The Business of Green Housing- Matthew Sachs
Nov 18, 2014
About the Presenter
Matthew Sachs graduated from McGill with a degree in Mechanical Engineering. He is an Ottawa homebuilder and home energy specialist. As General Manager of Urbandale Construction, he oversaw the construction of over a thousand energy efficient new homes built in Ottawa over the last six years. He was the R-2000 Builder of the Year in 2009, a member of the Energy Star Technical Advisory Committee, and the Vice-Chair of the R-2000 Renewal Steering Committee. Matthew writes a monthly column in the Ottawa Citizen entitled Modern Housing, and also maintains the blog Inside The Housing Evolution.
About the Organization
Urbandale was the first to build homes to the revised R2000 standards. In the last 6 years, they’ve sold over 1000 homes with highest standard of energy efficiency (over 20% more efficient than the average home).
Problem
Despite demand for green homes, the majority of houses being built in Canada continue to be built to the minimum standard. Why is the disconnect between housing desires and what is actually constructed? What are the barriers and drivers of increasing energy efficiency?
The Business of Green Housing
Matthew started the presentation defining ‘green’….. Although personally, he dislikes the term ‘green building’ because it has means different things to different people. In general, a ‘green’ home demonstrates improvements in four areas:
-
Indoor air quality: This includes using low toxicity material, low VOC paint in carpet and cabinetry (which normally uses formaldehyde), mechanical ventilation, high quality air filters
-
Water use: This includes implementing low-flow shower toilet and taps, and rainwater harvesting for landscaping purposes. There has been some interest in reusing shower water for toilet, but this can be against municipal regulations.
-
Building materials: This includes minimizing the amount of waste in the construction process, sorting waste for recycling, choosing recycled-content building materials (insulation, drywall, concrete), sustainable harvested lumber, and recycling excess waste from construction. There are bonus points for builders that consider the life-cycle cost of the material, as well as designing homes for disassembly. However, hardly any builder considers those last two aspects as it’s more academic than practical.
-
Energy efficiency and us: most of the improvement are to be made in the area.
Urbandale deliberately avoids the term ‘green’ in advertising as ‘green building’ doesn’t have specific criterias. Instead,they extensively uses the term improve and with it largely meaning an improvement over the norm. In this Green Home Spectrum, the Ontario Building Codes acts as the baseline. EnergyStar class home use 20% less energy than the baseline code and R-2000 uses 50% less. Each of these programs have been developed with a 3rd party verification criteria that have to be met, which ultimately aids in credibility.
What are the barriers and drivers of increasing energy efficiency?
The challenge for Urbandale is in how to create a package of greenness that is attractive and affordable. Cost is the main problem regarding energy efficient housing, as the incremental costs of these improvements are high. Building an Energy Star home will cost an extra $8000 – $10 000, an R2000 home costs $30 000 – $40 000 and a net zero home costs $100 000 – $150 000. Canadians built roughly 200 000 new homes per year. In 2012, around 1400 of those homes are energy star certified. Less than 50 are R200 certified and about 15 are considered net-zero.
In energy efficiency housing, there’s a hierarchy of considerations, and each levels increases in sophistication, and thus becomes more expensive. At the bottom of the hierarchy, orientation of the house for passive solar (optimizing window locations) is considered. Although this is very inexpensive, it will only work in situations when you have the ability to change the orientation of your house. Unfortunately, more bylaws prohibits this. The next level looks at the building envelope, or the shell of the house. This includes using additional insulation below the slab or in a double wall construction, and to increase air tightness to keep out cold air. Most Ontario houses use natural gas to heat. These types of mechanical systems can be improves upon through other technologies such as ground source heat pumps (but they are expensive due to drilling), tankless water heaters or a hybrid systems. Once the first three considerations are optimized, you can consider renewable energy generations. Ideally, your load will be minimized as much as possible and you can find a renewable energy system that would match your load.
Although cost is a problem, there are other tradeoffs or purchases concerns. There’s a risk and usability (hassle factor) which is a huge turnoff to potential homeowners. There’s the simple fact of the aesthetics. Solar panels on roofs is not attractive. For example, Urbandale partnered with Enbridge to sell solar water heaters below cost. They were giving away one $10 000 system for a demonstration and they had difficulties giving it away. People think it’s an eyesore; even at below cost rates. The final tradeoff is the reduction in liveable area of home. Especially if thicker walls are used since insulation takes space. On average, new homes cost around $220/ sq ft. The reduction in livable space can result in a significant value loss on a per sq foot basis.
EnerQuality surveyed potential consumer regarding their opinions on purchasing an energy efficient house. 88% of respondance stated that they value energy efficiency when making a home purchase decision. On average, these respondents are willing to pay up to $12 000 more for an energy efficient home. Based on the number of actual green home sales in Canada, it does not match surveyed answers of consumers. What they say they want is different than what they pay. While most consider energy efficiency as an important factor, it doesn’t actually play a role in their purchasing decision. Energy efficiency acts as an ‘after the fact’ bonus that people use to validate their purchase.
For example, Urbandale’s first revised R2000 standard home received coverage locally and nationally. But, in order to sell the home, Urbandale had to reduce the price by $30 000, matching other homes around the market.
Another example is when NRCan updated EnergyStar, Urbandale was the first to sell homes to the new standard. But, they found that they couldn’t sale those homes with their regular margins. Consumers compared the houses with competitor’s houses (not energy efficient ones). In the end, Urbandale found that they have to accept lower margins when it came to selling these types of houses.
How do you sell and market energy efficient homes then?
Originally, there was a great focus on the energy savings. However, this approach doesn’t really work well. Assuming that the cost of household energy use is between $2000 – 4000, an Energy Star home would take 10 to 20 year payback. R2000 would take 15 to 30 year payback, and net zero would take 25 to 50 year payback. Additionally, most homeowners only plan to live in a house for around 5 years, and thus they don’t get to experience all the energy saving benefits. Another approach focuses on the monthly energy savings and how it would be greater than monthly mortgage costs. While this is true, the savings are minimal over long term. If you don’t care about the environmental benefits associated, than it’s an economic wash.
The Urbandale marketing message is that “energy efficiency is a home that is the result of superior construction techniques, attention to detail and using better equipment and materials” An energy efficient home is a better built home. Energy efficient homes are more comfortable, Urbandale sells on that comfort.
Who’s pushing energy efficient homes then if its not buyers?
Government programs have been some of the biggest contributor and drives energy efficient homes the most. They have implemented building codes and plans for improvements to shape the quality of new homes. They utilize a ratchet approach, upgrading both the code minimum and energy star standards every 4 years, thus giving leaders new targets to reach. Given Canada’s low energy prices, there is no other strong market pressure of incentives to move the market towards energy efficient homes.
Specific technologies for the future of energy efficient housing
There are a number of emerging technologies that hold much promise for the future of energy efficient and net-zero homes. With further adoption and increasing support within the industry they stand to become the new norm in construction standards as standards and codes are ratcheted up over time. In the near future there are improvements in building air tightness, heat recovery ventilators (HRV’s), triple pane windows, underslab insulation, drain water heat recovery, LED lighting and exterior foundation insulation. In the long term emerging technologies such as vacuum insulation panels, cold climate air source heat pumps, building integrated PV ( AKA solar shingles), distributed energy heating systems and all electric homes all hold promise for the efficient home of the future.
Discussion
Discussion began by comparing the energy usage of condos and houses. Matthew pointed out that condos typically don’t use as much energy and are often located in higher density areas, contributing to LEED certification. One of the biggest drawbacks, however, is the use of floor to ceiling windows, which are generally very inefficient.
The next question was discussing home energy control systems like the ‘Nest’ and “Super Green Homes”, a company operating in the Yukon that builds homes with quadruple pane glass and extra thick insulation. The discussion surrounding smart thermostats was largely focused on their adoption and success within the market. Matthew said that a big issue with many of these technologies is the fact homeowners currently have to directly engage with the technology. The Nest’s ability to be remotely controlled via smartphone and also ‘learn’ homeowners preferences and movements makes it an easier technology to live with.
The affordability of homes was touched upon. Matthew acknowledged that many of the homes that Urbandale sells are not affordable by most people, and that despite surveys describing the intent to buy these types of homes, most people still opt for traditional homes. People simply cannot afford to pay so much extra money especially given the current economic climate.
On the policy and law side, a audience member then asked whether municipal bylaws could be used as a tool for greening buildings and construction. Matthew pointed out the existing challenges with affordability and the potential issues that may arise if the city forced developers into a particular standard of construction. He felt that it is not to the benefit of the municipality to alienate itself from businesses by regulating their construction standards.
Matthew then highlighted the current and future potential for energy volatility and price fluctuations as a reason for ‘future proofing’ your home. He suggested that by building a net-zero home or a highly energy efficient home, you are protecting yourself from market instability, mitigating risks associated with high energy costs.
Current low energy prices and high technological costs keep green home adoption unattractive. This has resulted in potential home owners ‘not caring’ as much about broad energy efficiency improvements in their homes. Matt went on to mention that improving building codes is working well to mandate improvement in home efficiency standards along with home efficiency improvement programs like the ecoenergy retrofit program. However, these retrofit programs are often better on paper than in practice and uptake varies. Additionally, existing housing stock that may be improved, often have many problems that contribute to inefficiencies. It is questionable whether the subsidization of retrofits will have as large an impact on efficiency due to the age of some homes.
Précis completed by Alex Bramm and Cathy Liu, Masters Candidates in Sustainable Energy- Policy