Apartment building's propane boilers solve a financial headache

Propane conversion provides rapid payback while helping to fill vacant units.

Jeff Lee
Staff Writer

The oil boiler in Chris McNamara's Pascoag, R.I., apartment building was giving him a financial headache.

Not only did McNamara have to pay an annual $15,000 oil bill for the 10-unit building, he also had trouble filling the apartments due to the $150 rent premium to pay for the pricey heat.

Luckily, McNamara's plumber recommended a simple fix. By converting the five-year-old boiler to run on propane, McNamara could drop his fuel costs from $3.79 per gallon for oil to $1.89 per gallon for propane and save 35 to 40 percent on his annual heating bill. With a cost of just $3,000 to adjust the boiler for propane, the decision was easy, McNamara says.

"Your payback is pretty quick — it's within the first few months," he says. "It's a no-brainer. It's that simple."

With many multifamily rental buildings in the Northeast running on expensive and aging oil-fueled heating systems, propane boiler conversions are a popular way for apartment owners to reduce their heating bills and make their apartments more marketable.

As costs for heating oil rise, rental owners throughout the Northeast are making a similar calculation. McNamara, who became an independent rental owner 12 years ago and now owns 50 properties totaling 75 units in the southern Massachusetts and northern Rhode Island region, has already converted most of his buildings to more-efficient, cost-saving propane space and water heating.

When he recently acquired two neighboring three-family buildings in Millville, Mass., for instance, he knew he needed to replace the 35-year-old oil boilers as part of the full renovations. So McNamara took an even bigger cost-saving step. He installed individual Baxi wall-mounted propane boilers for each unit. He says the 96-percent-efficient propane units beat out oil-fueled boilers (which have efficiency levels around 84 percent) in both fuel cost and efficiency.

"Not only do you pick up the 25 to 40 percent savings on price, but you get an additional 10 to 15 percent on top of that because of efficiency," McNamara says. "I had to buy a new boiler anyway, so I just decided to invest in propane boilers."

Financial fix

The propane conversion had a number of other benefits for McNamara's rental business. His propane provider installed individual meters for the propane usage in each apartment, and the company bills each tenant for their propane usage just like the local gas or electric utility. McNamara says the metering setup is "fantastic."

"Now I can market an apartment for $200 less and not have to worry about utilities," he explains. Any risk of fluctuation in prices is now absorbed by the individual tenant instead of the landlord.

"[My residents] were shocked when they got their gas bill. They said, 'I can't believe how cheap it is.' "

The propane company also paid for the propane tank, meters, and plumbing and provides rebates to cover the costs of excavation and tank inspection. McNamara says the switchover took about four hours.

The wall-mounted boilers also freed up space compared with the oil tanks and large central boilers that previously sat in the basement. McNamara put that space to good use, installing new laundry rooms in the basement and providing another attractive amenity for potential residents.

The boilers are combination units, meaning they provide on-demand domestic hot water in addition to space heating. McNamara says the water-heating savings, which amount to about 10 percent, are particularly high in the summer, when the boilers only need to turn on when the hot water is running. A storage tank heating system, by comparison, would have to run more often to heat the water in the tank 24 hours a day.

The cost-efficiency of the new boilers became particularly apparent when McNamara had a family move in from an inefficient, oil-heated home.

"They were used to oil, and used to the real huge oil bills," he says. "They were shocked when they got their gas bill. They said, 'I can't believe how cheap it is.'"

In a business where resident retention is key to profitable operation, pleasing a tenant with remarkably low utility bills is an invaluable opportunity.

Read more about apartment metering and propane conversions:

Can this air conditioner change the way restaurants get hot water?
Apartment building’s propane boilers solve a financial headache


Virtual Buildings
Tour our four sample commercial buildings to learn how propane fits into your specific project type.
All interactive tools
Video: Whole-Home Efficiency
Find out how propane-fueled heating can help you achieve affordable energy efficiency.
Watch now