This blog explores changes in the energy industry from an insider’s perspective as it transitions from the old centralized utility model to the new paradigm of distributed generation.
This blog was previously called Inside the Housing Evolution and focused on energy efficient homes. Ultimately, it’s all linked. Soon, every building will have the potential to generate, store, and sell energy. Welcome to the era of the transactive grid – the greatest shift the electricity sector has seen in over 100 years!
The Real Reason Most Homebuilders Build Crappy Homes
For the last four years, I’ve been using my position as General Manager at Urbandale Construction (a large homebuilder in Ottawa) to do whatever I could to push the industry towards more energy efficient housing. I’ve sat on government steering committees, created partnerships with academia to promote research, and redesigned the homes we sell. But for what? The general public seems less interested in energy efficiency now than when I started in 2008, and although we are making better homes, most purchasers don’t seem to recognize or value the difference.
Earlier this year, we changed our standard specifications to meet the revised 2012 ENERGY STAR® Standard. We were one of the first in the country to make this commitment, and for the last year we’ve had to compete with other builders who continue to build to the old standard or to minimum Code levels. What I’ve discovered, is that in order to stay competitive we’ve had to price our homes equivalent to builders who build to lower specifications. In essence, we’re subsidizing the energy efficient upgrades and accepting a lower profit margin.
Urbandale has a high performance demo home that is currently for sale. This is an amazing home that uses around 70% less energy than an equivalent house built to Code. It was the first home in Canada built to the revised R-2000 Standard and received national attention for this accomplishment. It is, arguably, one of the best-built homes in Canada, proven through third-party verification. Unfortunately, not a single prospect that has come to see it has been interested in the technical aspects of the home. We reduced the price by $20,000 because people were comparing it to resale homes, or to new homes built to Code. We are again put in a position where in order to sell a superior home we will have to accept less profit than if we had built a basic house.
It would be one thing to accept less profit if our actions were recognized and appreciated, but the sad fact is most purchasers do not care about the differences that make a home more energy efficient. Every single room in our demo home has a large info board describing the green upgrades, yet to this day, we have never had a purchaser walk into our Sales Office and say they want to buy from us because of our reputation for energy efficient construction.
I’ve had the pleasure of meeting many dedicated green builders from across the country. We often discuss construction techniques and marketing efforts. What I have found is that, in almost all cases, these builders have made the decision to build green out of a sense of personal responsibility and leadership, despite the fact they aren’t making as much as they could by building standard homes.
I’ve always felt that the shift to more sustainable housing would be market driven – that is, educated consumers would demand more energy efficient homes. I don’t really believe this anymore. Aside from a few high profile, super energy efficient custom homes, the greatest strides in bringing high performance homes to the mainstream have come from government policy mandating improvements to the building code minimums, and from dedicated builders willing to accept lower profits to build a better product.
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