According to The Arizona Republic, homebuilders are trying to capitalize on public angst toward electric utilities by offering “net-zero, no-electric-bill homes” that promise to wipe out monthly bills, but the details are a little more complicated.
The homes are built with energy-conserving appliances and insulation, and they use solar panels to generate electricity.
The homes still are connected to the utility grid to get power after dark, but the solar arrays are designed to produce enough electricity throughout the year to balance out what customers will buy from their utility, making their “net” energy costs zero for the year.
The latest company to offer net-zero houses is Shea Homes, which is offering the energy features as standard at its active-adult communities of Vistancia in Peoria and Encanterra in the San Tan Valley area through its SheaXero program.
The program also is available in all Shea Active Lifestyle and Trilogy communities in California, Florida, Nevada and Washington.
Shea markets the project as “the no-electric-bill home.”
Utilities however, still charge a basic service fee to be connected to the grid. For Arizona Public Service Co. customers, that comes out to about $8.55 a month, or more than $100 a year. Salt River Project customers pay at least $180 a year in basic service charges even if they offset all their electricity usage with solar power.
The basic-service charges can be higher depending on the rate plan.
Net-zero homeowners still could end up paying for at least a little electricity, especially in summer when air-conditioners run often. But the homes are built to generate excess electricity in the other months, which the utilities credit on their next bill.
The Shea net-zero homes start at less than $180,000 with the energy features included, and they are priced as high as $700,000.
The company raised its prices about $5,000 on every home from Seattle to Florida to pay for the features, said Rick Andreen, president of Shea Homes Active Lifestyle Communities.
Shea first offered net-zero homes in 1999 in a San Diego development and six years ago began offering small solar arrays as a standard feature in its adult communities, but this is the first time the features have been standard, rather than an option, he said.
About 90 percent of the company’s floor plans can now be made net zero, Andreen said.
Each home will get a custom solar array designed to replace all of the electricity the home will use in a year, except in Florida, where utility restrictions limit to 90 percent the amount of energy a home can offset.
“It’s no secret, if you asked our consumers what is your favorite big corporation, they are probably not going to list a large public utility,” Andreen said. “It is a little like Big Oil. You are trapped. You have to buy gas. It is something we live with. When the price (of electricity) goes up, people don’t appreciate it. There is a certain freedom in saying no, you don’t have to buy it. That is the emotion we are tapping into with this.”
The company has found through market research that the customers most interested in energy-efficient homes are empty nesters looking to stabilize their monthly finances, and those attracted to the “soft” benefits, like leaving the world a better place for their children and grandchildren, he said.
Meritage Homes Corp. of Scottsdale began offering net-zero homes in 2011, also with the hope of “never paying a utility bill again.” It now offers the option for $10,000 to $20,000 at all 17 of its Arizona communities. The price of the upgrade depends on the utility serving the community.
Other large builders such as PulteGroup Inc. increasingly are taking advantage of incentives from utilities to build efficient homes. APS reports the 20 largest builders in its territory now partner with the utility for efficient homes, but only Shea and Meritage have begun marketing net-zero properties.
When Meritage first offered net-zero homes at Verrado in the West Valley last year, 60 percent of the homebuyers took the option, said C.R. Herro, vice president of environmental affairs for Meritage.
“We anticipated 5 or 10 percent,” he said. “Since then we have been building a lot of net-zero homes. It has tailed off, but we still see 30 to 40 percent upgrade to net zero.”
The new Shea homes come equipped with insulation blown into the walls to keep out the summer heat; efficient air-conditioners and other appliances; compact-fluorescent lightbulbs; insulated garage doors; occupancy sensors for lights; and more.
Still, the energy benefits depend on how people use the homes. Shea and SolarCity guarantee how much energy the solar panels will produce but can’t guarantee how people will use electricity.
“If a person puts in an overly large swimming pool and fountain, or runs an industrial workshop in their garage, guess what, they will not be a net-zero house,” Andreen said. “And we can’t get rid of the (utilities’) basic service charges. Utility companies need to make money. They are still providing power lines and service at night when we can’t produce energy.”
Meritage uses some of the same technology as Shea and some different tactics to achieve net-zero in its homes. The most notable difference is the solar-electric hybrid system that also produces hot water and space heating and cooling.
Herro said the homes have been performing as expected but that customer behavior is a big factor in whether they actually have to pay utilities for energy costs beyond the basic service charges.
“Once you get to a super-efficient, low-energy-demand residence, behavior starts to dominate,” Herro said. “If someone lives conservatively, they are making more energy than they are using. But if someone starts to feel like energy is now free and starts using it with abandon, they have a net energy demand at the end of the year.”
Herro said with Meritage being a publicly traded housing company, officials had to be sure they were confident in the net-zero concept before moving ahead, because their reputation could hinge on success.
“It is not a good business strategy (to do it poorly) because those customers will be vocal in the marketplace,” he said. “We’d rather have them have a positive experience and be vocal about it in the marketplace.”
Utilities help out
While homebuilders such as Shea are capitalizing on consumers’ dislike of electric utilities, the net-zero programs would not be possible without them. Arizona utilities provide incentives for efficiently built homes and for solar panels.
They pay those incentives with special tariffs levied on customers.
The maximum renewable-energy tariff on an APS residential customer is $3.84 per month, in addition to the average $2.99 a month tariff for energy efficiency.
SRP charges customers a tariff that averages about $4.50 a month on residential customers to pay for energy-efficiency rebates and alternative-energy projects.
APS has been recognized by the Environmental Protection Agency every year since 2007 for the incentives it pays homebuilders to make homes energy-efficient and for the number of efficient homes built in its territory.
The EPA offers a Home Performance With Energy Star program to set criteria for efficiency in homebuilding.
APS pays builders $400 for every home built to the EPA Energy Star criteria, and $1,000 for every home that is built to an even higher level of efficiency. APS is seeking approval to increase those incentives to $1,000 and $1,500, respectively, per home.
About 9,000 homes in APS territory have been built with Energy Star ratings since 2006, said Tom Hines, energy-efficiency program manager.
Homebuilders and the EPA rely on the “home-energy rating system,” or HERS, to grade the efficiency of homes. A score of 90 means the home is 10 percent more energy-efficient than one built at today’s building codes, which would score 100. Older homes can score greater than 100 to reflect the weaker energy-efficiency codes of the past.
The ratings take insulation, appliances and other features into account, as well as power produced on-site from solar panels. A net-zero home has a HERS rating of 0.
“People would never buy a car these days without looking at that sticker with the miles per gallon,” Hines said. “People don’t buy an appliance today without looking at that sticker. HERS is the same thing on a home. All homes are not created equally.”
APS must ensure the performance of the homes once they are built, he said.
Homebuilders must pay independent contractors to test the homes that APS subsidizes to ensure they are as efficient as promised. The utility also compares the power usage from those homes once they are occupied to ensure they are meeting expectations for conservation, he said.
Keeping solar simple
To keep things simple for homeowners, Shea has formed an alliance with SolarCity of San Mateo, Calif., which typically offers solar arrays for lease.
Shea is paying SolarCity upfront for the systems, which Andreen said works well for Shea in adult communities because most empty nesters pay cash for their homes and make substantial down payments, rather than financing their purchase.
“It is all handled by Shea,” said Walter Cuculic, manager of national homebuilder programs for SolarCity. “Once they pay for their house, there are no future expenses with SolarCity. Shea covers that as part of the home purchase.”
Buyers get a 20-year service contract for SolarCity to keep the solar panels and associated equipment such as inverters operating properly, and a guarantee for the amount of electricity it will generate annually in that contract period.
At the end of the contract, customers can have the equipment removed, extend the contract or upgrade, Cuculic said.
SolarCity and Shea are offering the same deal in all five states, even though the incentives they get from utilities vary by region. SolarCity can take advantage of federal incentives of 30 percent of the cost of solar arrays nationwide.
“That is really one of the most exciting things,” Cuculic said. “It is great that solar is now starting to work in states where there are no (utility) incentives.”
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