Is the ENERGY STAR New Homes Program Dying?

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energy star new home program dying

Back in 2009, I attended a webinar given by Sam Rashkin, head of the ENERGY STAR new homes program at the time. (He has since left the EPA for the DOE.) He explained the changes coming in the program as they prepared for the transition from what we now call Version 2 to the new Version 3. The part of the webinar that got the most attention was the change from a fixed HERS Index to a variable HERS Index target, but he also made a prediction.

It was clear that ENERGY STAR was ramping up the requirements more significantly than they had in previous updates. HERS raters attending the webinar were worried what that might do to their rating businesses and asked about this. "We expect to lose about half of the builders in the program," Rashkin said.

Numbers

Before ENERGY STAR Version 3 replaced ENERGY STAR Version 2, the majority of HERS raters who had successful rating businesses rated mostly ENERGY STAR new homes. We're a HERS quality assurance provider, and about 80% of all the ratings we processed were for ENERGY STAR new homes. I don't know what the national numbers looked like, but I'm sure RESNET could corroborate what I'm saying here since they've been tracking these data.

As it turns out, Rashkin was a bit optimistic with his prediction. I'm sure well more than half of the builders have jumped ship. As a provider, we've seen our ENERGY STAR ratings fall to 20% of our total this year. We had some Version 2 stragglers earlier in the year, though, and if you take those away, our ENERGY STAR Version 3 ratings make up only 10% of our total. From everything I hear from raters and providers around the US, our experience is not unique.

Why the precipitous drop?

If you talk to HERS raters, you'll hear several reasons for ENERGY STAR's demise: The HVAC requirements are too onerous. The change came at a bad time, as the bottom had just fallen out of the housing market. The reduced thermal bridging requirements put too much liability on the rater when they recommend that builders use less framing. (See Skye Dunning's long comment about these issues in my last article.)

The HVAC requirements in ENERGY STAR Version 3 are difficult to meet.Those things are all true, of course. In 2010, I went to an ESV3 train-the-trainer session in Raleigh, North Carolina, and the room erupted when we got to the new HVAC requirements. Most of us in the room were HERS rater trainers and RESNET Quality Assurance Designees (QAD) and had spent considerable time fighting with raters, builders, and HVAC contractors over the much less rigorous V2 requirements. I remember telling Arnie Katz, the facilitator, that the new V3 requirements were great, but the HVAC industry wasn't ready for such a big leap.

Those things, however, are not the real reason ENERGY STAR is dying. No, ENERGY STAR is dying because they forgot what their role was. ENERGY STAR used to be an entry-level energy efficiency program. Home builders generally didn't have to stretch too far, or pay too much, to meet the requirements and get that ENERGY STAR label. They abandoned that role with Version 3.

Which way from here?

I wrote earlier this week about Georgia Power's path away from ENERGY STAR to the creation of their own entry-level energy efficiency program, EarthCents. They had been piggy-backing on ENERGY STAR and giving home builders a rebate for every ENERGY STAR certified home (with some other requirements). Instead of moving up to Verson 3, however, they created their own program based on a fixed HERS Index of 77.

Georgia Power's program, though, isn't national in scope. The only entry-level activity going on nationally that I'm aware of is home builders marketing the HERS Index. RESNET was smart to push hard on this as soon as they knew what the new ENERGY STAR Version 3 requirements  Lower is better!were, and it's worked. Our ratings took a dip from 2011 to 2012, when ESV3 first hit, but they're up significantly this year.

The only problem with builders just getting a HERS rating is that it's not a program with requirements that must be met. Version 2 of the ENERGY STAR program was great because it required two inspections (predrywall and final), right-sizing of HVAC systems, and a maximum HERS Index. Any builder can get a HERS rating and market the HERS Index, even if it's for a barely-legal, code-minimum home.

I'm certainly not knocking the idea of home builders marketing the HERS Index. After all, if they're doing so to compete against other home builders, they'll strive for better results. What I'm saying here is that a HERS rating is not an energy efficiency program, entry-level or otherwise.

It's too bad that ENERGY STAR vacated the entry-level program realm because their brand is so well known. Maybe they'll come back to their senses and reclaim this market. They could do so easily by introducing a tiered program, which would allow them to keep the ESV3 requirements and have an entry-level program. In the meantime, home builders looking for a national entry-level energy efficiency program will remain in limbo.

 

Related Articles

ENERGY STAR Version 3 vs. the HERS Index

Can Energy Efficiency Programs Stay Ahead of Energy Codes?

Georgia Power Fills the Void Left by ENERGY STAR

Comments

Neil Goldman

New Jersey also has a tiered rebate program still paying rebates for an enerty level energy efficet home.

Armando

And to those Builders that left ESv2, I say, Good Riddance! It goes to proof that many Builders use ES and other GB Programs more for the marketing tool than for building homes with good quality. ES is no more restrictive than 2012 IRC/IECC and many municipalities are there now or getting close to. I believe ES is doing the right thing. USGBC and NAHB have not saturated the market as we all thought once it was going to happen. I hope ES keeps on improving and staying ahead of codes.  
The good thing about this situation you describe is that my clients separate more from their competition. Building and selling high-performing homes take knowledge and skills that not too many have figured it out, so kudos to the Builders who have; they’ll do better. 
Now lets all push the Builder Challenge Program!!!

Tom Metzguer

Bingo, Allison. I, too, think a tiered program is a good path forward.

Harris Woodward

As long as the large publicly traded builders keep their ES mandate for all the homes they build, and as long as more states adopt IRC/IECC 2012 (making ES not much more of a leap to reach), ES will remain relevant. But, it will take time to return. 
 
HVAC industry needs to step up its game BIG TIME. It is way behind the Japanese in efficiency/product development. The commercial industry could care less about efficiency unless some LEED AP wielding architect starts hammering out specs. Residential contractors don't want to be bothered with regs when they could throw up replacement systems and make more money for less headache. EPA & DOE need to give the heating and cooling folks a serious beat down. HVAC is far and away the largest consumer of energy - builders need to focus on envelope and expect that HVAC will do its job. 
 
It all boils down to money: as long as our public service commission in Maryland continues to require our electric utilities to rebate us builders up to $1600 for both ES achievement AND a low HERS index, you'll see us and others continue to reach the bar and go over it.

Arlene

Outstanding Blog, Allison! I agree with you that the program is indeed dying so I have a few more thoughts to add. 
 
Is it not the role of a market transformation program to put itself out of business? The entire point is to MOVE the market. 
 
As we look at some of the provisions that are now in the minimum code, we can relate those directly to the EnergyStar program. In that sense, it was very successful. Does it still need to be around?  
 
I would argue this V3 is a response to "What do we do now?" There are govt contractors and bureaucrats who need to justify a funding source, so they have to come up with the next gen. Except they did such a good job previously, they didn't leave a lot of room for them to move to. I disagree with you that the original program was entry level - it was always meant to be top 10%. The center of the bell curve has shifted such that the current provisions are the only place the program could move to to keep to that 10%.  
 
Much of it is ludicrous and ill placed. My personal pet peeve is the Exhaust fan measurement. It is inappropriate that the rater has to check the CFM output of an exhaust fan. The builder takes it out of box and mounts it. We are supposed to be providing some kind of oversight on stuff that hasn't already been checked. We are tramping all over the exhaust fan manufacturer's QA and certification process by forcing US to have to measure it! (Obviously they didn't have anyone in the room when this criteria was created!) This requirement is just BUSY WORK! If these aren't accurate, then it's up to the GOV'T to be picking on the manufacturer, not causing an additional headache for the builder whose only recourse is to randomly select fans in hopes that one of them is labeled correctly! And if they are labeled correctly, then this is just an added expense and hoop just so EnergyStar can say its the new 10% 
 
Well, it's not the 10% of the market because it's better. It's the 10% of the market that really wants the differentiation so much that it's willing to do all the stoopid things the program wants.

Harris Woodward

Agreed. Corbett. Maryland was the first state in the US to adopt IRC 2012 on January 1, 2012. While stick builders got a reprieve, us modular builders had to step up on day One. 
 
The larger builders and all marketers understand the power of branding. Energy Star is burned into the minds of US consumers and its influence will not go away any time soon.

Matthew Brazil

Great blog! I personally applaud Sam and the EPA for stepping up to the plate. It's unfortunate that the ESv3 program isn't being embraced more by builders and HVAC contractors. We too have had little success in our market place with the program, but as a HERS Rater and Home Energy Professional you got to ask yourself, "Why wouldn't a builder want it?" and "Why wouldn't a home owner want it?". The major pitfall that we've experienced is with HVAC Contractor pushing back on taking responsibility for their work. I assume that a when a builder pays for a service they pay for the service to get done right, and in plain words that is what the ESv3 HVAC requirements are. I would personally argue with a HVAC contractor who thinks they are going to jack their price up for the service, "I'm only asking you to do your job right." The HVAC system is the system that provides that human comfort to the home, not a HERS score or a green certification, and if I'm not comfortable in the home then from my perspective the home isn't performing.

Kim Shanahan

Allison, 
 
Great blog! I too heard Sam speak in 2009 while on tour to promote the new Energy Star. I knew then it was dead.  
 
By 2009 I was building a subdivision with HERS ratings in the 50s in a town that required a HERS rating of 70 as code. Sam was aghast because he knew it was far beyond what Energy Star could do to be “10%” better than our code. He loathed the idea of local jurisdictions adopting more stringent codes. The builders would never bother for an Energy Star label. Our local electric utility even denied our builders a $500 rebate that Energy Star builders outside of our town were getting because we were already building beyond Energy Star. 
 
That was death knell #1. With no guarantee of a universally adopted national codes for every jurisdiction in America the program was not sustainable. For some jurisdictions it might be a stretch, in others - laughable and irrelevant. 
 
Death knell #2: It is a “threshold” program. You get there or you don’t. There is no “Super-Duper” Energy Star, you can’t even get a gem or a precious metal. Sure, you could bother to get a HERS rating to show how energy efficient you are but that just leads to: 
 
Death knell #3: It is not a HERS rating. Zero to 100 is brilliant. Pegging it to a baseline (2004 IECC Amended) that doesn’t change with changing codes is brilliant. Having a metric that is instantly understandable to builders, the public, bankers, appraisers, government bureaucrats, etc., is brilliant. Convincing the Leading Builders of America to unleash their competitive hounds in the race to net zero energy is brilliant. 
 
Death knell #4: Energy efficiency is the most easily measured financial metric in the green building pantheon. That is why the code is called the Energy Conservation Code and not the green building code. Energy Star moved to embrace a more comprehensive green program with version 3 at exactly the time the industry collapsed, which left only energy efficiency as the surviving green principle. 
 
As RESNET moves forward with their intentions for improved credibility, and now that it is an option for compliance in the 2015 IECC, the race between HERS and Energy Star is essentially over. And as a program that can be driven by capitalistic competition, it should even be Tea Party approved! Who’d have ever guessed? 
 

Ted Kidd

Nice Kim!  
 
"Death knell #2: It is a “threshold” program. You get there or you don’t. There is no “Super-Duper” Energy Star, you can’t even get a gem or a precious metal. " 
 
Pass/Fail cliffs are a sign of poor quality program design thinking.  
 
That thinking simply is not elastic enough to adjust to consumer needs, so it is unsustainable. 
 
No recognition or reward for excellence, and serious punishment for not "Toeing the line".  
 
HPwES appears to be having the same crushing problems. I'm seeing 'furnace quotes' from Program Contractors (hugely oversized btw) with NO recommendation for audit or sizing, EVEN THOUGH FURNACES NOW GET RUBBER STAMP APPROVAL!  
 
Contractors are abandoning this sinking ship, and unfortunately they are going back to the old ways of doing things.

Kim Shanahan

Ted, you said "Contractors are abandoning this sinking ship, and unfortunately they are going back to the old ways of doing things." 
 
I say some are going back but many are not and the direction, at least in my market, is clearly going forward. 
 
Both carrots and sticks are necessary: Codes to become more stringent over time, and a market reward for efficiency that is working either for or against the Leading Builders of America, depending where they are in the HERS rating race. 
 
It may not be so apparent to those who are mainly in the retrofitting industry, but new home construction is rapidly becoming more energy efficient. As it does, market forces will begin to demand that older homes get properly retrofitted and certified by independent 3rd party entities.

David Butler

@Allison, outstanding article! ES had a difficult challenge to stay relevant without overreaching, in light of what's happened with the IECC. It's ironic, as noted by Matthew, that the ver.3 checklists only ask HVAC contractors to follow their own industry's widely recognized (but rarely followed) design procedures. Sigh. 
 
Your point about HERS not being an EE program echoes my comment in RESNET BPI group on LinkedIn. HERS as it currently exists does little to incent proper HVAC design and installation practice, which is (still) the elephant in the room.

David Butler

Harris wrote: "HVAC industry needs to step up its game BIG TIME. It is way behind the Japanese in efficiency/product development." 
 
Although I agree that US mfrs are being leapfrogged by Pacific Rim mfrs (and btw, the new variable speed systems are NOT nearly the answer), the far more serious hvac issue is duct system design and installation practice, not box efficiency. Ductless is seductive in concept but has limited application in residential. 
 
Arlene wrote: "Is it not the role of a market transformation program to put itself out of business?" 
 
When the market has so, so far to move, transformation can only be accomplished incrementally. We're certainly not at the point where victory can be claimed. 
 
Arlene wrote: "This requirement is just BUSY WORK! If these aren't accurate, then it's up to the GOV'T to be picking on the manufacturer..." 
 
I disagree. The problem isn't (necessarily) with the fan, but with installation (e.g., duct system static). This is again something that should have been done all along (follow mfrs instructions), but no one enforces.

Kent Mitchell

Very good points made. We have seen the same drop in ES. However many are opting for improvement still and looking at other options such as good HERS rating, NGBS, & Net Zero. The few HVAC companies that are making the ES leap will be years ahead of their competitors. Codes will soon be duplicating the ES V3. RE Arlenes comment about the exhausts- we've found not only bad designed fans but also many fans that don't push any air because of poor installations. Builders are shocked that so many of the exhaust fans don't work at final. It's a worthy service and only takes minutes to do. 

Bob

The big problem with the HVAC requirements is there is no enforcement on the ManJ calculations. With a tight house equipment should be 1/2 the size (or less) of what is normally installed for the area, but it doesn't happen. In our area 1970's homes typically get 500sqft per ton, yet HVAC contractors are scared to do 1,000sqft per ton on a 2013 energy star home. If the heat gain isn't cut buy at least 1/2 of a typical 40yr old house what's the point? Energy star homes should have heat gains about 1/3 (or less) compared to a 40yr old house, why aren't HVAC systems 1/3 the size?

Gary Nash

I think that marketing the HERS rating is exactly what needs to happen, not gaining or creating some certification label or the other. The HERS rating is performance based & does not care how you achieve the results. It is MEASURED results. Certifications cost additional money & time - BUREAUCRACY. Certification programs can be "played" to gain the label and often do not guarantee performance. The only "building as a system" way that I know of to document performance is a quality third party HERS rating. If energy performance is really your goal, you should not rely on certification programs. You should embrace performance measurements of what is actually in place in the field. That would release the creativity & expertise of the Contractors & Developers to compete with measured results outside of a bureaucratic certification system, provide a consistent basis for the Owners to compare the performance of competing products & cost less than certification programs. You should be looking for ways to unleash the power of the marketplace. To the extent that any certification advances that goal, good. But, what does any certification really add to a quality/properly executed HERS rating that most home buyers care about? The path to getting most folks to care about this is the HERS rating. You must differentiate the value of similar houses standing next to each other that have vastly difference performance numbers for the average home buyer. The HERS rating is the primary tool. Promote it ahead of all of the other stuff.

David Butler

Gary wrote: "what does any certification really add to a quality/properly executed HERS rating that most home buyers care about?" 
 
Great question. I certainly agree with you that a performance label is better than a certification based on check-offs. However, as noted in my previous comment, HERS as it currently exists does little to incent proper HVAC design and installation practice, which is (still) the elephant in the room.  
 
I would be in favor of some sort of performance based duct system label, perhaps as a part of HERS. For example, Energy Star, LEED and many building codes require proof of a Manual D. That's nonsense. That piece of paper proves nothing. Much better would be to field verify that the duct system delivers the right amount of air to each room within a reasonable tolerance, and measure the external static pressure. If both of those numbers are good, then I don't care how you got there.

John Nicholas

We can all grip about certifications, programs, HERS Ratings etc. We can all grip about builders, contractors and others not properly installing; equipment, insulation, ducts or exhaust fans. 
 
The real issue in my mind, is not the Code V. Program V Rating . The issue is getting people to do something. 
 
I try to work in an area with no Energy Code. No commercial Energy Star work. Very few audits. No Tax Credit homes. 
 
I know someday it will change, I don't know when someday will come. 
 
So I will work on it one day at a time. I've been doing that for 3 years. Time to start on year 4. 
 
I will test the exhaust vents that come my way. I will test the duct systems, and do IR on them also. They all leak, some more than others. Had a 797 CFM @ 25 leakage the other day on a 2 ton system (new construction). Makes me wonder how much was charged for the duct system that was not delivered. 
 
I have been asked to serve on the local builder's association Code Group for Energy. We will see. I know this is red state Kansas, and codes are not liked. 
 
I enjoy reading your concerns and issues with all the various programs, certifications and builders pushing the envelope with HERS Ratings.  
 
As I said …… "Some day …. "

Bruce Chyka

Energy Star was a success but as others have noted bureaucrats are good a snatching defeat from the jaws of victory. I only have two builders that still participate in the program. That is partly because the local utility provides a small cash incentive.  
 
John hang in there it took me two years to get what is planned in the 2015 code adoption for HERS here. You know the story. The implementation has started (HERS is an alternative path to the 2012 IECC.) I just taught a 4 hour code class at the Johnson County Contractors licensing Institute. There were at least 50 builders in the 80 seat room. Vendors have brought Mark Laliberte in 3 times in the last 15 months to talk to the HBA, Code officials and other interested parties. It is grass roots progress at best.  
 
We are leading edge and trying to keep it from bleeding edge. So far so good. The main issue other than HVAC installation is the air sealing and insulation work. Its not pretty for insulators who have not work in a green program like Energy Star. Challenges we are encountering are the typical poor quality and consistency of installation. Fortunately when the builders are made aware of the issues they participate in getting the work corrected. Most don't want to pay for inferior work. 
 
John if you need any support let me know.

Lee

@David Butler: You said  
 
"Much better would be to field verify that the duct system delivers the right amount of air to each room within a reasonable tolerance, and measure the external static pressure. If both of those numbers are good, then I don't care how you got there. " 
 
I hope you care at least that the ducts are not fastened to the bottom of the roof decking. I work for a fire and water restoration company in Midland, TX. I am astonished at the number of homes where the entire furnace/AC evaporator and air handler unit, along with minimally insulated (and often enough un-insulated) ductwork is located entirely above the insulation in attic spaces where the outside temperature is above 100 degrees for most of July and half of August most years. Even if the correct amount of air reaches every room and static pressure is ideal, a system like that is going to waste energy like crazy.

David Butler

Lee wrote: "I hope you care at least that the ducts are not fastened to the bottom of the roof decking." 
 
Yeah, that too. But in the context of my comment and this blog in general (new construction of high performance homes), one would hope that goes without saying.  
 
Unfortunately, neither LEED nor Energy Star require ducts to be located inside the thermal envelope. In homes where ducts end up in the attic (other than encapsulated), a horizontal unit should be used with ducts parallel to and supported just above the insulation, which is by far the coolest part of the attic.  
 
Upflow units with radial ducts strapped to the rafters (I refer to this as an octopus) should never be tolerated, even if it's not illegal.

John Nicholas

Thanks all for your kind comments. 
 
It is coming, probably in an unexpected way.  
 
Kim, I doubt the legislature will pass anything statewide. Home Rule has always been strong in KS and the current political climate is not conducive! The other issue is most of the counties below 50K in population do not even have a code enforcement program for any parts of the IBC or IRC much less Chapter 11. That said, something will happen here. How it gets implemented is the real issue. 
 
Bryce, We look to your area and drool. Folks say, the builders down here can't build a home and sell it with Energy Codes - I say the builders down here are just as smart as the ones in NE Kansas. 
 
I may call on lots of you in the coming years. Thanks for being there.

Ryan Shanahan

We've also seen a significant drop in the percentage of our builder clients that pursue ENERGY STAR in the Pacific Northwest. Luckily, we have plenty of other certification pathways for our builder clients to build to. For example, we changed our Earth Advantage Home Certification program to no longer require ENERGY STAR but instead offer additional points towards EA certification for builders that meet both certification criteria.  
 
One point that I haven't seen addressed here or in the comments is the general idea that EE is getting harder and harder to reach. As code comes up to meet the EE specs of basic efficiency programs it gets a lot harder to reach 15% improvements of a dwindling home energy consumption number. When you apply a cost effective metric to these upgrades you can see it will always be a losing battle as we move towards net zero.  
 
That doesn't have to be the case though. If we changed the price of energy to reflect real costs and factored in higher appraised values for homes that outperform their code built competition the math around the cost effectiveness of the upgrades changes for the better.

John Proctor

OK folks -- what part of the HVAC list is too much?  
Shouldn't the heating and cooling be sized properly? (even the methods listed oversize) 
Shouldn't the building be ventilated for indoor air quality? (if not then put in a request for change to ASHRAE 62.2 it is under continuous maintenance) 
Shouldn't the air conditioner or heat pump have the right amount of refrigerant in it with the metering device working properly? 
Shouldn't the airflow through the evaporator meet minimum requirements? (many new homes we see even have the flow so low that the furnace cycles on the limit switch) 
Many in the industry (energy efficiency and comfort) say that the airflow to each room should be adequate to provide the desired heating and cooling to that room. Do you disagree? 
Sorry folks, but what do you want to leave out so that the antiquated HVAC contractors will not complain whining: "It is just too haaard"? 
twitter @proctoreng

Bruce Fillmore

I've had very successful results in Climate Zone 5, insulating with fiberglass batts and spots of closed cell foam, out of last 7-homes not one had an ACH-50 over 2. (1.5-1.8) If the HVAC system is sized for these conditions it is a completely different system than one sized for 7-ACH. I've found that 95% of builders cannot or will not think out of the box they have been in for the last 30years. To say Energy Stat is to expensive is another way of saying I'm to busy or lazy to figure out how to make it doable & affordable. In total it is costing me about $1.50/sqft more to hit the Energy Star requirements with HERS scores just under 50, if they cannot justify this they need to completely rethink their mission statement ("Make as much money as possible @ all costs quality and reputation be damned") 
 
My $0.02 
 

Harris Woodward

@ Bruce Fillmore - I COULD NOT AGREE MORE! U.S. buildings literally "suck". Forget for a moment the positive impact high-performance gains have on our contribution to climate change. The bottom line is that the owners enjoy an immedidate ROI. 
 
It's no longer conjecture or hyperbole. The juice is worth the squeeze. Build better and everyone wins.