Making apartment buildings more energy efficient can mean a massive cost to replace carbon-powered heating and cooling systems — something that’s pretty much out of reach for lower-income communities. And while air-source heat pumps are environmentally friendly they can struggle to work efficiently in very cold climates.
San Francisco-based startup Gradient and Midea America, a unit of Chinese conglomerate Midea Group Co., have developed a solution to both challenges: small, apartment-friendly air heat pumps that are both easy-to-install and designed to work in chillier weather. Their pilot units are slated for public housing installation next year in New York City, where the average temperature in January gets down to 26F (-3C).
Other cities are already showing interest in the technology and the companies are eyeing expansion. Gradient is raising new financing and exploring the potential for the US Inflation Reduction Act to help it bolster production, while Midea is looking at other markets.
“Several other cities and utility partners have shown a lot of interest in this concept, so we’re hopeful more partners get on board in the near future,” said Adam Schultz, residential air conditioning product manager for Midea America in Louisville, Kentucky, adding that it’s hard to assess what the potential market size might be. “The trend with these products is migrating to more heat pump technology, so we suspect other product families and categories will follow this lead.”
Heat pumps aren’t new — about 190 million of them were in operation in buildings worldwide in 2021, according to the International Energy Agency. The most commonly installed are air-source heat pumps, which work by absorbing heat from outside air and moving it to an indoor space. In warm weather the operation reverses and the device extracts heat from a room and moves it outdoors. The devices can deliver as much as three times more heat to a home than the electricity they consume, and the combination of energy efficiency and reduced fossil fuel use shrinks carbon footprints.
However, heat-pump systems for apartment buildings are complicated and expensive to install. The work requires a licensed professional and costs about $20,000 to $25,000 per apartment, said Dom Lempereur, chief of engineering at BlocPower, a Brooklyn-based startup that coordinates and finances retrofits of older residential buildings, including installing heat pumps and solar panels. “A lot of drilling needs to happen to connect these systems,” he said. “It is very disruptive for residents.” Window heat pumps have potential to play a big part in making electrification more accessible, he said.
The devices destined for NYC consist of a bracket that rests on a window sill that connects an outdoor mechanism with its indoor counterpart. Apartment dwellers can install the unit with about the same effort they already expend putting in an air conditioner. They aren’t yet commercially available. Gradient already sells other window heat pumps that cost about $2,000, and Lemperer estimates fitting them in a four-bedroom apartment could cost about $8,000 to $10,000.
“It is a system that lets us retrofit especially low-income and moderate-income buildings that are usually older, that are usually multifamily and lets us retrofit them faster,” said Vince Romanin, chief executive officer of Gradient. “It’s the platform for getting to zero carbon buildings and solving the climate problem.”
Gradient and Midea are very different. The former, founded in 2017, has raised about $13 million from venture capital investors so far, and Romanin said it will soon close a Series A financing round. Midea has a market capitalization of $47 billion and operates in 195 countries selling household appliances from air conditioners to wine refrigerators, according to its website.
The New York State Power Authority is taking a chance on both. It named them winners of a competition to provide heat pumps to the New York City Housing Authority, beating four other entrants. The challenge was designed to spur the development of a device that can provide heating and cooling without requiring extensive structural or electrical upgrades to buildings, said Paul DeMichele, spokesperson for the NYPA. “Heat pumps are a proven technology that have been used for decades all around the world, but there is not a packaged window heat pump on the market that can provide both heating and cooling for the New York area,” he said.
Midea’s device can manage temperatures as low as -13F, better than the minimum of about 30F to 40F for traditional heat pumps, Schultz said. The difference lies in the unit’s larger sealed system and more complex systems and software. “It will give NYCHA the freedom to take antiquated boilers and radiators that have been mainstays in these buildings offline,” he said.
Midea will submit its pilot units in the spring next year and install the remainder of units in 2024, he said. Romanin said Gradient will install test systems next year at the Woodside Houses public housing complex in Queens and assess their performance before rolling out more.
Residents there have been pleading for a permanent fix of the heating and hot water failures they’ve faced since Hurricane Ida flooded the basement boiler systems last year, forcing building managers to relocate the boilers to outdoor sheds. One tenant said his 87-year-old father, who has lived in the complex for over 50 years, will often sit in his heated car for two or three hours at a time when the systems in the building go out.
“He’s always with two jackets on and a sweater, suffering from the cold,” said the resident, who didn’t want to be named discussing his building’s problems. “It’s the same situation for everyone else.”
New York City estimates it will need to install about 156,000 cold-climate window heat pumps in public housing to achieve its goal of reducing carbon emissions 80% by 2050 compared to 2005 levels. Buildings account for 10% of global energy-related CO2 emissions, according to IEA data, behind only electricity generation, industry and transportation.
“In places like New York City and other dense American cities, buildings are — if not the biggest component — a major component of the climate puzzle,” said Alejandra Mejia Cunningham, a building decarbonization advocate at the National Resources Defense Council. Retrofitting US public housing, with its densely populated high rises, is no easy matter, and that's where the window designs could come to the rescue, she said. Easy installation is a “key advantage.”
However, the public-housing-friendly cold-climate devices haven’t been tested in commercial markets. The NYPA’s DeMichele said the challenge was modeled on one from the 1990s that cut energy used by refrigerators. “That gave us the confidence that with some incentives, we can find a win-win solution for the manufacturers and our customers,” he said. If the pumps work, NYCHA will roll it out to more apartments.
Gradient’s Romanin said the company is already in talks with public housing authorities outside of New York City about new projects. It’s also working with the state of New York, California and the federal government to explore ways to manufacture its products in the US, in addition to tapping the IRA and other incentives.
The company wants to “make sure that we're creating jobs and economic opportunity for the communities that we're serving,” he said. “We ultimately believe that climate change solutions need to consider the communities that they're designed for.”
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