while ensuring individual apartments don’t get too hot or too cold.
The project cost AvalonBay about $280,000 to implement in the three buildings but has saved more than $540,000 in utility costs so far, according to the companies — more than double its initial targets.
“We blew the projections out of the water,” said Alexander Heckman, AvalonBay’s senior director of engineering. That allowed the firm to break even on its investment in about 16 months.
The company is now rolling out Parity’s tech to all its New York City high-rises, and plans to deploy it across about 4.5 million square feet of its properties on the East Coast, as well as in select West Coast markets, said Freddy Boateng, AvalonBay’s senior manager of sustainability and decarbonization. On Monday, the companies won a 2026 Better Project Award from the U.S. Department of Energy, which recognizes innovative energy-management efforts.
Importantly, while about 40% of the financial savings from the three Midtown buildings came from using electricity more efficiently for summertime air conditioning, 60% came from burning less gas, according to Parity data. That helped cut on-site carbon dioxide pollution by more than 1,000 metric tons so far — a big deal because Local Law 97 requires most buildings over 25,000 square feet to cut emissions 40% by 2030, compared with 2005 levels, in addition to the 2050 net-zero target.
Modulating the operating cycles of fossil-fueled boilers in big apartment buildings isn’t nearly as simple as remote-controlling individual apartments’ air conditioning, Heckman said.
In AvalonBay’s Midtown buildings, both cooling and heating are delivered via packaged terminal air-conditioning units in each apartment. The air conditioning in those wall-mounted boxes can be throttled up and down with the flip of an electrical switch, so to speak. But the heating coils within them are part of a system fed by boilers in the basement and pumps, valves, and other mechanical systems that move steam or hot water throughout the building.
Building managers mess with those systems at their peril. As apartment tenants adjust their preferred heating levels up and down, more steam or hot water is needed to meet those demands. Skimping on burning enough gas at the boiler to provide the temperatures those tenants want when they want them is a recipe for complaints or violations of city regulations.
That’s why almost all central steam and hot-water systems are designed and operated to err on the side of overheating, said James Hannah, Parity’s chief operating officer. The company has seen this over and over in the roughly 100 million square feet of multifamily buildings and hotels in which it has deployed its software across East Coast cities, including New York, Baltimore, Boston, Toronto, and Washington, D.C., and more recently in California and Washington state.
Parity solves this problem by incorporating “weather data for what the temperature is outside and what it’s going to be in the near future, so we can understand what the demand is likely to be in the near future, and optimize the run time of the boiler,” Hannah said. “There’s a lot of room for buildings that have these systems to go from a baseline to the cutting edge of control optimization, which is where we’d like to think we are.”
A prime opportunity is when days veer from chilly to warm. “It might be 20 to 25 degrees one day, and the next day — or even later that day — it might be 45 to 50 degrees. That represents a huge swing in heating demand,” he said.
Most apartments aren’t set up to adjust for those changing weather conditions, he noted. In New York City, the best-known example is older structures with steam radiators that often overheat apartments even on the coldest winter days. But more modern buildings still tend to run their automated HVAC systems on simple schedules that don’t take real-time weather data into account, he said.
Parity is far from the only company using software and data to make building HVAC systems run more efficiently. Dozens of major companies retrofit and manage energy use for governments, schools, universities, and hospitals, which can recoup the cost of efficiency investments over longer periods of time. Meanwhile, companies like BrainBox AI target HVAC optimization for office buildings.
Hannah said that what differentiates Parity from many competitors is its focus on multifamily buildings and hotels, which typically have fewer employees. “In big apartment buildings — and we’re finding similar issues in hotels — you don’t have a big, robust engineering staff like you’d find with a Class A commercial building or a hospital or campus. You can’t go to market with a complex system that requires the on-site team to do a lot of stuff manually,” he said.
Parity’s tech is also helping AvalonBay tap into a new revenue stream: The real estate company is using the software to participate in utility programs that pay customers to turn down power use during times when electricity demand threatens to exceed supply, Hannah said. AvalonBay earned about $30,000 last year by using less electricity for AC during summer heat waves.
Then there are the savings that come from avoiding penalties for failing to meet building performance standards. AvalonBay estimated that using Parity’s software in its three Midtown buildings will help it avoid a potential $290,000 in fines or mitigation costs to comply with Local Law 97. The software could help its buildings comply with similar regulations in Boston, D.C., and other markets.
There’s a lot more room for this kind of optimization. About 40% of the more than 30 million multifamily housing units in the U.S. were heated with fossil fuels as of 2020, according to the Energy Information Administration. But increasing efficiency has its limits: In cities and states that have mandated an end to carbon emissions, those buildings will eventually have to switch to all-electric heating or alternative fuels.
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