Beyond Energy Ratings Basics

It’s time to rethink home energy rating metrics and inspire action.

This is Sam Rashkin’s latest in a series of articles based on his second book, “Housing 2.0: A Disruption Survival Guide.” It is intended as a roadmap for high-performance builders to become the most successful in the industry.

The most foundational part of high-performance home programs is the energy-efficiency scoring metric. It is a critical tool for creating contrast between business-as-usual and greater energy efficiency with lay consumer audiences. It needs to inspire emotion and action. 

With this in mind, I’ll examine existing metrics for rating new and existing homes.

The energy efficiency scoring metric creates a contrast between business-as-usual and greater energy efficiency with consumers. Credit: iStock/acilo

Home energy ratings were first developed with support by the U.S. Department of Energy (DOE) in the early 1990s, primarily as a tool for measuring the energy efficiency of existing homes. 

These early rating systems (e.g., Energy Rated Homes of America, Home Energy Rating Organization) provided a numeric score that also prominently featured a consumer-facing five-star rating, much like the peer review metric used pervasively today for thousands of products and services. In other words, these early home energy rating programs were ahead of their time.

Sample RESNET Home Energy Rating Certificate

A Standout Energy Rating Solution

In 1995 the Residential Energy Services Network (RESNET) emerged as the predominant Home Energy Rating System (HERS) with critical initial funding by the Environmental Protection Agency (EPA). This was because the EPA made HERS ratings a requirement for its ENERGY STAR Certified Home program and needed a national rating infrastructure. This resulted in a complete shift of focus for home energy ratings from existing to new homes. 

The original RESNET HERS Index score was based on a scale where zero was the least energy efficient home (e.g., effectively an open tent). A score of 80 was aligned with a code reference home (e.g., the latest Model Energy Code), and scores above 80 would be homes worse than code (e.g., the vast majority of existing homes). 

However, RESNET embarked on a transformational change to the HERS Index in 2006 that completely flipped the scoring system. This led to the current scale, where a score of zero is a zero-energy home. A score of 100 is the reference home tied to the 2006 International Energy Conservation Code (IECC). Scores above 100 are less efficient than code. 

Today, RESNET HERS ratings still calculate home energy savings relative to the 2006 IECC reference home. As the latest codes (e.g., 2015, 2018, and 2021 IECC) have gotten significantly more rigorous, the HERS Index-reported energy savings have become highly overstated for new homes. 

A sample RESNET home energy rating certificate shown in Figure 1 reveals the confusion communicating HERS rating results to consumers. The substantial energy savings are cited as “relative to an average U.S. home,” which is highly ambiguous. Is it an average new home? Is it an average existing home? Is it an average for all new and existing homes? 

What isn’t ambiguous is the energy savings, noted in a bold, extra-large font. The only assumption I can make is that homebuyers will interpret the savings cited on a customized certificate for their home as the utility bill they should experience—a huge over-promise.

Addressing this problem has proven to be a huge challenge for RESNET, since many versions of the IECC code are adopted by different states and modified with an incredibly complex array of addendums. That said, the RESNET HERS Index has very effectively served its primary purpose by ensuring certified homes meet a consistent energy efficiency threshold. 

This enables high-performance home labels (e.g., ENERGY STAR, DOE Zero Energy Ready Home [ZERH]) to deliver a consistent brand promise which has been critical to their success. As a result, the RESNET HERS Index has experienced impressive success with more than 4 million ratings. 

DOE Home Energy Score system for rating existing homes

In spite of its significant market impact, personal observations from mystery shopping thousands of high-performance homes suggest that the HERS Index itself remains complicated for homebuyers to understand. For instance, it’s very difficult to extract emotion for varying high-performance home HERS Index scores: approximately mid-60s for an ENERGY STAR Certified Home Version 3.2, low 50s for a DOE ZERH Version 2, and mid 30s for a Passive House Institute U.S. (PHIUS) home. 

Recognizing that the growth of RESNET HERS Index with new homes was not translating to existing homes, DOE was legislatively mandated to fill this gap and launched the Home Energy Score in 2012. Seeking a simpler and lower-cost option, DOE introduced a whole new “1-to-10” rating scale that went in a completely different direction than the RESNET HERS Index. In this rating system, “1” is the most inefficient existing home and a “10” is the most-efficient existing home (see Figure 2). 

This new metric entailed huge challenges related to creating a whole new rating infrastructure and getting homeowners engaged and inspired to take action based on rating results. I know from experience with Energy Star that this level of consumer education entails billions of dollars of investment. 

The latest results from the DOE website suggest the Home Energy Score is struggling to gain traction, with only 175,000 homes rated nationwide. This is in contrast to the millions of new homes scored with RESNET HERS ratings.

Energy Ratings: The Next Level

This overview of home energy rating metrics suggests two conclusions. First, significant progress has been made developing robust analytical tools with the RESNET HERS Index and Home Energy Score. And second, there is tremendous opportunity to significantly improve these metrics relative to their emotional connection with consumers and impact on decisions purchasing and/or upgrading homes. 

In particular, two proven behavior changing metrics can be leveraged that have been used globally with a proven track record for extracting emotion and inspiring action: traditional grading schemes and five-star peer review ratings. I’ll examine both.

An example applying the traditional grading metric is the Energy Performance Certificate (EPC), which was introduced in 1994 by the European Union. It is used on buildings and products, including all new and existing homes that are for sale or rent in European Union countries. 

This rating was made mandatory with the Energy Performance of Buildings Directive in 2010. Effectively, it is Europe’s ENERGY STAR. The EPC summarizes the energy efficiency score with ratings from “A” to “G,” where “A” is very efficient, and “G” is inefficient, and provides recommendations for improving your home’s grade (see chart below). 

Energy Performance Certification used by European Union

I would personally make a minor revision to the EPC— eliminating the “E” and “G” scores—to more closely align with the something like the traditional “A-through-F” grading scheme used in the U.S. This is because the “A-through-F” scale is an off-the-shelf metric that guarantees extremely high emotion for every individual in the United States who has ever been to school and gotten a grade (i.e., virtually everyone). 

For free, this rating system would leverage the mortal fear we feel of getting a “D” or “F,” euphoria we feel getting an “A,” and desire to do better getting a “C.” My personal recommendation is when you are given an invaluable gift for free, take it.

Getting back to the original HERS rating systems supported by DOE, it unintentionally leveraged the one-to-five-star peer review rating metric that eventually became a powerful asset for inspiring behavior change. American consumers are already emotional about peer reviews and make millions of purchase decisions every day based on them. 

In other words, they come fully trained. I won’t even choose a restaurant or hotel that has less than a four-star rating when traveling and that’s just for a $100 meal or $300 room. It should be expected that five-star ratings should yield substantially greater impact with what is often the largest asset we own, our homes. 

This leaves me with a simple but powerful recommendation for our nation’s home energy rating systems. Optimize investments to date and build upon excellent progress developing robust analytical tools by augmenting existing rating metrics with a simple, emotional, and action-inspiring summary score. Two options to consider are the “A through F” grading scheme and five-star peer review rating. 

We still have formidable challenges ahead moving the nation to zero energy new and existing homes. However, I believe it is a big handicap to rely on performance rating metrics that don’t inspire emotion and action with a lay consumer audience. The climate crisis depends on it. 

For decades, energy ratings systems have served a vital purpose in ensuring that homes carefully, efficiently and consistently use electric power. Credit: iStock/Oleksandr Hruts

Sam Rashkin’s two-decade career as a licensed architect includes serving on national steering committees for the U.S. Green Building Council (USGBC)’s LEED for Homes, Green Builder Media’s Green Builder Guidelines, the Environmental Protection Agency (EPA)’s WaterSense label, and EPA’s Indoor airPLUS label. He has partnered with Green Builder Media to develop the Housing 2.0 program, which empowers building professionals to design and construct higher-performance, healthier and more-sustainable homes at a fraction of the cost.

This Housing 2.0 presentation is sponsored by:  Jinko Solar,  Panasonic, Schneider Electric and LG HVAC