Green Houses: Home Buyers Driving Trend in Housing Market for Environmentally Friendly Construction
?Levinthal likes the idea of saving money on energy and doing his small part to reduce global warming. So when he built his new home in north suburban Glenview, he incorporated solar panels that will lower his utility bill and generate electricity to sell back to the power company. He uses geothermal and radiant heating systems and captures sunlight through skylights and well-placed windows for extra heat and light. Building green also meant choosing renewable woods such as bamboo for flooring and foam insulation made from recycled newspapers.
Levinthal also wanted a healthy home. Twice a cancer survivor, he chose products — paints, stains, adhesives — that were free of or had very low quantities of volatile organic compounds, or VOCs, that are known carcinogens. He added a “hospital-quality” air purification and humidity-controlled system to further make his inside environment green.
Levinthal is part of what Chicago real estate and columnist Mark Nash says is a growing trend in the housing market. “In” this year are buyers looking for a house, usually new, with a lower carbon footprint, a measurement of an individual’s carbon dioxide contribution to the atmosphere from daily activities such as heating and cooling a house, driving a car and producing, transporting and preparing food.
Nash says home buyers are looking for energy-friendly mechanical systems and appliances as well as renewable and reused construction materials. He says they are also asking for homes that get at least some of their energy from sources that are “off the grid,” meaning the home generates power through solar, wind or geothermal technology separate from the utility company. “Home buyers are asking about how their new home can save the planet. It’s more than a trend; it’s a convenient truth.”
Nathan Kipnis designs houses for this mostly high-end market and says that as the cost of energy increases, going green and off-grid is going to become the norm.
“Like very quickly, as quickly as you’re seeing gas prices going up, you are going to very quickly see people freaking out and wanting to figure out how to generate power on their building,” says Kipnis, principal of Evanston-based Nathan Kipnis Architects Inc.
“Builders are responding to that market,” says Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center. “We’re seeing a very different public consciousness — people who are looking to buy green, or greener. That’s a good trend, and that’s happening.”
With the right public policy, he says, Illinois can capitalize on this new mind-set. “We are wonderfully positioned to seize the economic growth, job creation and environmental benefits of the growing green economy.”
Two bills in the General Assembly this spring would amend the Energy Efficient Commercial Building Act to include single-family residential buildings under uniform energy efficiency standards. They contain similar language agreed to by homebuilders that would set minimum and maximum statewide standards for energy efficiency. HB 1842, sponsored by Evanston Democratic Rep. Julie Hamos, passed both chambers, and SB 526, sponsored by Chicago Democratic Sen. John Cullerton, awaits a concurrence vote when lawmakers return.
If adopted, Hamos says the code could save buyers of new homes at least 11 percent to 15 percent annually on utility bills. “If you make the investment in insulation and windows, you will achieve energy savings immediately, from Day 1 forward.”
The best and least expensive time to incorporate good insulation and windows, energy-efficient appliances and off-grid technologies such as solar or geothermal is in the design and construction of a new home, says Kipnis.
Says Learner, “If we build homes more energy efficient at the beginning, that can produce enormous utility bill savings for homeowners over time.”
Building green can cost 3 percent to 10 percent more. But some features of a green house, says Kipnis, cost no more than a conventional building. “Locating windows correctly doesn’t cost any money. Using low VOC paints, using bamboo flooring, using good, low-VOC adhesives, those all cost nothing.”
However, better insulation systems, better mechanical systems and the “really esoteric stuff” — photovoltaic panels that generate power and the geothermal systems — “those begin to cost some significant money.”
At state and federal levels, most public policy for renewable- and efficient-energy programs that help with upfront costs is aimed at commercial and public buildings rather than residential, except for low-income individuals.
Levinthal believes that’s where he and others can make a difference. He points to the attractive feature of his solar roof panels, an advancement in technology that encourages its use in upscale neighborhoods. “They look like they’re part of the house. They look like they belong there, and that was one of the statements I was trying to make. I live in a reasonably affluent area where people can afford this kind of stuff, and if they go ahead and do it, they’re paving the way for other people. We can actually lower the cost so that the people who really need to save the money can do so.”
The housing market is still in a dive from the number of foreclosures after the collapse of the subprime loan industry. Housing starts hit a 17-year low in April, and the measure of homebuilders’ confidence fell again in May. Yet, market researchers project growth in commercial green building construction will lead to more residential adaptation. McGraw-Hill Construction Analytics estimates that the value of commercial construction starts for green building will grow from $12 billion in 2008 to $60 billion in 2010.
“The biggest incentive is that buyers, people who are purchasing homes, are increasingly looking for the homes to be greener,” says Learner.
Jonathan Feipel, deputy director overseeing the Bureau of Energy and Recycling in the state Department of Commerce and Economic Opportunity, says the renewable energy program that seems to make the most sense for residential customers and has been the most successful is the one for solar rebates.
“Looking at more bang for your buck, where the program has been more successful, has been on the solar side for residential.”
The department administers a solar rebate program that picks up 30 percent of the cost of installing photovoltaic panels to generate electricity, up to a maximum of $10,000. In fiscal year 2007, the department awarded 150 solar rebates and seven small wind energy grants, and in FY 2008 to the end of May, it had awarded 107 solar rebates.
Appropriations to the department to support residential green building statewide amount to about $8 million a year. In addition to some dollars solicited from the federal Department of Energy, two funds make up the bulk of money available for programs. About $5 million in the Renewable Energy Resources Trust Fund comes from all electric utility customers statewide through a charge on their bills. Money for the Energy Efficiency Trust Fund, about $3 million, comes from electric company payments into the fund. Electric utilities and alternative retail electric suppliers contribute annually, based on the number of kilowatt-hours sold during the previous year.
Kipnis says that the state rebate check helps cover the upfront costs of a solar installation that generally pays a homeowner back in energy savings within five to six years.
Aur J. Beck, chief solar panel technician for Advanced Energy Solutions Group Inc., says the interest in solar energy is high in southern Illinois, and many people use the rebates. In the nearly nine years he has been retrofitting homes with photovoltaic panels to generate electricity, his company’s sales have increased 30 percent to 40 percent per year. His own home in Pomona, a community in the Shawnee National Forest about 30 minutes southwest of Carbondale, is completely off-grid, which means he uses battery storage for excess generated electricity and is not connected to the power company’s lines.
Gerald “Butch” Dunn, who owns Ecologic Construction in Carbondale, does not advertise, he says, because he is a year behind in orders for new and retrofitted houses that incorporate environmentally friendly and energy-efficient materials into the design. He offers both passive solar — for example, dark stone floors that collect natural sunlight from strategically placed windows during the day and release the captured heat at night — and active solar from both thermal solar for water heaters and photovoltaic panels that generate power, taking some customers totally off the grid.
“Most people around here like the idea, especially now. In the last couple of years, attitudes have changed a lot. The power company has really been sticking it to us here lately, and fuel costs are going through the roof. It used to not make sense to go off the grid. It was cheaper to get your power from the power company, but now it kind of balances out. It won’t be too many more years before it makes no sense to not go off the grid.”
However, he says some of his customers are still afraid to invest in technology to go off-grid, though in some cases the upfront costs would be equivalent to running a power line from the nearest neighbor. Also, he says, information about state rebates for solar installation is not readily available. “A lot of people know there’s something out there, but they don’t know how to do it. They don’t know how to make the system work.”
Net metering, which was signed into law last summer and became effective in April, requires investor-owned utilities, primarily Commonwealth Edison and Ameren Illinois, to provide meters that record electricity produced by residents through renewable energy sources — wind, solar, anaerobic digestion of livestock or food processing waste, hydropower, and fuel cells and microturbines powered by renewable fuels — and compensate them for any power returned to the grid.
Ameren Corp. spokesman Leigh Morris says the company, as with Commonwealth Edison, offered net metering prior to the April deadline. He says most Ameren customers use it for wind generation, but it is available for all renewable sources, and the company “welcomes inquiries about the service.”
Dunn says from his perspective Ameren has been slow to make it available in southern Illinois. “It’s unfortunate. If we do go to net metering, and they give you a fair price for the power you produce, then it makes sense.”
Levinthal has a similar story with Commonwealth Edison. He says it took seven months to get the right meter to measure the electricity he was producing and in mid-May it still was not registering correctly. “It is very difficult to get the utilities to work with you on this,” he says. However, he is not ready to lay the entire blame on the utility. “When you’re doing cutting-edge stuff, it takes a while to figure out everything that you’re doing.”
State Sen. Bill Brady, a Republican from Bloomington, was an early sponsor of net metering. A central Illinois homebuilder by trade, Brady says some homeowners he serves have incorporated geothermal options into their plans, but so far he is not seeing an increased demand for green products in central Illinois. He says part of that comes down to public education.
“Incorporating green standards — where financially they make sense — into the mix is good,” says Brady. “I think we have to be very cautious not to overmandate things. They increase the cost of housing so much because they sound good rather than have real application.”
However, architect Kipnis believes many new and rehabbed buildings are going to be built as net producers of energy. “On an annual basis, they will produce more power than they use,” he says. “Realistically, we’re going to see buildings get closer and closer to being 100 percent of their power — not necessarily their total energy, but their electric power — with solar, as the price of electricity goes up and as the price of the PV panels comes down. And any government help in between to bridge the gap will be great.”
Help from government may be slower in coming. A bill (HR 6049) that passed out of the U.S. House of Representatives in May would extend through 2014 the 30 percent investment tax credit for solar energy property and qualified fuel cell property, and the 10 percent investment tax credit for microturbines. Biomass, geothermal, landfill gas and other technologies receive a three-year extension under the legislation. The $54 billion package would extend the federal production tax credit for wind power only through December 31, 2009, but it does contain a new small-wind investment tax credit, which is technology that could be applied to homes.
However, the legislation failed to pass in the U.S. Senate by mid-June. Congress has been trying unsuccessfully for a year to extend tax credits for individuals, businesses and developers who invest in clean power. When the credits expire at the end of this year, some economists estimate that more than 100,000 jobs and close to $20 billion in investment will disappear.
In Illinois, Comptroller Dan Hynes’ office reports that about $20 million is available in the Renewable Energy Trust Fund but that the state Senate in May voted to return authority to Gov. Rod Blagojevich to use money in dedicated funds to fill budget holes. Hamos says that, as of the end of May, the House had not authorized a fund sweep.
“They’re still vulnerable,” she says. “The money sitting in those funds is sort of like a sitting duck.” The state doesn’t have new revenues coming in, and those it depends upon are affected by the economy. “As a result of that, we do not have the revenues to support all of our big dreams.”
Still, environmentalists and builders agree that what is needed to spur more green construction — multiplying the environmental and job creation benefits that come with it — is public policy.
“Illinois is positioned and poised to be leaders in the growing market for solar energy equipment and installation,” says Learner. “We really need to focus and move forward if we want to seize the jobs of the future in the growing green economy.”
Illinois Issues, July/Aug. 2008