Energy Efficient Homes

Introduction

Consumers, including buyers and sellers of real estate, do not necessarily think in terms of energy units and energy efficiency. Instead, consumers think about comfort and about the dollar amount of their energy bills. The beauty of energy efficiency is that it saves money. An energy efficient home is not only more comfortable, it can save the homeowner hundreds, if not thousands of dollars over the life of the home. Homeowners who are not necessarily thinking about selling can make energy saving renovations that will translate into reduced energy bills and increased savings.

It is important to have real estate professionals who are trained to identify energy saving opportunities and who can work with homeowners to make their homes not only more energy efficient, but more marketable. Real estate professionals have the opportunity to provide added value by understanding basic energy related terms and units, and being able to communicate the benefits of the energy efficiency features of real estate to buyers and sellers more effectively.

Energy Ratings and “Green” Financing Options

Energy efficient homes with proper insulation, high efficiency heating and cooling systems, and energy efficient windows can save between 10-50% on utility bills. People can benefit from green financing options whether they are buying, selling, refinancing or remodeling their home. Depending on the lender and the program, borrowers who meet the criteria for an energy-efficient mortgage can often get a better rate and additional funding for qualified energy improvements.

The trained real estate professional should be prepared to (i) recommend properly qualified home energy rating contractors, (ii) assist a buyer or seller in evaluating the results of a Home Energy Rating System report and formulating an action plan, (iii) explain the use of a home energy rating in applying for an energy efficient mortgage or other “green” financing options, and (iv) assist a buyer or seller in estimating the financial benefit of energy savings and its impact on monthly ownership costs.

The Home Energy Rating System (HERS) provides a standardized evaluation of a home’s energy efficiency and expected energy costs. It summarizes how a property uses energy and highlights specific opportunities to save energy and money. A home energy rating report can also be used as a tool to help a homeowner or home buyer qualify for green financing options such as an energy-efficient mortgage or an energy improvement mortgage.

Energy Efficient Mortgages (EEM) are available from certain lenders. When a homeowner or homebuyer applies for a home loan, at the time of purchase or refinance, can roll the cost of needed energy improvements into the mortgage, amortizing the cost of the improvements over the life of the mortgage, based on expected savings. These mortgage products are especially attractive because there is no compromise in the loan-to-value ratios for the borrower.

Energy Savings Performance Contract (ESPC) is an agreement between an energy services company and a building owner which creates a win-win for both parties and saves energy, money and other resources. One of the most attractive features of an ESPC is that the contractor only receives payment when they provide proof that savings have been created on the customer’s utility bill.

Future Value Financing (FVF) is a term for describing mortgage financing based on appraisals of a property’s forecasted value after energy saving renovations.

One example is the energy-efficient mortgage offered by Fannie Mae, which can reach up to 15% of the total loan value. This EEM product allows borrowers to add the cost of the energy efficiency improvements to the principal of the loan at no compromise in the loan-to-value ratio. In other words, the borrower can finance 100% of the improvements without increasing his or her down payment.

Another example of the wide range of financing options available is the Department of Energy’s Energy Star® Mortgage which allows a borrower a lower interest rate, discounts on closing costs and reimbursement for the cost of a home energy rating report, provided the home being financed is 30% more energy efficient that guidelines established by the Energy Star® Model Energy Code for similar house products.

Energy Efficient Windows

Windows can be a major factor in heat loss in the winter and heat gain in the summer. Energy used to offset heat losses and heat gains through windows in homes and buildings across the U.S. accounts for approximately 25% of all the energy used for space heating and cooling. Energy efficient windows can help reduce a homeowner’s energy bills by an average of 15%.

Some of the terms a real estate professional should be familiar with are “U-factor,” “R-value,” “Low-e,” and “solar heat gain coefficient.”

The U-factor or U-value measures the rate of heat loss, or how well a product prevents heat from escaping. U-factor ratings usually fall between 0.20 and 1.20. The lower the U-factor, the greater a product’s resistance to heat flow and the better its insulating value.

The R-value is the insulating value, which is the inverse of the U-factor. Windows R-values usually range from 0.9 to 3.0, with the exception of some very highly-efficient windows.

Low-e (low-emittance) coatings can be applied to glazing surfaces to reduce heat loss, improving both heating and cooling performance.

Solar heat gain coefficient measures how well a product blocks heat caused by sunlight. It is expressed in a rating from 0 to 1. The loser the SHGC, the less solar heat it transmits.

Window manufacturers are constantly improving on their technologies. For example, some windows have been manufactured that incorporate low-e and SHGC measures that work in cooperation with the sun’s varying seasonal angles, blocking solar heat at higher angles in the summer, but permitting solar heat transmission at lower angles in the winter.

The Department of Energy’s Energy Star ® performance requirements and Energy Star® certifications for windows is specifically tailored to fit the varied energy needs of northern, southern and central states’ climate regions in the U.S. Check for the Energy Star label to see if the windows you are considering qualify for certification and if so, in which region the window is best qualified.

“Energy Efficient Windows”
U.S. Department of Energy
http://www.eere.energy.gov/consumerinfo/pdfs/eewindows.pdf

Space Heating and Cooling

Residential heating and cooling systems should be sized so that the home will be not only comfortable during the coldest weather, but in the hottest weather as well. Oversized equipment results in increased energy costs and higher temperature swings during mild weather. Energy raters and HVAC specialists are in the best position to evaluate and make recommendations regarding the proper sizing of equipment.

Humidity plays a major role in energy efficiency. Most humans are most comfortable at a relative humidity of 50%, plus or minus 10%. In the winter, air inside the home is recycled repeatedly past heating elements where the airs gets drier and drier. As the room air dries, the dry air increases the rate of evaporation of body moisture from skin surfaces and this evaporation actually makes a person feel more chilled. The normal reaction is to turn the heat even higher, which results in burning extra fuel without positive results. In order to effectively and efficiently maintain a comfortable room temperature, the strategy is to add moisture into the air.

Studies have shown that when proper humidity is maintained heating temperatures can be set as much as 5 degrees lower and cooling temperatures as much as 5 degrees higher while still providing the same level of comfort. This is especially important for air conditioning since most air conditioners are electric, and most electricity is generated by central station power plants through the burning of high carbon coal.

Annual Fuel Utilization Efficiency (AFUE) is the most widely used measure of a furnace’s heating efficiency. It measures the amount of heat that is actually delivered to the home as compared to the amount of fuel that is supplied to the furnace. AFUE is commonly expressed as a percentage. Energy Star ® qualified furnaces have an AFUE rating of 90% or greater making them about 15% more efficient than standard models.

Seasonal Energy Efficiency Ratio (SEER) is the most widely used measure of a central air conditioning unit’s energy efficiency. Air conditioning units manufactured after January 23, 2006 must achieve a SEER of 13 or higher, which reflects a 30% increase in the previous federal minimum efficiency levels.

Electric Air-Source Heat Pumps use the difference between outdoor air temperatures and indoor air temperatures to heat and cool a space. They remove excess heat from indoors and release it outdoors. These products are most often used in moderate climates and can result in a 20% reduction in energy costs over traditional systems.

Geothermal Heat Pumps are similar to ordinary heat pumps, but use the ground instead of outside air to provide heating and air cooling. Since they use the earth’s natural heat, they are among the most efficient heating and cooling technologies currently available. Instead of having to heat frigid incoming outside air to the desired temperature, it draws air from an underground cavity which enters the heating system at roughly 55 degrees and, therefore, only needs to be modestly heated before distribution. The benefits in the air conditioning are even more pronounced.

Installing a programmable thermostat is one of the easiest energy savings tools available to the homeowner. Setting the thermostat back for as little as four hours a day can result in significant savings. Contrary to some myths, numerous studies have shown that energy savings in adjusted thermostats far outweighs the energy used to return the home to the higher (winter) or lower (summer) temperature desired during normal hours of use.

Planting shade trees in strategic positions is an effective way to cool the home naturally. Shading can result in reducing inside temperatures by as much as 20 degrees in the summer.

Passive solar elements such as high efficiency skylights can help heat the home naturally in the winter. Opening windows and creating natural cross-ventilation through proper positioning of windows and doors can have equally dramatic impact in the warmer months.

“A Guide To Energy-Efficient Cooling and Heating”
U.S. Environmental Protection Agency
http://www.energystar.gov/ia/products/heat_cool/GUIDE_2COLOR.pdf

Energy Efficient Insulation

Insulation is typically one of the core improvements recommended by energy auditors in their written energy rating reports. A properly insulated home provides owners with increased comfort, reduced noise, and substantial energy savings. Insulation must be installed correctly as it only performs optimally when it is dry and properly installed. It is usually recommended that insulation be installed by trained professionals with the expertise to ensure that the application is going to create the maximum benefits.

There are a number of online insulation calculators available to assist homeowners in estimating the energy efficiencies and energy cost saving opportunities presented by proper insulation.

Insulation levels are expressed in R-values. The R-value is a measure of the insulation’s ability to resist heat transfer. The higher the R-value, the better the thermal performance of the insulation.

Properly trained real estate professionals should be able to help buyers and sellers understand the recommended R-values for basements, attics, floors, walls and ceilings and direct their clients to trained professionals for the expert advice and services they need to get the job done right.

There are a number of types of insulation, including fiberglass, cellulose, blown and loosefill, rigid foam and foam-in-place, as well as a variety of insulating materials including recycled newsprint, rubber and denim.

“Recommended Levels of Insulation”
U.S. Department of Energy
http://www.energystar.gov/index.cfm?c=home_sealing.hm_improvement_insulation_table

Energy Efficient Appliances

According to the 1997 Residential Energy Consumption Survey, lighting and appliances (refrigerators, washers, dryers, dishwashers and stoves) used 27% of all energy used in residences and accounted for more than 45% of all household energy costs. These figures do not include the cost of water and the cost to heat the water, resulting in savings potential that is even higher.

The lifecycle cost of an appliance represents its true cost because it includes the purchase price of the appliance plus the cost to operate the appliance over its lifetime. The reduced operating costs of an energy-efficient appliance are typically sufficient to earn back or pay back the potentially higher purchase price of the energy efficient model.

Proper placement in a home is integral to an appliance’s energy-efficient operation. For example, a refrigerator placed near a stove or in direct sunlight will expend considerably more energy than a properly placed refrigerator.

Federal law requires a bright yellow Energy Guide label be placed on many types of home appliances. The label compares the most and least energy used by comparable models of the same appliance type, and helps consumers estimate the cost to operate each appliance. Energy Star® labeled appliances typically exceed federal minimum efficiency standards by 15 to 20%.

Gas ovens and ranges use less energy than comparable electric appliances. Horizontal axis (front loading) clothes washers use approximately one-third of the water that conventional machines use to wash the same size load of clothing. These models also spin clothes faster which results in less drying time and, therefore, also results in reduced energy costs associated with dryers.

The implementation of energy standards for appliances by the U.S. Department of Energy established new benchmarks for energy and water efficiency. A significant proportion of the energy savings for today’s automatic dishwashers comes from the reduction in hot water use. Because energy is used to heat water, less water use by a dishwasher also means reduced energy use. In 1978, 83% of a dishwasher’s energy use went to heating water, with 10% used for washing and 7% for drying. By 1994, only 56% of the energy used by the dishwasher was to heat water. A significant reduction in water usage resulted from designing more efficient wash systems that incorporate direct water delivery and improved soil-handling systems. The average water use per dishwasher cycle decreased from a range of 11-15 gallons per normal cycle in 1978 to 6-10 gallons per normal cycle in 2000. Today, energy efficient models such as the Bosch dishwashing machines now use only 1.8 gallons per normal cycle.

A properly trained real estate professional should be prepared to (i) describe the importance of energy-efficient appliances in relation to cost savings, (ii) explain the significance of Energy Star® labels, (iii) assist buyers and homeowners in using various resources to estimate the savings of energy efficient appliances, and (iv) recommend a qualified energy rater to assist in the process.

U.S. Department of Energy
http://www.energystar.gov