ENERGY STAR’s “NextGen” Upgrade Rewards All-Electric Lifestyles

A new, upgraded certification program through ENERGY STAR encourages new construction that’s heavy on electric technology, light on fossil fuel reliance.

You may be familiar with the ENERGY STAR for Homes program from the Deptartment of Energy. It’s a 30-year old whole-house certification aimed at producing homes 10-20% more energy efficient than standard new homes. Pathways to compliance include better insulation, high-performance windows, efficient HVAC systems, and effective lighting and appliances.

At its core, the new ENERGY STAR NextGen option emphasizes electric gear over older technology.

A new, optional NextGen version of that certification was introduced in November 2023. It’s a higher-level program supported financially by the Inflation Reduction Act (IRA). If you whittle away the similarities between this enhanced certification and the standard one, the NextGen upgrade is essentially an “all electric” version of the standard ENERGY STAR certification. While it does allow for gas appliances in special cases, such as cosmetic gas fireplaces, it encourages the use of electric technology over gas for all of the home’s infrastructure. 

Let me break down the differences in a little more detail. A NextGen home will include:

• Variable Speed Heat Pumps. More efficient and quieter than furnaces or boilers, heat pumps are a standard part of a NextGen certified home. Multi-speed technology optimizes heat pump performance. 
• Hybrid Heat Pump Water Heaters. A typical water heater uses more energy than a refrigerator, clothes washer, dishwasher, and dryer combined. ENERGY STAR certified heat pump water heaters are up to four times more efficient than standard models, saving hundreds of dollars every year
• Electric cooktop and oven. Although NextGen does not mandate a specific type of electric range or cooktop (coil element, glass over resistance, etc), induction tops would make the most sense, as equitable replacements for the performance of gas ranges. It should be noted that the NextGen literature doesn’t emphasize the CO2-saving aspects of electric technology, instead pointing out reduced exposure to combustion by-products from gas-based appliances.
• Electric vehicle (EV) charging capability. In homes with private parking, a heavy-duty power outlet is wired in and ready to charge an electric vehicle or have a Level 2 EV charger installed. Properties with shared parking are equipped with ENERGY STAR certified EV chargers.

Selling NextGen to Building Pros

When you look at the reasons the EPA suggests that builders or architects upgrade to NextGen certification, most of the reasons are based on data from past ENERGY STAR homes, not these latest versions. (They’re still too new.) 

Can builders leverage NextGen certification to eco-conscious consumers looking for advanced, sustainable home features? Absolutely. Can they present the homes as “future proof,” in terms of their technology, so that they can be upgraded as new technologies come online? Yes, without question. 

But for now, it’s a stretch to say that NextGen-certified homes are likely to have a higher resale value than a “standard” ENERGY STAR-certified home. 

The reality is that any home with upgraded green features tends to sell for more than a non-upgraded home of the same size. In other words, the value of the NextGen enhancement has not yet been quantified in terms of its long-term ROI.

NextGen homes qualify for the same Incentives and tax credits as existing ENERGY STAR homes, but their high-tech gear may make it easier to max out these credits because electric technology is called out specifically. In some states, other rebates may also apply, such as big rebates for heat pump hot water heaters. These are not really part of the NextGen upgrade, however. They’re an existing benefit that can be accessed by anyone installing this tech.

Renewables Should Be Part of the NextGen Path

One “elephant in the room” criteria missing from the NextGen certification is a clear imperative to factor in on-site renewable energy when weighing the footprint of electrification.

A NextGen home heated with a heat pump that uses energy from a coal-fired plant miles away has little in common with one running directly from a rooftop solar array or other “green” power source. An EV charged from the grid the same way is little better than an existing gas vehicle. Power it up with sunlight, however, and it’s truly game changing. 

We’d like to see the DOE step up its game with regard to this new certification. They’ve offered some lukewarm incentives for all-electric conversion. Before builders dive in, they need more solid incentives and a better narrative. ENERGY STAR NextGen homes should stand out as a new kind of ultra-efficient home that are no more expensive to build (with incentives) than conventional homes, and resilient in the face of energy volatility.

For detailed information on the incentives and benefits of the ENERGY STAR NextGen certification, visit the EPA's ENERGY STAR NextGen page and the Department of Energy's Home Energy Rebates Programs page.

Would you like to learn more about ENERGY STAR at Sam Rashkin’s Housing 2.0 session at PCBC? Register at www.pcbc.com and enter a discount code, GBMEDIA, to access the Housing 2.0 session for $95, which includes lunch and a pass to the exhibit floor both days of the show.