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Home Energy Ratings in Delaware Roger Colton Fisher, Sheehan & Colton February 1999.

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Presentation on theme: "Home Energy Ratings in Delaware Roger Colton Fisher, Sheehan & Colton February 1999."— Presentation transcript:

1 Home Energy Ratings in Delaware Roger Colton Fisher, Sheehan & Colton February 1999

2 2 Agenda Review objectives Review energy costs in Delaware Introduce HERS in Delaware Review consumer impacts

3 3 Training Objectives To explain the link between energy costs and shelter affordability To explain the role of Home Energy Ratings in supporting energy efficiency To explain the financial impacts of energy efficiency investments

4 4 Consumers Interest in Energy Increased energy efficiency ranked #9 in top 10 trends in consumer demands for new homes (1996). 1997 survey: 83% of consumers more likely to buy from builder who offers energy efficiency upgrades. 1998 survey: consumers willing to spend extra $1200 - $1500 for $300 annual energy savings.

5 5 Energy Costs in Delaware Fourth highest in nation * $1,594 per year in 1997 Average natural gas bill: $655 Average electric bill: $940 *SOURCE: National Consumer Law Center, Energy and the Poor: The Crisis Continues (1995)

6 6 Energy End Uses in the Home

7 7 Average Consumer vs. Lower- Income Consumer Average: Bill: $1,700 Burden: 4% Low-income Bill: $1,450 Burden: 15%

8 8 The intensity of energy use/costs Average: Cost intensity: $0.62/sq foot Use intensity 50,000 BTU/sq foot % of shelter costs devoted to energy: 13% Low-income Cost intensity: $0.69/sq foot Use intensity: 57,000 Btu/sq foot % of shelter costs devoted to energy: 27%

9 9 Summary of Energy Use Discussion Distinguish heat and non-heating Distinguish between energy end-uses Distinguish discretionary and non- discretionary use Distinguish energy bills and energy burdens.

10 10 Home Energy Rating System (HERS) Similar to EPA rating of automobiles on a miles per gallon basis Represents a standard measurement of homes energy efficiency

11 11 A HERS Audit Looks At: Attic, wall and floor insulation Water heating Lighting Heating and cooling systems Quantity and quality of doors/windows Mechanical equipment Health and safety features

12 12 HERS Report Should Contain Overall rating score on the home Recommended cost-effective energy upgrades Estimates of both the costs and the annual savings of the upgrades Improved rating score after the upgrades Estimated total energy cost before and after upgrades Health and safety improvements

13 13 The Energy Efficient Mortgage Home purchase mortgage add-on Finance $4000 or 5% of loan Without further credit qualification Without further appraisal Insured by FHA

14 14 The Concept of Cost-Effective Saves more than it costs Net Present Value Cash flow

15 15 Potential Areas of Benefit Space heating savings Domestic hot water savings Increased comfort

16 16 Example #1: Cash Flow Savings

17 17 Example #2: Purchasing Power

18 18 Example #3: Effective Impacts Effective Interest Rate Reduction Assumptions: $400 a year in energy savings $2000 energy efficiency investment $50,000, 30-year mortgage (7.5% interest) Effective interest rate reduction is 1.2% (from 7.5% to 6.3%).

19 19 For More Information:

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