May 25, 2012

Energy Star upping efficiency ante

This year is the 10th anniversary of the Energy Star home program, and the EPA brand is taking a giant step forward by pushing home sweet home’s comfort and durability — and of course energy efficiency — to levels unimagined 10 years ago.

But some builders who have partnered with the volunteer program until now will drop out, unwilling or unable to both meet the higher standard and keep new homes in the price range their customers can afford.

“We expect attrition,” said Kate Gregory, residential programs manager for EPA Region 8, which includes Colorado. “This next level, Version 3, is a big jump from Version 2.”


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Nationally, 500 builders have partnered with the program to date, said Gregory, and Energy Star homes are approaching 50 percent of all new housing built in Colorado.

In Boulder, McStain Neighborhoods, Meritage Homes, Wonderland Homes, Coast to Coast Residential and Markel Homes together have built 888 or about half of the total 1,695 Energy Star homes.

“Colorado builders have been strong supporters of this program,” Gregory said. “It’s a way to differentiate themselves from the pack as a quality builder by co-branding themselves with the Energy Star logo.”

To differentiate themselves, builders’ Energy Star homes are constructed to standards that generally are well above building codes. When building codes catch up to Energy Star standards, then the next more stringent version of Energy Star is rolled out. Version 3 is generally 20 percent above most current building codes. Boulder is the exception, where codes exceed Energy Star standards.

“The industry is now catching up to its potential,” said CR Herro, vice-president of environmental affairs at Meritage Homes. “Using better windows, insulation, using better functioning lights and appliances, and building with different sorts of materials, we can get a home to consume half of the energy and half of the water that a conventional home consumes and actually make it work better, be more comfortable, healthier, and it costs less to operate.

“We are not making people set their thermostats differently, we are not making people live differently. Energy Star represents the way a home should be built,” Herro said.

Builders today are using third-party engineering firms that employ breakthrough software modeling technology to tweak configurations of the components of a home until an ideal combination of insulation, windows, appliances, lighting and sheathing is developed within Energy Star criteria to produce a design for a new house that falls within the price parameters set by the builder for its target market.

Mark Samuelson, who writes about the Colorado housing market for The Denver Post, noted that Oakwood Homes is an affordable Colorado-based builder that will guarantee a buyer’s energy bill for two years based upon their modeling. That’s a factor when they are competing against higher-priced builders and it helps to gain consumer confidence, he said.

“What’s happened over the past 10 years is that the modeling software for building performance has become so much more reliable and accepted by builders that they can now look at a house and tell buyers with a great deal of confidence what they are going to save on their utility bill,” said Samuelson. “Particularly in the tight market that we have been through in the last 3-4 years, that really does make a difference to buyers because they can save $100 to $200 a month off traditional utility bills. The net-zero house is the ultimate example of that.”

Net-zero buildings are measured using a protocol called HERS score. The score relates to how tightly the home is built, how much air leakage there is, and as a result how much energy must be used to heat and cool the space. According to building code analyst Jim Meyers at the Southwest Energy Efficiency Project in Boulder, a net zero HERS score means that the home is not using any energy at all because the building generates enough renewable energy on site to equal or exceed the building’s annual energy use. Generally a builder doesn’t get there without building a very energy efficient building and then incorporating solar PV, Meyers noted. As a comparison, houses in Boulder County that were built in the early 1980s and haven’t been upgraded commonly have a HERS score of 130-160 and version 2 Energy Star homes may have a HERS score of 60-80.

While insiders note that builders are making a big deal about Energy Star, the fact is that most home buyers are more concerned about nuts and bolts issues like bedroom count, getting the space they need for a growing family, granite countertops and comfort features other than energy use.

That may be part of the reason why some builders are dropping out of the latest version of the Energy Star homes program: It adds another level of complexity and cost to the building process in order to boost energy efficiency that isn’t necessarily in the top tier of things consumers are interested in.

“The new Energy Star standards are much more complex and rigorous: The bar is much higher,” said Scott Rodwin, AIA, LEED AP and President of Skycastle Homes, a custom builder in Boulder County. “The level of administrative tracking, verification, education of subcontractors and coordination is much higher, which adds time and expense.”

Rodwin conceded that custom home builders don’t have the same marketing and cost constraints as production builders. Energy Star originally focused upon production builders and 10 years ago the designation was easy to implement and as a result widely accepted, he said. But the new version is “pushing them beyond their comfort zone.” Rodwin says his company may build a super-efficient home but it may not include every item on the Energy Star checklist. He is still trying to figure out how valuable to the business is the Energy Star designation before making a commitment to Version 3.

Though Markel Homes in Boulder County chose to join the Version 3 Energy Star program, it’s because it suits their “quality builder” brand, said Chad Kipfer, project manager. “The new Energy Star standard requires different framing techniques and more third-party testing, which people aren’t used to,” he noted. “It is more expensive.”

It’s a buyer beware situation, said Samuelson. “Particularly right now with Energy Star’s higher standards, you are seeing that some builders are saying that they are Energy Star but have backed off from adopting the new code,” he said. He suggests that new home buyers and their realtors ask for the HERS score of the house, because it can be an indication of how well the home is built and new homes often have drastically different scores.

For builders who are adopting Version 3 of the Energy Star home standards, the challenge is finding a way to translate all of the energy efficient information in a snappy way that makes it as attractive as granite countertops—and that hasn’t happened yet.

Herro, who affectionately refers to older homes as “boxes of shelter,” said that, over time, Energy Star builders educate consumers and slowly homebuyers start to respect a better built home. Once you change homebuyers’ expectations, then all the builders have to go that way, he said. Meritage hires sales consultants to teach realtors and home buyers the value of Energy Star homes locally.

There is a lot for the consumer to understand, Herro explained. When you change the characteristics of a home like better windows and better insulation, it changes the way the air conditioning system works. You have to completely redesign your air conditioning—the size of AC, how you distribute the air, how it cycles. For ultra-efficient homes, fresh air cyclers are added to bring in fresh air. To keep a healthier indoor air quality, builders use different filters and recirculation systems. Thermostats are upgraded to mix the air better. Since heat and air conditioning units don’t come on as often in efficient homes, air can stratify, so builders upgrade thermostats to mix the air. The better built the house, the more opportunity there is to have a healthy, comfortable home, Herro said, but builders have to leverage all the components of a home to really extract all that value.

Try telling all that to the average realtor or homebuyer and the response may be, “But how many bedrooms and bathrooms does the home have?”

Samuelson said that Realtors generally convey this basic information plus the glitz features such as granite countertops, which is generally all that’s needed to sell a house. Most realtors aren’t well-educated about energy efficiency, he noted, though some do make it an area of expertise.

Builders note that realtors represent a comparable slice of humanity: Some of them are extremely forward-looking, associate with innovative builders and look for what’s new. They can provide a better value to their customers, help them discriminate between marketing and substance and help them make better choices.

But most homes sold are resales, and that’s where Energy Star gets tricky. Gregory of EPA noted that a 2011 report by the North Carolina Energy Efficiency Alliance found that Energy Star homes spend fewer days on the market and have a higher resale price. Realtors and homeowners are rewarded for selling this type of home, she noted.

But David Scott, a Boulder-based eco-certified real estate broker associate with Colorado Landmark Realty, and board member of the Colorado Green Building Guild, isn’t so sure.

“The value of a resale home is determined by an appraiser, and the appraiser sets the value based upon comparable sales in the area,” he said. “The appraiser does not generally take energy efficiency into account.

“We have been collecting data now for more than a year and one-half and less than a third of the homes that have green features are being recorded by realtors and builders. So if appraisers don’t have comparable sales with energy efficiency features documented — or even solar systems — there is no value for these things,” Scott said.

Suzanne Pletcher is director of communications at the Southwest Energy Efficiency Project based in Boulder, which promotes energy efficiency policy in six states of the Southwest.

This year is the 10th anniversary of the Energy Star home program, and the EPA brand is taking a giant step forward by pushing home sweet home’s comfort and durability — and of course energy efficiency — to levels unimagined 10 years ago.

But some builders who have partnered with the volunteer program until now will drop out, unwilling or unable to both meet the higher standard and keep new homes in the price range their customers can afford.

“We expect attrition,” said Kate Gregory, residential programs manager for EPA Region 8, which includes Colorado. “This next level, Version 3, is a…

Christopher Wood
Christopher Wood is editor and publisher of BizWest, a regional business journal covering Boulder, Broomfield, Larimer and Weld counties. Wood co-founded the Northern Colorado Business Report in 1995 and served as publisher of the Boulder County Business Report until the two publications were merged to form BizWest in 2014. From 1990 to 1995, Wood served as reporter and managing editor of the Denver Business Journal. He is a Marine Corps veteran and a graduate of the University of Colorado Boulder. He has won numerous awards from the Colorado Press Association, Society of Professional Journalists and the Alliance of Area Business Publishers.
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