The Value Add of Energy Efficiency is Still Cost
June 8, 2011 / EcoHome Magazine
“We are not a green builder,” said Chris Schoonmaker, vice president of sales at S&A Homes in Bellefonte, Pa.
He made that comment during a panel discussion called “Seizing Energy Efficiency as a Competitive Weapon,” during last week’s Housing Leadership Summit in Chicago. Schoonmaker was talking specifically about S&A’s eHome marketing campaign, which features a 2,721-square-foot house with a Home Energy Rating of 67 that saves the homeowner $171 per month in energy costs compared to a 10-year-old, less-efficient home.
That translates into savings over seven years of $14,364, and S&A—whose homes typically sell for $30,000 more than its competitors’—is focusing on how those savings increase a home buyer’s purchasing power.
Schoonmaker and his fellow panelists—C.R. Herro, Meritage Homes’ vice president of environmental affairs; and John Friesenhahn, a partner with San Antonio-based Imagine Homes—consistently emphasized the importance of affordability when marketing energy efficiency. “Consumer expectations for energy efficiency are rising, and this is a big value-added opportunity for builders,” said Michael Dickens, co-founder of the consulting firm IBACOS and the panel discussion’s moderator.
The panelists made clear that consumers still view “green” marketing skeptically, which is why the builders prefer “energy efficient” to describe their products.
Dickens explained that IBACOS advocates an approach to energy-efficient construction that views the whole house as a “system,” integrates technology and business processes, and builds the house cost efficiently. The panelists—all of them IBACOS clients—wholeheartedly endorsed this approach.
“The entire house needs to be improved and/or changed so that the end package functions better and your costs are about the same” as building a house without energy efficient features, said Herro. He added, though, that these changes could be achieved relatively simply. For example, he spoke about reducing the uncontrolled loss of air in construction as a first step toward reducing energy consumption significantly but “without having to change the floor plan or design.”
Herro contended that a well-built house with a lower HERs rating will consume half of the energy and water of a traditionally built home without requiring the owner to change his or her lifestyle.
But educating consumers—to say nothing of banks and appraisers—about the value of energy efficiency is still a challenge, the panelists concede, especially when the cost of building these homes is generally higher. Friesenhahn said Imagine’s construction costs are about $3,000 per home more than when it started down this road three years ago. The “centerpiece” of its houses is its sealed, semi-conditioned attic, and since 2006, the average selling price of Imagine’s houses has risen to $220,000, from $180,000. “If we don’t charge for energy efficiency, it would be valued by the customer,” Friesenhahn insisted. That being said, any energy efficient feature the builder includes in its new homes “has to be easily reproducible and pass the cost test,” he explained.
Consumer education could be abetted by some kind of energy labeling for new houses, although Dickens cautioned that the terminology about energy efficiency needs to become less technical and more understandable before it’s embraced by the general public. For example, the panelists agreed that one of the best ways to position an energy-efficient home is to emphasize how it extends the life of the house. Friesenhahn noted as well that his company’s warranty claims right now “are zero.”
And Meritage has demonstrated that energy efficiency can be a tie-breaker in winning over customers. Its Lyon’s Gate community in Gilbert, Ariz., where homes range from 1,640 to 3,062 square feet and from $181,900 to $231,900, has been drawing three times more traffic than other local communities and has been closing three times the number of buyers. The houses include as standard features spray foam insulation, high-performance windows and plumbing fixtures, energy-efficiency lighting, weather sensing irrigation, and a 14 Seer air conditioning unit. The houses’ ECHO solar electric/thermal system “is cost-plus on day one for the owner,” said Herro.