Energy Labeling & Energy Billing Analysis

January 06, 2010
January/February 2010
A version of this article appears in the January/February 2010 issue of Home Energy Magazine.
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Discussions of building labels worldwide have pointed out the difference between “asset value” labels, which are based on how a building performs under standard operating conditions, and “operational value” labels, which are based on measurements of energy consumption using the operating conditions that exist at a particular time. Most products, such as cars or appliances, are rated using asset value labels with a standardized operational component— for example, cars are rated by EPA miles per gallon (mpg) but are not resold based on the mpg that the seller actually obtained. But for buildings, analysts generally recognize that both results are useful.

At this summer’s Westford Symposium, l made a presentation entitled “Energy Star- Qualified Homes Stuff.” About one-third of the presentation was dedicated to discrediting the HERS index, which is, at present, an asset value rating (although RESNET is in the process of adding an operational component).

Much of the presentation was based on a checklist prepared by EPA to evaluate the differences between the HERS index and EPA’s Home Energy Yardstick (see Figure 1). The checklist found the EPA Yardstick acceptable and the HERS index unacceptable in every single category!

What exactly is the EPA Home Energy Yardstick? It is a Web-based statistical analysis tool that compares the reported energy use of a given home against data provided in the 2001 Residential Energy Consumption Survey (RECS) to determine the home’s percentile energy use compared against the reported RECS data, adjusted for climate, number of occupants, and house size. Thus a home with a Yardstick score of 9.9 would have an adjusted energy use that is less than 99% of the adjusted energy use of existing homes of that size, with that number of occupants, and in that weather category. This is a completely operational rating.

We need all the tools we can muster, and the Yardstick is a useful tool. But it is certainly not all things to all people, as EPA suggests. For example, it is widely known in building science circles that the independent variables used by the analysis (weather, home size, and number of occupants) can explain only part of the annual energy use of any given home. The unexplained variance in home energy use, when using only these variables, is normally greater than ±40% of the mean. This is a rather large statistical variance, and over an entire population of ±3 standard deviations, it can result in errors as great as ±120% for any given home. Thus, the Yardstick can severely over- or underestimate the physical attributes of any given home. In fact, more than one-third of all homes will have building energy use attributes that differ by more than 40% from the Yardstick projection.

The heart of the issue is that the Yardstick and the HERS index are two different types of energy indicator, and as such have completely different (and complementary) uses and purposes. Neither one is necessarily better than the other—they simply measure different things. The Yardstick uses utility bills to measure the actual energy use of the home by the occupants.

The HERS index measures the relative energy use of the home based on its physical characteristics and a standardized set of operating characteristics. The HERS index, like a car’s mpg rating or an air conditioner’s SEER label, is based on an engineering model of its physical attributes and a standard set of operating assumptions. This is called an asset rating because it looks at the home’s physical “assets” (energy attributes), rather than at the way the home is “operated” by its occupants. It is widely known in the building science community that a large fraction of actual home energy use is driven by the lifestyle and operating characteristics of the inhabitants themselves. As a result, the Yardstick actually says more about the energy habits of the inhabitants than it does about the physical attributes of the home.

The HERS index does the opposite. It speaks only to the physical energy attributes of the home under a standardized set of operating assumptions. This is an important distinction that must be addressed.

RESNET explicitly and purposely chose to remove lifestyle from consideration in the HERS index. It does so by using a set of consensus- based, standardized operating conditions that is applied consistently to all homes. This has two results. First, only the physical attributes of the home affect the HERS index, and second, the HERS index does not predict the impact of lifestyle choices made by the occupants of the home.

When these two ways of looking at home energy use are combined, they provide a valuable tool for the home’s occupants, helping them understand how and why their energy use habits differ from standard operating conditions, and providing a customized assessment of the effects that home improvements will have on energy use, and on the cost to operate the home. However, to do this, one needs to go quite a few steps beyond the Home Energy Yardstick. The critical value of utility billing data is that they provide a basis from which to calibrate the engineering model of the home to the occupants’ lifestyle. Without the calibrated engineering model, the energy use history is not very valuable, because it contains no information about the physical attributes of the home. It is analogous to saying that we can know something about the eating habits of a household by examining their monthly grocery bill. In reality, we would know very little about their eating habits without knowing the actual items (the attributes) contained in their grocery cart.

However, with a calibrated engineering model of a home, many engineering assessment opportunities become available. One can now ask many kinds of “what if” questions— not only, What happens if a physical attribute is changed? but also, What happens if a particular operating characteristic is changed? A calibrated model also enables us to assess the cost-effectiveness of a broad range of home energy retrofit options. These options can be individually or collectively evaluated very quickly, and can be rank ordered by any number of economic indicators—from internal rate of return to simple payback. Of course, this same engineering exercise can be performed using the standard operating assumptions that are used for the HERS index if one wants to make similar decisions based on an unknown “typical” user, as would be the case if the home is changing ownership, or if a builder wants a standardized energy label.

What is RESNET doing with these challenges? Much of the national discussion on home energy ratings, and especially ratings on retrofits, has been oversimplified into a slogan: Existing homes are different from new homes. But the physics that determines energy use is the same for both homes. We badly need to change the conversation. The national discussion needs to be refocused on standard operating conditions and calibrated operating conditions, rather than on new homes and existing homes. Not using the correct terminology to describe the challenges only confuses the issues. After all, a new home becomes an occupied home as soon as the first occupants move in, and an existing home is an unoccupied home as soon as the occupants move out.

And there are good and valid reasons to have both standard and calibrated operating conditions. Energy ratings used for labeling should always use standard operating conditions; otherwise the rating label has no basis for comparison. An energy rating label based on the previous occupants’ energy use habits would say little to nothing about the physical energy attributes of the home and would make it virtually impossible to compare the physical energy attributes of one home against those of another. This would be unconscionable.

On the other hand, a calibrated engineering model is extremely useful for decision making by the current occupants of a home. So there must be both capabilities if the home energy marketplace is to be well served.

RESNET has established an Occupied Home Software Task Force and Working Group. This group is working on standardizing methods and procedures that can be used to exploit utility billing analysis to create calibrated engineering models of occupied homes. This would allow analysts to project energy use and savings potentials much more accurately where there is a billing history. RESNET is also working very closely with the National Renewable Energy HERS Index vs. YardstickLaboratory and DOE on a new software verification test suite called BESTEST-EX, which can be used in the accreditation of software tools capable of creating calibrated engineering models for occupied homes. 

David Goldsten in is the energy program codirector for the National Resources Defense Council and vice president of the RESNET Board of Directors. Philip Fairey is the deputy director of the Florida Solar Energy Center and president of the RESNET Board of Directors.

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