Maryland's zero-energy homes are rising in popularity and cost

As Maryland moves toward eliminating greenhouse gas emissions, homebuilders have begun pursuing a stringent federal energy efficiency designation that requires advanced features well above current standards.

The upfront costs for upgrades such as solar roofs with battery storage, air ventilation systems and electric vehicle charging stations may be out of reach for home buyers and prohibitive for builders outside of luxury homes.

Yet a handful of companies are rushing to lead the way as energy policy and technology evolve rapidly. They are looking for a market that they believe will not only grow, but could one day become the norm across a range of residential developments.

“I saw that there was an opportunity to build homes with better insulation, better indoor air quality and more energy efficiency without breaking the bank for homeowners,” said Vicrum Puri, president and co-founder of the Tysons Corner, Va.-based established August Homes. which plans to build 11 “energy independent” homes in Woodbine in western Howard County by 2027.

August is among the countries pursuing the U.S. Department of Energy’s “Zero Energy Ready” certification. Others include Atlanta-based national builder Beazer Homes and regional custom builders such as Rockville-based Mitchell & Best.

The 19 new single-family homes valued at $700,000 and up at Beazer’s Holly Farms on Cub Hill Road in Parkville all feature solar panels, access to electric vehicle charging, air ventilation systems and state-of-the-art insulation. new standards in design, wiring and building materials.

It is the second Beazer development in Maryland where all homes will carry DOE certification, part of a corporate strategy to have 100 percent of new construction meet the stricter standards by the end of next year.

The battle for affordability continues

The expansion of ultra-efficient housing in Maryland comes as the state is transitioning away from fossil fuels. A 2022 law aims to reduce greenhouse gas emissions by 60 percent by 2031 and achieve net zero, nearly eliminating the state’s carbon footprint by 2045.

The measure stopped short of banning fossil fuel heating systems in new buildings, as environmentalists had hoped. It does not apply to single-family homes, but calls for residential and commercial buildings larger than 35,000 square feet to achieve near-zero net direct greenhouse gas emissions by 2040.

The bill was opposed by former Governor Larry Hogan, who ultimately withheld a veto, while some Republican lawmakers had argued that residents and businesses would bear the costs of upgrading energy systems with little benefit.

“With inflation rising and energy prices at record highs, this is absolutely the worst possible time for policies that raise costs for consumers,” Hogan had said. “Our focus now must be on increasing domestic energy production and reducing costs – not increasing them.”

Allan Merrill, CEO of Beazer, and others in the real estate industry recognize that homebuyers are often skeptical of the need to make such investments.

“The first association people make with energy efficiency is sacrifice,” and having to turn the thermostat up or down for heat or cold, Merrill said in an interview Tuesday as he unveiled a model home in the community of brick single-family homes. “These houses don’t need it.”

So far, 12 of the 19 home sites in Parkville have been sold. Beazer completed an even more luxurious “Zero Energy” project in Ellicott City last year.

During a tour of the 4,000-square-foot Parkville model home, Taylor Oakley, director of sales for Beazer in Maryland, showed off features that she said would keep the average utility bill under $200, compared to $500 to $600 for a comparable parent house.

The Energy Star-certified design also promises no air leakage, solar panels to lease or purchase, efficiency in heating and cooling, and an electrical outlet to support electric vehicle charging.

Few builders in Maryland are making the same effort, but that’s likely to change, some experts say.

“It’s not necessarily as easy or cost-effective to do for smaller builders and at a lower price point,” said Lori Graf, CEO of the Maryland Building Industry Association. “For a townhouse that you’re going to try to sell to first-time buyers, it’s just not profitable to make net zero right now.”

She said more energy-efficient homes are being developed, but described the Beazer homes as “at the forefront” of what is happening in the industry.

“Ultimately, I think there will be a lot to come from it, but they are certainly leading the way in terms of what the industry can do,” she said.

The pressure to achieve new energy standards

The Zero Energy Ready program began in 2013 to accelerate innovative energy-saving technologies, said Carolyn Snyder, deputy assistant secretary at the Department of Energy.

“These are not ideas sitting on the shelf in a national laboratory, but market-ready technologies that consumers want and pay for,” Snyder said at Tuesday’s event. As the country tackles future energy security, electricity system and affordability challenges, she said, “We need efficiency more than ever.”

A national trade group for builders said that while Zero Energy supports voluntary sustainable new home construction and certifications to achieve these goals, it poses challenges.

“The … program is overly prescriptive in some aspects, including the building thermal envelope and electrical-ready home requirements,” said Paul Karrer, program manager for energy, codes and standards at the National Association of Home Builders, in an email. “This limits the options and flexibility builders need to find cost-effective solutions.”

He said it’s too early to say if or when the tax breaks will move the housing market.

Beazer officials hope to convince consumers that their brand of state-of-the-art construction and efficiency methods will not only save residents money, but also improve their quality of life, eliminate drafts, buffer them from outside noise and improve air quality and health .

“We’ve eaten the cost, and I look at that as an investment we’re making in our future, and to create a differentiated value proposition” that includes a sharp reduction in utility bills, Merrill said.

The builder built more Zero Energy Ready homes last year than any other builder in the U.S. and also surpassed the total number of homes built since the Energy Department started the program.

“It’s not easy,” Merrill said. “Consumers today don’t fully understand what we’ve done.”

Will broader understanding increase demand?

To be certified as Zero Energy Ready, homes must meet certain standards or be equipped to meet them in the future. Homes must be certified so that builders can qualify for federal tax credits, while homeowners can receive state or county credits.

Revised federal tax credits included in the Biden administration’s Inflation Reduction Act offer $5,000 for eligible single-family homes, as well as a $5,000 credit for eligible manufactured homes in a separate version of the program.

According to Energy Department guidelines, a single-family home must be well insulated, equipped with LED lighting and Energy Star appliances, contain energy-efficient windows, high-efficiency water heaters and fresh air ventilation systems.

Homes must use high-efficiency heating and cooling technologies, and they must be built with low-emission materials that meet industry standards for low-formaldehyde paints, carpets and wood products.

Homes must also be ready for the next generation of energy technologies. This means that infrastructure is needed to install an electric vehicle charging station now or in the future, be ready for the current or future installation of heat pump technology and, if no rooftop solar panels are installed to lease or purchase, ‘to be ready for solar energy’. This provides the necessary wiring and space to add solar energy to the roof in the future.

August Homes has taken the concept further. The company is building a 4,000-square-foot custom home in Alexandria, Virginia, with a solar roof and battery backup system that will allow the house to power itself within a year. And it expects to break ground on its “energy independent” community in Woodbine by 2026.

Puri states that DOE Zero Energy requirements can be met with no more than a 5 percent increase in construction costs for those experienced with the methods, and says higher costs can be recouped through energy savings.

“There are definitely people becoming more aware of energy conservation in general, so there are people asking for it,” said Greg Dalgarno, director of construction services at lender Embrace Home Loans in Timonium. “The majority of people don’t understand it very well yet.”

Laurel Peltier, a consumer energy advocate in Baltimore, said it makes sense to design homes and new technologies at the same time.

“This is like a dream because everyone who doesn’t have a new house is renovating an old house to upgrade to this way of doing more energy efficient and climate friendly things,” Peltier said. “This is exactly what the US should be doing.”