Compliance costs more

Since most states adopted the 2009 International Energy Conservation Code, they are likely to adopt the 2012 IECC or similar standards that meet or exceed it. Through implementation of the 2012 IECC, the Department of Energy’s immediate goal is 30 percent incremental savings over the 2006 IECC.

To review a few examples, the 2012 IECC changes include above-grade wall insulation in Zone 3 increasing from R-13 to R-20. Basement wall insulation in Zone 3 moves from no insulation required to R-5, and in Zones 5-8 from R-13 to R-19. Floor insulation in Zones 7 and 8 move from R-30 to R-38. Ceiling insulation requirements move from R-30 to R-38 in Zone 3, and from R-38 to R-49 in Zone 5. Ducts sealing will be verified by required testing if the ducts pass through unconditioned spaces. Plus, there are new aggressive window standards. In Zone 1, the U-factor moves from U-1.2 to U-0.50. For Zone 4, the U-factor moves from U-0.40 to 0.35. As for solar heat gain coefficient in Zones 1, 2 and 3, it moves from 0.40 to 0.30.

Cost of Compliance

The cost of complying with the IECC is minimal, but it’s clear builders and designers bear the onus of recovering their investments in energy upgrades. By means of comparison, a BCAP study of the 2009 IECC (with 15 percent savings over 2006 IECC) determined the cost of complying was $818 for a 2,400-sq. ft. single-family residence. To tack these costs on an average 30-year mortgage, the homeowner pays $36 per year to save around $245 in annual energy costs, showing a four-year payback on the investment.

For the 2012 IECC, an MC2 Mathis Consulting study for South Carolina found that complying with the new IECC costs $1,186. MC2 estimates it costs as much as $84 per year in increased mortgage payments, but saves between $274 and $544 annually. “The energy modeling showed net positive cash flow to the home buyer from day one with simple payback on the added costs of 2.3 to 4.2 years,” according to the report.

The question is who pays the $1,186? Unfortunately, it’s the builder and designer, and they do so with no guarantee they will get their money back. House prices are set by square foot, not by quality. So, unfortunately, a 2012 IECC-compliant house that costs less to operate will likely sell for the same square foot value as a house built to older standards, or even no standards.

 

Realtors, appraisers and bankers don’t have a dependable, consistent system for properly valuing improvements, even when the improvements are required by code or state law. Does it pay to have a logo in a builder’s advertising that says, “2012 IECC Compliant Home”? Probably, if you have a prospect who understands what that means to their bottom line/operating costs.

I have seen some studies that show Energy Star-qualified homes obtain pricing premiums, and tend to sell more quickly than so-called nongreen homes. But Energy Star has a recognizable logo, and DOE provides builders with a wealth of marketing resources and scientific source material to justify a price premium, so they can recover what they paid for in extras. IECC or some reputable independent entity needs to develop a similar moniker for IECC compliance. The payback is very real, the return on investment very short, and the end user — who benefits from it — should be the person who pays for it, not the builder or designer who was required to comply.

 

 

 

Correction: In the October issue (page 13), the California solar farm percentage was listed incorrectly. The contribution of the California solar farm is 2.1 percent (370/17,000 = .0217647 x 100 = 2.17647%), not .02 percent.

John D. Wagner is an award-winning author of many books and articles about construction, and a frequent contributor to the industry’s leading trade magazines. A sought-after speaker for industry events, he can be contacted at JohnDWagner.com. Read past columns at ForResidentialPros.com.

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