Understanding Builder Needs with Ekotrope Home Data
More than ever before, builders today are on the hunt for energy efficiency improvements and positive outcome design tradeoffs. It’s driven by customer demand, more stringent energy codes, and by the plethora of incentives for improvement, including monetary incentives like utility rebates and tax credits, marketing incentives like the HERS Index, financing incentives including corporate ESG (environmental, social and government) initiatives, and the ever-present mission to stay cost competitive. For a more complete list of these incentives, check the bottom of this post.
Meanwhile, Building Product Manufacturers are busy creating and marketing innovative products to help builders build more efficient, lower cost homes. And, by the way, they are creating some really neat science-fiction-type stuff (like this eco-friendly, aerosol based sealant that reduces home leakage as it seeps through the cracks).
So far so good, that makes a great match!
Unfortunately, it’s not so easy. The home construction industry has a major information gap between builders and Building Product Manufacturers when it comes to identifying a good match between a builder and a product, and certainly when it comes to quantifying the benefits of that product. Building Product Manufacturers do their best to market their products, but without robust energy analysis information, typically they are left to rely on generic messaging, like “Product X can reduce energy consumption by up to 15%!” HERS Raters and energy consultants do their best to help builders bridge the gap, but in many cases they don’t have the data or tools required to do so efficiently and effectively. HERS Raters are also often paid per home rather than per hour, so consultative work doesn’t generate extra revenue.
This leaves some tough questions unanswerable:
For any given product, which builders would benefit most by switching to that product?
Which regions have the most favorable market conditions for which energy products?
For a given builder, what is the specific, quantified benefit of switching to a new product in their homes?
These are the problems we are now solving here at Ekotrope through a variety of strategies, which I’ve outlined very briefly below:
Business Intelligence. By leveraging aggregated HERS Rating data, we can help identify trends in the market, where certain products are being installed, and where market conditions might be right for a specific product.
Smarter Prospecting. For any given product, we can run a search across all Ekotrope HERS Ratings (about 250,000 homes per year), virtually swapping in that specific product to identify and engage builders that will benefit most.
Scenario Modeling. Once engaged with a builder, we can help a Building Product Manufacturer run what-if scenarios for the builder and quantify the exact value and outcome of tradeoffs that involve their product.
Have you ever wanted to know what types of equipment are being installed across the country? Did you know that in 2020 in Texas, for example, only about 1% of Ekotrope HERS rated homes installed heat pump water heaters? Turns out they were mostly centered around the Austin metro area.
If you’re interested in learning more, please contact us! And stay tuned for future blog posts, where we will explore trends in the industry and case studies about specific products. To stay up to date with Ekotrope, follow us on LinkedIn where we share all of our updates, blogs, events, and more.
See below for a more comprehensive list of the factors we see these days that influence home builders’ decisions. An understanding of these incentives is critical to successfully marketing an energy-related product.
What types of incentives are driving decisions?
Federal Tax Credits. In addition to various equipment-specific tax credits, builders can capture a $2,000 performance-based 45L Tax Credit by building a home with 50% reduced heating and cooling loads compared to IECC 2006. NOTE: as of September 2021, there is pending legislation to extend and modify this tax credit, so stay tuned.
Utility Incentives. Many states in the US have regulatory structures that require utility providers to reduce energy consumption. Utilities achieve this through rebate programs, which includes paying builders to build more efficient new homes. Some notable states with significant new home rebate programs are Massachusetts, North Carolina, Maryland, Texas, Virginia, California, Michigan, and Ohio (but there are many others!).
HERS Index. Many builders leverage the HERS Index for marketing benefits as well as to promote ESG initiatives. A lower HERS Index Score is better!
ENERGY STAR. The EPA ENERGY STAR Certified Homes program provides great marketing opportunities for builders, as well as gateways to utility-sponsored incentives.
Lending Benefits. Organizations like Fannie Mae are leveraging Ekotrope to offer builders incentives for mortgages on energy efficient homes. Learn more about the Single Green Family MBS here.
Energy Code. Most areas require builders to meet some level of energy code, which is typically modeled off of the IECC. The energy code landscape is complex, with many states and municipalities having adopted modified versions of various IECC publications.
Many other programs, like DOE Zero Energy Ready, LEED for Homes, Indoor Air Plus, NAHB’s NGBS program, etc.
Builders, raters, utilities, lending organizations, and utility programs all have unique and impactful roles to play in the construction of energy efficient housing. A thorough understanding of how each of these stakeholders function, what they provide, the standards they enforce, and the goals of each is essential, but proves to be difficult as the industry continuously evolves. Ekotrope’s aim is to close this information gap and aid each of these stakeholders by hosting a platform where each party can communicate with one another, access critical information, and make better decisions. We believe that our latest suite of tools for Building Product Manufacturers is a crucial piece of this puzzle that will help connect builders with products that improve their HERS Scores, qualify for lending benefits, enable them to meet utility program requirements, and go beyond code with ease.