Cross the threshold of a PowerSave model home and take a look at a future that at last appears to have arrived. A touch screen panel glows warmly, showing the daily electric usage and production within the home. Nearby, another panel allows visitors to access a history of energy use—expressed in dollars—in the Power-Save house compared to other homes in the community.
Throughout the house, brochures, signage, and other pieces of supporting collateral material call attention to the unique features and products such as automatic ventilation cooling, 2.4 kilowatt photovoltaic array, and a 40-gallon solar water heater that comprise the PowerSave option packages.
Positioned nearby in the design studio, among the carpet swatches and solid surfacing samples, a prominent interactive display space is dedicated to explaining and marketing PowerSave options. Visitors can get hands-on with technology such as PV, the nighttime ventilation system, and radiant barrier roof sheathing.
What sets this home apart from other high-tech models is that this is not another demonstration project but rather a new, mainstream product offering from Centex Homes. This month in San Ramon, Calif., Centex will begin the marketing push for PowerSave homes with a fully outfitted model in the Windemere community of Aventura, where homes are priced from the mid-$600,000s. In May, a second model offering the PowerSave option packages will open in the community of Lunaria, where homes are priced from the high $800,000s.
Building on the successes of the Dallas-based builder's 2001 R&D prototype in Livermore, Calif., these second-generation Zero Energy Homes (ZEH) from Centex are projected to have a zero electric bill based on time-of-use rates, an annual utility cost savings of 82 percent for gas and electric combined, and a positive cash flow for buyers—where annual energy savings should exceed the incremental mortgage payment incurred to purchase the options.
“It's not a high-tech group of offerings in a multimillion dollar custom home,” says Jeff Jacobs, Centex Homes Northern California project manager. “Most of the things that we're doing are off the shelf, readily available technologies. You just haven't seen big builders rushing to embrace this and bring it to market.”
But it appears that may be changing. The force behind Centex's marketing campaign clearly suggests that the economics behind Zero Energy Homes has reached the point where ZEH technology now has the momentum to move into the mainstream production housing market—at least in markets where utility costs remain a big concern for buyers.
“We've created a logo for all of this and we're trying to brand it,” says Jacobs. “When you walk into this house the logo will appear, along with the message that you are entering a PowerSave house.”
And Centex isn't alone. A growing number of builders including Pardee Homes, Shea Homes, Morrison Homes, and Clarum Homes are also finding ways to take advantage of ZEH benefits.
Building on the Benefits Launched in 2001, the Department of Energy's (DOE) Net Zero Energy Homes program implemented four teams of consultants, engineers, and builders to take energy efficiency to the next level—integrating whole house energy efficiency with energy producing technology so a house actually creates as much electricity as it uses.
When Palo Alto, Calif.-based Clarum Homes originally signed on with the DOE's program, its primary objective was to capitalize on a marketing message about its involvement. But the company quickly realized other benefits.
After easily selling its first 20 Zero Energy Homes in 2002, Clarum found so much traction with consumers that it changed its business model. Although Clarum says it was the first builder in northern California to offer solar electric systems as standard equipment in its homes, today it also includes zero energy and environmentally friendly features as standard equipment in every home and townhome it builds.
“Solar electric power adds value to the homes we build,” says John Suppes, president of Clarum Homes. “We're also differentiating our homes in the marketplace. We set out to provide exceptional value for our customers ... and in the process, we did something exceptional for our business.”
Shea Homes, of Walnut, Calif., also has embraced the program by incorporating 100 Zero Energy Homes in its San Angelo community. All homes will provide efficiency at or above 40 percent over California's Title 24 regulations and will include 1.5 kilowatt solar water heaters. About 100 homes will feature 1.2 kilowatt PV as standard and another 100 will have the option to upgrade to 2.4 kilowatt PV. In research conducted by Shea, home buyers often cited the homes' solar features as one of the top three reasons for purchase.
While the teams are working hard to create good economic sense of these products, the numbers don't always work out. But in the case of Bay area-based Morrison Homes, the advantages were still too powerful to ignore.
As Morrison began developing a new community within a land-locked area of Sacramento, the builder was determined to find a way to drive traffic to the subdivision and decided ZEH could do that. It has provided substantial press and provided traffic beyond Morrison's wildest dreams. In fact, the package was successful; in spite of the fact Morrison was unable to work the figures to make the $18,000 upgrade a wash for home buyers. “They did it anyway, just to get the [press] coverage,” says Hammon.
“The public is extremely interested,” says Centex's Jacobs, who has received coverage from the local branches of all three major television networks, and newspapers, magazines, and local politicians. “It's going to get to a point where it becomes a competitive advantage,” he predicts.
Maintaining Momentum While Zero Energy Homes are the latest and most aggressive wave in a series of efforts to develop energy efficient homes (see “Unraveling the Efficiency Enigma,” page 42), what's remarkable is the speed behind its implementation. In little more than two years, the DOE teams have gone from conducting research with R&D prototypes such as Centex's Los Olivos Pilot Zero Energy House to seeing more than 500 Zero Energy Homes completed or under construction. As a result of the energy crisis that has plagued California, the data that emerged was used to quickly establish a benchmark of 60 percent to 70 percent overall reduction in energy efficiency.
While weather, funding, and consumer awareness have helped propel the movement in California, ZEH teams headed by NAHB Research Center and Norwalk, Conn.-based Steven Winters and Associates are also seeing some momentum with projects by John Wesley Miller in Tucson and others in Chicago, New York, and New Jersey. Although they are not part of an official DOE team, IBACOS, based in Pittsburgh, Pa., has been successful working with builders, associations, and government programs to implement research on and market delivery of these homes.
“The most important thing we did was monitor,” says Jacobs. Centex participates on the team headed by Davis Energy Group, a 21-year-old energy consulting and engineering firm that is providing funding in federal and state grants as well as expertise on how to build homes to meet the standards of a zero net energy dwelling.
Centex used real-time sensors that download system performance information to the Davis Energy Group once a day. “The next step from that has been for us to get more precise on our costing. Davis Energy runs information through its computer modeling and determines which features—or groups of features—make the most sense financially,” says Jacobs.
When it comes to selling the packages to consumers, Centex avoids putting a price tag on the options. Sales representatives talk about cash flow instead. “At today's interest rates, people will be ahead every month for having bought this,” says Jacobs. “We have found that if we throw a number on it, that's all people focus on. But if we can show it as a monthly cost in the mortgage and the savings in that month's energy, we can prove to them that on an annualized basis, they come out ahead.” Another angle to emphasize is the ability to hedge against future rate increases.
Subsidies Still Matter For now, the biggest curve ball for Zero Energy Homes appears to be funding. Several states including California, Arizona, and New York offer utility “buy-down” programs to builders using solar energy products. Designed to encourage usage and bridge the financial gap until technology becomes more affordable, builders rely heavily on these incentives when marketing their cash-flow calculations to home buyers.
According to Rob Hammon, principal of the independent energy consulting firm ConSol, when you include the buy-down figure, overall costs to incorporate ZEH technology is somewhere between $10,000 and $20,000 per house to reach a 60 percent reduction in energy and net zero annual electricity use. “Without the buy down, it's about $10,000 more,” he says.
On Jan. 1, however, California's buy-down figure was lowered from $3.85 a watt to a yet-undetermined figure that is speculated to be about $3.20 a watt. “We haven't evaluated the effect of that yet, so we don't know where we stand,” says David Springer, president of Davis Energy Group.
In another setback, Congress inadvertently cut 2004 funding for the Net ZEH program when a DOE restructuring moved the program from the “Solar” program category to the “Building/Technology” category. Lew Pratsch, project manager for the DOE, however, says he feels that the funding lag for 2004 won't be an issue given other funds DOE can reallocate if need be. “The question now is, will we use some of that money to supplement ZEH or wait until we get funding next year?”
In the meantime, ZEH teams say that with funding, this program is ready to move to the next level: ZEH communities. Whether funding will in fact increase remains an open question.
“The message needs to get back to Congress that this has its own merit,” says Hammon, adding that builders have both an opportunity and a role in ZEH's future. “Builders need to know how to include on-site power into communities.” However, “without buy downs and DOE support,” he says, “the future [for Zero Energy Homes] is tenuous.”
Regardless of the outcome, those with experience in ZEH initiatives sense customers will continue to embrace the options as they are presented to them. “Eventually, we expect buyers will demand this type of technology and we will already be there,” says Centex's Jacobs. “When people think energy, our phone rings.”
Focus: 1993's code only looks at efficiency of heating, cooling, and water heating systems, which account for about half the total energy load of a home.
Goal: At 30 percent increased efficiency of 50 percent of load, an Energy Star home actually reduces the whole house load by 15 percent.
Big Builder Participants: Pardee Homes declares every home it builds will meet or exceed Energy Star standards.
Homes In Development: 165,000 (estimated for 2004)
Focus: Whole house envelope as well as HVAC and appliances.
Goal: Improving energy efficiency by 40 percent.
Big Builder Participants: Pulte Homes in Nevada and Ryland Homes in Texas use a program initiative called “Guaranteed Bill Program” where participating builders pay homeowners the difference if average monthly utility costs exceed established maximums.
Homes in Development: NA
Focus: Combines whole house energy efficiency with energy producing technology.
Goal: Cut effective energy use by 60 percent to 70 percent.
Big Builder Participants/Teams:
1. Davis Energy Group, of Davis, Calif.—works with partners Centex;
2. ConSol, of Stockton, Calif.—works with partners Pardee, Shea, Clarum, Morrison, and Premier;
3. NAHB Research Center, of Washington, D.C.—works with partner John Wesley Miller;
4. Steven Winters & Associates, of Norwalk, Conn.—works with partner Mercedes Homes; in talks with Beazer.
Homes in Development: 500 (estimated)
Learn more about markets featured in this article: Los Angeles, CA.