Overview of the Home Energy Score (HES)What is it?

The Home Energy Score (HES) was first developed in 2012 when the Department of Energy (DOE) recognized the need for a more consumer and real estate industry friendly method of defining homes’ level of performance in terms of energy usage. The marketplace has had difficulty recognizing (to any level of scale) the value of energy efficiency improvements in spite of widespread utility programs and federal support through the ARRA funds*. (See 0. DOE Home Energy Score Overview.)

DOE research revealed that current home scoring systems, while granular and accurate, are costly, take a high level of expertise to execute and are difficult to communicate to homeowners and the real estate community. Consequently, the DOE instituted 12 pilot programs around the country to test the idea of a simpler scoring system, HES, which assigns a score of one through ten, with ten being the most efficient, in terms of energy use. According to the DOE they wanted to create a way to rate homes that is “Similar to miles per gallon for vehicles, the Home Energy Score provides a standardized method for quickly assessing the energy performance of a home’s major energy systems and envelope.”

The DOE has taken feedback from these 12 pilot programs and attempted to adjust the algorithms behind the score to address issues that the programs identified. For instance, in the pilot, larger homes consistently were shown as having to spend substantial sums to improve the score a small amount, like getting from a 5 to a 6, thereby having the reverse of the intended effect by dis-incentivizing the owners to make improvements. (See “1. What’s the Score?” for further detail on the adjustments.)

*(see Shelton group’s report http://sheltongrp.com/data-data-everywhere-nor-any-drop-to-drink/)

As the HES system has developed and improved, 12 states have adopted or are in the process of adopting it, some as a statewide policy. HES working group 6/23/2015 Page 1

Examples of other states’ adoption of HES:

1. Connecticut:After launching the Home Energy Score program on April 1st 2015 Connecticut plans to score between 12,000-14,000 homes annually. The effort helps the state track its progress in meeting a goal of weatherizing 80% of homes by 2030. http://energy.gov/eere/articles/connecticut-launches-nation-s-first-statewide-home-energy-score-program

2. Vermont:

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The above is the certificate that the Vermont working group designed. They chose to illustrate three metrics: energy consumption in Millions of British Thermal Units (MMBTU) usage, which resonated with the residents of Vermont (Massachusetts followed suit), the DOE Home Energy Score, and a pie chart of annual energy costs. The HES produces all three metrics. One consideration was to meet the needs of several independent audit programs operating across the state (see 2. “Vermont Energy Label Report”).

Vermont Core Working Group

● Efficiency Vermont● Vermont Fuel Efficiency Partnership● Energy Futures Group● Vermont Gas Systems● Vermont Public Service Department● Burlington Electric Department● Building Performance Professional Association● Sustainable Energy Resources Group● Vermont Office of Economic Opportunity

This is a diverse group of utility partners, home performance contractors, government agencies, advocacy groups and non-profit energy efficiency organizations who worked together to establish the Vermont Home Energy Score.

3. Massachusetts:

New Approaches to Home Energy Efficiency: Energy Performance Scores

The Massachusetts Department of Energy Resources (DOER), in collaboration with Mass Save®, is using U.S. Department of Energy grant funds in the Greater Springfield area to provide interactive tools for homeowners to encourage more – or "deeper" – energy efficiency upgrades. This initiative, called Home MPG (miles-per-gallon) is an enhancement to the Mass Save home energy assessment program. Home MPG' provides an interactive web portal that connects homeowners to their scorecard and links to their home’s thermal image (if available). Core elements:

● An Energy Performance Score (EPS), similar to a vehicle MPG rating, reflects a home's expected energy use and carbon emissions, and allows comparison between area homes. The EPS also provides data on utility incentives available to help pay for the cost of energy efficiency improvements aimed at improving the EPS.

● A web-based tool that allows homeowners to view the results of their Mass Save home energy assessment and their energy scorecard.

● The web interface also connects homeowners to an infrared thermal image of their home (if available) to help understand the potential for targeted cost-effective building improvements.

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Main goals of this program are:

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● Speed Adoption of High Efficiency Products - Accelerate the adoption of high-efficiency, quality consumer and business sector lighting solutions, electronics and appliances that reduce total home and building energy use and peak demand.

● Reduce Energy Use in Buildings - Make possible a future in which all homes and buildings are zero net energy, through incremental yet aggressive improvements to building energy policies and programs.

● Advance Knowledge and Best Practices - Promote knowledge and the use best practices that support the expansion, implementation and evaluation of policies and programs to increase and accelerate energy efficiency.

● Make Efficiency Visible - Position the Northeast and Mid-Atlantic region as the national leader for efficiency as a critical and tangible resource to support environmental sustainability, a robust economy, and a reliable and affordable energy system.

4. New York: New York State Energy and Research Development Authority (NYSERDA)NYSERDA has two pilot programs:

● One is working within the confines of a utility program● The other is experimenting with training home inspectors to conduct HES assessments on

homes in an attempt to broaden the professional population of energy assessors and to see if the Home Energy Score can act as a lead generator for energy efficiency improvements.

● NYSERDA is also working with local Multi-List Services (MLS) to integrate this information into real estate listings.

ITHACA — Five Tompkins County municipalities are working together to develop a plan for scoring the energy performance of local homes. The goal: to use market forces to improve the energy efficiency of existing housing stock by providing meaningful home performance information to future home buyers.

The Towns of Ithaca, Caroline, Danby and Ulysses, along with the City of Ithaca, are partners in the Residential Energy Score Project. Tompkins County and Cornell Cooperative Extension of Tompkins County are also providing guidance to the project, which draws inspiration from the growing number of successful energy rating and disclosure programs across the country. Like fuel efficiency “MPG” ratings for cars, the energy efficiency of homes can be measured in a standardized way. The project will study such rating methods and consider how to create value for energy efficiency in the local housing market.

At this stage in the discussion, participants and stakeholders in a Technical Advisory Committee are formulating the details of the program, which is expected to be developed by spring of 2016. The committee includes representatives from realtors, builders, lenders, home performance contractors, low-income housing advocates, and utility companies.

“Home buyers not only ask about taxes, but they want to know about the energy efficiency of the homes they are considering,” said Melissa Miller, 2015 President from the Ithaca Board of Realtors®. HES working group 6/23/2015 Page 6

“This is why the Ithaca Board of Realtors® developed a Green Features Statement to begin capturing information about the homes listed in its multiple listing service.”

“Simply looking at the monthly utility costs of a home is not reliable,” said Greg Thomas, CEO of Performance Systems Development (PSD), the Ithaca-based energy efficiency consulting firm that is managing the project’s development. “One homeowner may set the thermostat low, while another keeps the windows open. The energy efficiency score will be a standardized rating based on the attributes of the home, not the behavior of the occupants (Known as an “asset” rating). These ratings create a market value for investments in energy efficiency, allowing homeowners who make efficiency investments to recover some or all of that cost upon the sale of their home.”

The program is supported by the New York State Energy Research and Development Authority (NYSERDA) Cleaner, Greener Communities program. “Governor Cuomo’s Reforming the Energy Vision (REV) encourages all manner of clean energy and energy efficiency around the state. Rating the efficiency of a home will help increase the value of these types of investments, while helping home buyers save energy costs and increase comfort,” said John B. Rhodes, President and CEO, NYSERDA. “This is a great example of how an innovative community program can help promote the value of energy efficiency improvements here and in other regions of the state.” http://psdconsulting.com/municipalities-launch-residential-energy-score-project/

5. Colorado: BPI/MLSThe Building Performance Institute (BPI), which is now a national HES Partner/Provider, has teamed up with the Colorado Multiple Listing Service and the Colorado Energy Office to create a statewide inclusion of HES in their database. On Sept 17th they launched the program at the Colorado Association of REALTORS convention.

As you can see from these examples each region is defining the score in their own terms according to what they understand to resonate with homeowners. The DOE understands that all real estate is local and therefore expects each state and region to customize its own score accordingly.

For example, in Southwestern Pa, experience tells us that health and safety problems are of major concern for homeowners and that comfort is a primary market driver. This adds up to a quality of life issue which is further augmented by local conditions, such as our poor air quality and high level of asthma - with indoor air quality becoming a recognized public health issue. It is our opinion that the score should be broadened to include messaging that addresses these issues as well.

For a further detailed analysis and comparison of States’ labeling efforts, including New Jersey, Nevada and California, see 3. “Residential Energy Labeling” by NASEO. As these programs develop, better feedback will become available on best practices and impact. Clearly, there is a trend among the clusters of neighboring States to adopt and develop the Home Energy Score as well as a national tendency towards adopting the score as part of a regional and state wide scoring strategy.

Multiple Listing Service (MLS)

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Representation of “Green” homes in the real estate industry’s multiple listing service (MLS) is an important corollary to the development of a HES program in PA. Concurrent with our efforts there is an MLS committee (formed by members of the ReEnergize Pittsburgh Coalition*) that is being led by Penn Future and Pennsylvania Environment Council, PEC. This committee is working to incorporate information about home energy use into real estate listings, and has specifically included the need for a Home Energy Score into their presentation to the realtor community in PA. They are following Elevate Energy’s “blueprint” as a guide. See 4. “unlocking the Value of an Energy Efficient Home”).

This issue is especially important to assigning value to energy efficiency improvements at the time of sale, because the appraiser uses MLS listings to identify comparable homes, to justify the appraised value. If the MLS does not include information on energy efficiency and other green features, there is no way for the appraiser to justify their value.

One of the main contentions of the local MLS, however, is that there is no way to quantify the “greenness” of a home. Use of the HES could solve this problem.

Although the HES is a stand-alone certificate, its value should also be seen in the context of providing information and documentation at the time of sale of a residential property, thereby injecting the value of energy efficiency improvements into the market place. On a national level the National Association of Realtors understands this, but on a local level in PA only one of 12 MLSs has made the effort to incorporate Green Fields into their database, irrespective of the HES being incorporated into the Real Estate Transaction Standard (RETS).

Hence the necessity of coordinating our efforts with Penn Future and PEC who are leading the ReEnergize MLS committee.

“See 5. MLS Energy Project – case study” by Conservation Services Group gives an in depth look at issues surrounding Greening the MLS. At the time it was written, the HES was still in its pilot phase so its future role is not emphasized.

Results:

Although there still isn’t enough volume nationwide to accurately determine the efficacy of HES, the DOE hired the Shelton group to research and document consumers’ responses to the HES via focus groups (see 6. “DOE Focus Group Findings”). They brought up issues like ‘how much do I have to invest to improve my score’ and ‘to what extent can I raise it given that investment’. Homeowners preferred to see energy savings over a twelve month period as opposed to over ten years because they wanted a more short term payback scenario but they were curious about how their home compared to others, which is a proven method of encouraging people to take action. They also appreciated the additional information page which went into more depth on ROI on improvements etc. HES has more value to a home buyer than a seller, but if the score was too low no one wanted to disclose it. The group discussion centered on energy savings or reducing energy costs and there was interest in having it combined with a home inspection.

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The Shelton group also pointed out that the score alone is not enough. They said that Assessors (individuals who are certified to administer the on-site home analysis) need to be able to “address homeowner’s outstanding questions and concerns.”

Role of assessor and provider:

The HES should not be seen as a silver bullet, but rather as a tool to encourage homeowners to take action and an opportunity to enable certified home assessors to open up a broader conversation with homeowners, beyond the simplistic and ineffective moniker of “save energy, save money,” which seems to be the main focus of the current HES presentation. The assessors need to be skilled and trained to do more than just present a score to homeowners. The presentation of the Home Energy Score should be seen as an opportunity to engage with homeowners on a level that addresses their concerns. Both the certificate and the assessor need to be attuned and designed to take advantage of the opportunity to have a face to face conversation with homeowners.

Providers, who are certified partners with the DOE, provide administrative oversight, quality assurance and data management for assessors conducting in home HES scores. They can be Conservation Service Providers, Utility Program managers, non-profits etc. who are in a position to develop and oversee a HES program.

Conclusion:

There are many moving parts to this simple score including data transfer protocols, training, policy support etc. which need to be understood and implemented. The case studies attached to this document outline them. But without State leadership on residential energy efficiency, we have to face the handicap of individual initiatives working in a silo fashion in PA--Intelligent in their own right, but not adding up to a strong enough effort to impact market adoption. As the DOE puts it “Statewide initiatives can foster more rapid uptake of the score.”

All references to documents in this article are available on our archives (homeenergyscorepa) on Google Drive. Contact alisons@ccicenter.org for an invite to access the files.

If you want to go fast, go aloneIf you want to go far, go together

African Proverb

* ReEnergize Pittsburgh is a local coalition of energy efficiency partners dedicated to creating market demand for energy efficiency services in Southwestern PA.

Prepared by Tim Carryer

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