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Natural Resources Defense Council Posts Blog on Increase Demand for HERS Ratings

Sep 8, 2016

David Goldstein of the Natural Resources Defense Council (NRDC) posted a blog on the NRDC website entitled, “Sometimes Market Forces Work”.

The post comments on the increase of the number of homes HERS rated in the first half of 2016 as compared to the number of homes rated over the same period in 2015.

Key points in the blog:

  • “Most of my experience over the past 40 years shows that the market forces they teach you about in Economics 101 don’t work when it comes to energy efficiency. Just about every day our team hears new examples of efficiency options that make great sense economically but are overlooked. As a result of these failures of the market, policy solutions need to be implemented to stimulate (or simulate) the outcomes of perfect markets.

So it is gratifying when occasionally you see markets functioning more properly. One of the key assumptions needed for markets to work is the availability of information. For the case of homes, the key information that consumers need is how efficient the home is: how much it will cost to operate.”

  • As part of its quality assurance program, RESNET maintains a database of all homes rated to date. The results for the first half of 2016 are now in, and they show that over 100,000 homes were rated. The average score for a rated home was 61, which means that the average rated home saves almost 40% of total energy use compared to a home built to the 2006 IECC standard. The average rated home is also more efficient than an Energy Star new home and consumes about 10% less energy than a home that meets the component-by-component requirements of the 2015 IECC.
  • These results also illustrate continual improvement. In the first half of 2015, the average HERS score was 63 (rather than 61) and 13% more homes were rated in 2016 than the previous year. This improvement is noteworthy because:
    • There are few financial incentives for ratings: most homes were rated by their builders (at the builder’s expense) to gain a competitive advantage with their customers.
    • One might expect that as the number of ratings increases, the scores get worse because builders who build less-efficient homes start to enter the program. Instead competitive forces are driving homes to be more efficient at a rate of about 2 HERS points year on year.

To download the blog go to https://www.nrdc.org/experts/david-b-goldstein/sometimes-market-forces-work

David Goldstein has worked on energy efficiency and energy policy since the early 1970s.  He currently co-directs NRDC’s Energy Program.

Dr. Goldstein has been instrumental in the development of energy efficiency standards for new buildings and appliances that are currently in effect at the regional and national level in the United States, Russia, Kazakhstan, and China. He was a founding director of the Institute for Market Transformation, the Consortium for Energy Efficiency and the New Buildings Institute.  He also serves on the RESNET Board of Directors.

David Goldstein received a Ph.D. in Physics from the University of California at Berkeley, and is a Fellow of the American Physical Society and the recipient of its Leo Szilard Award for Physics in the Public Interest. He received a MacArthur Fellowship in 2002 and is the recipient of the California Alumni Association’s 2003 Award for Excellence in Achievement. He is also the author of “Saving Energy Growing Jobs” and “Invisible Energy.”