Alabama does not normally come to mind when discussing progressive energy programs, and yet Alabama Power, the state’s largest utility, is now working with three builders in the state to build “future proof” housing on a neighborhood-by-neighborhood scale. The Smart Neighborhood Builder program was spawned by the Smart Neighborhood project at Reynolds Landing, a Signature Homes community in Hoover, Ala., which is about 12 miles southwest of downtown Birmingham.
A Living Laboratory
In addition to Signature Homes, Alabama Power partnered up with Southern Co., its parent firm, the Electric Power Research Institute, and the Oak Ridge National Laboratory to develop and build the first 62-home Smart Neighborhood community that is interconnected with smart home technology and powered through a 1-megawatt microgrid. The microgrid, which remains connected to the main grid, is composed of a 400-kilowatt solar array that is backed up by a 400-kilowatt natural gas-powered generator and a 600-kilowatt-hour battery storage system.
The homes in the community feature super tight building envelopes, triple-pane windows, heat-pump water heaters, and air-source heat pumps to make them 35% more energy efficient than homes built to state building code, according to the firms involved. In addition to being energy efficient, the homes are also highly intelligent. Smart home features include remote controlled door locks, lights, and security systems. The microwave has a grilling element, and different compartments in the fridge can be set to varying temperatures.
The smart neighborhood concept proved to be quite popular and resulted in a quick sell-out. “The efficiency and connectivity we were able to provide our Reynolds Landing homeowners through our partnership with Alabama Power was outstanding,” says Dwight Sandlin, Signature Homes CEO. “We were thrilled with the market acceptance—all 62 homes were sold within six months—and are proud to be a part of this important project that is already making waves in the home building industry.”
In exchange for living in such a technologically advanced environment, the homeowners in the community agreed to allow their energy usage data to be harvested and analyzed. “We built a data portal tracking every circuit in every home,” says Todd Rath, marketing services director of Alabama Power. “The data is being collected in the cloud—collected and codified by us and then we share it back with all the partners.” In addition to what is collected electronically, the neighbors also participate in focus group discussions with the partners to talk about what’s working and what needs improvement.
Rath admits that the Reynolds Landing project was in some ways not yet practical for the marketplace but figures the knowledge being gleaned more than makes up for the investment. “In a lot of ways the project was strictly for research,” he says. “The energy efficiency levels achieved in these homes is not economical today. We’re trying to understand what load shapes and customer interactions will be like 20 years from now. But the Smart Neighborhood Builder program is designed to be economical today.”
Expanding the Vision
The popularity of the program at Reynolds Landing spurred the utility to expand the vision by recruiting other builders who are interested in smart neighborhoods. “We began to get some interest internally and externally about doing it in other places,” says Rath. The first company on board was Holland Homes, a builder and remodeler based in Auburn, Ala.
“Alabama Power is the largest power company in the state, so we work hand in hand with them all the time,” says Daniel Holland, owner of Holland Homes. “They approached us saying they wanted to expand the pilot project in Birmingham, and we had a 51-lot neighborhood just getting started, which we thought would be a perfect fit.”
A wet spring has slowed progress at the site, but Holland already has some sales on the books and believes the technology edge will help with another sell-out. “It’s definitely something that people are interested in,” Holland says. “Technology has changed the way we live our lives. Five years from now, everybody will be telling Google to turn the lights on. I already do it at my house.”
Curtis White Cos. has been in the home building business since 1953 and is based in Leeds, Ala., just east of Birmingham. Joe White, who is president of the company, followed his father, Curtis, into the business and was looking for some kind of a sales advantage during the Great Recession. “We had to figure out a way to differentiate our houses from all the foreclosures on the market,” says White. “The energy stuff was where we really started pushing our sales.”
White has been in the business long enough to remember Alabama Power’s energy efficiency initiatives that date back to the 1980s, which was long before it was trendy. Even though White has been into green building for quite some time, working with the Smart Neighborhood Builder program has taught him a few new tricks, including new places to add drywall gasket foam. White also notes that “the energy stuff is evolving every day, what was cutting-edge two years ago is now run-of-the-mill,” he says.
What may have changed the most lately is consumer’s perceptions about paying more for a house upfront that will save them money in the long term. White has the numbers on his side. He’s calculated that one of his energy-efficient homes can save a homeowner $90 to $100 a month on power bills. He weighs that against adding $50 a month to the mortgage payment for a $6,000 investment in a better building envelope and a more efficient HVAC system. “Right off the bat you’re seeing the savings,” he says.
Learning New Tricks With HERS
All of the builders working with Alabama Power’s program are required to have their houses tested by a third party using the Home Energy Rating System (HERS). The U.S. Department of Energy estimates that a typical resale home on the market clocks in at 130 on the HERS scale. A new home comes in at 100. A home with a HERS rating of 70 is 30% more efficient than a standard new home, as the lower the number, the higher the efficiency. Homes in the Smart Neighborhood program are required to score 65 on the HERS scale.
The utility is providing on-the-ground support to help builders get to the magic number. J. Brooks Harris is the chief business development officer for Harris Doyle Homes, based in Birmingham and part of Clayton Properties Group. “Alabama Power has a couple of guys who will come out to the site as we’re building the model home and instruct us on how to frame it more efficiently so we can get the insulation correct,” he says. “We have to hit certain standards with our blower door tests and duct blaster test.”
Sending personnel to the jobsite to help train the crews is backed up with Alabama Power sales and marketing muscle as well. “They’ve put a lot of time and effort into the packaging of this smart home concept and we think it adds a lot of value and differentiates us from what the competition is doing,” says Harris.
In the past, builders trying to market something similar to one of the Smart Neighborhood homes might be forced to offer an a-la-carte approach to selling the home buyer better insulation, doors, and windows matched with a more efficient HVAC system. Selling the smart home features would be an entirely different pitch.
In the Smart Neighborhood program all of those elements are included in the base price. Harris believes combining energy efficiency with desirable technology makes for an easier sell. “For somebody who’s buying a $300,000 house, if it has smart thermostats and smart door locks and smart security system, that’s a really big value add and they have the peace of mind that their house is somewhat future-proofed.”
While energy efficiency may be the steak of the Smart Neighborhood program, the gadgets are the sizzle. “The energy-efficient stuff, some people come in with a lot of questions about that and some people could not care less. They just want an affordable house,” says Harris. “The market is starting to tip over on the smart home features like the programmable thermostats, smart doorbells, and door locks. Those features are becoming almost expected.”
Joe White looks at his company’s past and its initial reason for going green and doesn't have any plans to change course. “When I started it was a pure business decision—how can my house compete with the flood of foreclosures on the market? How can I convince you to buy a new house versus an old house and then spend $35,000 remodeling it? Now we do it just because it’s the right thing to do.”
Holland believes Smart Neighborhoods are the way of the future and a way for builders to stay one step ahead of the competition. “I believe projects like this are really going to get it out there in the market,” he says. “Show the community, show the consumer what a smart home or smart neighborhood is. I don’t think it’s anything that people are going to have to get talked into [buying]. We all sell bricks and sticks, and these are bells and whistles that people really like."