Home energy scores: The next wave of city innovation in energy efficiency
A new report represents the first study to provide statistical evidence for what many have intuited for years: greening your home increases its value and makes market sense.
By Elizabeth Willmott
Cross-posted from New Energy Cities
In a groundbreaking report last week, researchers in California found that single-family homes with green certification labels sell for nine percent more than comparable, non-labeled homes. The report represents the first study to provide statistical evidence for what many have intuited for years: greening your home increases its value and makes market sense.
This analysis, while limited to California’s market, signals that cities with home energy rating programs are in powerful positions to shape their local housing markets. Experts call this suite of labeling and rating tools “energy intelligence,” critical information for making the housing market work better.
Energy consumption is a cost driver for homeowners, so it makes sense that historical energy consumption data be included in the information that a prospective buyer sees when considering whether to buy a house. Making energy data available shines a light on opportunities for buyers, sellers, property managers, and tenants to make better financial decisions.
Early adopter cities around the United States have seen the value of encouraging and, in some cases, requiring home energy information disclosure at construction, time of sale, and other key points in a home’s life cycle. Austin, TX was the leader in this regard, passing a first-of-its-kind law in 2009 that required energy disclosure from property owners of single-family, multi-family, and commercial buildings.
Santa Fe, NM mandates that all new homes be tested and certified according to the National Home Energy Rating System (HERS), which provides an evaluation of current energy efficiency relative to other buildings, as adopted by the Residential Energy Services Network (RESNET). In a HERS assessment a rating of 100 represents an average American home energy profile, whereas 0 represents a building that uses zero energy.
Babylon, NY, Charleston, SC, Columbia, MO, and Eugene, OR are among the communities across the country whose local governments or utilities have partnered with the US Department of Energy to launch a Home Energy Score program in 2012. These examples and others are profiled in New Energy Cities’ recent report, Powering the New Energy Future from the Ground Up: Profiles in City-Led Energy Innovation.
Home Energy Scores provide a quick overview of a home’s energy performance similar to a car’s fuel economy (miles per gallon) rating. In a Home Energy Score assessment, homes are scored on a scale of 1 to 10, with 10 being the most efficient, and scores reflect how a home performs relative to others in its area. Home energy assessors who provide the scores also deliver recommendations on how to improve scores with cost-effective energy efficiency measures.
Cities attempting to encourage this type of market transformation do face barriers. Builders in some communities may perceive that costs of green building (and certification itself) are prohibitively high, among other challenges. Addressing this, Austin and Santa Fe collaborated intensively with their building communities to develop their laws.
Realtors are a critical source of home intelligence, and the National Association of Realtors (NAR) has worked to develop voluntary green MLS (multiple listing service) listings. But NAR also lobbied heartily and successfully against building energy disclosure requirements in the Waxman-Markey climate bill, stating that such mandates would have adverse consequences for the real estate industry.
Meanwhile the Appraisal Institute—the largest professional association of real estate appraisers in the United States—has developed tools and professional development curricula for home appraisers to incorporate the value of green features in their evaluations, but uptake of these resources has been slow.
Lenders, the primary source of appraisal requests, typically do not ask for evaluations to reflect a home’s energy efficiency or green features. Moreover, appraisals are often completed on a very short timeline and may not allow time for energy assessments.
Despite barriers, some communities are already fostering the next generation of this work: using information about home energy and carbon profiles to attract private investment. Little Rock’s Home Energy Affordability Loan (HEAL) program, funded by a US Environmental Protection Agency’s Climate Showcase Communities grant, has begun the hard work of monetizing carbon savings for sale on carbon markets. In the case of HEAL, Little Rock is partnering with the Clinton Foundation (a primary driver of the program) and MaineHousing Energy Data Repository to realize its ambitious scope of work.
Established in 2008, the MaineHousing Carbon Quantification Project researches the feasibility of generating carbon offset revenue from home energy efficiency retrofit projects. MaineHousing, the state’s housing authority, maintains the data repository as a source for statistical information and reporting on weatherization activities, outcomes, and carbon savings, according to its pilot partner application materials here.
Needless to say, such efforts to aggregate information and scale up investment require sound and standardized energy data—essentially a reliable database of home energy ratings or scores—to meet private investor expectations. To catch this next wave of innovation, and to shape their own future opportunities in the housing energy market, communities will need to double down on simply getting home energy disclosure on the table with stakeholders.