From Overhead to Opportunity: How Microgrids Improve NOI in Multi-Family Housing

Key Takeaways:

• Microgrids like e2Companies’ R3Di^® System provide instant, full-facility backup power,far beyond the limited coverage of diesel generators.
• Switching to on-site power can reduce energy costs by more than 50% and eliminate peak demand charges.
• Grove365 automates energy optimization, enabling new revenue through demand response programs and EV charging.
• Microgrid and energy storage systems now qualify for enhanced federal tax credits under the Inflation Reduction Act, expanded in the One Big Beautiful Bill Act, bringing back 100% bonus depreciation and increasing ITC up to 50%.
• On-site power systems reduce outage risk, improve tenant satisfaction, and raise property value while offering long-term energy resilience.

When you’re managing multi-family housing, every dollar of operating expenses makes a difference, especially in today’s market. Multi-family property expenses rose by 7.1%, or $593 per unit, on a year-over-year basis as of January 2024, according to a recent report.

This makes it a challenging market for multi-family property owners and developers.

Energy costs account for up to 20% of a property’s OpEx, making utilities a “hidden giant” that can quietly erode your net operating income (NOI).

With utility demand and costs on the rise, and the U.S. grid aging rapidly, it’s a great time for multi-family property owners to consider ways to seek energy resilience and transform utility costs into strategic opportunities.

That’s especially true today, as the recently passed One Big Beautiful Bill Act expands the Investment Tax Credit, offering additional incentives for companies to save up to 50% of the cost of battery energy storage system projects.

Here’s a closer look at the economics of making this transition.

Why Grid Dependency Is Risky

Sole reliance on the public power grid is becoming less convenient and more concerning.

Electricity costs rose by 4.5% over the past year, outpacing the rate of inflation for the third consecutive year. Meanwhile, storm-related power outages are growing. The U.S. has seen 74% more weather-related outages in the past decade than in the one before it, according to a recent report.

With more than 70% of transmission lines over 25 years old and nearing failure, it’s not a matter of if you’ll experience outages at some point; it’s a matter of when.

For a multi-family housing complex, a single, multi-hour outage can result in equipment damage, loss of security, and health concerns for tenants in inclement weather.

Historically, diesel generators have been the go-to solution for power backup, but they have several limitations. Due to environmental regulations, they can be operated only about 100 hours per year, and they support only critical loads such as elevators and emergency lighting. Maintenance and fuel are costly for diesel setups, making them an inadequate stopgap.

Turning Power into a Strategic Asset

What if you could make energy management and generation part of your multi-family property management strategy? With a microgrid, power can become a controllable, even profitable, part of your financial strategy rather than a passive, ongoing cost.

A turnkey microgrid such as e2Companies’ R3Di^® System delivers more than backup power. It’s a fully-integrated, full-load solution that provides instant-on resilience regardless of grid conditions. Where traditional diesel generators support only emergency loads, the R3Di^® powers your entire facility without interruption, preserving tenant comfort, operations, and revenue during a grid outage.

With Grid Response Optimization of Virtual Energy (Grove365) energy management system, you’ll be able to orchestrate energy performance in real time, optimizing load profiles, tracking compliance metrics, and identifying savings opportunities. Grove365 monitors weather models, market pricing, grid conditions, and your energy assets to predict peak demand times, helping you maintain operational uptime and avoid increased charges.

Sample Savings and Revenue Streams

Investing in a microgrid is a move toward energy resilience, but the financial case is just as compelling. Together, R3Di^® and Grove365 help you reduce utility costs and gain new revenue opportunities that improve your bottom line. Let’s look at the numbers:

Cost Comparison: Grid vs. Diesel vs. Microgrids

• Traditional Grid Power costs typically range from $0.11 to $0.15/kWh, with peak demand charges pushing that rate as high as $0.25/kWh during summer afternoons or high-demand events.
• Diesel Generators, still common in many multi-family buildings, are costly and inefficient. Fuel alone runs about $0.245/kWh, with additional maintenance, emissions compliance, and limited runtime (100 hours a year) making them a poor long-term option.
• Microgrids powered by natural gas average just $0.06 to $0.08/kWh—often less than half the cost of grid electricity during peak hours.

Switching to on-site power helps you avoid peak surcharges and stabilize energy costs, directly protecting your NOI.

Here’s how.

Peak Shaving & Load Optimization

Grove365 automatically shifts building load to avoid costly demand spikes, cutting utility bills by up to 30%. For a 300-unit property, that can mean tens of thousands in annual savings.

Demand Response Programs

During grid stress events, you can earn payouts when you reduce consumption or provide stored energy to the grid. The R3Di^® can easily pick up your facility’s load during strategic times, allowing you to participate in demand response programs. In a deregulated energy market, you can even resell power back to the grid, transforming your on-site energy system into a revenue stream.

EV Charging Infrastructure

Multi-family properties that offer EV charging stations can gain a competitive edge and a new income stream. R3Di^® supports adding Level 2 and Level 3 chargers without overloading local infrastructure. A typical setup with six chargers can generate up to $115,000 in annual income, depending on factors like usage, rate structures, and demand.

NOI and Property Value Impact

Every dollar you save on utility costs, or earn back through demand-response credits or energy generation, positively impacts your NOI. These gains can help you achieve a higher cap rate and long-term asset growth.

Microgrid systems reduce costs and open new revenue channels, from demand response to EV charging, while ensuring a steady flow of uninterrupted power to keep tenants comfortable, helping to improve satisfaction and boost retention.

Because their outage risk is lower, properties with on-site power also often qualify for lower insurance premiums. And from an investment perspective, clean energy infrastructure makes your property more attractive for ESG-minded investors and institutional buyers who prioritize environmental performance and future-proofed assets.

With a microgrid, you’ll do more than keep the lights on during the next weather event—you’ll also strengthen your property’s financial foundation and market appeal.

Energy Storage Tax Credits and Bonus Depreciation

Microgrids offer several additional benefits beyond cost savings and energy resilience, including eligibility for tax incentives and funding opportunities.

• Flexible Financing
  With e2Companies’ flexible financing models that include leasing, companies don’t have to fully purchase the system. e2Companies can own, operate and maintain it so you can benefit from reliable power without a large upfront investment.
• Inflation Reduction Act (IRA) Tax Credits
  With the passage of One Big Beautiful Bill July 4, microgrids are still eligible for 30% in federal tax credits under the Inflation Reduction Act. The bill retains an additional 10% “energy community bonus” for projects installed in qualifying communities near brownfield sites or with a high percentage of employment in the fossil fuel industry. An additional 10% domestic content bonus tax credit means qualifying projects can save up to 50% of the cost.
• 100% Bonus Depreciation
  The new bill also allows for 100% bonus depreciation for assets placed into service before 2029. That means property owners can deduct the entire cost of the R3Di^® System in the first year, saving as much as $1 million or more.
• Future-Proof, Flexible Architecture
  R3Di^® is designed to evolve, with a flexible framework that supports future integration with renewables, hydrogen, and emerging energy technologies. You’ll be empowered to stay compliant with shifting regulations and sustainability goals in the future.

Control What You Can

Energy costs don’t have to be a growing, unpredictable portion of your annual OpEx. You have no control over grid reliability or utility rates, but you can take control of your on-site energy assets.

Investing in on-site power generation boosts your property’s energy resilience while reducing utility costs, opening new revenue streams, and helping you qualify for federal tax incentives. Microgrids offer a clear path for improving NOI and property value. Use our Virtual Utility^® ROI calculator to estimate your potential savings.

Want to see what Grove365^® and the R3Di^® System can do for your multi-family property? Schedule a discovery call today.