As a recent homebuyer, I can attest to the fact that for-sale home listings leave a lot to the imagination when it comes to energy efficiency. This is problematic for the vast majority of prospective buyers who care about heating and cooling costs when considering a home purchase—specifically, 85 percent of buyers, according to a 2013 survey by the National Association of REALTORS.
In large part, energy-saving home improvements are not easily visible or verifiable—and consequently not reported in Multiple Listing Service (MLS) databases. Without this information, buyers and appraisers cannot recognize or assess the value of upgrades made by the seller with much confidence.
Real estate markets require high-quality data to value homes intelligently. Real estate agents and appraisers are leery about sharing information that cannot be backed up by a third-party source. And without industry-wide protocols, data may be too costly to collect and translate from system to system. So this past summer, it was welcome news when the Building Performance Institute (BPI) published standards that target this complex problem.
Home Performance-Related Data Transfer and Collection
In July, BPI published BPI-2100 and BPI-2200 – otherwise referred to as the Home Performance XML (or HPXML) standard and corresponding data dictionary. By establishing a common vocabulary by which systems can store and transfer home performance-related data, adoption of HPXML should encourage more accurate, granular, and automated data collection and reporting between contractors and energy efficiency program administrators. Less paperwork and data entry should lead to lower administrative costs. Lower costs make it feasible to bring more high-quality data to the market, which is critical for realizing the value of home energy efficiency.
The latest version (v1.1.1) of the open source schema, which is hosted by the National Renewable Energy Laboratory (NREL), represents three years of collaboration among over 80 stakeholder groups, led by the National Home Performance Council (NHPC).
The initiative was no small technical challenge. For example, “You might think it would be easy to describe insulation,” said Robin LeBaron, Managing Director of NHPC and chair of the working group that developed the standard. “But then you get into questions about where the insulation is installed. Do you need to describe the wall assembly as well? Potentially this involves a lot of detail, and different modeling software tools approach the problem in different ways.” Detail indeed—the data dictionary includes over 800 elements.
Development of the standard has been (and will continue to be) an iterative process based on feedback from implementers. Since January 2013, pilot testing has been underway by the New York State Energy Research and Development Authority (NYSERDA), the Arizona Public Service (APS), and the Local Energy Alliance Program (LEAP) in Northern Virginia. In August, the pilot program achieved a key milestone when contractors successfully transferred a standard set of home performance data from auditing modeling software to NYSERDA.
Cynthia Adams, Executive Director of LEAP, anticipates that HPXML-based tools will improve the quality and cut the cost of data reporting for LEAP’s Home Performance with the ENERGY STAR (HPwES) program. Adams notes that LEAP is moving toward requiring HPwES contractors to use HPXML-compatible energy audit software that can communicate with its EnergySavvy program management system. EnergySavvy is partnering with several vendors to support the standard.
Certainly, the significance of HPXML extends beyond the real estate transaction process, offering an indefinite number of possible applications. For a primer on what HPXML is and isn’t, check out the official HPXML website as well as this excellent article on Energy Circle. For a more detailed overview, see this working paper co-authored by LeBaron.
Certificates of Home Efficiency Improvements and Performance
Parties involved in a real estate transaction rely on high-quality data to make decisions. Due to liability concerns, real estate professionals use caution when sharing information in MLS databases and often need supporting documentation to verify data. To address this need, BPI-2101: Standard Requirements for a Certificate of Completion for Residential Energy Efficiency Upgrades was published as a standard in September.
The BPI-2101 standard allows flexibility in terms of what information may be certified. For example, certificates can be used to document the results of an energy audit, the presence of a piece of equipment, or the details of a deep retrofit project.
Most significantly, BPI-2101 defines who may sponsor a certificate. Qualified sponsors include residential energy efficiency programs and organizations that implement a nationally-recognized third-party quality assurance program.
“Our biggest challenge was trying to understand where the industry is today and where it is going. How do you achieve the most market uptake but also maintain quality and credibility? We wanted to ensure that, even in parts of the country that don’t have energy efficiency programs, the standard still allows for the issuance of certificates,” says Adams, who serves on the BPI-2101 working group.
The primary innovation of BPI-2101 is its alignment with other data standards, including HPXML, the Appraisal Institute’s Residential Green and Energy Efficient Addendum, and the Real Estate Transaction Standard (RETS)–Just as HPXML provides a common language for home performance data transfer, RETS standardizes real estate data transfer.
Using HPXML-based tools, LEAP hopes to redesign and automate its HPwES certificates to meet the more granular data reporting guidelines of BPI-2101. At least initially, this information will be provided as a PDF file to homeowners, who will hopefully share the file with their real estate agent when preparing to sell.
Over the next year, it will be interesting to see if energy efficiency programs start certifying a broader range of activities beyond nationally-coordinated programs. “Many homeowners have communicated that they would like recognition for various projects. We would need to consider how to attach credibility to these certificates without undermining our HPwES program,” said Adams.
A certificate’s credibility largely rests on the Sponsor’s liability for inaccuracies. This risk can be mitigated with proper disclosures. “The standard allows people to be very clear and transparent about representations,” says LeBaron, who co-chairs the working group with Laura Stukel, a real estate professional and consultant for CNT Energy. For instance, reported energy savings can be represented as “measured” (based on actual energy usage) or “estimated” (based on modeled energy usage).
Putting the Pieces Together
In August, CNT Energy and NHPC put forward a comprehensive blueprint designed for implementation by energy efficiency programs (which was also summarized in an October webinar, “Unlocking the Value of an Energy Efficient Home: 7 Steps for Energy Efficiency Programs”). The blueprint outlines how new BPI standards fit into a larger strategy to realize the value of home energy efficiency.
In 2014, look out for new initiatives to implement this strategy. For example, LEAP is considering a pilot program in which its HPwES program would directly transfer certificate data to the local MLS. Since BPI-2101 aligns with RETS, some (but not all) certificate data fields should be able to auto-populate MLS data fields. Full certificate information could also be uploaded to the MLS as attached files.
As more home performance data enter the MLS, real estate analysts can better estimate the impact of energy-saving features on sales performance and price premiums within local markets. This information should facilitate appraisers’ use of the Residential Green and Energy Efficient Addendum, allowing for better apples-to-apples sales comparisons.
As LeBaron notes, “Surveys demonstrate that this is data that consumers want. However, it will take time for energy efficiency programs to develop the data architecture. I think there will be a slow but steady evolution of programs offering the certificates and making that information available to the market.”