Emily Robinson, Elevate Energy
Paper Provides Blueprint for Valuing Energy Efficiency Improvements in a Real Estate Transaction
AUGUST 14TH, 2013
CHICAGO (August 14, 2013)—A new paper provides a pathway to document energy efficiency improvements made to existing homes so that appraisers, Realtors®, buyers, and sellers all understand and reflect the value of such upgrades in the real estate transaction. Co-written by CNT Energy and National Home Performance Council (NHPC), the paper shows how proper documentation, verification, and standardization of energy efficiency improvements can add value to a home that owners can recoup at sale.
“Survey research clearly shows that homebuyers are interested in purchasing energy efficient homes,” said Robin LeBaron, Managing Director of NHPC. “This paper shows how energy efficiency programs and real estate professionals can collaborate to ensure that efficiency features are fully visible and fairly valued during a real estate transaction.”
The paper, Unlocking the Value of an Energy Efficient Home: A Blueprint to Make Energy Efficiency Improvements Visible in the Real Estate Market, argues that greater transparency around energy efficiency in a real estate transaction will encourage more homeowners to invest in these improvements, since they will have a clearer indication as to how much of the investment might be recaptured at the time of sale.
The authors also point out a timely need for energy efficiency and real estate sectors to collaborate and help homebuyers and sellers understand the value of efficiency upgrades. For example, the National Association of REALTORS® Home Buyer/Seller Profile finds that a home’s heating and cooling costs are important factors for consumers. There is increasing demand for homes with money-saving energy efficiency features and improvements such as air sealing and insulation. In addition, there is a growing supply of high performing homes due in large part to successful efficiency programs across the country.
The paper outlines seven steps the energy efficiency industry must take to unlock the value of efficiency in the real estate market:
- Consistently document energy efficiency improvements
- Ensure data is incorporated into the appraisal process
- Work with the real estate community to reflect these improvements in local for-sale listings
- Capitalize on existing education and training opportunities
- Report on the growing inventories of energy efficient homes
- Develop standardized IT solutions
- Work with partner financial institutions
“Most of the data required for a more transparent transaction is already being captured by energy efficiency programs,” said Anne Evens, CEO of CNT Energy. “Standardizing and communicating this information makes upgrades visible and accessible at the time of a home sale, and encourages homeowners to invest in energy efficiency improvements. This helps efficiency programs meet goals, and benefits the real estate industry, homebuyers and sellers, and the environment.”
The paper also highlights several new transaction tools that, when implemented, result in more accurate valuation of energy efficient homes and home characteristics.
The National Home Performance Council is a national nonprofit organization created to support whole-home energy efficiency programs through research and stakeholder engagement. NHPC’s board of directors includes a wide range of energy efficiency stakeholders including: state energy offices, non-profit organizations, contractors, program implementers, real estate representatives, utilities, and manufacturers. NHPC’s mission is to address challenges that prevent the growth and expansion of the whole-home energy efficiency sector and communicate these solutions.
Energy Use Benchmarking in 33 Cook County-Owned Buildings
JUNE 26TH, 2013
Energy Use Benchmarking in 33 Cook County-Owned Buildings Shows Efficiency Upgrades Have Saved Taxpayers $3 Million
Analysis shows 11 percent energy use reduction since 2010
CHICAGO (Jun 26, 2013)—An energy use analysis of 33 Cook County municipal buildings shows that low- and no-cost energy efficiency upgrades have reduced overall energy use by 11 percent in these buildings since 2010, saving taxpayers an estimated $3 million over the past three years. CNT Energy completed the energy use “benchmarking” effort for the County and analyzed more than 4.5 million square feet of space in Cook County owned buildings, roughly equivalent to the gross square footage of Willis Tower. The 33 buildings account for 25 percent of the County’s total square footage in its building portfolio. When all other projects currently underway are completed, 65 percent of the county’s buildings will be benchmarked.
“Implementing energy efficiency across Cook County’s building stock has the potential to save taxpayers millions of dollars over time,” said Cook County President Toni Preckwinkle. “By measuring and tracking energy consumption in our buildings, we can identify opportunities to use energy more efficiently, implement improvements and measure progress.”
Cook County paid $24.4 million in utility bills in 2012. Its 150 buildings consumed 242.5 million kilowatt-hours (kWh) of electricity and 13 million therms of natural gas that year.
Since 2010, Cook County has focused on low- and no-cost energy efficiency improvements to many of its buildings, such as removing unnecessary light bulbs in light fixtures, installing sensors that shut off lights when not in use, and reprogramming building systems to shut off heating and cooling systems when the buildings are not occupied. The benchmarking analysis shows that the upgrades are paying off: the improvements have saved taxpayers $3 million on energy costs over the past three years.
In particular, Cook County has focused on the energy use in its suburban courthouses, which represent 5 percent of the County’s total building energy use. Of the six courthouses CNT Energy analyzed, Cook County decreased its adjusted energy use in these buildings by 23 percent since 2010, adjusted for weather and occupancy changes. The 6th District courthouse in suburban Markham had the highest energy use reduction at 31 percent, reducing its energy costs by $91,000 in a single year.
“Cook County is leading by example, benchmarking its building portfolio’s energy use and taking the important next step to interpret the results and implement smart energy efficiency improvements,” said Anne Evens, CEO of CNT Energy, which has benchmarked more than 43 million square feet of commercial, municipal, and multifamily building stock. “As municipal budgets and staff resources shrink, energy efficiency is one way for governments to provide essential services at a lower cost and avoid raising revenue from the tax base. Cook County is a model for other governments and nonprofit organizations to follow.”
CNT Energy benchmarked the Cook County buildings using the U.S. Environmental Protection Agency’s EnergyStar Portfolio Manager, a free tool that allows users to compare an individual building’s performance with similar commercial buildings nationwide, adjusting for weather variations and basic operating conditions. By benchmarking its building portfolio, Cook County is adding to the national benchmarking database, which will improve comparison capabilities of the tool. The Portfolio Manager also allows users to examine a particular building’s energy use over time. CNT Energy has found that tracking a building’s energy use from year to year provides an important gauge for understanding the building’s performance and identifying areas to increase energy efficiency.
The Cook County Department of Environmental Control coordinated the benchmarking effort across several agencies, including the Cook County Health & Hospitals System, Facilities Department, the Department of Transportation and Highways, and the Office of Capital Planning and Policy. Funding for CNT Energy’s benchmarking services were paid for by funding through the federal Energy Efficiency and Conservation Block Grant Program and support from the Joyce Foundation.
Multifamily Housing Offers Opportunity for Utilities Seeking to Meet Energy Efficiency Goals
MARCH 27TH, 2013
CHICAGO (March 27, 2013)—For utilities seeking to meet energy efficiency goals, the multifamily housing sector represents a sizeable opportunity to achieve energy savings through targeted energy efficiency programs. In the report, Engaging as Partners: Introducing Utilities to the Energy Efficiency Needs of Multifamily Buildings and Their Owners, CNT Energy and the American Council for an Energy-Efficient Economy (ACEEE) examine the factors that contribute to effective energy efficiency program design for multifamily buildings and recommend strategies that can help utilities design and implement energy efficiency programs to attract multifamily building owners and achieve significant energy savings.
“There is enormous opportunity to achieve energy savings in the multifamily sector, and utilities have an important role to play in delivering effective energy efficiency programs,” said Anne McKibbin, policy director for CNT Energy. “Utilities need to work with the multifamily sector to design programs that address the barriers that prevent multifamily building owners from investing in energy efficiency upgrades.”
The United States has more than 18 million occupied apartments and condominiums in buildings with five units or more, and 16 million of these units are occupied by renters. Collectively, these building owners and tenants spent nearly $22 billion on energy in 2009, an average of $1,141 per household. If the best current multifamily energy efficiency programs were expanded nationwide, they could save up to $3.4 billion per year. Improvements to current program models could result in even greater savings.
Key recommendations for utilities include designing programs that address the diverse needs of different segments of the multifamily housing markets, making rebates easy to understand and access, and coordinating programs offered by natural gas and electric utilities. In addition, the report stresses the importance of developing programs that overcome the split incentive that occurs in rental housing where building owners are responsible for the costs of efficiency upgrades while tenants pay their own utility bills and reap the benefits of those upgrades.
The strategies outlined in the report offer utilities a roadmap that can help them capitalize on the enormous opportunity for energy savings that exists in the multifamily housing sector. The report highlights key industry players who make natural partners, including building owners, financial institutions, and affordable housing intermediaries. It also lays out a practical approach to designing programs that will achieve deep energy savings and lasting benefits for all stakeholders, building owners in particular.
“Energy efficiency can make a huge difference in the bottom line for multifamily building owners,” said Kate Johnson, ACEEE senior policy analyst. “In addition to lower utility bills, owners have happier tenants because units are more comfortable. That means lower tenant turnover and higher occupancy rates, which also makes a big impact on cash flow for building owners.”
This report was made possible by support from the John D. & Catherine T. MacArthur Foundation. It is the follow-up to an earlier report that introduced building owners and housing advocates to the utility sector.