Here is the text version of the webinar “DOE ZERH Version 2 Orientation Training,” presented in August 2023 by the U.S. Department of Energy’s Zero Energy Ready Home program.
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Sam Bowles:
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Hello, everyone, and thank-you for tuning in to this orientation for Version 2 of the Zero Energy Ready Home program. My name is Sam Bowles, and I am the communications director for the Zero Energy Ready Home program, and we're excited to share with you our Version 2.
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Please note that all partners must view this orientation, but raters and verifiers must take this and all other required training through their overseeing HCO or MRO for ZERH so that they may track and record your participation. Watching this orientation via the ZERH website does not fulfill the training requirements for raters and verifiers.
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In the orientation today we will cover four main topic areas. There will be a brief welcome from Jaime Van Mourik at the Department of Energy and an introduction to the ZERH program. Next, we will discuss the value of ZERH, how to earn the ZERH certification, and next steps for partners who would like to get started with the program. And now we will hear from Jaime Van Mourik, the ZERH program director.
Jaime Van Mourik:
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Thanks, Sam. I'm really thrilled to be here today with you all as we launch this orientation, which will cover the Zero Energy Ready Home program. This is a really exciting time to be part of the program. I have been with the Department of Energy for a little over two years. I've been working in the green building industry for over 20 years, and every day I am looking towards that North Star of how we are going to decarbonize the built environment. In my time at the Department of Energy working with our Building Technologies team, it has become so apparent that the residential sector just needs so much support, innovation and leaders like all of you to really pull us toward that future goal. And so with this orientation, I am thrilled to be able to share that I am now stepping in as the new ZERH program director, and I look forward to learning all about the work that each and every one of you are doing to support this goal. This a really important and exciting time with the passage of the Inflation Reduction Act, which is the largest climate legislation bill that we have seen and that offers a really great tax incentive under the 45L tax credit. With this incentive, builders will be able to earn $5,000 when they achieve ZERH certification under our single-family program, and then there will also be a tax incentive for a multifamily program.
At this time we knew that it was really essential that we started to raise the bar for this program, again with that decarbonization goal in mind, and also with everything else that is happening in other industries, in the transportation industry, what's happening with our grid and the industrial sector, we knew that this was the moment in time to increase efficiency, encourage electrification, and really increase the scope to have more building types fall within this program and widen the applicability of solar readiness. And you are going to see this in our Version 2 program requirements. So I want to thank each and every one of you for participating in the program. If you are watching this and you are interested in participation, you know, again, we are here to support your journey along the pathway and are always happy to answer questions and provide any guidance that you need. I'm going to go ahead now and turn it over to Sarah Cok, our ZERH technical manager. Sarah?
Sarah Cok:
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Thanks so much, Jaime. To echo Jaime’s sentiments, we'd like to recognize stakeholders taking this training and thank them for being a part of a select group of builders, raters, and related industry partners. Please note that for those of you that have not yet joined as partners, we'll cover how to become a partner at the end of this orientation.
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Before we get into the details of the ZERH program, here's a little bit about why this program exists. In 2020, 40 percent of all the energy used in the United States went to powering buildings and everything in them. This is a fact that many people don't recognize: our homes and buildings use more energy than any other sector in the U.S., more than the industrial and manufacturing sector and more than our cars. Because of this, the building sector is also where we have the greatest opportunity to reduce energy use.
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Building code developers are acutely aware of this, so codes are getting increasingly stringent. And with each new version they put a greater emphasis on energy efficiency. For example, you can see here that between 2006 and 2021, the energy use of a house built to the International Energy Conservation Code, or IECC, dropped by about 30 percent. And we can expect this trend to continue. Because the ZERH is an above-code program, builders involved in the program are more prepared than their peers to meet these increasingly stringent codes.
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In addition to meeting the increasing efficiency levels of energy codes, tens of thousands of new homes are getting energy ratings each year. The average score of these ratings is getting lower, meaning homes are on average getting more and more efficient. HERS scores, the energy rating scores displayed here, are set up so that a score of zero represents a home where all the energy the home uses is offset by on-site renewable energy like rooftop PV. There are lots of ways to define zero energy, and this is one of them, but for the Zero Energy Ready Home program, the zero-energy state we're preparing for is using all renewable energy whether it's produced on-site or off-site.
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However, it's important not to jump to all renewable energy use too quickly without considering the implications and necessary preparations. The residential sector will need to coordinate with both the energy infrastructure and energy production sectors to get down to zero operational emissions. The residential sector can do its part by conserving energy with tighter envelopes, right-size systems, time of use improvements, and load balancing. By reducing the amount of energy our buildings use, we help reduce the burden of new development needed in the renewable energy sector, including both infrastructure and production. With these three sectors working together, the residential sector can strive to do its part to support the Administration's goal of the net-zero emissions economy by 2050.
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Many builders and developers across the country are doing their part to make this goal a reality. There are now 45 states with ZERH certified homes, and the total number of ZERH certified homes is increasing exponentially. It's very encouraging to see this amazing program growth …
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… but we need to remember that these ZERH homes are currently only a very small portion, less than half a percent of new homes built in the United States each year, however, because of the Administration's ambitious commitments to reducing carbon emissions in a short amount of time, there are more and more resources every day to encourage participation in ZERH and other energy-efficiency programs. It's vital to take advantage of these resources and participate in the energy-efficiency movement now. It can't wait, if we want to limit the drastic impacts of climate change.
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ZERH is a step on the way to a sustainable future for generations to come. But aside from this larger goal, it also has tangible value for builders, developers, and homeowners today. Now we'll hear about the value of ZERH and how to earn a certification from Jamie Lyons, the program's technical director.
Jamie Lyons:
Thanks, Sarah. So we'd like to start unpacking the value of Zero Energy Ready Homes, and we'll do that over the next few slides here.
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So becoming a Zero Energy Ready partner and building ZERH certified homes is really a good decision for both efficiency and environmental reasons, but also very much from a business perspective, as well. Today we have hundreds of builder partners in the program from all around the country, leveraging the benefits that you see here based on their participation in the program. The Zero Ready program can help these builders to ensure quality construction. It can boost customer satisfaction and drive positive reviews, and it can help to drive increased market differentiation for the builders in the markets where they work.
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So in the first piece, ensuring quality construction, it really starts with the Zero Ready program, its requirements and the third-party verification that helps builders to design and then build homes that perform well as a system. Zero Energy Ready and its prerequisites use building science best practices to increase the energy efficiency but also to integrate that efficiency with comfort, indoor air quality, and moisture management measures that all come together to create homes that deliver exceptional performance while at the same time helping to mitigate builder risk. The Zero Energy Ready program often prompts builders to consider different elements in how their homes perform perhaps with a little more focus than they would have otherwise had they not been participating in the program.
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One way the Zero Ready program helps to ensure high-quality construction is the second set of eyes, requiring the third-party oversight and verification as part of the certification process. So in this slide we see a few examples of construction defects and issues that in the absence of any third-party oversight might get missed and then therefore be built into the home for the long term and possibly result in performance problems or customer complaints or other issues. So the first image on the left side here shows a missing air barrier in the floor framing that spans the house, running from an area above a garage to another area over the living space. So missing that air barrier can possibly result in thermal issues, air quality issues, and potential moisture problems. In the middle we have an infrared image showing missing rim joist insulation. Those areas that are glowing orange, which represent a lot of heat loss, so this miss in the insulation detailing could result in thermal issues as well as possible moisture problems. Then on the far right side we see some insulation batts, which are heavily compressed and they simply won't perform as well because of that compression. And then once covered up by drywall, this reduced performance is sort of built into the home and will be there for many years to come. So third-party inspections and verifications for the Zero Ready program would catch these kinds of things and therefore improve performance and reduce builder risk in the process.
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By meeting the Zero Energy Ready program requirements, participating builders often experience higher levels of quality assurance, which can then also help to reduce callbacks and reduce warranty costs. One builder noted that their Zero Energy Ready projects end up having fewer callbacks for moisture infiltration issues, and also they end up passing inspections faster and more reliably. So these types of effects help to reduce business risk and improve customer satisfaction and can improve a builder's reputation as a high-performance builder.
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This leads to the next builder benefit, which is that Zero Energy Ready certified homes can also offer really exceptional levels of customer satisfaction.
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So the technical components of the program focus not just on the energy efficiency, which is quite high, but also on comfort, indoor air quality, and managing the biggest risk to a home's long-term durability, which is moisture. So this is a systems approach to designing and building a high-performance homes, and it leads to higher levels of customer satisfaction in many cases, as illustrated by this one Zero Energy Ready Home homeowner testimonial that notes, “We've lived here for almost a year now and it's been the most comfortable home I've ever lived in. We're happy clients living in our happily ever after home.”
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And for many homeowners, a healthy living environment is really a critical part of their consumer experience. Zero Energy Ready Homes are built with many indoor air quality measures including things like fresh air ventilation, air filtration, and pest protection. So these measures are all drawn together to provide a complete indoor air quality approach drawn from the EPA's Indoor airPLUS program. And for many homeowners, a healthy indoor environment is among the most important features that they're really looking for in their new home, again, as Illustrated in this customer's testimonial, which notes, “Our children haven't had to take breathing treatments since we moved into our new house last year. The air quality in our home is excellent.” So homeowners with this level of satisfaction can really help to boost a builder's reputation in their market.
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The total cost of ownership can be another critical part of a customer's experience. Most Zero Energy Ready Homes will end up including some additional costs for things like more insulation and better equipment, and these are often rolled into the mortgage and add a small amount to the monthly payment.
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But when we also consider the monthly energy costs, the total cost for Zero Energy Ready Homes will often be lower than a minimum-code home when we look at them on this monthly basis. So this means that homeowners are able to start saving money really from day one in their new Zero Energy Ready Home.
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So all these benefits set Zero Energy Ready Homes apart from other homes in the market, which is another advantage for participating in the program, to get at that market differentiation that can set builders apart from other offerings in their marketplace.
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So there's a lot of things going on in Zero Energy Ready Homes, but to communicate the value of the Zero Ready program, the program has developed a communication strategy that really centers around a very simple message of living better. And in the context of a Zero Energy Ready Home, living better means thousands of dollars in energy savings over time. It means exceptionally cozy indoors, really unlike what most homeowners have experienced in other places that they've lived. It means total comfort even during extremely hot or cold weather periods. It also means a healthy indoor living environment that minimizes pollutants and provides fresh air. It means increased peace of mind from a complete system of water management details. And it also means knowing that quality assurance has been provided all along the construction process by a third party. And it also means future readiness for things like adding a PV system in the future. So this living better message is repeated and related in a variety of marketing materials available from the Zero Ready program for its partners’ use.
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ZERH builder partners can also establish market differentiation by leveraging the program as a trusted voice. In many markets, home buyers can be skeptical of builder claims, but Zero Energy Ready builders don't have to rely solely upon their own claims. They can also leverage the messages and materials that DOE puts out there about the performance of Zero Energy Ready certified homes. So they can leverage DOE resources that speak to the level of performance in these homes and therefore leverage DOE is a trusted voice. And DOE provides several types of resources that partners can leverage in this effort.
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One example is the Zero Ready partner locator. Using the partner locator off the Zero Ready website, potential home buyers and people in the marketplace are linked to leading-edge builders. Once a builder becomes a partner with the Zero Ready program, they’re searchable all throughout the country through the partner locator. Each builder partner and rater partner will appear on the partner locator website once they're registered, and their profile will include the locations where they're active in business and also list the number of Zero Energy Ready projects that they've completed. It's a nice opportunity for builders to become visible within the Zero Energy Ready program.
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The Department of Energy's Tour of Zero is another recognition opportunity that partners can take advantage of. Builders that have completed at least one ZERH home in the past year can apply for the annual DOE Housing Innovation Awards. And winning projects in the Housing Innovation Awards are shown on the DOE virtual Tour of Zero, which has hundreds of different homes all around the country in a very consumer-oriented, graphic-oriented format. As you can see here on the slide, each home profile on the tour includes several pictures – interior, exterior -- to show the beautiful floor plans. The pictures often will also include some pictures of the technologies. The profile also includes the main house specifications like its size, the energy rating, and the estimated annual energy cost savings. It will include technology features like you see down there at the bottom in the key features section. If you click on that, that'll open up even more information for people who want to do a deeper dive about the home and its technologies. And then each profile also includes a testimonial about the experience of living in the home to capture that element. So our partners that have homes shown on the tour will often link to their home's profile on the Tour of Zero and use this in their marketing communications to show the stature of their homes in this DOE national Tour of Zero Home profiles.
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Partners also have access to a database of testimonials from builders and homeowners that display the zero energy homes’ value in a very tangible way through those testimonials. Also there's promotional videos on the Zero Ready website that are oriented towards consumers and cover the benefits of living in Zero Energy Ready Homes. And these videos can also be used, by our partners in their promotional materials as they market and showcase their participation in the Zero Energy Ready Home program.
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And lastly, partners are certainly encouraged to use the Zero Energy Ready logo in a variety of ways to show their commitment to and their participation in the program. The logo is recognized throughout the energy-efficiency industry and can be used to promote new homes, homes under construction, and even entire Zero Energy Ready Home communities.
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So now that we've covered materials on why Zero Ready provides so much value to both customers and builders, we'd like to discuss the program requirements in a little more detail here in the next section.
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So as Jaime mentioned at the outset, a major component of the Version 2 updates is increasing the program applicability beyond Version 1. And so in Version 2, we have separate Zero Energy Ready specifications for single-family homes, as you can see here on the left, multifamily -- as those program specifications are completed, there will be no height limit. And then Zero Energy Ready also offers a manufactured homes pilot program. So this allows the program to cover all building types throughout the residential sector, and the Zero Ready specifications apply both to affordable housing as well as market rate housing. And within the program we've seen many successful affordable housing projects already come through the pipeline, which is great to see.
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Zero Energy Ready builds upon the base energy code as well as the EPA’s ENERGY STAR residential new construction and Indoor airPLUS programs. Further, the program also leverages the findings from DOE's Building America R&D program. Both the ENERGY STAR residential new construction and the Indoor airPLUS programs are prerequisites for most of the Zero Ready program versions, and they provide a really, really solid foundation for energy efficiency and indoor air quality.
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So in this slide we have the basic technical building blocks that apply to the Zero Ready V2 programs. Over on the left-hand side, we start by, as you might imagine, optimizing the efficiency of the home.
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And we do this through a very well-insulated and air-sealed building envelope, high-efficiency space conditioning and water-heating equipment, and taking advantage of highly efficient appliances and lighting. But that's just the starting point. We also want these homes and buildings to perform well, not just be energy efficient, but also offer high levels of comfort quality and moisture management.
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So this takes the form of adding measures that address water management, including features to make the home more comfortable, and a complete set of IAQ protections.
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And then the third component is to make the home, which is often the largest purchase of a lifetime, make it more future-ready to adapt to upcoming changes that could take place. This means adding future-ready provisions for PV readiness, electric vehicle readiness, and electric readiness for space and water heating systems. So the details of what these requirements actually look like are posted as technical requirements on the Zero Ready website for each of the program versions, where you can do a deeper dive and see the actual program requirements.
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In general the program requirements are structured around a set of mandatory requirements and then a performance threshold. So the mandatory requirements are the must-haves. These are the items that DOE wants to see in each and every certified home because of their impact on efficiency and performance and the opportunity cost of not getting them right the first time. So these are things that really make sense to do right for initial construction. A good example of that is designing and building a very well-insulated building envelope for the home. Really, the initial construction is the perfect time to get that kind of a system right. The performance threshold sets the bar for the energy-efficiency level that the home must meet. In order to meet the performance threshold, this generally will involve using a variety of energy-efficiency measures that collectively meet the threshold. There's some flexibility here in how the builder pursues meeting that performance threshold. And then compliance with both of these types of requirements is verified using the rater checklists that are completed by a third party and support the home certification.
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On this slide there's a layout of the certification process that applies to Zero Ready Version 2 single-family and multifamily programs. So working left to right, during the design phase the design team will use the Zero Ready program requirements as an overlay to guide the design of the home or the building to make sure the efficiency level is on target with the program's requirements. Next, modeling and consultation takes place, where the home is modeled using energy simulation software to ensure that the design will meet the required efficiency level based on the design and specs. So it's continuing to refine the design to make sure the efficiency level will be where it needs to, as well as making sure the mandatory items are met. During the construction phase, the builder starts the construction and development of the project and deviates as little as possible from the design specifications. The rater’s right there working alongside the builder to ensure that construction matches the design. And as we go into the rating phase, the rater is then performing on-site testing and inspections to verify that as-built conditions match the design specifications. And then oversight takes place as a DOE recognized certification oversight organization will oversee the certification docs and eventually approve the home for certification. This group then also reports the certification information for the project back to the Department of Energy. More specific info on the certification process can be found in the program version specific training that will be available as we move forward.
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So the prior slide touched on the certification oversight organizations, and the these are this element that has been updated in the Version 2 Zero Ready program versions. So certification oversight organizations are either going to be home certification organizations, or HCOs, or they'll be multifamily review organizations, or MROs. And these are both groups that are recognized by DOE to provide certification oversight for Zero Ready projects. And this role includes providing Q&A on the rating process and documentation. It includes overseeing the raters and reviewers that work under their oversight, and it also includes reporting the certification activity back to DOE. These groups have applied to DOE to serve in this role of certification oversight, and once they're recognized by DOE they'll be listed on the Zero Ready website. We also want to note that HCOs and MROs support certification activity, single-family, and for the multifamily program versions, while a different type of organization called a quality assurance provider plays this role for projects that fall under the Zero Energy Ready manufactured housing program.
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So we've mentioned about different program versions, and a natural question is, well, which program version would apply to my project? So in the Zero Energy Ready website under the program requirements webpage, partners can find an implementation timeline that you see here that describes which set of specifications to use for different scenarios. And this is going to be based on the project type and its location and its permit date. These specifications should be used in tandem with the most recently published policy record, which provides the most up-to-date information about any updates that are happening to a program version.
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So the policy record is a living document that serves as an area to capture any clarifications or minor changes that are in the pipeline for a program version. And the policy record is posted online so partners can see any changes that will soon be implemented for a particular program version.
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One final topic is the Zero Energy Ready Home program reference within the 45L federal tax credit. The Inflation Reduction Act of 2022 -- the IRA -- amended this 45L tax credit for energy-efficient new homes to require DOE Zero Energy Ready Home certification to earn the higher tier tax credit, with ENERGY STAR certification required for the lower tier credit. This slide shows the tax credit amounts available for Zero Energy Ready Home certification for different building types. IRS Notice 2023-65 establishes that to be eligible for the higher tier credit, the home must be certified under the applicable Zero Energy Ready Home requirements as defined on the DOE Zero Energy Ready Home program requirements web page. To determine which Zero Ready program requirements to use to be eligible for the tax credit, you'll need to know the project's location, building type, and permit date. And we'll go through a quick example of this on the next slide. The DOE web page titled 45L Tax Credits for Zero Energy Ready Homes also contains links to the IRS notice and additional IRS guidance on the 45L credit. Individuals or entities seeking to claim the 45L tax credit should consult with a tax professional to determine whether and how they can claim the credit and determine whether the credit can be used in conjunction with other tax incentives or federal incentives.
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So for a quick example, if a builder is working on the construction of a high-performance duplex project in Wisconsin, the national program requirements would apply. And then because the project is a duplex, it would fall under the DOE Zero Energy Ready Home single-family requirements. And then lastly, because the permit date is August 9, 2023 in this example, the applicable single-family requirements would be Version 1 Revision 8.
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With that, I'd like to hand it back to Sarah to take us through some key points on getting started with the Zero Energy Ready Home program. Sarah?
Sarah Cok:
Thanks very much, Jamie. We'll now finish up with a few points on getting started with the ZERH program.
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If you haven't registered as a partner yet, you can make your way to the ZERH website and do so now. You'll have to fill out a registration form and sign an online partner agreement. When you arrive at the new partner registration page, there will be a drop-down where you'll identify your partner type. There are different partner agreements for the different partner types.
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The program requires all these partners to work together to create Zero Energy Ready Homes. Currently there are five partner categories available: builders, verifiers, architects and designers, lenders, and innovation. Please note that while builders and developers often serve different roles on projects, developers should register as builder partners then select the subcategory for developer at the bottom of the registration page. Raters and verifiers can be individuals or rating companies. Note that either way they must work under the oversight of an HCO or MRO for ZERH, as we previously noted. Innovation partners are the loosest category. These are leaders who support and promote ZERH that aren't directly a part of the building process. An innovation partnership is a way for your organization to support the program, whether you're a manufacturer, university, building institute, utility, or something else.
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If you're a builder, developer, or designer and have never worked on a Zero Energy Ready Home before, it's important to talk to a rater or verifier before you get started. They can help you understand the program requirements and get the project on the right track. It is much easier to earn a ZERH certification if you plan a project with the ZERH rater or verifier from day one. You can find rater and verifier partners in your area with the partner locator available on the ZERH website.
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As a ZERH partner, you do have a few responsibilities. The first one is to take this orientation training, so you've already got that covered. In addition, you'll be required to complete any follow-up training DOE releases as it becomes available. You're also responsible for staying up to date with program updates, things like the policy record and newly released revisions to program requirements. You can keep up with this by reviewing the DOE emails and newsletters you'll receive as a ZERH partner. Partners are provided with ZERH marketing materials free of charge but must review the guidelines for using the DOE ZERH name and logo correctly. These guidelines can be found under the marketing tab of program resources on the website. Finally, partners must build or verify at least one ZERH every 18 months to maintain active partnership. This requirement only applies to builders, developers, raters, and verifiers.
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Thank-you for watching this orientation webinar. Now please take a moment to review the resources noted on this slide. We look forward to working with you and seeing the Zero Energy Ready Homes that you build.