Nearly every building owner in the country is thinking about energy efficiency right now, driven by some combination of rising utility costs, tightening local regulations, and pressure from lenders and insurers. For a single owner with a clear capital plan, the decision-making process is relatively straightforward. You evaluate the options, run the numbers, and execute. Co-ops and condos have a fundamentally different problem. Before any upgrade happens, a board has to agree on a path forward, and then that board typically has to convince residents to accept an assessment or a fee increase to pay for it. The technical challenge of electrifying a building is significant. The governance challenge of getting a few hundred owners to agree to spend money on it is often harder.

The most effective approach, according to Matt Cebula, VP of Energy Services at AKAM Living Services, is to start with projects that deliver clear savings without forcing a painful conversation about assessments. “We look for things that cost tens of thousands of dollars. Things like new lighting and building systems,” Cebula said. “Once we get through those, we start to look at larger line items and that often means starting electrification projects.” Building goodwill through smaller wins matters more in a co-op or condo context than it does anywhere else, because the board’s ability to push through a major capital project later depends on residents trusting that the money is being spent well. Moving too fast on a large assessment can turn residents against the whole effort, and in the worst cases it can create a cost burden significant enough to affect the marketability of units in the building.

Once a board is ready to consider electrification, the first question is not what it costs but whether it is physically possible. Electrifying a building means dramatically increasing its electrical load, and many older buildings simply do not have the service capacity to support it. “Things like whole-building water heaters can be major power draws,” Cebula said. “First, you have to understand if the building even has the capacity to make these upgrades.” That assessment goes beyond the building itself. Upgrading a main service line requires available capacity in the local transformer, and in dense urban areas that capacity is not always there. A building can be fully prepared to electrify, with board approval and financing in place, and still find that the utility infrastructure serving its block cannot support the increased demand without an upgrade that takes years to schedule and complete.

For the buildings that can proceed, the costs are substantial. Full electrification involves engineering studies, specialized labor that is in short supply, major interior remodeling to accommodate new equipment, and heat pump and water heating systems that carry significant equipment costs. “We have had one building spend $8 million to fully electrify. It is a major undertaking,” Cebula said. That figure explains why boards approach these decisions cautiously and why the phased approach matters so much. An $8 million project is not something a board proposes at the first meeting where energy efficiency comes up. It is the end point of a multi-year process of assessment, planning, smaller upgrades, and consensus building.

In New York City, Local Law 97 has added a regulatory deadline to what was previously a voluntary calculation. The law covers most buildings over 25,000 square feet, including condominium buildings governed by the same board of managers that together exceed 50,000 square feet, and assesses penalties of $268 per metric ton of CO2 emitted over a building’s assigned cap. The first compliance period has been relatively forgiving, with roughly 90% of covered buildings clearing the 2024 through 2029 limits. The 2030 limits are a different matter. NYC Accelerator projects that 57% of covered buildings will exceed the 2030 through 2034 thresholds without significant intervention, and analysis from the Urban Green Council puts the figure as high as 63%. The Real Estate Board of New York projects that total penalties across all covered buildings will exceed $900 million per year once the tighter limits take effect.

That penalty structure creates a genuine financial calculation for boards rather than an automatic mandate to electrify. “Sometimes the economics of paying the fines outweigh the expense of electrification,” Cebula said. For a building facing an eight-figure electrification cost and a six-figure annual penalty, the math does not always favor the upgrade, at least not on a pure return basis within the current compliance period. That reality is uncomfortable for a law designed to drive decarbonization, but it is the calculation that boards with fiduciary responsibilities to their shareholders are obligated to run.

Financing is available and generally favorable for buildings that decide to move forward, through a mix of utility incentive programs, state energy office funding, C-PACE financing, and specialized lending products designed for multifamily retrofits. The sequencing, however, matters. “I tell boards not to worry about financing until you have a solid plan of exactly what you need,” Cebula said. Approaching lenders or incentive programs without a detailed scope produces worse terms and slower approvals than coming to the table with an engineering study, a defined project scope, and a clear timeline. The planning work is what unlocks the best financing, not the other way around.

One challenge unique to residential buildings is that energy efficiency upgrades to shared systems only address part of the consumption picture. Individual residents control their own thermostats, appliances, and usage patterns, and in most co-ops and condos there is no mechanism to limit what any individual household consumes. That makes education a necessary component of any serious efficiency effort. “At the end of the day, people are going to run their AC at the level they want, but we can at least let them know how important it is to try and reduce their usage at certain times,” Cebula said. Peak demand periods are where that education has the most impact, both on the building’s emissions profile and on its utility costs, and residents who understand the connection between their behavior and their maintenance fees tend to respond better than those who receive a general appeal to conserve.

Whether the motivation is regulatory compliance, rising energy costs, or a genuine commitment to reducing emissions, most co-ops and condos will eventually face these decisions. The buildings that navigate them successfully tend to be the ones that started early, built consensus through smaller projects first, understood their infrastructure constraints before committing to a path, and treated resident education as part of the work rather than an afterthought. The technical solutions for building electrification are well understood at this point. The harder problem, and the one that will determine how quickly this segment of the housing stock actually decarbonizes, is getting a few hundred neighbors to agree on how to pay for it.

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