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Economic drivers to broader acceptance
Last Post 18 Dec 2010 10:14 AM by Bob I. 37 Replies.
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Eric Anderson
 Basic Member
 Posts:441

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| 14 Dec 2010 09:14 AM |
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Just to throw out some numbers for last year: ~6300 HDD climate zip code 06232 1140 sf house 1056 ft inside space with conditioned heated 1000 sf basement workshop ~2000 sf conditioned space Electricity usage 2449 kwh per year assume ~0.30 Efficiency = 8163 kwh primary source of electricity. Heat, Hot water, cooking with propane, 140 gallons total 140*93000 btu/gallon = 13.02 Million btus 13.02x10^6 / 3412 btu/kwh = 3815 kwh Wood ¾ cord mix of ash, maple, red and white oak, cut on site 0.75*24Milion btu/cord= 18 million btu’s 18x10^6 / 3412 btu/kwh = 5257 kwh Total primary energy 8163+3815+5275= 17,253 kwh ballpark. 17,253/200o ft^2=8.62 kwh/sf/year Actual energy required for heating in cooling assuming 65% efficiency wood stove, 90% efficiency propane boiler assuming ~100 gallons of propane is used for heat. 100*93000*0.90 = 8.4 Million btu’s propane 0.75*24,000,000*0.65 =11.7 million btu’s wood ~20 million btus per year heating or 10,K btu’s /sf per year or 1.55 btu’s/hdd/sf/year So I miss the target for passive house for heating and cooling energy requirements by a factor of 2.1, 10Kbtu/sf vs 4.75Kbtu/sf. I meet the overall energy PH goal of 11.1kwh/sf/year in fact it is 30% under. I bet if I bought a couple of plasma TV’s , an extra refrigerator and left them on all winter, and got a couple of large dogs, I could get down to 4.75 btu/kwh primary heating and still be under the total energy cap. Now if I look at the utility companies numbers for Connecticut, the average house uses 780 kwh/month and 800 gallons of#2 fuel oil per year. At current rates that is 168$ month in electrical bills, 2,026$ year 800 gallons of oil is~3.00 gallon right now so that is 2400$ for a total utility cost of 4426$. By contrast, last year my electrical utility was 612$ and I used 380$ in propane. If I had to buy wood at retail cost it would have added 135$ to my costs. So my total was 1127$. Savings of 3300$/year. Now compared to the average house my mortgage could have been 275$ higher per month and still cost me the same each month. Realistically the difference between my house and a code minimum house would be ~35,000$. For this I got, outsulation, ICF foundation, better windows, erv, airsealing, a solar water heater, a solar air heater, a 92% efficiency boiler and indirect tank, high efficiency lighting, and a thermostatically controlled shower. Compared to a code minimum house, the basement is inside the thermal envelope, effectively doubling the livable/usable size of the house. All in all, it is quite a good deal I think. On the other hand I do not intend to sell the house. I built the house to live in, not as an investment.
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| Think Energy CT, LLC Comprehensive Home Performance Energy Auditing |
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McFish
 New Member
 Posts:77
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| 14 Dec 2010 11:35 AM |
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Thank you Eric; this is something that makes sense and can be supported. Using your basic numbers, a savings of $275 per month over a 25 year mortgage at a NPV figure of 4.5% is worth almost $49,000. This is very basic, and does not figure tax breaks based on paying with mortgage deduction money, which most people would be doing. If I say to the average buyer, I'm selling you these features that will save you $82,500 over the next 25 years, with a NPV of $49,000, and I'm only charging $35,000; then as a consumer, I'm impressed. Thanks for your effort. |
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fred1
 New Member
 Posts:4
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| 14 Dec 2010 03:14 PM |
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So let's say that it can be shown to house buyers that purchasing a highly energy efficient house will be good for their wallets in the long run. How much sway do you think this, versus more cosmetic concerns, has over someone's decision to buy one house over another? Say a builder can put either $10000 into either increasing the R-value of a house or he can put it into buying some higher end kitchen and bath fixtures and finishes. Which option would generate the best ROI for the builder? I can see that as a private home builder, someone might want to build according to a certain philosophy which emphasizes environmental concerns, household cash flow, etc. but most builders want to maximize profit and they're the ones putting up the majority of our houses. Are we at, near, or decades away from the tipping point when the importance of the energy efficiency of a house outweighs the importance of the shape of the kitchen faucet? |
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Bob I
 Veteran Member
 Posts:1435
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| 14 Dec 2010 03:33 PM |
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I think there will be three main drivers affecting consumer acceptance of high performance houses: 1. Energy costs; 2. Laws (building codes) and 3. Consumer Awareness - as in the case of radon. Twenty years ago radon gas was unknown to most consumers. With the advent of a) "standard" home inspections at sale and b)radon being listed on the listing form copnsumers became aware that evidence of radon would affect the sales price. When Realtors start listing the HERS rating o fthe house on the listing sheet (or some other measurement), people will start paying attention. In the mean time, all those HP houses we're building will be a step ahead and more valuable to some people, though maybe not to everyone. Houses being built now that are not HP will be like my 12mpg pick up truck - still worth something, but losing value comparitively. |
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| Bob Irving<br>RH Irving Homebuilders<br>Certified Passive House Consultant |
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Eric Anderson
 Basic Member
 Posts:441

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| 14 Dec 2010 04:01 PM |
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A builder putting up spec houses can't afford to spend the extra money on insulation, unless it is used as a major selling point i.e. as a "green" House. The only thing that will change that is educating the general public, or the cost of energy becomes prohibitive for most people to afford. Or have it forced by code or mandate. Where I live, average new construction house plus land is around 500K. Taxes are going to run you around 12K, mortgage around 30K (swag). In the grand scheme of things saving 3K on utility costs is not important. It is the people who are buying older houses that are feeling the pinch of utilities, Unfortunately it is always easier to do things upfront then to retrofit. People also get sucked in with the sexy stuff like PV solar, geothermal, led lighting, and neglect the basics like airsealing and insulation which are invisible and does not have a cool, look at how green I am feel.
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| Think Energy CT, LLC Comprehensive Home Performance Energy Auditing |
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jonr
 Senior Member
 Posts:5341
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| 14 Dec 2010 04:18 PM |
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neglect the basics like airsealing and insulation which are invisible But they can be measured and annual operating costs can be estimated with reasonable accuracy. Appliances have an annual energy cost figure on them, why not a house? |
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fred1
 New Member
 Posts:4
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| 14 Dec 2010 04:56 PM |
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Appliances have an annual energy cost figure on them, why not a house? Excellent idea. Now if only we can get the regulating bodies on side because whatever rating system is used, it would obviously have to be standardized. There's already the LEED, Energy Star, Passive House ratings, etc. but as a home buyer, I'm like, "Great, but what does this mean practically?" and by practically I mean how is this going to affect my ongoing costs, how is going to affect my comfort level in the house, how is this going to affect the resale value of the house? In other words, perhaps a more consumer friendly rating system might lead to a better educated public and broader acceptance/desire for a highly energy efficient house. Either that or someone could start publishing pin-up calendars with girls/guys holding bats of insulation, foam and house wrap. |
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Dana1
 Senior Member
 Posts:6991
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| 14 Dec 2010 05:26 PM |
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McFish: I haven't had a chance to ferret out the part of the Title 24 2008 regarding energy standard upgrading of existing homes, but it doesn't surprise me that the enforcement end is lacking. Other parts of the code are still routinely ignored or fudged (duct-leakage testing required for ANY modification, etc.), but Title 24 2008 has only been in effect for about a year. I do remember the protracted arguments about those issues when Title 24 was being updated (and I'm pretty sure those measures made it into law- cood B rong, offen am... ) Any modifications/repairs/replacment to HVAC, roof repairs, window/door replacements or repairs, and any addition to living area of an existing residence also come with a load of prescriptive measures for compliance, (also often ignored or finessed to date.) It's a big bill, lots of details... Not enough inspectors & bureaucrats sufficiently up to speed to chase it (yet), would be my guess, but I suspect it'll be coming. $35K cost adder would be a tough sell, but in many instances in coastal CA $35K of insulation air sealing & window upgrades would save the cost of air conditioning & heating systems, for a net cost well-under that number once it's hit PassiveHouse levels. This guy's retrofit in Berkeley wasn't outrageously expensive, and the cost-delta had it been done as new-construction would have been very modest indeed: http://www.nabihtahanarchitect.com/rte/upload/download/hem_nd08_tahan_remodel.pdf http://www.nabihtahanarchitect.com/ This rehab project didn't suck either, but it too would have been far cheaper and probably fairly cost-neutral to have done it as new construcion: http://www.greenbuildingadvisor.com/book/export/html/18076 Bob I: 1) yes 2)HELL yes 3)yes, but don't hold your breath unless #1 grows exponentially- it's hard to make the consumers that aware until it's such an agonizing pain in the wallet that requires lifestyle changes, in much the same way that $4+ gasoline made commuting from the far flung new developments in the F150 literally unaffordable- either the truck or the mortgage had to go. #2 is still the driver- even the current code minimums don't cut it on #1 & #3 alone, since it doesn't come close to breaking-even within the 6 year average tenancy of home buyers in the US. Refrigerators don't cost more now than they did in 1980, but they use only 1/3 the energy, not because people became more aware or the cost of electricity went up. The cost of electricity went down in inflation-adjusted terms, and people still car more about the ice-maker, cubic yards of beer capacity, and automatic defrost than what the kwh/year numbers say on the li'l yellow tag. The cost to the manufacturer didn't change much either- a bit more care taken in the design process to better-utilize the insulation content that was already going into it, maybe a bit more EPS and bit less steel in the doors, etc. An 83% AFUE furnace doesn't cost any more inflation-adjusted dollars than the 65-70% AFUE junk of the '50s & '60s either. The same or similar could become (and is- becoming in isolated areas) true on home construction too. Love 'em or hate 'em, efficiency mandates work. Soaring energy prices do too, but only if they're well ahead of inflation for an extended period. Consumer awareness of things like HERS ratings, etc would be nice, but I've seen scant evidence in the marketplace. Just as people barely read EnerGuide tags and are more concerned with other features, expect HERS ratings (even when available) to take 5th place behind raw square footage vaulted ceiling great-rooms, deluxe kitchens, and master-bath spas.
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Bob I
 Veteran Member
 Posts:1435
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| 14 Dec 2010 06:45 PM |
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The HERS # on a realtor listing would attract attention as soon as energy costs rise. All it takes is for the RE agents to learn that the # means lower heating costs & they'll start using it as a sales tool. BTW, oil was $30/barrel 9/08, now is over $85/barrel. |
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| Bob Irving<br>RH Irving Homebuilders<br>Certified Passive House Consultant |
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Dana1
 Senior Member
 Posts:6991
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| 15 Dec 2010 11:04 AM |
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Posted By Bob I on 14 Dec 2010 06:45 PM
The HERS # on a realtor listing would attract attention as soon as energy costs rise. All it takes is for the RE agents to learn that the # means lower heating costs & they'll start using it as a sales tool. BTW, oil was $30/barrel 9/08, now is over $85/barrel.
Cherry picking a number the bottom of the highly volatile oil market tells you nothing about the average cost & trends of energy. Oil was pushing $140/bbl in July '08- if you followed only the trend line from the '08 peak to the '08 bottom they'd be paying us substantial amounts to take the stuff right now: http://2.bp.blogspot.com/_D9-JN...ure+10.pngAt $85/bbl the oil market is still well below the inflation adjusted pricing of the early 1980s: http://www.marketoracle.co.uk/i...080315.gifBut while in the 1980s the US market was large enough to wag the OPEC dog by increased fuel economy in the automotive fleet, transportation use in the emerging economies is now a much larger (and growing) factor. Oil prices in the next decade are likely to continue tracking higher, since new oil discoveries (and the cost/complexity of exploiting them) are rarer and more expensive, and not expected to keep up with the growth in demand in Asia. It would take a very aggressive plan in the US and Europe to electrify the transportation to relieve that market pressure- oil IS likely to go up. But the effect oil pricing on home heating costs and electricity cost is extremely small. Most fossil-heated homes in the US are on natural gas, which is also a volatile market but does NOT track oil pricing. Crude oil pricing is not driving residential utility costs for most people AT ALL (those using propane & heating oil being the notable exceptions). Natural gas has a much bigger influence, in part because natural gas is also a sizable fractional energy source for many local electric grids (gas-importing New England included). Both fell in price significantly with the world-recession, but unlike oil, gas production is largely local market, and unlike oil, large deposits shale gas have been discovered (and not even close to being fully tapped) near markets in the northeastern US, which will have a long term moderating effect on the price of NG nationwide. This is in addition to the large scale exploitation of coal-seam gas that has come on line driving the price down from it's 2006-2008 peak. NG pricing stayed pretty flat throughout the 1980s, but rose during the 90s as the economy grew, stimulating greater exploration and development of known reserves. NG prices will probably rise again as the economy recovers, but the size of the known available exploitable resource within the US is roughly an order of magnitude larger than what it was in as recently as Y2K. Development of those resources in response to price ticks will be a moderating force in the market for decades, even if coal-fired grid operators begin massively switching over to NG in response to a carbon tax at some point: http://www.eia.doe.gov/dnav/ng/hist/n3020us3a.htmI'm not hanging much hope on fuel inflation getting ahead of income to the point where HERS ratings hit the top-3 factors for home buyers, no matter how heavily marketed by the real estate industry. But building code such as those in Austin TX will make a dent, at least on new construction. The biggest elephant in the room is the existing stock: 80% of the buildings & homes that will be standing in the US in 2050 are already built. Deep-retrofit insulation/weatherization and higher-efficiency mechanical systems (including micro-cogeneration), will be the only way to make a significant dent in things like carbon footprints of buildings in coming decades, even if ALL new homes were built to PassiveHouse or NetZero standards. |
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Bob I
 Veteran Member
 Posts:1435
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| 15 Dec 2010 06:10 PM |
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You caught me being parochial - oil is the primary residential fuel in New England, so thats where my mind is. "The biggest elephant in the room is the existing stock" THis is an even bigger problem than new construction - why should anyone bother? |
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| Bob Irving<br>RH Irving Homebuilders<br>Certified Passive House Consultant |
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Dana1
 Senior Member
 Posts:6991
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| 15 Dec 2010 06:34 PM |
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Begging to differ- there are far more MMBTU of NG heating New England homes than oil & propane combined- almost every New England city over 200K residents are on the gas-grid. Oil is primarily a fuel of choice for rural or smaller population residents of the region who don't have a gas main near them. Oil held the lion's share for the region (even in the cities) before the 1980 oil shock, but oil's market share has been declining ever since. See: http://www.eia.doe.gov/oiaf/servicerpt/nehfuel/images/figure_15.jpg By 1997 NG and oil had swapped market share, and the oil spike of 2008 had many urban holdouts with access to the NG grid RUNNING for retrofit burners to install on their boilers & furnaces. "...why should anyone bother..." what- upgrade efficiency codes for new construction? Retrofit older stock? Build a PassiveHouse? |
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McFish
 New Member
 Posts:77
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| 15 Dec 2010 10:45 PM |
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Dana; I talked with the Calif. energy department this afternoon. None of the title 24 law effects existing stock that has already been built. New construction and any additions/remodeling to older homes have to be to current code. Remodel an older home; new appliances to code but you don't have to upgrade the insulation. So no changes to existing stock when sold, only when new built or when remodeling effects a portion of the house that is regulated. |
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Dana1
 Senior Member
 Posts:6991
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| 16 Dec 2010 09:58 AM |
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So I guess those lobbying for those measures lost in the end, eh?
Thanks for the clarification!
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McFish
 New Member
 Posts:77
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| 16 Dec 2010 05:20 PM |
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Such a provision would have had some really interesting consequences. Builders, insulation sales people, etc would love it. Sell your house, spend $5000-10,000 to bring it to title 24 standards before you sell. Boy, what a bonanza for the home improvement industry!! What's that, you're under water already? Too bad, give it back to the bank. What's that you say, BoA? I can't hear your protests because WF and Citi are yelling louder. Or should we grant an exemption to the big lenders who caused this mess by making loans they had to know would go south sooner rather than later? Oh well, we can have a multi-billion dollar bailout for you. Or maybe not, cause you alrready got that TARP money and everything else. All right, maybe I am a pessimist as to why the next logical step wasn't taken and the 24 should have been applied to everyone. After all, your used car has to be smogged before you sell it. The pollution contribution from heating an under-insulated house is arguably greater than that of a bad car. Since there's no such thing as a free lunch, we'll just share the pain of pollution costs spread out through the population, rather than making the individual owner of the asset pay for his own costs. |
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Dana1
 Senior Member
 Posts:6991
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| 17 Dec 2010 05:50 PM |
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We'll see what the mood of the CA public is AFTER the pain of real-estate crash and near-bankruptcy of the state has stopped throbbing. CA has long led the nation on most energy efficiency regulation. CA may be the tail wagging the US dog, but it's a big tail- the influence is felt. Title 24 is a pretty good first-step, but only a first step. The carbon footprint of buildings (residential & commercial) nationally exceeds that of the transportation sector. Yet building fixes are both easier and more permanent. It's the economic externalities of this energy use, not a NPV on the cost savings that make upgrading building codes (including existing buildings) economic in the longer term. It's far more cost effective to buy building-envelope efficiency (on average) than it is to build the greener energy sources to support the greater load represented by a low efficiency. If it takes a lot more real estate in solar/wind/whatever to support the annual load of a house than the building itself occupies, it's not so sustainable in the end. But the cost of getting it to that level really isn't terrible for half of the US, particularly for new-construction. |
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jonr
 Senior Member
 Posts:5341
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| 18 Dec 2010 10:05 AM |
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And to think that all they need to do is tax energy to account for its full cost (environmental damage, wars, depletion for future generations, etc) and adoption would mostly take care of itself. The artificially low energy prices in the US are shameful and destructive.
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Bob I
 Veteran Member
 Posts:1435
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| 18 Dec 2010 10:14 AM |
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I've been noticing more and more references to "Zero Energy Homes" - mainly in trade magazines, but some elsewhere, indicating to me that the concept is intriguing to many people . It'll be interesting to see how that plays out, but I'm betting we'll start seeing references in consumer magazines within a few months. I've been wondering for a few years what "energy efficiency" terminology people would respond to and this may be it. Not that it is going to change the building industry overnight, but it may be a spark that will spur some interest. |
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| Bob Irving<br>RH Irving Homebuilders<br>Certified Passive House Consultant |
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