When Simpler is Better: Choosing the Right Home Efficiency Rating for Point of Sale Comparisons

Posted in: Advocacy, Gabe Lieb

An image with different houses with different energy efficiency ratings

As the market for energy efficient buildings has grown, so has the need to measure and rate the effectiveness of upgrades and new home efficiency measures. Regulators, programs, and industry groups have come up with a number of rating systems to help inspect, calculate and compare a home’s energy performance. 

Over the years, these models have become more and more complicated. The industry standard measure, Home Energy Rating System (HERS)—Whole House, not Compliance—currently requires hundreds of extremely detailed data points that use very expensive and sophisticated test equipment and it must be completed by a certified HERS whole home energy rater.

Comprehensive industry tools like HERS have their place. But recently a number of people in the industry have been pushing back on complexity and making a case for simpler approaches. For example, the city of Aspen, Colorado recently dropped the HERS rating from its energy code in favor of a simplified pathway that still meets International Energy Conservation Code (IECC) requirements. 

Part of California Assembly Bill AB 758 mandates that the state develops an asset rating that is shared in real estate listings. Yet there’s pushback from homeowners and real estate professionals who don’t want to spend the extra money and time to have an expensive and time-consuming energy audit completed. HERS won’t fit the bill.

Are Complex Systems Always Needed? 

Unfortunately, having a complicated rating system isn’t a guarantee of accurate results when evaluating a home energy efficiency. Models can be inaccurate. For example, at one point EnergyPro software was overestimating the impact of attic insulation on efficiency. The team revised the model, but overcorrected and was then overestimating the value of under-floor insulation and underestimating the value of attic insulation. 

In the case of HERS, the required software frequently overpredicts energy use and thus savings; sometimes the savings it predicts are larger than the customer’s annual utility bills.

Of course, experienced contractors can tell when models are wrong and have always adjusted accordingly to solve specific homeowner issues. But a faulty model is not always the problem. Often, the inputs are inaccurate. This is compounded with more complicated modeling tools. Our director worked on a project where the HERS rater didn’t know how to model solar panels—so he left them out of the calculation. This made the results completely worthless.

By contrast, some simpler rating approaches have been shown to yield surprisingly accurate results. For example, averaged out, the Department of Energy’s simple Home Energy Score (HES) has been shown to be within 1 percent of actual consumption when accounting for behavior and input errors. 

Efficiency Ratings at Point of Sale: A Good Place for a Simpler Approach

Rating homes for efficiency can serve a number of important ends, the most obvious one being to promote upgrades. But promoting upgrades shouldn’t be the only goal. Helping homebuyers and renters choose more efficient places to live, and help them understand how to make their new homes more efficient, is at least as important.

So what characteristics would make an efficiency rating most useful for point of sale comparisons?

  1. Ease of use. Getting the broad adoption of energy performance ratings that we need will require bringing in more than that just home performance contractors. When it comes to the point of sale, the people on the front lines are most often real estate agents and home safety inspectors. Using a simple “clipboard audit” would make it possible for these and other non-specialists to quickly and objectively evaluate a home for common efficiency metrics. 
  2. Inexpensive. Relying on costly audits to develop efficiency ratings adds significant transaction costs to the sale of a home and is a major barrier to buy-in from real estate professionals. High-cost also excludes low-income housing from efficiency ratings. 
  3. Simple “MPG” approach. When you buy a car, it comes with an estimated “Miles Per Gallon,” but your mileage will vary depending on how and where you drive. In the same way, the amount of energy a house consumes will vary greatly depending on how it’s used and by whom. Empty nesters, for example typically use less energy than families with teenagers. Providing utility data or using an audit that tries to predict savings just muddies the water for a potential new home buyer who needs a rating to compare buildings “apples to apples.” 

Examples of Simple, Effective Rating Approaches

Home Energy Score (HES): HES is a simple scoring system developed by the Department of Energy as a way to generate accurate information about a home’s energy use and potential improvements. The assessment takes approximately an hour, after which the assessor will give the house a rating on a 1 to 10 scale with a “1” representing the least efficient home and a “10” indicating the most efficient. The score and report are generated by the DOE/Lawrence Berkeley National Laboratory software called the Home Energy Scoring Tool.

AjO: AjO is a relatively new home performance app that works on both web and mobile devices. Using an intuitive interface, the app prompts users to enter values for a range of potential characteristics, including insulation, wall characteristics, foundation type etc. The app is designed to be easy to use by real estate professionals, homeowners, appraisers and home performance professionals. 

The Right Tool for the Right Job

When it come to energy ratings for homes, choosing the right tool is key: there is no panacea. HERS and other types of comprehensive audits can still be useful if you need to do equipment sizing, full house upgrades, duct designs, ZNE, etc. But, we believe when it comes to point of sale, the best tool for a prospective home buyer is the one that is simple, inexpensive, reasonably accurate and gets used. 

Gabe Lieb
Communications & Marketing
Efficiency First California

Read Gabe's other blog posts >>

Image from iStock.

Comments

HERS

While an interesting perspective i think there are a number of items either missing or incomplete. The RESNET HERS index has been used to rate nearly two million homes and has a robust technical Quality Assurance process behind it, the value of which is demonstrated by its adoption into code as an ANSI standard. Are their opportunities for user error, of course; but the approved software providers also all have tools which aid significantly in eliminating these and new tools such as QA Genie now run continuously in the background looking for anomalous patterns in practitioners data entry. Neither of the other tools referenced provide this degree of QA/QC, nor do they have the track record of the RESNET HERS Index. As for cost, no information is provided in this article to substantiate what an appropriate cost is, much less demonstrates how using the HERS index is any less cost effective than the other two methods. Lastly, the HERS index has nothing to do with equipment sizing or duct design ( which are determined by use of ACCA's Manual J, D & S) but since it IS a recognized Appraisal Institute's factor of differentiation; it can be relied upon to determine a home's worth and therefore affect loan availability.

HERS isn't a bad tool

Hey, Mathew. Thank you for your comment.

It's not that HERS is a bad tool, it's that complicated tools like it may not be the best specifically for this instance: time of sale. We think that it would be beneficial to use a simple asset rating that all the stakeholders can get behind, including real estate agents and their trade groups.

We just don't think the upfront expense of a HERS is necessary in all cases, particularly in existing homes. A Home Energy Score walk-through can take as little as an hour or two, where a HERS score can take four to eight hours depending on the home when you include modeling. (This amount of time can be reduced even more if it coincides with a home inspection.)

And honestly it doesn't have to be Home Energy Score, but something that's quick and reliable that real estate agents, inspectors, and others could be trained in. When something comprehensive is necessary, and this is not limited to HERS but includes other energy audit tools, those tools should be able to produce a separate score for that simpler asset rating. (Many tools, for instance, can produce a HES.)

We want an apples-to-apples comparison score for homebuyers and renters when deciding on a home, but we want it to be cost effective.

Home Efficiency

Such an interesting stuff, we all are worried about our home condition and improvement structure, before buying and selling a house, we should follow several kinds of instructions for home improvement. Choosing a right home is very much essential for every homeowner, as we are looking for different advantages from our home and also assured about the right efficiency and right home improvement. Thanks for this wonderful article.

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