Oncor Low-Rise Multifamily ENERGY STAR Homes Baseline Study Results July 17, 2008
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1 Oncor Low-Rise Multifamily ENERGY STAR Homes Baseline Study Results July 17, 2008 ICF International 7160 North Dallas Parkway Suite 340 Plano, TX ICF International. All rights reserved.
2 Agenda 1. Market Characteristics 2. Developer Survey Results 3. On-Site Testing Results 4. Impact Estimates 5. Program Cost-Effectiveness 2
3 Baseline Study Goals 1. Document current construction characteristics based on a builder survey and independent on-site testing and verification 2. Develop defensible kw and kwh impact estimates 3. Assess developer interest in a full-scale LRMF ENERGY STAR Homes Program 4. Develop cost-effectiveness, cost, and program impacts of a full scale program 5. Determine market potential in Oncor s service territory 3
4 Change in EPA Policy 1. Existing Policy: All units in multi-family buildings three stories or fewer can qualify for ENERGY STAR. 2. New Policy Effective June 13, 2008: Units in four and five-story multi-family buildings may qualify for ENERGY STAR if they are permitted as residential structures by the local building department. Multi-family units that are located on top of commercial spaces (e.g., retail, restaurant, etc.) may be qualified as ENERGY STAR even if the structure is permitted as commercial, as long as: 1) the entire structure is five stories or less; and 2) the space conditioning and water heating systems are not shared between the residential and commercial spaces. 4
5 Market Characteristics 1. According to the Dallas Morning News, Dallas/Fort Worth is currently the number one apartment development market in the country. 2. As of July 1, 2008, 19,217 apartment t units were under construction ti in DFW, while ground was broken on 6,100 of these units in the second quarter of National rankings based on units currently under construction: 1. Dallas-Fort Worth 19, Houston 18, Austin 12, Atlanta 11, Los Angeles 9, However, the second quarter of 2008 statistics provided by the Dallas Morning News shows s a decrease ease in apartment t demand: d Apartment completions: 1,459 units Apartment demand: (-1,830) units Average monthly rent: $749 Average occupancy: 92.7 percent 5
6 Building Permit Trends for Multi-Family Housing Multi-Family Building Permits in Oncor Service Territory Counties 30,000 25,000 Building Permits 20,000 15,000 10,000 5, Projected 2008 Year Projected 2008 total is based on the number of permits from January through h May of
7 Top Performing Counties Based on Building Permits Jan - May 2008 Projected 2008 Collin 1,244 2,682 3, ,382 Dallas 3,814 5,405 6,136 5,093 12,223 Denton 1, , ,321 Tarrant 2,810 3,277 3,110 2,452 5,885 Travis 4,217 5,378 4,573 1,981 4,754 Williamson , , Total 14,043 18,582 19,815 11,443 27,463 7
8 Developers by Region Number of Developers Identified: DFW 83 Central Texas - 12 North Austin - 32 East Texas - 3 Midland/Odessa 3 Allies will include: Architects Responsible for design and determining energy-efficient measures in a complex General Contractors During the baseline study, general contractors t informed ICF they would be interested t in participating as an added selling point to their clients Apartment Management Companies Beneficial to recruit flipper developers into the program 8
9 Survey Design 1. With the recent changes in the ENERGY STAR policy, any developer who builds at least one complex of five stories or fewer was able to be recruited into the baseline study 2. More than 80 developers in the Dallas/Fort Worth area were contacted for the baseline study 3. Survey yquestions were designed to evaluate developers current building practices, growth plans, and to determine their barriers to increasing energy efficiency 4. Survey questions evaluated the following measures: HVAC system Windows Insulation ENERGY STAR appliances and light fixtures Building cycle Market Potential Interest in participating in the Program 9
10 Survey Questions Con struction Pra actices Firmogr raphics 1. Is your organization currently incorporating any energy efficiency measures in the apartment units you build? If so, what are these measures? 2. What is the typical type and size of HVAC systems that are being installed in each unit, (i.e. SEER, tonnage, heat-pump, electric resistance, etc.?) 3. What is the typical window that is currently being installed (i.e. metal,vinyl)? What is the U-value and SHGC-value? 4. What type of insulation is being installed in the walls, ceilings and floors and what is the typical R-value for each application? 5. What appliances are being installed by your organization and are any of them ENERGY STAR rated? 6. Are any of the installed the light fixtures ENERGY STAR qualified? If so, what percentage of the fixtures is ENERGY STAR qualified? Are any CFL s installed in the apartment units? 7. What is the typical time-frame for completing a complex from the permit date? 8. What percentage of the apartment dwellings that your organization builds are three stories or less? 9. Who decides within your organization what features are installed? 10. How important is energy efficiency to your decision making? 11. What are the barriers to greater energy efficiency? 12. The Oncor single-family ENERGY STAR Homes Program currently offers various types of technical, sales, and MCE trainings. Does your organization typically participate in external training sessions. If not, would your organization be open to attending free, energy efficient training sessions? What additional training sessions do you think would help your organization promote energy efficiency? 13. Finally, would your organization be interested in participating in a low-rise multi-family incentive and marketing program that is sponsored by Oncor Electric Delivery? 10
11 Reported Construction Practices 1. All of the developers surveyed, except one, believe they are incorporating energy efficient measures into their building practices 2. Only one developer is installing a 14 SEER unit, vinyl windows, ENERGY STAR appliances, and exceeding code requirements for insulation 3. Besides installing ENERGY STAR appliances, none of the other developers surveyed were exceeding the basic code requirements 4. All of the developers surveyed are interested in participating in the Program Construction Practice Number of Developers Incorporating energy-efficient efficient measures 12 92% Using vinyl windows 1 8% Using HVAC systems of 14 SEER or higher 1 8% Using HVAC systems with heat pumps 0 0% Installing ENERGY STAR appliances 4 31% Exceeding code requirements for insulation 1 8% Installing ENERGY STAR qualified light fixtures 0 0% Installing CFLs in the apartment units 1 8% Expressing interest in participating in the LRMF ENERGY STAR Program % % 11
12 Firmographics 1. Two types of developers: 1. Vertical Developers design, develop, and manage apartment complexes they build. Examples: Post, Legacy Partners, Lincoln Property Management, AMLI Properties 2. Flipper Developers design and develop a complex and then sell complex to an apartment management company 2. Architects or the development team are generally responsible for determining i the energy efficiency i measures in an apartment t unit (this can occur 24 months before occupancy) 3. Building cycle for a LRMF complex is months from date of vertical permit 4. Gas is typically not installed in apartment complexes because of safety issues 12
13 Firmographics (continued) 1. Developers are switching to four and five-story complexes due to the high price of land and code requirements allowing the use of wood instead of steel 2. With the green push, developers are seeing an increase in demand for urban style complexes 3. The major barriers associated with incorporating energy efficient measures in a complex were found to be: Cost Return on Investment Company awareness Working with architects to incorporate energy efficient design into a complex 4. In the past, some developers were only concerned with meeting local code requirements. However, one developer claims that the escalating fuel and energy cost we are facing today is moving energy efficiency considerations to the front of the line. 13
14 Field Verification Ten developers were selected for field survey; a total of twenty-five apartment units were independently tested Developer Market # Units/yr Market Share Surveyed Field Verified # Units Verified First Worthing DFW 1,000 5% x x 3 Hillwood Development DFW 400 2% x x 2 William and Taylor Sons DFW/AUS 700 4% x x 2 ICON Properties DFW 500 3% x x 3 AMLI Properties DFW/AUS 2,000 10% x Drexel Development DFW 200 1% x x 2 Post Properties DFW/AUS 2,500 13% x x 3 Amicus Properties DFW 500 3% x x 3 Legacy Partners DFW/AUS 1,000 5% x x 3 CLB Partners DFW 50 0% x x 1 Lincoln Property DFW/AUS 1,200 6% x Arioso Properties DFW 300 2% x x 3 Portfolio Development DFW/AUS 350 2% x 14
15 Summary of Units Tested Field verified apartment units were constructed in 2007 or 2008 Complex Type # Developers Standard three story complex 4 Three story complex with commercial attached 4 Standard four story complex 2 Standard five story complex 0 Floor Type #U Units Top Floor 11 Middle Floor 5 Bottom Floor 9 Unit Type # Units End Unit 4 Middle Unit 21 15
16 Field Verification Components Yash Shukla and Steve Ellison (certified HERS Raters) conducted a blower door and duct blaster on each unit The ICF team field verified the following to determine the accuracy of the survey results Insulation in the attic, ceiling, walls, and exterior sheathing HVAC system including SEER value, condenser/coil model number, tons, heat-pump, and location of air handler/furnace Duct location and insulation r-value Water Heater model number and location Windows glass, frame, and U/SHGC value Window to Floor Area 16
17 Field Verification Analysis ENERGY STAR Multifamily HERS Analysis BUILDER: Andres/Hillwood PLAN: B1 BD 50pa): 1174 Date Tested: 5/15/2008 ADDRESS: 704 Monterra SQ FT 845 DB LO 25pa): 190 CFM/100SqFt CITY: Fort Worth FLOORS: 1 DB TL 25pa): STATE: TX METER: TCEC ORIENTATION: S ZIP: ASPECT RATIO Middle Unit AVG CEILING HT: 9 SUBDIVISION: Monterra ROOF COLOR N/A W/FA 19.3% INSULATION WILL THE HOME BE ENCLOSED WITH FOAM? No R-VALUE: NOTES: ATTIC/FLAT CEILING N/A R-VALUE: NOTES: VAULTED CEILING N/A R-VALUE: NOTES: SERVICE AREAS N/A R-VALUE: NOTES: WALLS Fiberglass batts R-VALUE: R-13 NOTES: FRAME FLOOR (Cond/Un, Crwl/Bsmnt/Cant'r/Garage) N/A R-VALUE: NOTES: ATTIC KNEE WALL N/A R-VALUE: NOTES: EXTERIOR SHEATHING Thermal Ply R-VALUE: R-0 NOTES: EXTERIOR DOORS FRONT MATERIAL: Wood R-VALUE: N/A NOTES: REAR MATERIAL: Wood R-VALUE: N/A NOTES: GARAGE/OTHER MATERIAL: Metal R-VALUE: N/A NOTES: FOUNDATION TYPE: Slab on Grade STRUCTURE If Crawlspace/Basement, foundation wall insulated? No If YES, what R-Value: Framing: 2 X 4 Wood If foundation not insulated, is floor insulated? No If YES, what R-Value: Radiant Barrier: No HVAC SYSTEM 1 DUCTS SYSTEM 1 ENERGY STAR APPLIANCES/MISC MANUFACTURER Bryant/1st Co. LOCATION: Conditioned DISHWASHER: No CONDENSER MODEL # 113RNA018 INSULATION: R-6 REFRIGERATOR: No COIL/AH MODEL # T-STAT Program WASHING MACHINE: N/A ARI # WATER HEATER SYSTEM 1 CEILING FANS: No SEER MANUFACTURER: Ruud EXHAUST FANS: N/A TONS 1.5 MODEL #: PE2S40-2 LIGHT FIXTURES: No HEAT PUMP/ AC Air Conditioner EFFICIENCY RATING: CFLs % OF LIGHTING: 0% If Heat Pump, what is the HSPF rating? ELECTRIC OR GAS: Gas CLOTHES DRYER FUEL: Electric If AC, is heating gas or electric? Electric CAPACITY: 40 OVEN/RANGE FUEL: Gas If Gas, what is the AFUE rating? LOCATION: Garage Location of Air Handler/Furnace: Conditioned/Upflow INSULATING JACKET: None WINDOWS: (Double Pane assumed) SLIDERS GLASS: Low E FRAME: Aluminum U/SHGC: FIXED GLASS: Low E FRAME: Aluminum U/SHGC: DOORS GLASS: Low E FRAME: Aluminum U/SHGC: SKYLIGHTS GLASS: N/A FRAME: U/SHGC: WINDOWS: Sq Ft SLIDERS 141 FIXED 0 DOORS 22 SKYLIGHTS N/A TOTAL FENESTRATION
18 Field Analysis Results The field verification produced the following results: Average Range Sq Feet Duct Leakage ACH at 50pa Window/Floor Area 11.4% 64.0% - 0.0% Floor Type Avg Sq Ft Avg CFM/100 LAvg ACH 50pa Top Middle Bottom Unit Type Avg Sq Ft Avg CFM/100 LAvg ACH 50pa End Unit Middle Unit
19 Field Verification Observations Reasons for High Duct Leakage: Developers utilize the building cavity as a ductless return The distance between the return and air handler ranged from 4 to 20 feet Eight developers used the First Company Air Handler pancake system. The air handler is located above the bathroom tub to minimize space 19
20 Additional Field Verification Observations Upflow System One developer used a upflow air handler located in the hallway that minimized the duct leakage. The units tested registered 8.19 and 9.47 CFM per 100 square feet. The range for the pancake system was to CFM per 100 square feet No discrepancies were found between the survey questions and the field verification 20
21 Impact Estimate Modeling: 1. The units were modeled in DOE-2 to establish baseline consumption, demand, and HERS Index values. For characteristics that could not be determined through the field visit (e.g., wall insulation), ICF estimated the values using knowledge about construction characteristics from the single-family new construction sector. Units were modeled twice - once with a heat-pump and once with electric resistance heating. 2. The units were then modeled in DOE-2 with three packages of upgrades. The first package included the requirements for an ENERGY STAR home. The requirements from the standard multi-family Builder Option Package were refined to focus on demand-saving measures, including reduced SHGC, high-efficiency HVAC, duct sealing, and the absence of a programmable thermostat Additional measures could be evaluated for impact, including increased fluorescent lighting and a radiant barrier in the attic, and measures to reduce hot water consumption, but these would be above and beyond what's needed to meet ENERGY STAR requirements given the upgrades already included in the package. The second package was comprised of a duct sealing upgrade The third was comprised of a window upgrade 3. The resulting demand, energy, and HERS Index values from these runs were then summarized. The maximum, minimum, and average savings between the baseline homes and upgraded homes were calculated. 21
22 Impact Estimates SAVINGS - ENERGY STAR - BOP HOME COMPARED TO BASELINE HOME Average Maximum Minimum KWH SAVINGS 1,276 3, KW SAVINGS KWH SAVINGS (%): 9% 21% 4% KW SAVINGS (%): 21% 33% 12% SAVINGS -ENERGY STAR - BOP HOME WITH HEAT PUMP COMPARED TO BASELINE HOME Average Maximum Minimum KWH SAVINGS 1,724 4, KW SAVINGS KWH SAVINGS (%): 13% 26% 5% KW SAVINGS (%): 21% 33% 12% 22
23 Impact Savings based on Unit/Floor Type The highest kw/kwh savings will come from the units with the highest exposed surface areas Floor Type BOP kw BOP kwh kw Savings kwh Savings Top ,817 12% 25% Middle % 19% Bottom % 17% Unit Type BOP kw BOP kwh kw Savings kwh Savings End Unit ,832 11% 22% Middle Unit ,170 21% 21% 23
24 Impact Savings based on Energy- Efficient Measures SAVINGS FOR BASELINE HOME - BY CHANGING AC TO HEAT PUMP Average Maximum Minimum KWH SAVINGS KW SAVINGS KWH SAVINGS (%): 4% 13% 0% KW SAVINGS (%): 0% 0% 0% SAVINGS FOR BASELINE HOME - BY SEALING DUCTS Average Maximum Minimum KWH SAVINGS KW SAVINGS KWH SAVINGS (%): 2% 10% 0% KW SAVINGS (%): 4% 19% 0% SAVINGS FOR BASELINE HOME - ENERGY STAR WINDOWS Average Maximum Minimum KWH SAVINGS KW SAVINGS KWH SAVINGS (%): 2% 7% -1% KW SAVINGS (%): 3% 7% -1% 24
25 Impact Savings based on Energy- Efficient measures by Unit Type SAVINGS FOR BASELINE HOME - BY CHANGING AC TO HEAT PUMP Floor Type BOP kw BOP kwh kw Savings kwh Savings Top % 4% Middle % 3% Bottom % 3% Unit Type BOP kw BOP kwh kw Savings kwh Savings End Unit % 6% Middle Unit % 0% SAVINGS FOR BASELINE HOME - BY SEALING DUCTS Floor Type BOP kw BOP kwh kw Savings kwh Savings Top % 4% Middle % 0% Bottom % 0% Unit Type BOP kw BOP kwh kw Savings kwh Savings End Unit % 3% Middle Unit % 4% SAVINGS FOR BASELINE HOME - ENERGY STAR WINDOWS Floor Type BOP kw BOP kwh kw Savings kwh Savings Top % 2% Middle % 1% Bottom % 1% Unit Type BOP kw BOP kwh kw Savings kwh Savings End Unit % 2% Middle Unit % 3% 25
26 Market Barriers Flipper developers are based throughout the United States and will have general contractors providing oversight during construction stage Building cycle at tleast t18 months from permit itdate Aligning design and construction team to incorporate ENERGY STAR features at the design stage Two developers mentioned dthat tthey will not tlease to an applicant tthat thas foreclosed on their home Potentially flood the marketplace with vacant units ARI matching systems The First Company Pancake system is not certified by ARI. Only two developers of the ten tested used a different air handler Developers are hesitant to switch to a different system because of space issues Cost to reach the ENERGY STAR standard can be 2 percent or higher of total budget 26
27 Market Barrier - Dallas Code Requirements Dallas Code will adopt above code requirement starting in 2009 Effective October 1, 2009 all new residential construction must be 15% better than 2006 IECC Effective October 1, 2011 all new residential construction must be LEED or Green Built North Texas certifiable Possibly affect 4,000 or more apartment units a year depending upon the developers building cycle Jan - May 2008 Projected 2008 Dallas County Permits 3,814 5,405 6,136 5,093 12,223 City of Dallas Permits 2,425 3,424 4,270 4,642 11,141 % of Total 63.6% 63.3% 69.6% 91.1% 91.1% 27
28 Case Study: Post Eastside Construct 2,500 units annually in DFW and Austin Will continue constructing 2,500 units in 2009 and showed interest in participating in program Post Eastside Four-story complex located in Richardson with units ranging in size from 503 to 1426 square feet Lease price ranges from $685 to $3385 a month Construction Manager informed ICF that the building cavity is sealed well and passes the city of Richardson's energy code requirements Second Floor unit Lofted apartment, 1164 ft 2, 2.5 ton system Duct Blaster CFM/100 square feet for leakage to outside air Could not pressurize the system to determine the total leakage 28
29 Post Properties: Reason for High Duct Leakage Return located on first and second floor The distance between the return and air handler was approximately 20 feet The length of the building cavity and the inability to properly seal the cavity most likely caused the high duct leakage 29
30 Impact Savings for energy efficiency Based on the DOE 2 modeling, the apartment unit did not meet the code requirements The apartment unit would gain 18 HERS Index points by sealing the ducts SAVINGS - ENERGY STAR - BOP HOME COMPARED TO BASELINE HOME KWH SAVINGS 3,674 KW SAVINGS 0.80 HERS IMPROVEMENT 32 KWH SAVINGS (%): 21% KW SAVINGS (%): 32% SAVINGS FOR BASELINE HOME - BY SEALING DUCTS KWH SAVINGS 1761 KW SAVINGS 0.48 HERS IMPROVEMENT 18 KWH SAVINGS (%): 10% KW SAVINGS (%): 19% 30
31 Case Study: Tonti Properties La Valencia at Starwood in Frisco will be the first ENERGY STAR certified low-rise multifamily complex in Dallas-Fort Worth Permit date is 08/31/2007 First occupancy is scheduled for the end of September 2008 Complex will be completed in the end of 2008 Complex will consist of 270 garden style apartments ranging in size from 744 to 1450 square feet Total cost of building each unit to ENERGY STAR standards is 2 percent of the $30 million budget 31
32 ENERGY STAR Cost Analysis Costs to certify each unit as ENERGY STAR $400 - heat pumps with ILO resistance heat $100 - Electrical upgrades (larger unit panels) $200 ENERGY STAR kitchen appliances $200 - Additional insulation and draft stopping (including insulation encapsulation at attic knee wall) $150 - Window Upgrade $50 - Additional furdown work/modification for duct tightness testing $200 - Thermal bypass checklist miscellaneous items TOTAL: $1,300 Each unit will use the First Company Air Handler and the duct leakage will be under the 6 cfm/100 sq ft requirement of ENERGY STAR Construction Manager claims their units will test around 3-4 cfm/100 sq ft This is possible by limiting the furdown area Designed each unit with the return within four to ten feet of the air handler 32
33 Single Unit Cost Effectiveness Cost-Effectiveness Calculation - ENERGY STAR Multi-Family - Per Average Unit Assumption Value Note Annual Avoided Capacity Cost $/kw/year $ Set by PUCT Avoided Energy Cost $/kwh $ Set by PUCT Measure Life Max % of Avoided Cost Potentially Payable as Incentive Peak kw Savings at Customer Meter 25 ICF 100% Set by PUCT 0.31 ICF Annual kwh Savings at Customer Meter 1,276 ICF Transmission and Distribution Loss Factor Reserve Margin Requirement kw Savings at Generator Annual kwh Savings at Generator 1,276 Discount Rate PV of Avoided Capacity Costs $ PV of Avoided Energy Costs $ PV All Avoided d Costs $ Share of Total Expense allowable as Oncor Admin. 10% 0% Assume T&D Losses are included in Avoided Costs 0.00% Assume Reserve Margin is included in Avoided Costs 9.00% Provided by Oncor Amount Allowable as Incentive and Program Cost per Unit $ 840 Includes customer incentive as well as all implementation and other non-utility admin costs 33
34 Illustrative Program Cost Effectiveness Cost-Effectiveness Calculation - ENERGY STAR Multi-Family - Overall Program Components of Cost-Effectiveness Test A New Participants ,200 2,000 2,000 B Cumulative Participants ,800 3,800 5,800 C kw Savings per Participant D Annual kwh Savings per Participant 1,276 1,276 1,276 1,276 1,276 E Cumulative Program kw Savings ,178 1,798 F Cumulative Program kwh Savings 127, ,600 2,296,800 4,848,800 7,400,800 G Avoided Capacity Costs $ 2,480 $ 14,880 $ 44,640 $ 94,240 $ 143,840 H Avoided Energy Costs $ 7,018 $ 42,108 $ 126,324 $ 266,684 $ 407,044 I TOTAL AVOIDED COSTS (Benefits) $ 9,498 $ 56,988 $ 170,964 $ 360,924 $ 550,884 J PV TOTAL AVOIDED COSTS (Benefits) $4,226,210 K Program Incentive Payments $ 30,000 $ 150,000 $ 360,000 $ 600,000 $ 600,000 LProgram Costs $ 250,000 $ 185,000 $ 203,500 $ 223,850 $ 246,235 M Allowance for Oncor Admin Costs $ 28,000 $ 33,500 $ 56,350 $ 82,385 $ 84,624 N TOTAL COSTS $ 308,000 $ 368,500 $ 619,850 $ 906,235 $ 930,859 O PV TOTAL COSTS $2,318,360 P Benefit Cost Ratio 1.82 Sources A ICF Assumption/Derivation B Sum of previous years' participation, less any dropouts due to measure life C ICF Baseline Analysis D ICF Baseline Analysis E B*C FB * D G E * $80/kW/yr H F * $0.055/kWh IG + H J PV of 9% over program life + measure life K ICF Assumption/Derivation L ICF Assumption/Derivation M ICF Assumption, (K + L) * Allowance % NK + L + M O PV of 9% over program life + measure life P J / P 34
35 Summary Based on the number of building gpermits within the Oncor service territory and the demand for apartment units, there is strong desire for market differentiation by developers Developers expressed a strong interest in converting their units to ENERGY STAR Along with recruiting developers, the program needs to focus on architects, general contractors, and apartment management companies In order to maximize impact savings, developers must switch to an upflow system or properly seal the building cavity for the pancake system 35
36 Questions/Comments 36
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