By the time the new Energy Star 3.0 requirements kick in on January 1, Fulton Homes in Arizona will already have a year’s worth of experience with the requirements under its belt.

“We were pioneers,” said Dennis Webb, the Tempe, Ariz.–based builder’s vice president of operations. For Fulton, complying early with the new, stricter codes gave it a head start on the local competition. Promises of energy efficiency are one way the builder has differentiated its products from competition.

“We were the first in Arizona to do that, so we advertised it” on billboards, its website, and via direct mail. “When the EPA got ahold of it, they called and told us, ‘You can’t talk about Energy Star version 3 because it doesn’t’ go into effect until 2012,’” Webb recalled.

Fulton got a head start figuring out what many other builders who want to continue building homes that earn the Energy Star rating are sorting through now, how to comply with the stricter requirements it will take to earn the label starting in January.

For builders who were or are building homes to higher standards than the existing Energy Star code, the transition should be relatively smooth, say builders who have already made the jump. But for those who are barely making the standards or who have just recently decided to join the certification program, the transition may be tough.

Fulton was able to make the change from Energy Star 2 to 3 with little extra cost because it was already building homes energy efficient enough to qualify for rebates from local gas and electric companies that equaled about $1,500 a home. “You don’t have to be Energy Star [to meet their efficiency guidelines], but you are going to be close to Energy Star if you do,” said Webb.

For Fulton the change meant installing higher efficient air-conditioning systems, 14 versus 13, using blown-in cellulose insulation, radiant barriers in the attic, and vinyl versus aluminum windows. The company was able to procure the vinyl windows at the same price it was paying for aluminum, Webb said. Compact fluorescent bulbs also helped the builder reach the new Energy Star requirements. “They affect HERS ratings more than you think. It was surprising to us, like two points.”

As a result of the changes, Fulton’s HERS scores have gone from between 75 to 80 to between 60 and 68, Webb said.

Ashton Woods, Beazer Homes, KB Home,  M/I Homes, Meritage Homes, and NVR Inc. have all committed to complying with Energy Star 3 in the majority of their communities. Some say they are ready; others are still working on complying with the new standards.

KB Home spokesperson Cara Kane said the builder is still “working through the logistics of the new program right now." The goal, she said, is to keep the costs at a minimum to keep from passing the added costs on to home buyers.

Ashton Woods also started building to the new code early “to get the kinks out” before January, said Ralph Farrell, senior vice president of operations for the builder. The company found complying with the new requirements “very easy.” The builder needed to make only a few changes from the way it was already building homes in all of its markets.

“It’s pretty minor cost-wise too,” said Farrell. “The only real challenge is the checklists.”

The new Energy Star requires three new checklists be filled out that certify that a home's envelope is sealed tighter than was required before, and that the HVAC unit is correctly sized, engineered, and installed so that it leaks little air and efficiently heats and cools the home. There is also a water management checklist certifying that the home is water tight, not just at the roof, but at windows and other places where water could intrude and cause damage and mold. It also has advanced requirements that prevent condensation and other water problems.

Beazer Homes USA also said it will be relatively easy to meet the new codes, because it, too, has been concentrating on energy efficiency in its homes for years now. “For us, I think it’s not going to be that difficult a process,” said Jim Moore, national vice president of construction and quality insurance for the Atlanta-based builder. “We have had some sort of high-performance [home] strategy for the last four years,” he said. “If you have just been a code-minimum builder and all of the sudden you decided to build Energy Star” it would be much more difficult.

The new program is likely to be harder on HVAC installers who are required to prove through testing and certification that what they have installed meets the design intentions and is sealed tightly.

“They have to do some things that they should be doing anyway but that they weren’t required to do before. Their own association said they needed to do it,” said Moore. There are also additional requirements for preventing water intrusion

“There is quite a bit more documenting that things were installed properly than there has been in the past,” said Moore. “It’s just a matter of working that new process into the system.”

The process of complying with the new rules would be tougher for very small builders, said Matt Ivey, an owner of Ivey Residential in Augusta, Ga. Ivey has been earning Energy Star certification for all of its homes since 2006, but in 2010 after winning the program’s Energy Star Sustained Excellence award, Ivey said he wasn’t sure if his company could continue its streak because of the additional costs and because it takes a knowledgeable staff to figure out how to meet the program’s standards and still build a house with some profit in it.

“We have been able to stay with the Energy Star program, despite the changes they made,” said Ivey. “Some of the changes made things very difficult for us. But the great thing about being a small builder is that you have a team to help figure it out.”

For Ivey, complying meant doing “a lot of little things.”

The stricter requirements, including the extra paperwork and certifications, will increase the cost of building an Energy Star certified home. Just how much of an increase hasn’t been pinned down, only estimated.

Jonathan Passe, acting manager for the Energy Star residential brands, said early estimates placed the increased costs at between $2,500 and $3,500; but after talking with builders around the country who are early adopters, the price tag seems to be closer to $1,500 and is likely to get smaller after subcontractors get used to the new paperwork requirements.

“As the marketplace starts to demand those things, the price starts to go down,” Passe said. 

Teresa Burney is a senior editor for Builder magazine.

Learn more about markets featured in this article: Phoenix, AZ, Atlanta, GA.