KB Home executives Dan Bridleman and Jacob Atalla tell Green Builder Media CEO Sara Gutterman how the all-electric Oak Shade and Durango communities in Riverside County combine rooftop solar, home and community batteries and a smart load center into a self-sustaining microgrid that first-time buyers can still afford.
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Sara Gutterman: Hi. I'm here today with Dan Bridle, senior vice president of technology, Strategic sourcing and sustainability for KB home, as well as a longtime friend, Jacob Atala, vice president of innovation and sustainability at KB home. We're so excited to hear from you about your communities in Riverside County in California, in the Shadow Mountain Master Plan community, but specifically the Oak Shade and Durango communities.
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Sara Gutterman: These are net zero, all electric communities. So can you tell us about what is unique and different and special about these communities of the future?
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Dan Bridleman: These two communities are a culmination of years of, I think, innovation and sustainability and technology that all convene at the right time. It's also a story of partnerships. This couldn't have gotten done without brilliant minds from places like University of California, Irvine and big thinkers at Schneider Electric and our partners at SunPower, as well as, you know, our partners in the community with the division.
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Dan Bridleman: And so there are so many things that have come together here for us to be able to do this. And also partnering with SoCal Edison. I mean, for the first time, you've got the power companies, we've got the technology experts, we've got academic thinkers. And I'm going to also say the federal government, Department of Energy all came together in this project.
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Dan Bridleman: And it sort of just came through in terms of how do you take a big idea and build resiliency into a community in today's environment, make it affordable for a first time home buyer, and do some research on how to effectively be able to continue to make this better and roll it out. So the idea was a resilient community that on its own, a home, take a house.
00:02:02:22 - 00:02:28:07
Dan Bridleman: The envelope itself is so innovative and so good, that requires very little power in the first place, and is built to the Department of Energy's zero ready standard. So each house has its own power plant on the roof. It has a battery storage in the garage, so it has the ability to be able to use the battery so it can switch between grid power and the battery power and give you a better, you know, energy savings in the house.
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Dan Bridleman: It also has a community battery in which all the homes in the community not only charge their home battery, but they also charge the community battery, which means in the in in a time where you might have to walk away from the grid because of fires or a lockout. The community itself has been charging its own community battery.
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Dan Bridleman: So it's a self-sustaining microgrid, meaning that it's a mini little power plant at the house and for the community, and they all share in powering the community. The idea here is demonstrating also that you can do two way power with using the cars as well. So if you think about it, you've got a car in your garage that has a battery in it, you've got a battery in the garage that can be used and you have a community battery.
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Dan Bridleman: So I'll be appliances, like for example, the stove in the house is an induction stove. It's a beautiful stove. Uses, I think, 40% less power than that of a typical electrical stove. Heat pump, heat pump technology for the air conditioning, heating, as well as a very sophisticated heat pump hot water heater that uses very little power as well to generate hot water.
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Dan Bridleman: So all electric, beautifully designed and very innovative. And that was the idea that came out of the partnerships as let's go ahead and try to do this. And the brains behind the whole thing was the Schneider Smart Load Center is kind of the brains that manages all those things you can think of, like, how do you get power from the grid or from the batteries, from the batteries?
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Dan Bridleman: And then you're using SunPower solar panels. And, Jacob, what's the name of the SunPower battery? What's that called? The Sun Volt.
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Jacob Atalla: And it has a hub as well that works with the Schneider system.
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Dan Bridleman: It is about the story. It is about that this time, and it is about that idea of thinking big. And that was the fundamentals behind this project and resulted in a very resilient microgrid in California and demonstrated that we can do this and we can be effective at, you know, making affordable homes. The prices on these homes today range from, I think the high 400,000 to the high 500,000, depending on the, you know, the amount of square footage that you purchase, which believe me, it's a lot of money.
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Dan Bridleman: But in California, it's a it's an affordable first time in a brand new community.
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Sara Gutterman: So, Jacob, you know, clearly you're showcasing that the future is here now. The future of communities and larger scale developments has to include demand side energy management and microgrids. So as the VP of Innovation and Sustainability for KB home, can you talk a little bit about the impact of microgrids? And are you able to, let's say, optimize energy use within the homes and the community before the energy even hits the grid?
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Sara Gutterman: And then you're having that two way bidirectional conversation, not only with a vehicle to a home in the grid, like what Dan was saying, but amongst homes and then within the grid. And ultimately, will this community be effectively a power plant, a power generation entity for the grid so that it not just reduces grid stress, but actually net meters back to the grid?
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Jacob Atalla: So we're doing grid services here, whether it is load balancing for the grid load, grid stabilization, providing an energy source and distributed sources to the grid. That's what these the, the newer items that were working on here. And actually these are tests we're going to research and report back to the Doe on these items so that that not only KB home, but the industry and the E also utility companies can learn from our experience as we build out these communities and the microgrid.
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Sara Gutterman: Now, Dan, you talked about the value of the partnerships and the various different entities that came together to help create all of the innovative strategies and systems and technologies for these communities. And I know from your press releases that you all were able to access a grant to help support the build out of this technology. How far away are we from actually having the numbers pencil out so that developers can do this, you know, on an ongoing basis without grants and, you know, can can.
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Sara Gutterman: What would your tips to other community scale builders and developers be? You know, if they have this vision, do they have to get grants and funding it? Right and right now to to have it pencil out? Or is there a way to do it without that step?
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Dan Bridleman: Yeah. Everything has to have a beginning. Right. And so I think that the nice thing about working with the US Department of Energy with the grant is that through research, we're going to be able to look at continuous improvements and innovations to help drive down some of the costs. And so the gap is smaller than what you think.
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Dan Bridleman: And then you think in California we're already doing solar on the roofs. Right? So that's part of the part of the process we figured out. So you've got you got the battery and then you've got some infrastructure costs. And then you've got, you know, the community battery cost. But beyond that you know the load centers and the software is there relatively minor compared to the fixed costs of those things.
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Dan Bridleman: And I think over time we'll find ways to offset some of those costs. And one would say, well, $10,000 in a 30 year mortgage, you know, is relatively small. It is, but in a softball, but for every time you raise the cost of the price of the house, first time homebuyers may not qualify. So we're very sensitive to, you know, looking at ways, looking at other ways to take out some costs to offset some of the innovation costs.
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Dan Bridleman: So I think we're the gap is not as big as you think. And the nice thing about the grant is that through research and through partnerships, I think we're going to learn a lot and be able to do this in a way that in the future doesn't mean you have to charge a lot more to the consumer, but it's going to take some work.
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Sara Gutterman: Is there a big learning curve for your buyers, or are the buyers in California at this point fairly savvy about, you know, electrification and at zero and microgrids, are there generational differences? So are you talking differently to millennial and older Gen Z home buyers than you are, say, to Xers or Boomers? And finally, Green Builder Media's data, when we survey our audience and granted, we reach early adopter and first mover consumers, the majority now of which are millennial and older Gen Z homeowners and home buyers.
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Sara Gutterman: And we are seeing that they're looking at a little bit of a shifting valuation metric where they're not only looking at lowest price per square foot or lowest upfront costs, but they are starting to think about the full cost of home ownership. And so they are starting to understand that first cost doesn't mean full cost. And if they can, you know, even if they have to spend $10,000 more up front or in over the course of their mortgage on a battery, if they're basically eliminating their utility bills, that might be a really good investment.
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Sara Gutterman: So are you seeing that that's an equation that your buyers are kind of proving out in their heads as they're deciding to purchase homes in this community?
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Jacob Atalla: You know, we're not trying to create.
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Jacob Atalla: It. Techie home owner, if you will. What we're trying to do is create the two things they want as far as energy. They wanted stable, and they want it at low cost or lower cost and a predictable cost into the future. So in this community, we have workforce homeowners. We have also retirees, and both of them are cost sensitive.
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Jacob Atalla: And they both understand. And we also help with marketing tools, help them understand that it's the total cost of ownership that you want to really focus on. And that then opens their mind to, okay, it could be like you said, Sarah, it could be $10,000 more, even though in this case it's not that, but it helps them understand that their total cost of ownership is going to be less, but they're going to have reliable power and resilience in that, in that regard.
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Jacob Atalla: And they're going to have that power at a predictable and a leveled cost for a very long time. Whereas we know the market is signaling and has been we've seen the history of it, where the price of kilowatt hour continues to go up and up all the time. So finally, it's their choice. We sit down, we plan to sit down with them as when we deliver the first homes, sit down with them and say, what are your preferences?
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Jacob Atalla: What are your priorities? Do you how much do you want to keep in the in the battery so that you can charge your battery at night if you want to? Or do you want to participate more in the grid services and sell more of your power to the grid and get economic return for that to lower your energy costs even further?
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Jacob Atalla: So these are the kind of things that we're going to explore together with our customers here.
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Dan Bridleman: Every home should be as unique as your own DNA, and you want to have choices. So we don't build it and hope you will buy. You get a chance to pick your lot. You get a chance to pick your plan and elevation. You get an opportunity to go to our studio and then add to those things that make it unique to you.
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Dan Bridleman: And at the same time, fundamentally, the grid, the microgrid is automatically built into the to the infrastructure. So it fits our model beautifully. And I think that if you're that kind of person that wants something unique, that you want to be able to pick and choose the kinds of things you want to add to it, it's a perfect community for people to come to.
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Dan Bridleman: We've talked about energy a lot, but in California, you might be aware, Sarah, that water is almost a bigger issue in California than even energy. Even the cost of water is becoming at a point, almost more expensive than energy. So the other nice thing about these homes is that they're all built to a water sense standard. And, you know, they have a very efficient use of water.
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Dan Bridleman: The other thing we did is we also followed the indoor called Air Plus programs. And so it's it's a healthy home.
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Sara Gutterman: Clearly water is the most important topic of our moment to solve for. I agree with you. We've kind of already solved for energy. Now it's just about implementation and bringing battery storage costs down as much as anything else. Bottleneck I think, in that area. But I'm curious, you know, not even to this community per se, but are there water innovations on either a home scale or a community, or even a municipality scale that you have your eye on?
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Sara Gutterman: I know for us, you know, certainly low flow fixtures, that's just the no brainer. And that actually they make a big difference in terms of water use within the home. Now, some of the leak detection and water monitoring systems like fin, I know, are really kind of emerging on the market and are interesting. We're looking at things like hydro panels, so panels that look like solar panels, but actually harvest potable water out of the air.
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Sara Gutterman: I'd be curious to hear, are you looking at any of those or any other innovations that you have your eye on?
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Dan Bridleman: We've got repetitive motions on what it takes to build an efficient, water efficient home and water efficient fixtures, but I think is the next frontier water. And if you think of anything more precious to us in life, it's it's water. And so everything that you mentioned, even at the point of sensors in terms of like, you know, sensors of where you may have things that are using more water than not to tell a homeowner electronically, hey, you've got, you know, you're using more water than you should or, or a sensor on, you know, just input to your house.
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Dan Bridleman: But even using greywater and how do you but how do you do it attainable. How do you do it efficiently. And and we got a lot of work to do with, you know, permitting and getting government agencies also to recognize that using great water for the outside and for other things is a feature that we're going to have to do going forward.
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Dan Bridleman: So I think it is a it's been one of our key strategies. I do think there's a frontier in front of us, and it should it's going to be fun to watch how that one grows.
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Jacob Atalla: So the homes we build in the southwest go beyond use of water sense fixtures to being water sense labeled homes, similar to certifying to energy star or other above code standards. So they're they're rated with hers H2O and when appropriate they and reaching hers H2O 70 or less. They are water sense labeled homes.
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Sara Gutterman: You know we hear that you know monitoring energy and water and even indoor air quality changes homeowner behavior. Can you corroborate that? That is indeed the case.
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Dan Bridleman: An integration of a resilience monitoring system that's integrated with your home that drives behavior, ultimately will be much better than little point solutions that you have to try to drive that tend to be fun in kitschy, but maybe don't help you really change and drive to a benefit of either improving your electricity or improving water. Or it's interesting to know how much electricity my refrigerator is using, but it did it really change how I use my refrigerator?
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Dan Bridleman: I don't know, so I think there's some. This is my opinion. In my opinion, it's just my opinion. But I think there's some work to do with creating more of a resiliency monitoring system that's connected, that's not special, that will run on the platforms that run on your phone without having to require a whole bunch more technology and passwords and things like that.
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Jacob Atalla: How we step forward is with do it for me kind of thing, rather than having to need a lot of user interface, set it and forget it. Another word set it once, set the rules what works for me, and then do it for me. So we start borrowing from the future from AI and as Dan said, something that kind of brings these things all together.
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Sara Gutterman: And clearly, you know, we can't make the shift in our industry unless we get the appraisers and the realtors and the lenders on board to appraise sustainability and to include energy efficiency and water conservation into mortgages and resiliency and things like that. So are you starting to see shifts in those kind of peripheral sectors? Are you starting to see mortgages that do start that are incorporating either sustainability or resiliency, or at least energy efficiency?
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Sara Gutterman: Tell me a little bit more about what you're seeing in California and just across the nation on that front.
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Dan Bridleman: There's definitely glimmers of certainly mortgages that are based on, you know, the resale value of a home as Energy Star qualified. And, you know, there's there's a number of things like that that are happening. And there's been a lot of work with local governments and agencies to get permitting done, especially like when you talked about doing a microgrid.
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Dan Bridleman: This was a very unique. And and so I do see that there's very positive momentum with everybody to move forward, because we're all kind of living in this world together, but they're still work to go there for sure. And, you know, one step at a time and you prove things work out, and then you go on to the next one.
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Jacob Atalla: For example, in the early days of when we adopted solar, we were asking the appraisers that worked in our communities to take a solar class that we offered, okay, our partner SunPower offered, take that class, learn about solar and the value of solar and how to value it, and then appraise our homes. And that's really something that then it became a very normal kind of thing.
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Jacob Atalla: The same today we have to do a little bit more education or use new tools to kind of pave the way for the technologies and and solutions of the future.
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Dan Bridleman: And I'm really proud of the progress at KB. Home is made in, you know, setting the foundation for us to have a strategy around sustainability. But we've always known that you can't ask people to pay for it. You've got to figure out ways to innovate and reduce the costs, but still have a balanced approach to attainability, because you can build the most efficient home in the world that nobody could afford.
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Dan Bridleman: And that's not a good solution.
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Sara Gutterman: Dan and Jacob, thank you so much for being so generous with your time today. Congratulations on the Oak Shade and Durango communities. I think they are something that all of us in the building industry should be looking at and keeping our eyes on with respect to the evolution of the housing sector, and just really appreciate your great work at KB home.
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Sara Gutterman: Thank you for being here.