How Energy Efficiency Makes Homes More Affordable
This week we talk to John Weldy about energy efficiency and home affordability. We learn how smaller homes tend to be more energy efficient, but they are penalized by current energy efficiency measuring systems, which make it hard to compare energy use from home to home.
The good news is, there are a couple of easy ways to know whether or not a new home will be more energy efficient than similar models, and we talk about how consumers can protect themselves as well as how local governments can adjust their building codes to put smaller homes on equal footing as larger homes with energy efficiency requirements.
Note: The transcript has been lightly edited for clarity purposes. For transparency, please note we are an independent manufactured home dealer that sells Clayton Homes products.
Mauricio Chacra: Welcome back to another episode of the Doublewide Dudes. On previous episodes we’ve been talking about a little bit about affordable housing. Today we want to go back to our roots and talk more on the manufactured home industry and the energy efficiency of homes. I’m joined by John Weldy. Thanks for joining us John.
John Weldy: Good to be here.
Alberto Pena: Yeah, I think what I’m excited about on our conversation today is that we’re going to talk about how energy efficiency ties right into the conversation of affordable housing. And John is definitely an expert on that front.
For our audience, just to give you a little of his background, he’s a Purdue graduate and has been in the factory-built housing industry for 26 years now. He’s been the Director of Engineering with Clayton Homes since 2005.
He’s a registered professional engineer on the civil and structural side in 39 States. So dang near the whole country! He holds International Code Council Certifications for residential inspections for all disciplines. Just finished serving on the Department of Housing and Urban Development’s Manufactured Housing Consensus Committee, where he was the chairman of the Technical System subcommittee as well as the chair of several taskforce groups.
He’s an active member of the Manufactured Housing Institute and on the board of Systems Building Research Alliance. So, we are definitely excited to have you and discuss this topic specifically in the industry that we serve families in. So, I always have to ask… I think everybody that comes into our industry has a story behind it.
What got you into the factory-built housing industry, John?
John Weldy: Well, it’s not as exciting as the stories you probably want to hear. I was born and raised in Elkhart County, Indiana, which is kind of the birthplace of the industry of manufactured housing and the RV industry.
And one weekend I was getting ready to go back to Purdue. And my mom actually said, “Hey, did you know there was an engineering company in Nappanee?”, which I didn’t. And so, on my way back to Purdue, I was probably wearing sweatpants or whatever, I stopped in at NTA, Inc, and I asked them if they’re looking to hire.
They said they were, they hired me before I graduated. And so that’s where I started. That’s how I got into the industry, that was back in 1994. Hurricane Andrew had just hit. The federal standards were changing for structural. And since that’s my education field they were eager to hire me, and I stayed there for about 11 years.
And so that’s how I got into the industry.
Alberto Pena: And so you’ve been an engineer at heart the entire time, huh?
John Weldy: That’s right.
Alberto Pena: Yeah. My son is very interested in that. I’m glad he’s got teachers around them to help train them on that. Cause I’m lucky if I can put together Lego stuff.
Well, when we talk about sustainable and affordable housing, we talk about things and have with previous guest on the podcast about inventory, housing density, government regulations, and whatnot, all affecting pricing. How does energy efficiency of the home have to do with, with the whole affordable housing conversation?
John Weldy: Yeah. Great question. And it has to do with the overall operational costs of the home. So, you look at utility costs. Specifically costs regarding gas and electric can be a major factor in the overall total monthly cost. So, you have your mortgage and you also have utility costs. So, energy efficiency determines what those utility costs are. So, the more energy efficient we can make the homes, the less you’ll be paying on utility bills throughout the lifetime of the home. So, especially when we’re talking about lower income families, utility costs can make up a much higher percentage of the home ownership costs.
And in those cases, offering an energy efficient home can have a much larger long-term impact for those families, potentially lowering their heating and cooling costs significantly for the lifetime of the home. So, that’s what we’re talking about when we’re talking about sustainable energy home costs.
I would also say that we provide Ecobee, a smart thermostat. We provide options for low E windows, and we provide energy efficient furnaces for our homes to help deliver that long-term value for homeowners on the sustainable end.
I like to brag about this, because I think it’s really cool. (It) has nothing to do in that scenario with the energy of the home, but as the home was being built very recently, back in 2017, we went through the process of getting all of our state-of-the-art building facilities ISO 14001 registered. Now what does that mean? That’s a very process driven certification program, which focuses on sustainable building practices, environmental impact and green building practices, like dust control, recycling, landfill waste and things like that.
And what’s really cool, I think is that in one year, 2017-2018, that first year we were able to divert over 40,000 tons of waste from landfills as a result of this program. So that’s pretty cool.
Alberto Pena: That’s awesome. We’ve talked a lot about on this podcast, the total cost of homeownership, and in some cases where cities are sprawled, there’s a “drive until you qualify” movement. But when you factor in the cost of gas in that gas tank to get to work, the total cost of owning that home goes up and that’s definitely the same with your utility bills. There’s a lot more than just the initial cost of buying a home that needs to go into factoring a budget for a family, looking to build a home.
John Weldy: That’s exactly right.
Mauricio Chacra: Thinking back on the customers that I helped, that’s a big part because a lot of people are upgrading from previous homes that they’ve had and it is factory built housing and they’ve talked about their electric bill as one of the main reasons why they want to make this change.
They’re spending upwards of $500 a month on these utility costs. Right? So, long-term, sustainability is an important factor now that you bring it up that way. And cost-wise for these families, because there is a mortgage and there’s costs for everything. But when you factor that in it can save by a hundred percent of what they’re normally paying, and it’s going to be a big help. And it’s awesome that these factors are putting that into play.
John, how would one of these homes be scored to determine like being energy efficient versus the home not being efficient? How does that work nowadays?
John Weldy: So when you get into scoring, this is one of those things that can get overwhelming for homeowners that don’t want to get wrapped up or tied into the deep weeds of the process.
There’s multiple scoring systems out there. So, all of them are primarily based on the thermal envelope of the home. A thermal envelope is the blanket that separates the conditioned interior space with the outside. That’s your environment. So, that’d be your foundation walls, your roof and your ceiling insulation.
But it also includes the windows, and in terms of windows, we talk about window coefficient of heat transmission, or the U value. That’s what that means. That’s a heat transmission number. And so that’s what primarily the models are based on. And they’re based on a standard house. So, they pick a scientist, pick a base house, and then they make these scores compared to that better or worse.
There’s two primary rating systems. One would be the score, right? A score is great for comparison. So, if you’re looking at one house to another, the score will tell you, okay, well, this one’s better than that one, but it really doesn’t tell you what the value is of the money in place. Cause if you think about it, if you’re (Elon) Musk and you have just an unlimited amount of money, you could get a pretty good score. But what does the average person mean?
But there is another method, more of a targeted system. The primary two scores that are out there, are the Home Energy Score [HES], that was developed by the Department of Energy. And it’s relatively new, in the last five or six years. And again, it’s a score to help consumers compare homes from one sector to the other, as far as energy. There’s another one out there primarily used for site builders. That’s the Home Energy Rating System [HERS]. It was developed by the Residential Energy Service Network.
Now that’s a lot of words, but basically both of these programs provide an index. They provide an index for comparison purposes. They really don’t tell you what your target is. When it comes to the HERS score, it’s based on 100. One hundred would be your base model. So, if a home is 30% more efficient than that base model, you would have a score of 70, for example.
So that’s how that’s scored. I have a tendency to like the targeted systems better. And I’ll explain that that targeted system is a model based on standard assessment of energy use by scientists. So instead of a score, it’s if you hit this certain energy savings, we’ll give you a label. You can be certified for this program.
Two primary programs that we use for that are the Energy Star program, and we also have kind of our own, it’s called the Energy Smart Home Package. Both of these are targeted. So, what they do is, in the building science field, we determine what’s the best value for the homeowner in terms of money. So, if you’re going to put a hundred dollars more in a house, where would you put it? Well, that’s what these systems are targeted for. Specifically, Energy Star is a program through the (Department of Energy). It was targeted to save homeowners between 20 to 30% of their energy bills. So, as long as you do those things, to hit that target, you get an energy star label and you don’t have to worry with scores on that.
So, unlike the HERS rater, where there was a score, if you’re comparing to energy star houses, you can’t tell which one’s better than the other. All you know, is they both meet that particular threshold, if that makes sense. But that threshold was really a target value designed to optimize the value of the money of the home to put into it.
So, you don’t get all the bells and whistles, but it’s really minimized to pay off quickly as far as the utility costs, for the extra value of the provisions. So those are the two different systems when it comes to energy rating for homes.
Alberto Pena: So it sounds like Energy Star, that is definitely, when customers are always asking us “what options would you suggest,” that is definitely one here in Texas that we were strongly suggesting. It gets very hot down here in terms of return on their investment in utility bill swings, how much are we really talking about here with an Energy Star rated home, for instance? Do you have an example of what the difference in utility cost might be on a lower efficiency manufactured home verse one that is built to these high energy packages?
John Weldy: I mean, everybody wants to know that. And it’s one of those things, especially in engineering our legal team say don’t touch. Because it’s very difficult to give a number because it depends on so many different things. For example, it depends on the lifestyle of the homeowner, how they do their laundry, what they set the thermostat for. How do they cook? All of those things, but it’s also greatly impacted by the climate. The United States, we’re a very diverse country. We go all the way from the cold mountain regions in the North to sunny Arizona. So, there’s a lot to go in there, but what with that said, the actual gas and electric bill monthly savings could be between $25 to $70, would be a pretty good average that that may happen there.
And again, it depends on the lifestyle, the size of the home, the age of the home, the equipment used, all those kinds of things. You want to keep in mind that again, Energy Star is the target the DOE set for the program was between 20 and 30%. So, let’s take all that science and put it down in an example.
So, example would be, let’s say as a homeowner, you can save $60 a month right now on your utility costs by buying an energy star certified home. Well, that would equal $720 per year. Wow. $60 a month would equal $720 per year. So that could be over $7,000 over the course of 10 years.
So, if you look at that, your payback on the original investment of whatever the Energy Star cost increase was for the home would be paid back very quickly. So that’s a good way to look at it.
Alberto Pena: Yeah. And that, that 30% savings is across homes built without those packages to today’s standards. I imagine that that cost difference would be even greater if, like Mauri was talking about, families are calling with homes that had energy packages from the seventies or eighties.
John Weldy: Yeah, right. That comparison would be based on minimum code for today’s energy codes. So yeah, if you’re talking about a seventies or later home where the energy standards were even lower, it would be even a greater savings.
I’ve been a big promoter, in fact I’ve talked to a number of Congress and representatives in the Senate about, if you guys can remember the Cash for Clunkers program, they had for cars back in the seventies, to do something like that for manufactured housing. To give incentives, to get some of those older homes, to get some of those homeowners into newer homes, it would make a big difference on the overall home energy use in America if they would do that.
Alberto Pena: It definitely takes some stress off our grids as communities too.
John Weldy: Exactly.
Mauricio Chacra: When you were talking about the, the scoring systems and all that, it’s important to look at those numbers scientifically to provide data and all that, but for customers, seeing the long-term savings is what’s going to be beneficial for them.
You would think, as far as how it really comes into play as savings, as far as size of the homes, you would think a smaller home would take less power to cool it and heat and do all that. I know it all depends on your lifestyle and for how they’re using their home.
But based on the data, looking at the RESNET and the HERS, the opposite seems to be true about the efficiency of these homes. Can you touch on that on that? Are smaller homes less energy efficient or what’s going on there?
John Weldy: Yeah, this is one of those cases where the model has a flaw. So, going back to my earlier answer is they’re based on a model and it’s primarily focused on the energy, how much insulation goes in. So, if you think about it, if you have a bigger home with more walls, more ceilings, more roof. You can actually put more insulation in that home. And based on those models that can make it look like they actually provide a better score. Although they provided the better energy score because of that model, they do consume more energy.
So, your utility bills with the comparative larger house would actually be more. One of my pet peeves in this whole thing is a lot of times, policymakers look at cost of home energy in terms of square foot. So, if you look at the 2015 U.S Residential Energy Consumption Survey, which the government put out, it shows the smaller homes actually have a higher cost of energy per square foot.
Well, buried in their data it clearly shows that where that is true, the overall energy use of those smaller homes is significantly less than larger equivalent homes. It not only shows that smaller homes consume less energy, but they consume less energy per person. So, they also take in consideration how many people are in each home.
When you look at energy use as a whole, whether you have a 10,000 square foot house or a 2,000 square foot house, you have a kitchen and you do cooking, relatively based on the number of occupants in the home. So those energy costs are kind of fixed. So, where you provide savings with the cost of the home is in your heat, the smaller furnace, smaller air conditioning, smaller water heater, you’re consuming much, much less of those utility bills on the smaller home.
So that’s why I’m a big proponent that the energy consumption should be looked at as environmental footprint. The home size does matter, the larger the home the more energy it’s going to take in comparison, therefore home energy efficiencies should be based on the household, or the energy use for the home rather than per square foot.
So, yeah, you’re right. When you look at those rating systems, they can be a little bit misleading. It can make a bigger house looked like it has a better rating than a smaller house. That’s not necessarily indicative of what you would expect to pay in utility bills and for most homeowners, that’s what they’re really concerned about. They’re really concerned about how much money is going to go out of their pocket at the end of the month.
Mauricio Chacra: I would say that’s the most important factor to them. Long-term savings is the key there. With all the rating stuff, I know it can be a little bit overwhelming for say, just a consumer to hear this episode and kind of break it down, but what can a home buyer do to be sure that they’re buying an energy efficient home? What do they have to look out for?
John Weldy: This is one of those things where doing a little bit of due diligence or homework really pay off. We try to make it simple. I think that the simplest method would be for homeowners to choose an Energy Star certified home or one with the optional Energy Smart Home Package. So those are the two targeted systems where they know they’re getting the most value for their money. And it’s that certain level of acceptable savings.
So that would be one thing. Another thing that they can do is they can ask. They can ask about the home’s installation package and available upgrades. Most manufacturers offer upgraded packages in installation of your walls floor, ceiling, as well as windows, they can get better low-E windows, ask for that. High efficiency, heating and cooling equipment. Heat pump can make a real difference, if you install a heat pump on site.
Those are primarily the low hanging fruit, the things that can really get your most bang for your buck in those areas. So, if you ask, “What is the insulation that will be in this home? Can I upgrade it?” That will go a long, long way.
The other thing is the homes, especially manufactured homes, double wides, multi-section homes, they need to be set up by trained professionals and they have to be installed right. So, a lot of it’s tied to that end product as it’s sitting on the lot. So, when your cable guy comes in, if he cuts big holes in your thermal envelope, that’s gonna cost you money over a long period of time.
So, you want those things to be resealed. You want them to be set up properly. You want them to be tight and sealed efficiently. You want the homes to be installed and set up by trained professionals that are going to do a good job. And you want to ask questions and get involved in that process.
Alberto Pena: I think we hit the nail on the head. From the eyes of the consumer it’s if I spend this money, am I going to get this back and then some over the course of living in that home and it sounds like looking for Energy Star or energy smart packages is the way to go. With those packages, it’s upgraded insulation. It’s the upgraded windows. Those kinds of things.
But when it comes to the local, state and federal governments, I know you mentioned you were speaking with some of the representatives there, what things make practical sense when it comes to ensuring energy efficiency, especially in the affordable housing space where every dollar really counts for this group of home buyers?
John Weldy: That’s a great question. I think there’s some danger in here. Cause everybody wants to save the planet. There’s some programs out there, and I’m not going to throw any states on the left under the bus here, but there’s some programs out there that do not have any consideration for home costs.
They want to hit a certain energy level or use or lack of energy use and they don’t care what it costs to the home, with very little concern with the home owner or the cost of home ownership. And these, these programs are actually driving up our homeless crisis. So, we have a housing crisis in America with a lack of homes; under-homed people.
So, policies like that can drive that. So, my part with the government to locals would be, we have to really balance affordability with energy savings, specifically when you get into that approach, to me, it makes sense to look at a tiered system or an energy plus system where larger homes or more expensive homes have to meet additional energy requirements to try to maintain an affordable market for smaller homes or entry level homes, to allow the people the option for that.
It’s really the low-cost homes, if we negatively impact those, it drives people out of home-ownership and the American dream of home-ownership. So, we’ll want to be really careful there and we’ll want to make smart decisions when it comes to policy makers to make sure that new requirements really focus on the value to the homeowner.
What are the things that can add the most value to the overall cost of the home, including utility costs? So, again, it’s things like Energy Star, what they’re designed to do. And if code policymakers would do the same thing, I think we would all be better off.
Alberto Pena: There’s a hundred percent an affordable housing crisis really across the whole country. At the same time, we’ve all got to live on this planet, so we want to protect it too. Right. But like you said, if we price people out of the market by trying to go too far to one side or the other, then we didn’t really accomplish anything on solving the affordable housing crisis there.
The Department of Energy had released a new energy efficiency standard for the factory-built housing industry, but then it was held back for further review just before they published it. What impact would those new standards that they’re looking at have on the energy efficiency of the homes we build?
John Weldy: Yeah, without getting in too much of, on the weeds on this thing. Cause it’s been kicked around now for almost a decade. The new proposed DOE proposed standards would have raised the minimum energy code to about the equivalency of Energy Star certified home requirements today. Okay. So, it would have basically made mandatory an Energy Star targeted homes.
So, as you mentioned, it’s so critical that we balance the home ownership costs in environment and impact together. The concerns, as you mentioned, were that the DOE proposal would have driven up home consumer costs too high. And so that’s why it’s being, still looked at. One thing that’s really important in this conversation to understand is just because the federal government hasn’t increased the energy standards doesn’t mean that the homes aren’t built being built above the minimum standards today.
In fact, I would say the majority of manufactured homes today are being built to exceed the current energy standard minimums required. So, for example, we use a better window than is required. We install an Ecobee programmable smart thermostat in homes. You know, we provide a high efficiency carrier smart comfort furnace.
All those things aren’t required. We do them, and we do them not just because it makes sense to the environment, but it also makes a lot of sense for the homeowners. It’s just being good stewards all the way around, we feel. So, I think most manufacturers, not all, I can’t speak for everybody, but I think just because we haven’t updated the federal code minimum, I think many, many manufacturers are using, the latest technologies and techniques to build more energy efficient home.
Alberto Pena: We can definitely speak to that. I think that’s one of our favorite things in working with y’all at Clayton as a factory partner, even on the Tru Series, which is the most cost effective homes out there. Those homes still have the energy efficient windows and that Ecobee thermostat, without that being an option you have to pay more for. So, that’s definitely something we’ve seen across the board on the homes we sell. And then what do you think Mauri, 9 out of 10 homes we sell are pushing to get that Energy Star package?
Mauricio Chacra: Yeah. I mean the majority, I stress the importance of it only because cost wise, it’s not much for the customer, and going from the thermal zone 2 to 3 to get the thickest insulation, you know, it’s about 600 bucks to consumer, but it’s going to really provide much more energy savings.
So, I stress the importance of that and almost all of them get it. And that’s how we build the stock models as well. But, to the conversation of this new regulation coming into play, it just sort of makes sense for the environment as well, where it’s just a standard to put the thickest insulation inside of these walls. And it only makes sense to do that. Like if we’re offering that, why not make it standard?
I know there’s a lot of things involved cost-wise, and me personally, of course, I’m not in the lobbying system of knowing how to pass these type of regulations, but in my eyes, that’s one of the key upgrades for these homeowners to do in the houses that they get built, that’s for sure.
We like to share with our listeners, John, what they can do to get involved in the sustainable affordable housing conversation in regards to energy efficiency. What can the average person do to get involved and really be a proponent for helping out?
John Weldy: I think the biggest thing they can do is, kind of take ownership of their own footprint, get involved, certainly, educate themselves. There’s all kinds of information out there, but simply going around your house and sealing, caulking joints, windows and stuff. Caulk your thermal envelope, change your furnace filter regularly, those types of things. Put in the LED lights and update your lights. You can, as a homeowner you can start doing some of those things.
Smart thermostats. A lot of people now have smart thermostats. Just by setting them with a few degrees different when you’re not home will lower your utility costs and consume less power on the grid. Those are kind of entry-level things that everybody can do. And in addition to that, not for everybody, but in addition to that, what we need is really informed consumers to go out there and drive the policy.
So, contact your state and local building departments, ask them to notify you when they consider adopting a new energy code. They will. Every building code process, they have what’s called a public comment period where people can write in. They can provide proposed update standards and that’s something we’re involved in, but I would encourage homeowners to be involved in it as well, to drive those things on a local level and as well as state level.
And if you’re, really concerned about the world’s environment, I would encourage them to be an advocate for code incentives for smaller homes. We know smaller homes, based on all this science and all the studies, use less materials, they use less electricity. They have less construction waste. They use less transportation of materials during the construction process and they use the overall less fuel, electric and gas for the lifetime of the home.
So, where code policies can negatively impact smaller homes more, that have to meet those standards. That’s where I would encourage policymakers to really have a tiered system, to keep affordable houses affordable as much as possible. And then, add plus items to larger houses, people that can afford it. It’s okay for Bill Gates to put solar panels on. That’s fine. He can afford it. But maybe not for the average user, to consider those things.
Alberto Pena: Yeah, it’s all good stuff. It’s definitely going to be a balancing act and I’m glad we got smart folks like yourself, trying to balance keeping costs low and affordable with reducing the impact on the grid. For our local audience and those here in Texas, I know CPS (Energy) has a kind of quiz you can take on your home to address some of the things John was just talking about, and locally CPS also offers funding in the form of grants, if you need things like upgraded insulation or windows, and just might not be in a position to afford that. So, I know local energy providers are trying to reduce stress on their grids locally while helping to curb the energy bills for our residents.
Well, thank you so much, John. I know I definitely learned a lot. I didn’t know anything about the scoring system. I’m 11 years in and I even sold them with energy star or not. Now I’m glad I know a little bit more on how that goes into it, so definitely appreciate you joining us.
John Weldy: Thank you. Thank you for having me. It was fun.
Mauricio Chacra: Thanks John, for all the insightful information, I learned a lot as well. I think that wraps it up for this episode, guys. Thanks for tuning in and we’ll catch you guys in the next one.