 What is the Home Energy Rating System or HERS?
A Home Energy Rating System is a method of evaluating the overall energy performance of a home. The energy rating can include information about projected utility costs for a home. For homeowners who want to reduce their energy bills, a home energy rating can help identify cost-effective improvements for the home.
What exactly does a home energy rater do?
Home Energy Raters perform a standardized evaluation of the energy efficiency of your home. Evaluation includes:
- on-site inspection
- air leakage test with blower door
- computer analysis
- estimated energy savings
The data gathered is translated into a point system and a home is awarded a home energy rating score between 1 and 100.
How can home energy ratings help consumers finance new construction or renovations?
There are two ways that home energy ratings can help consumers finance these costs. First, home energy ratings can help consumers to qualify for energy efficient mortgages. Second, if homeowners achieve a certain level of efficiency through the energy rating, they qualify for the Energy Star Homes program. There are a number of incentive programs available to help consumers achieve Energy Star status with their homes.
What is an Energy Efficient Mortgage?
Banks make lending decisions based on a consumer's debt-to-income ratio. That is they look at how much is money coming in (income) and how money much is going out (car payments, student loans, utility costs) to determine how much available cash a consumer has for a mortgage payment. By incorporating efficiency into a home, consumers lower the utility costs and consequently have more cash available on a monthly basis for a higher mortgage.
Here's a quick example from Energy Rated Homes of Vermont. A consumer refinances her home for remodeling costs of $75,000. Her mortgage payment is about $524/month and her utility costs are about $150/month, so her total monthly housing cost is $674/month. Now suppose she invests an extra $4000 in energy efficiency improvements. Her mortgage goes up slightly to $552/month, but her utility costs are cut 40 percent to $90, so her total monthly housing cost is only $642 - $32 less than the first option.
 What are Energy Star Homes?
If you're buying a new home, check out an Energy Star home. The homes are 30 percent more efficient than the model energy code requirements. (www.energystar.gov)
The US Department of Energy and the Environmental Protection Agency developed the Energy Star Program to help consumers easily identify products that are significantly more efficient than the average product on the market. You can find a host of products with the Energy Star label such as computers, dishwashers, refrigerators, and homes. Many utility sponsored-programs such as rebates and low-interest loans are based on Energy Star.
When should a consumer have a home energy rating performed on their home?
For consumers who are building a new home, they should work with a home energy rater before the home is built. This is because the rater can review the plans and help develop the most energy-efficient home design at a given price point. The most cost-effective way to make a home energy efficient is to make efficiency part of the initial design.
For homeowners looking to improve the energy performance of their homes, any time is a good time to work with a home energy rate. However, with currently low interest rates now is a great time to consider improving the energy efficiency of a home, and the rater can help determine the most cost-effective improvements for consumers.
How can consumers find a certified Home Energy Rater?
Consumers can go to the Residential Energy Services Network's Certified Rater Directory to search for raters in their state.
Global Energy Efficiency Financing Resources
Energy efficiency improvements, because they may involve capital investment, can present an interesting funding challenge. While these projects often are economically attractive, there are many barriers to financing these projects. To overcome these barriers, the Alliance has identified a number of avenues of financing energy efficient improvements globally.
Funds for Energy Efficiency Projects is a compendium of more than 65 energy efficiency funds operating throughout the world. It provides a variety of information about each fund, including interest rates, loan terms, minimum and maximum loan amounts, types of projects, contacts, and more. Although most are loan (debt) funds, the list also presents a limited number of loan guarantees and equity investment funds.
The intention of this compilation is to act as a springboard for prospective energy project developers, managers and financers seeking additional information to finance energy efficiency projects in the U.S. and other countries. It was last updated April 23, 2002 and will continue to be expanded as more information is available.
Energy Efficiency Financing Funds: Providing Access to Affordable Financing is a Powerpoint presentation used by the International Team to address some of the barriers to implementation of energy efficiency improvements, particularly financing. For a copy of this presentation on financing for energy efficiency projects, click here.
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