DESCRIPTION. Program Planning Committee: Program Review Template. Program Name: Residential New Construction

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1 Program Planning Committee: Program Review Template Program Name: Residential New Construction PROGRAM DESCRIPTION The NJ Clean Energy Program s Residential New Construction (RNC) Program is designed to increase the energy efficiency and performance of residential new construction in New Jersey. The RNC Program has the long-term objective of transforming the market to one in which a majority of residential new construction in the state is net zero-energy, i.e., extremely efficient buildings whose low energy needs can be met by renewable energy generation. The RNC Program is market based and relies on builders and raters to build to and utilize national platforms including the ENERGY STAR Certified New Homes Program, the ENERGY STAR Multifamily High- Rise Program, and the Department of Energy Zero Energy Ready Home, which are defined by core efficiency measures, energy modeling, rater and builder oversight and check lists to ensure quality installation. While the national programs provide general guidelines, NJ currently uses the platforms to create tiers in order to accommodate the NJ market and baseline construction practices in the state. The current program structure covers four types of homes: single family, multi-single (townhouse), multifamily up to 3 stories, and multifamily for buildings of 4 to 6 stories (through the Multifamily Highrise category). NJ ENERGYEfficient Home (Tier 1) - Tier 1 uses the ENERGY STAR v 2.0 framework and encourages new builders to participate in the Program. These homes save approximately 15% energy over code, which is currently IECC While these homes will not be ENERGY STAR qualified, they will allow builders to gain the skills to fully transition to full ENERGY STAR implementation. These homes carry the NJ ENERGYEfficient Home label. The incentive structure within this tier is performance based with higher incentives for higher performance using the HERS index as the metric. ENERGY STAR Homes (Tier 2) - Builders that enroll in Tier 2 satisfy the full check list requirements of Version 3 and are ENERGY STAR qualified. These homes save approximately 20% energy over code and ensure builders follow best practices in the field by requiring quality check lists. The incentive structure within this tier is performance based with higher incentives for higher performance using the HERS index as the indicator. Zero Energy Ready Home (Tier 3) The current program includes all of Tier 2 requirements plus DOE ZERH requirements to achieve approximately 50% reduction in energy use compared to IECC 2009, before the addition of on-site renewable energy generation. The incentive structure for Tier 3 rewards higher performance through a sliding scale based on HERS index. In 2014, this tier was transitioned from a pilot program with NJCEP home energy raters to an open rater system relying on same market-based network as Tier 1 and Tier 2. 1

2 ENERGY STAR Multifamily High Rise Program - Multifamily buildings at 4 to 6 floors are eligible for the ENERGY STAR Multifamily High-Rise program 1. These buildings achieve at least 15% better than code, which is currently ASHRAE The current incentive structure within this program is set at $1,000 per qualifying unit PROGRAM GOALS AND OBJECTIVES The RNC Program currently has multiple goals and objectives which focus on market transformation and driving demand. In FY 2015, the program expects approximately 5,000 new units to enroll in the program, saving 7,800 MWH and 88,000 DTh. The program also tracks units that are carried forward; not all units that enroll are completed in the same program year. There are a number of market barriers to efficiency investments in new construction in New Jersey that will remain a focus in upcoming years. Key among these are: A slow return from the economic downturn on the housing market. According to the census bureau, in 2005 approximately 38,000 housing units applied for permits. In 2009 there were only 12,000 permits and in 2013, the most recent year the data is available, there were about 25,000 permits. The upward trend is encouraging but market actors are still hesitant and very concerned with bottom line which can limit investment in efficiency. According to the census data, multifamily units surpassed single family units from the first time in Multifamily units are sold as condos or are built by developers to rent. Multifamily rental units present a unique barrier of split incentive where often the tenant pays the utility bills and investing in efficiency does not benefit building owners. Builders do not always value or know how to articulate the benefits of the additional administrative procedures of ENERGY STAR, especially where the upgrade requirements are not linked specifically to energy savings. Limited technical skills of some builders and their subcontractors is a barrier to achieving the efficiency levels required to achieve zero energy ready homes. Lack of information regarding the benefits of efficiency and environmental performance on the part of consumers, builders, lenders, appraisers, realtors and others prevents the ability to differentiate between efficient and standard homes. The RNC program employs several strategies to overcome these barriers including: Direct incentives to builders of homes that meet program standards; Multiple pathways that allows participation across efficiency levels, entices new builders to the program, and promotes increased efficiency and quality-assurance with higher incentives; Marketing assistance to builders to promote the energy and environmental benefits of NJ ENERGY STAR Homes participating projects; 1 Multifamily decision tree has detailed steps to determine if multifamily is low-rise or high-rise 2

3 Providing technical assistance to inform builders and their subcontractors on details of the program and how to comply with the rigorous performance requirements; and ENERGY STAR and DOE Zero Energy Ready Home certification, inspections and testing through third-party rating companies, competing in an open market for services. For FY2016 the Market Manager Team would like to focus on additional goals and objectives which include: To the extent possible, develop streamlined application and reporting procedures for builders and raters with a focus on multifamily units Move away from the strategy that the rating companies are in the best position to advise and market the program. Instead have the program become a trusted advisor and technical expert that the builders can consult when faced with unique or challenging configurations during construction Prepare the builder and rater community for stringent new construction code standards that will be adopted by NJ over the course of the next few years Reduce incentives where needed to align with incremental costs and improve program cost efficiency Retake the leading role in marketing to buildersby increasing outreach and program staff interaction with builders and raters Conduct rater and builder education on program QA/QC field procedures to ensure standards are being met in the field Educate home buyers on benefits of efficiency and work with realtor community to give them the tools to sell efficiency HISTORIC PROGRAM RESULTS Since 2010, over 17,500 units have participated in the RNC Program and savings total 450,000 MWh and 18,000,000 Dth over the 20 year calculated life of each home. 2 These homes will likely last five times that long, increasing the actual impact of the RNC program dramatically. When it comes to building a new house, integrating efficiency during design and construction is the least cost option, making RNC an important program to minimize lost opportunities. On average, the program saves about 1,100 kwh and 160 therms per unit. Actual results will vary depending on unit type (single family, multi-single or multifamily) and size. For homeowners, an ENERGY STAR home saves about $350 a year on energy bills. 3 As we are all well aware, the new homes market was severely impacted by the housing downturn. Figure 1 shows the number of permits requested in NJ from , which peak in 2004 and sharply decline to Since 2011, we see a rebound, in particular with multifamily housing which for the first time surpasses single family during this period. 4 2 Data sourced from program results 2010-FY14 Historical_NJCEP_Savings_Data xls, 2010-FY14 Historical Participants xls and 2010-FY14 $-KWh_Saved-All_Yrs_byPrgm_ xls 3 Utility rates from Department of Labor 4 Converting permits to completions is approximately a 4% decrease. 3

4 It is interesting to note that RNC Program participation does not mirror the housing rebound in Between 2012 and 2014 there is a continued decline in RNC participation. 5 During this time frame, ENERGY STAR Homes and subsequently the NJ RNC program did introduce new, more stringent standards. Also, the program transitioned to an open rater marketplace. As mentioned before, a barrier to the RNC Program is the split incentive where builders who make design and procurement decisions do not pay the homeowner operating costs associated with those decisions as well as builder ability to FY14 Historical Participants xls 4

5 articulate the value of efficiency in a marketplace where home buyers are unable to see insulation improvements but can touch and feel granite countertops and stainless steel appliances. The historic participation in the program has been dominated by the multifamily sector with single family representing about 30% of the participation. The remaining 70% of participants is split between multi-single, multifamily, and multifamily high rise. These results are shown in Figure 3. 5

6 The average rebate by program tier is shown in Figure 4. This shows that the average Tier 1 incentive is approximately $1200, Tier 2 $2500 and Tier 3 $5500. Multifamily high-rise is a fixed $1000 incentive. 6

7 4. 4. RESULTS OF BENEFIT ENEFIT/C /COST ANALYSIS /C Table 1 presents the cost-benefit analysis results for the RNC program for FY2015 and FY2016. The analysis for FY2015 is draft and was provided by Rutgers and make use of a 7% discount rate. Given that the changes proposed here will result in increased savings at lower costs, the FY2016 results will be more cost-effective than FY2015. Table 1. Cost-Benefit Analysis for FY2015 and FY2016 FY2015 FY2016 Proposal Lifetime Net Benefits - Total Resource Cost Test ($870,953) $3,107,078 7

8 Benefits-Cost Ratio Lifetime Net Benefits - Societal Cost Test $1,899,062 $6,829,155 Benefits-Cost Ratio COMPARISON TO OTHER PROGRAMS P 5.1 Incentive levels The NJ RNC program currently offers performance-based incentives for each tier for Tiers 1, 2, and 3. The Multifamily High Rise component of the program has a fixed incentive after a performance threshold is met. Because of the progressive incentive structure with increased incentives based on energy savings, as well as the type of unit (single family, multi-single and multifamily), it is difficult to make direct program comparisons. The approach taken by the Market Manager Team is first to review the specific tiers and available incremental cost data. Incentives targeting approximate 50% of incremental cost are generally thought to be adequate to motivate the market and also bring builders a return on investment within an acceptable time frame. The second review is to consider incentives as average per unit to understand how NJ compares to other programs. NJ ENERGYEfficient Home (Tier 1) This tier supports the long term transition to ENERGY STAR Version 3 by providing waivers for some of the inspection checklist requirements. The incentives for Tier 1 are shown in Table 2. Multi-single units receive 75% and multifamily units receive 50% of the single family unit incentive. HERS Table 2: Tier 1 Incentives Tier 1 - NJ ENERGYEfficient Home Single Family (SF) Multi-single (MS) Low Rise Multifamily (MF) 75 $1,250 $938 $ $1,500 $1,125 $ $1,750 $1,313 $ $2,000 $1,500 $1, $2,250 $1,688 $1, $2,500 $1,875 $1,250 Average incremental cost for single family minimum compliance with Tier 1 (HERS 75) is estimated at 8

9 $ The current incentive structure provides 100% of the estimated incremental cost. ENERGY STAR Homes (Tier 2) - Builders that enroll in Tier 2 satisfy the full check list requirements of Version 3 and will be ENERGY STAR qualified. The incentives for Tier 2 are shown in Table 3. Multi-single units receive 75% and multifamily units receive 50% of the single family unit incentive. HERS Single Family (SF) Table 3: Tier 2 Incentives Tier 2 - NJ ENERGY STAR Home Multisingle (MS) Low Rise Multifamily (MF) 75 $2,250 $1,688 $1, $2,500 $1,875 $1, $2,750 $2,063 $1, $3,000 $2,250 $1, $3,250 $2,438 $1, $3,500 $2,625 $1,750 Average incremental cost for single family minimum compliance with Tier 2 (HERS 75) is estimated at $ The current incentive structure provides 100% of the estimated incremental cost. Zero Energy Ready Home (Tier 3) - Current program includes all DOE ZERH requirements, plus 50% onsite renewable energy generation. The incentives for Tier 3 are shown in Table 4. Table 4: Tier 3 Incentives Tier 3 - Zero Energy Ready Home HERS Single Family (SF) Multisingle (MS) Low Rise Multifamily (MF) 50 $10,000 $7,000 $4, $14,000 $9,500 $6, $18,000 $12,000 $8, $22,000 $14,500 $10, $26,000 $17,000 $12, $26,000 $17,000 $12,000 6 Incremental Cost using national average costs for ENERGY STAR V3.0 compliance with Rx requirements only (no checklists) approximately equivalent to ES v 2.0 Source ES include link 7 Incremental Cost using national average costs for ENERGY STAR V3.0 compliance with checklists include link 9

10 20 $26,000 $17,000 $12, $26,000 $17,000 $12, $26,000 $17,000 $12,000 5 $26,000 $17,000 $12,000 0 $26,000 $17,000 $12,000 Average incremental cost for single family minimum compliance with Tier 3 (HERS 50) is estimated at $15, The current incentive structure provides approximately 65% of incremental cost. Multifamily High Rise - Multifamily buildings at 4 to 6 floors are eligible for ENERGY STAR Multifamily High-Rise program. The current incentive structure within this program is set at $1,000 per qualifying unit. Table 5: Multifamily High Rise Incentive Multifamily High Rise Incentive per unit $ 1,000 Average incremental cost for minimum compliance with MFHR (15% better than code) is estimated at $ The current incentive structure provides approximately 250% of incremental cost. Program Comparison - Average per unit Data from the draft ERS Benchmarking Study is provided below, which compares the NJ $/kwh to other national RNC programs. ERS concluded: Program $/kwh and kwh/participant were poor in 2012, but 2011 was right at the median Incentives are higher than the comparison programs 8 Incremental cost using NJ Climate Choice Homes Final Report. Incremental cost analysis by Rutgers 9 Personal communication with Ted Leopkey 6/30/14Average incremental cost in NY from sample of 44 MFHR buildings. 10

11 Figure 5: Data from ERS Benchmarking Study The Market Manager Team concludes that there is sufficient evidence to consider reducing RNC program incentives based on incremental cost estimates and ERS baseline comparisons. 5.2 Program Requirements R Each tier has specific performance and prescriptive requirements as listed below. NJ ENERGYEfficient Home (Tier 1) - Tier 1 uses the ENERGY STAR v 2.0 framework. 10 To qualify for this tier a unit must comply with Performance Path of ENERGY STAR v2.0 requirements, including: REM/Rate Model which calculates HERS index Comply with v2.0 Thermal Bypass Check list Duct leakage to outside: 6 CFM25 per 100ft2 CFA (No maximum total leakage. CFM25 is defined as the air flow (in cubic feet per minute) needed to create a 25 Pascal pressure change in the ductwork. CFM25 is one of the most basic measurements of ductwork air tightness.) Up to 25% of Slab edge in CZ 4 & 5 may be un-insulated. Additional New Jersey requirements: HERS index must not exceed 75 (2009 IECC base) Comply with NJ program specific HVAC check list 10 Detailed program requirements for ENERGY STAR Version 2.0 are found at 11

12 Fully duct all HVAC supplies and returns and fully seal all duct system joints and seams with mastic compound (no tapes) as applicable Install ENERGY STAR qualified HVAC equipment (or highest available alternative) Install ENERGY STAR qualified mechanical ventilation with automatic 24-hour control, as required by ASHRAE 62.2 as applicable Install only direct or power vented space heating, water heating and/or fireplace combustion appliances, when present ENERGY STAR lighting: 60% of all light sockets including interior and exterior, or EPA Advanced Lighting Package (ALP) for fixtures House size capped at 4000 sq. ft. Over 4000 sq. ft. requires HERS 65 ENERGY STAR Homes (Tier 2) - Builders that enroll in Tier 2 must meet all the EPA ENERGY STAR Homes v 3 Performance Path standards including. 11 REM/Rate Model which calculates HERS index Meet a site specific (variable) HERS index target Comply with all EPA mandated checklists Install ENERGY STAR qualified HVAC equipment (or highest available alternative) Install ENERGY STAR qualified mechanical ventilation with automatic 24-hour control, as required by ASHRAE 62.2 as applicable Install only direct or power vented space heating, water heating and/or fireplace combustion appliances, when present Duct leakage to outside: 4 CFM25 per 100ft2 CFA Total Duct Leakage: 8 CFM25 per 100ft2 CFA Additional New Jersey requirement: Fully duct all HVAC supplies and returns and fully seal all duct system joints and seams with mastic compound (no tapes) as applicable Zero Energy Ready Home (Tier 3) - Current Tier 3 requirements are the DOE ZERH Specification which include all of the ENERGY STAR V3.0 check lists and requirements as well as improvements in thermal envelop, appliances and the EPA Indoor Air Plus criteria. Table 6: Zero Energy Ready Home Requirements Size Technical Standard Maximum home size is 3,000 square feet DOE Zero Energy Ready Home specification 12 - All DOE Zero Energy Ready Home specifications (DOE ZERH) need to be met minus the Renewable Energy Ready Home (RERH) Checklist Detailed program requirements for ENERGY STAR Version 3.0 are found at If a solar photovoltaic or solar hot water system is already included with the home, then compliance with the solar photovoltaic or solar hot water RERH checklist, respectively, is not required 12

13 HERS Index Maximum 50 points DOE ZERH specifications alone do not ensure maximum HERS Index of 50 points. Rating providers should model Tier 3 NJ ZERH homes to achieve a target HERS score of 50 points or less Mechanical Equipment Install ENERGY STAR qualified HVAC equipment 14 Renewable Energy Solar Electric must provide at least 50% of modeled electricity consumption. Small wind or hydro may be used with engineering estimate of available resource. Solar Thermal or Solar Electric must provide at least 50% of modeled hot water energy requirement. 15 Lighting 90% ENERGY STAR Qualified Fixtures and/or Bulbs ENERGY STAR Multifamily High Rise Program - Multifamily buildings 4 to 6 floors can enroll in the performance path of the ENERGY STAR Multifamily High-Rise program 16 and meet the following criteria: Used approved software and ENERGY STAR MFHR Simulation Guidelines to verify the building design meets performance targets of 15% better than ASHREA Comply with ENERGY STAR MFHR Testing & Verification Protocols Commit to benchmarking the building in Portfolio Manager for a period of two years EPA ENERGY STAR Program centrally manages compliance and sends approved documentation and modeling summaries to the NJ RNC Program. Our primary contact is Rebecca Hudson, ES MFHR program manager. 5.3 Identify best practices The best practices identified in Figure 6 were developed by ERS (Energy Resource Solutions) as part of their draft benchmarking report and compare several leading programs across a range of requirements. As can be seen in the table, best practices in RNC program design include the following: Best practice Leveraging national platforms and brands Optimizing incentive structure to NJ RNC Program ENERGY STAR New Homes Program ENERGY STAR Multifamily High Rise DOE ZERH RESNET, REMRate HERS index Progressive incentives for energy savings 14 For equipment types that are not ENERGY STAR certified, install highest efficiency available 15 For natural gas water heaters, modeled therm/yr can be met with PV kwh btu equivalent

14 reward energy savings Including prescriptive requirement to ensure specific end uses are using most efficient equipment Offer training and education to raters, builders, homeowners and realtors Encourage market HVAC minimum requirements High efficient appliances Lighting DOE ZERH training Fully transitioned to open rater structure Figure 6: Comparison to Other Leading RNC Programs SUMMARY OF INPUT FROM CONTRACTORS AND CUSTOMERS The program has collected input through multiple channels including NJCEP committee meetings and interactions with builders and raters to inform program design recommendations. Structure of Tiers Marketing Program Administration Table 7: Summary of Comments from Subcommittee Consider a Zero Energy Ready home without a solar requirements Make the coop marketing program more effective Include Homeowner education to drive demand Look for opportunities to reduce cost to the program Improve the application process for builders or raters, perhaps by registering projects as a batch rather than one home at a time Explore having rebates paid faster, sometimes builders wait 3-4 months for payment 14

15 7. 7. CODES AND STANDARDS IMPACTS ON PROGRAM Building energy codes set a minimum efficiency level for new construction. The residential energy code is currently 2009 New Jersey Uniform Construction Code, based on 2009 IECC, and the commercial new construction code is 2009 New Jersey Uniform Construction Code, based on 2009 IECC and ASHRAE Tiers 1-3 (single family, multi-single and multifamily units) are regulated by the residential energy code. The Multifamily High Rise Program is considered commercial and regulated by the commercial energy code. Model codes such as IECC and ASHRAE are updated on a three year cycle then adopted either wholesale or with modifications by individual states. Nationally, there is a trend in the new construction industry to set goals to transition all of new buildings to net zero energy. This requires extremely efficient buildings and the remaining energy needs are met by renewables. One of the more well-known goals was set by Architecture 2030 challenging the industry to transition to net zero by The energy code cycle and the drive toward net zero are represented in Figure 7. Since 1980, both the commercial and residential energy code have made substantial gains to require efficient construction. Actual compliance with energy codes is dependent on code enforcement and other factors including local builder practices and available construction materials. Figure 7: History of US Building Codes, Energy Codes for Ultra-Low-Energy Buildings: A Critical Pathway to Zero Net Energy Buildings. ACEEE. Source: Data from U.S. DOE Building Codes Program 15

16 Both commercial and residential efficient new construction programs are faced with reduced savings margins due to increasingly stringent code requirements. The Division of Codes and Standards is a department within the New Jersey Department of Community Affairs (DCA) and is responsible for updating the new construction codes. DCA 18 indicated they proposed that the State of NJ adopt IECC 2015, and ASHRAE (which will apply to multifamily buildings 4 stories and greater) in The goal would be that NJ adopts these codes with a June 1st or July 1st start date, and a 6 month grace period before they would become effective in early The program should continue to monitor and support the code adoption cycle as it will impact program design and savings claims CHANGING BASELINES IMPACTS ON PROGRAM The increased code requirements will affect the RNC program in several ways. Builders will be impacted because the skill sets to build to the code minimum is becoming more difficult and existing builders will have no choice but to modify existing building practices to advances techniques. The RNC program needs to provide intensive market support over the next few years to assist contractors to surpass code so the program can continue to generate energy savings. The RNC program is different than prescriptive programs because it uses modeling software to claim custom saving for the thermal envelope upgrades from each unit. The modeling software is programmed with a NJ-specific baseline to calculate savings. Energy savings from lighting, ventilation and appliances are prescriptive and are generally aligned with the products program. Tiers 1-3 Savings Methodology The RNC program uses REM/Rate software for Tiers 1-3 to calculate savings by comparing the characteristics of the energy efficient home to the baseline/reference home, called the User Defined Reference Home (UDRH). The UDRH is a custom input into REMRate and is the baseline against which the new home is compared to calculate energy savings. The UDRH is described in the Protocols and is based on IECC The UDRH will need to be updated when the energy code changes. To update the UDRH, a baseline study is conducted by gathering a statistically significant sample to determine the actual as built components of NJ homes. This study helps determine what percentage of the new home market is below, meeting, or exceeding the energy code and where if any components of the UDRH should be modified from code. REM/Rate calculates heating, cooling, hot water, lighting, and appliance energy loads, consumption and costs for new and existing single and multi-family homes. A home energy rating (HERS) is calculated based on the proposed DOE HERS guidelines (10 CFR 437) as modified by the RESNET/NASEO HERS Technical Committee. In addition to an energy rating, REM/Rate creates value added information including energy efficiency mortgage report, energy appraisal addendum, energy code compliance (MEC, IECC, and ASHRAE), improvement analysis (existing homes), design optimization (new homes), heating and cooling equipment sizing, utility DSM compliance analysis and ENERGY STAR Home analysis. Other Impacts 18 Personal communication to Rob Austin Division of Codes and Standards, New Jersey Department of Community Affairs 1/28/15 16

17 The RNC program is market based and leverages several national protocols. ANSI/RESNET Standard , adopted March 2014, requires modifications to the HERS Reference Home to reflect IECC The REM/Rate v15 release, currently expected in 2015, will include ANSI/RESNET Standard changes to HERS reference home as well as various bug fixes. These changes will impact the HERS index on new homes and may be substantive enough to warrant modifications to the NJ RNC tier and incentive structures SUMMARY OF RECOMMENDED PROGRAM MODIFICATIONS For FY2016, the Market Manager Team would like to focus on additional areas for improvement which include a long term strategy to support and respond to increasingly stringent codes as well as improve program performance by increasing participation and yields. A summary of these changes is below. Prepare the builder and rater community for stringent new construction code changes that will be adopted by NJ over the course of the next few years Reduce incentives where needed to align with incremental costs and improve program yield To the extent possible, develop streamlined application and reporting procedures for builders and raters with a focus on multifamily units Serve as a trusted advisor and technical expert that the builders and raters can consult when faced with unique or challenging configurations during construction. Adjusting field protocols to have MM team present at preconstruction meetings Improve marketing for builders and outreach by increasing program staff interaction with builders and raters at trade shows and conferences Conduct rater and builder education about program QA/QC field procedures to ensure standards are being met in the field % for the higher HERS. 9.1 Proposed Restructuring R for Tiers 1-3 While the Market Manager has reviewed a great deal of data from this and other programs, we make these preliminary recommendations with the understanding that builders, rating companies and other stakeholders must have greater input into a final recommendation. Given that, the proposed restructuring for single family, multi-single, and multifamily units creates multiple paths for builder participation, rewards increased savings and performance, and provides incentives for homes to be DOE ZERH Certified with or without renewables. This structure will help builders move up the pathway toward greater energy efficiency and become familiar with new codes, in particular IECC 2015 which allows for a compliance path similar to HERS called the Energy Rating Index (ERI). While providing flexibility for builder to determine least cost performance path, IECC 2015 will also require code inspectors to view certain building components including foundation, framing, roughed in mechanicals, direct vented equipment in combustion closets, and increased duct insulation. Overall IECC 2015 will require a significant improvement in efficiency compared to IECC 2009 and the program can help to prepare the NJ building industry for that level of performance through the NJCEP. Table 8 below shows the paths and incentive structures currently under development for adoption in FY

18 18

19 Equivalen t Code HERS before Renewabl e IECC IECC 2012 IECC 2015 IECC 2018 (estimate ) 70 HERS 65 $500 Table 8: Tier 1-3 Incentive Structure IECC 2015 ENERGY STAR V3 DOE ZERH 50% Renewables Max Incentive $ $750 $1, $1,000 $1,000 $3, $2,250 $1,250 $9, $3,250 $3,000 $12, $4,250 $5,000 $15,250 $1, $5,250 $7,500 $18,750 $10,00 $2,000 $3, $6,250 0 $22,250 $10,00 25 $7,250 0 $23,250 $10,00 20 $8,250 0 $24,250 The new incentive structure is heavily weighted toward lower HERS index and drive up energy saving. It also reduces the maximum HERS score from 75 to 65, which will increase savings of minimal compliance homes by approximately 10%. The incentives build from right to left as homes comply with additional standards such as IECC 2015, ENERGY STAR, DOE Zero Energy Ready Home, and add renewables systems. If builders choose to ENERGY STAR V3 certification, they will receive an additional $1000 incentive. IECC 2015 which would produce additional savings for NJ as the baseline in the state is still IECC This incentive structure has the following benefits: Improves Yields This structure improves program yields by reducing incentives to be more in line with incremental costs and rewarding better performance. Table 7 above shows single family incentives. Multi-single would be 75% and multifamily would be 50% of single family incentives. (The same ratio that is used in the current program). When looking at current incentive structure, a minimum Tier 1 home can enter at HERS 75 and receive $1250. Under the proposal, the minimum performance for incentives is HERS 65 and the unit would receive only $500. And at a HERS of 20, the current program structure would give $26,000 for incentives and the proposed structure would provide $25,250. Align HERS with Code Versions The Market Manager Team would like to incorporate some level of code compliance into the incentive structure. More research needs to be done to finalize the exact structures and requirements, but given the complexity of IECC 2015 (with additional prescriptive requirements) the program can play an important role interacting with code officials and helping to improve new construction practices statewide. 19

20 Zero Energy Ready The current Tier 3 has adopted DOE ZERH standards but requires 50% on site renewables to receive incentives. Based on input received from raters and builders, this new structure would allow for a path to earn DOE ZERH home designation where onsite PV is not feasible. Incentives are slightly decreased, recognizing the significant investments needed to build a home to this level. 9.2 Proposed Incentive Rest estructuring for Multifamily High RiseR The Multifamily High Rise program currently offers a flat incentive of $1000 per unit. The Market Manager Team recommends reducing incentives and developing a performance-based incentive structure to align this component of the program with the others. When looking individually at MFHR savings relative to baseline, the unit average is about 25% better than code. Table 9: Multifamily High Rise Incentive Structure Savings before RE Incentive per unit 15% $ % $ % $ % $ % $350 40% $400 45% $ % $ % $ % $ % $650 70% $ Proposed Increase in Technical Support Offered by the Program As noted above, the residential new construction industry is approaching a critical transition as NJ looks to adopt IECC To support that transition, the program proposes to increase technical and field outreach, increase training opportunities, and support a BPU/DCA collaboration with code officials around the state so that the expertise within the NJCEP can be brought to bear and ensure successful transition to the new code. 9.4 Proposed Improvements in Marketing and Outreach The Market Manager Team heard during the Homes Subcommittee calls that program marketing needs to be enhanced in order to drive consumer interest in homes built to these advanced performance levels. The following approaches are proposed for the FY2016 program: Use ENERGY STAR Tools and Resources. Leverage national recognition through DOE and ENERGY STAR. Program staff will work to encourage and facilitate builder submissions of homes. 20

21 Restructure Co-Op Marketing. The current Co-op Marketing program only has one participating builder and needs to be restructured. A common complaint is the restrictive nature of content and templates utilized by the program. Increase Program Reach. Program staff should retake the lead and strengthen relationships with developers, raters, and the NJ Housing and Mortgage Finance Agency (which currently requires ENERGY STAR for projects seeking financing) to increase knowledge of, and participation in, the program. Pilot Direct Marketing. The program should engage in a pilot program to gather data on the potential benefits of direct marketing to home buyers to make them aware of the benefits of efficient new homes. Engage the Real Estate Industry. We recommend that the NJ RNC Program, in coordination with HPwES, find ways to work with the real estate industry to include energy efficiency information in the Multiple Listing Service (MLS) where most homes are listed for sale, and ensure that real estate agents and appraisers are trained to support buyers and sellers of energy-efficient homes. 21

22 APPENDIX A: DETAILED TECHNICAL REQUIREMENTS OF CURRENT TIERS Specification Date: A: Minimum Requirements ENERGY STAR Home Baseline Check List Requirements DOE Challenge - Zero Energy Ready Homes (Tier 3) NJ ENERGY STAR Homes (Tier 2) NJ Energy Efficient Homes (Tier 1) April 21, 2014 ENERGY STAR v3 (Rev. 07) ENERGY STAR v2 Req'd cz4 cz5 cz4 cz5 cz4 cz5 All ENERGY STAR v3 ENERGY STAR v3 ENERGY STAR v2 All Thermal Enclosure Rater Checklist Thermal Enclosure Rater Checklist Energy Star V2 Thermal Bypass Checklist All HVAC Quality Installation Rater Checklist HVAC Quality Installation Rater Checklist All All HVAC Quality Installation Contractor Checklist Water Management System Builder Checklist HVAC Quality Installation Contractor Checklist NJ ENERGYEffecint Home HVAC Rater Checklist NJ ENERGYEffecint Home HVAC Contractor Checklist Water Management System Builder Checklist - IAQ All EPA Indoor AirPLUS n/a n/a House Size Minimum Technical Specifications (ZERH) Prescriptive Path Requirements Rx Prescriptive path: CFA threshold based on # bedrooms Windows All U-0.32 / SHGC: 0.40 U-0.30 / SHGC: any Prescriptive path: CFA threshold based on # bedrooms U-0.32 / SHGC: 0.40 U-0.30 / SHGC: any n/a SEE COMMENT Ceiling All R-49 R-38 R-38 Walls All R-20 (or 13+5) R-13 R-20 or 13+5 R-13 R-19 or 13+5 Floor All R-19 R-30 R-19 R-30 R-19 R-30 Foundation Wall Slab (unheated) All R-10 (cont) / R-13 (cav) R-15 (cont) / R-19 (cav) All R-10, 2 ft (edge only) R-10, 2 ft (edge only) R-10 (cont) / R-13 (cav) R-10 (cont) / R-13 (cav) R-10, 2 ft (edge only); (up to 25% edge uninsulated) Slab (heated) All R-15, 2 ft (edge only) R-15, 2 ft (edge only) R-15, 2 ft (edge only); (up to 25% edge uninsulated) Duct Leakage Requirements All All ducts within thermal boundary; Total Leakage: 8 CFM25/100sf CFA Leakage to outdoors 4 CFM25/100sf CFA; Total Leakage: 8 CFM25/100sf CFA Leakage to outdoors 6 CFM25/100sf CFA; Total Leakage: No Requirement 22

23 Specification Date: Water Efficiency DOE Challenge - Zero Energy Ready Homes (Tier 3) NJ ENERGY STAR Homes (Tier 2) NJ Energy Efficient Homes (Tier 1) April 21, 2014 ENERGY STAR v3 (Rev. 07) ENERGY STAR v2 All EPA WaterSense Standard n/a n/a Appliances All ENERGY STAR ENERGY STAR ENERGY STAR (5 or more) Refrig All ENERGY STAR Qualified ENERGY STAR Qualified ENERGY STAR Qualified Dishwasher (Standard) Dishwasher (Compact) Clothes washer All ENERGY STAR Qualified ENERGY STAR Qualified ENERGY STAR Qualified All ENERGY STAR Qualified ENERGY STAR Qualified ENERGY STAR Qualified All ENERGY STAR Qualified n/a ENERGY STAR Qualified Lighting All 80% ENERGY STAR Qualified Exhaust ventilation efficiency 80% ENERGY STAR Qualified fixtures or bulbs; ALP may be used for Rx path (60% fixtures) 60% ENERGY STAR Qualified fixtures or bulbs; or Advanced Lighting Package All ENERGY STAR Qualified ENERGY STAR qualified ENERGY STAR qualified Renewables All Renewable Ready (RERH checklist) Not required in NJ n/a n/a Mechanical Equipment Heating Rx 90 AFUE 94 AFUE ENERGY STAR Qualified (or highest available alternative); 95 AFUE (gas); 85 AFUE (oil) ENERGY STAR Qualified (or highest available alternative); 95 AFUE (gas); 85 AFUE (oil) ZERH Target Home Specifications Cooling Rx 15 SEER 13 SEER Air Source Heat Pump Rx 9 HSPF 10 HSPF Geothermal Rx ENERGY STAR Qualified ENERGY STAR Qualified (or highest available alternative); >=14.5 SEER/ >=12 EER ES qualified (or highest available alternative); 8.0 HSPF (single pkg); 8.2 HSPF (split system) ENERGY STAR Qualified (or highest available alternative) ENERGY STAR Qualified (or highest available alternative); >=14.5 SEER/ >=12 EER ES qualified (or highest available alternative); 8.0 HSPF (single pkg); 8.2 HSPF (split system) ENERGY STAR Qualified (or highest available alternative) Whole house ventilation Rx ASHRAE 62.2 (1.4 cfm/w); no heat recovery ASHRAE 62.2 (1.2 cfm/w); heat recovery ASHRAE 62.2 (24-hour automatic control); No heat recovery ASHRAE 62.2 (24-hour automatic control); No heat recovery 23

24 DOE Challenge - Zero Energy Ready Homes (Tier 3) NJ ENERGY STAR Homes (Tier 2) NJ Energy Efficient Homes (Tier 1) Specification Date: April 21, 2014 ENERGY STAR v3 (Rev. 07) ENERGY STAR v2 60% SRE Water Heater Rx ENERGY STAR Qualified; Oil ER 0.60 EF varies dep on system/fuel type EF varies dep on system/fuel type Envelope Insulation grade Insulation level Rx Grade I Grade I Grade I Rx IECC 2012 (see above) IECC 2009 (see above) IRC 2004 (see above) Infiltration Rx 2.5 ACH50 2 ACH50 5 ACH50 4 ACH50 6 ACH50 5 ACH50 Windows (U- Value) Windows (SHGC) U-value when WFA > 15% Performance Standards Rx U-0.32 U-0.30 Rx 0.27 any SHGC: 0.40 SHGC: any Rx Improved U-Value = [0.15 / WFA] x [ENERGY STAR U-Value] n/a SEE COMMENT n/a Maximum HERS Index Perf Target Home HERS Index Target (low-mid 50's) Target Home HERS Index Target HERS 85 (IECC06 baseline); HERS 75 (IECC09 baseline); HERS 65 (CFA > 4000 sf) Energy Consumption n/a n/a n/a 24

25 APPENDIX B: CODE COMPARISONS B: IECC Code Version Date IECC 2009 IECC 2012 IECC 2015 Climate Zone Component Shell Fenestration (U-Value) Skylight (U-Value) Glazed Fenestration SHGC NR NR 0.4 NR 0.4 NR Ceiling (R-Value) Wood Frame Wall (R-Value) or or or 13+5 Mass Wall (R-Value) 1 5/10 13/17 8/13 13/17 8/13 13/7 Floor (R-Value) BasementWall (R-Value) 10/13 10/13 10/13 15/19 10/13 15/9 Slab R-Value and Depth 10, 2 ft. 10, 2ft. 10, 2 ft. Crawlspace Wall (R-Value) 10/13 10/13 15/19 10/13 15/19 Air Leakage Test max. 7 ACH 50 or Visual inspection Test max. 3 ACH 50 Test max. 3 ACH 50 Systems Programmable Thermostats Required, one for each zone Required, one for each zone Required, one for each zone Hot Water Boiler Outdoor Temperature Setback Not Required Not Required Required Ducts R-8 in attics, R-6 elsewhere R-8 in attics, R-6 elsewhere Dependent upon duct diameter and location, R-8 (> 3 " in Dia.) and R-6 (< 3 " in Dia.), in attics, R- 6 ( > 3 " in Dia.) and R-4.2 (< 3 " in Dia.) Duct Leakage (Sealing mandatory) To outdoors - 8 CFL/100ft. 2 conditionded space, or Total - 12 CFM/100ft.2 conditionded space Total - 4 CFM/100ft. 2 conditionded space Total - 4 CFM/100ft. 2 conditionded space Duct Leakage (Sealing mandatory) Exempt if all ducts are located within conditioned space Exempt if all ducts are located within conditioned space Exempt if all ducts are located within conditioned space Building Cavity Supply Ducts Not allowed Not allowed Not allowed 25

26 Mechanical Ventilation Required Required Required Mechanical System Piping R-3 R-3 R-3 Hot Water Systems Piping Not Required R-3 R-3 Lighting Lighting (Permanent fixtures) 50% of lamps 75% of lamps 75% of lamps Performance (HERS Score, Copied from Neil's Incentive Structure Recommendation) The second R-Value applies when more than half of the insulation is on the interior of the mass wall 2 10/13 means R-10 continuous insulated sheathing on the interior or exterior of the home, or R-19 cavity insulation at the interior of the basement wall. "10/13" means R-10 continuous insulated sheathing on the interior or exterior of the home, or R-13 cavity insulation at the interior of the basement wall. 26