The average utility bill for a residential household is around $100 a month, according to the
Energy Information Administration. In peak energy usage months, that number can be considerably higher.
So, when a new mixed-use apartment building’s heating tab came in at only $1,500—for 79 units during a record cold January in Des Moines, Iowa—the property owner became concerned the energy company made an error. He was expecting a bill for thousands of dollars more.
The culprit for the drastic savings in energy costs? A modern geothermal heating and cooling system designed by mechanical contractor
Bell Brothers Heating and Air Conditioning, Inc.
As a local leader in the emerging geothermal market, Bell Brothers was approached by Nelson Development in 2007 to help brainstorm the preliminary construction plans for e300 Grand, envisioned as an urban, sustainable property with one story of retail and six stories of energy-efficient, market-rate apartments.
Bell Brothers gladly accepted the challenge to become the mechanical design-build lead on the construction team spearheaded by energy consultant
The Weidt Group, a Minneapolis-based firm.
The team determined that integrating energy-saving components into the building would add about 7 percent in construction costs to the $16 million project. But with about $500,000 in tax incentives offered by the city and the federal government, as well as credits from local energy supplier MidAmerican Energy, the extra cost to install the geothermal system would even out in the long run.
Today, the geothermal system is already lowering the building’s operating costs. Upon its first test, the Weidt Group verified a 56 percent savings in energy costs from the geothermal heat pumps and a 23 percent savings from the geothermal hot water system, beating the cost savings modeled at the start of the project.
MidAmerican Energy’s tests confirmed further savings: e300 consumes only 667,621 kilowatts, compared with the base average of 1,099,000 kilowatts for a structure with a standard HVAC system—meaning a reduction of 400,000 kilowatts in energy consumption and about $50,000 in operating cost savings per year.
“We came out much better than what the energy company first thought,” says Chuck Gassmann, vice president and general manager of Bell Brothers, who foresees this segment of business growing rapidly in the near future. The company completed 300 geothermal installation and consultation projects last year.
“Ultimately, the choice to use a geothermal system was like taking 25 houses off the street,” Gassmann says.
In addition, e300’s electrical systems, which were designed and installed by
The Electric Company of Greater Des Moines, offer cost savings through daylight sensors and dimmers. Each apartment features 6-foot-tall windows that flood apartments with natural light. Cabinets are made from recycled and renewable wood sources, such as eucalyptus, and recycled materials can be found in the countertops, carpet and flooring. All appliances are Energy Star-qualified.
Consumer-Driven ChangesWithout a doubt, these green features make a property like e300 Grand more marketable. Even in a tough real estate market, 78 percent of the building’s units are full, beating regional occupancy rates.
On the consumer side of the market, energy efficiency is a strong selling point; if given the choice, many homeowners and renters opt for a more modern heating and cooling system even if it means a little more expenditure upfront.
“Consumers today are becoming more educated than ever before,” says Dan Kalman, vice president of home services for
Lee Company, Franklin, Tenn. “The biggest thing defining clients today is they are more prepared. With the resources on the Internet, people can Google search anything. They have more questions and expect you to know the answers.”
Because these questions often have to do with the energy efficiency of residential heating and cooling systems, Lee Company—which works almost exclusively on HVAC, plumbing and electrical retrofits—is working to stay ahead of the game to educate its customers.
“People used to think they needed a carpet cleaner when you mentioned ‘carbon footprint,’” Kalman jokes. “But today, it’s becoming more socially accepted that you should be thinking about your home’s impact on the environment.”
He says one consumer incentive is an energy evaluation program offered by the Tennessee Valley Authority, intended to help reduce the load on the state’s electrical grid. Following an evaluation, homeowners can choose to make repairs and upgrades that ultimately improve their energy bills. But inquiries about repairs recommended by these energy evaluations only account for a small percentage of Lee Company’s green business growth.
Instead, existing clients primarily influence green decision-making. Technicians dispatched to a residence for a repair or upgrade frequently recommend a more energy-efficient machine. Kalman says about 60 percent of clients respond positively to these suggestions, emphasizing the importance of giving the customer
a choice.
“Make sure to give them all the options. Never assume someone can’t afford or wouldn’t want the green option. Sometimes the person you don’t assume would want a green system is the person who wants it the most. Dive down deep and find out what’s important to them,” he says.
Currently, most residential customers are more concerned about heating and cooling cost reduction than savings related to electrical and plumbing upgrades. But attention to residential water consumption will influence the next wave of business, Kalman says.
Lee Company recently decided to step up its environmental awareness and put sustainable principles in practice at its own office and warehouse. As an
Associated Builders and Contractors Certified Green Contractor, the company underwent a series of upgrades to its lighting and plumbing systems—installing low-flush toilets and sinks and waterless urinals, as well as motion sensors for office lights. Within six months, Lee Company reduced its water consumption by 51 percent.
In addition, the company bought seven Toyota Prius models for its home services fleet, and replaced its Chevrolet Silverados with smaller Colorado models—saving the company 50 percent on fuel costs.
“We realized we didn’t need full-sized pickups to run our business. If we’re able to provide the same level of service out of a Prius, and save 50 percent, then over time, the savings will add up to at least a million dollars. That’s huge. And it’s something we can do today, right now,” Kalman says.
Surviving in the Multifamily MarketplaceMultifamily project developers nationwide are seeking contractors that can deliver projects quickly—and without a significant learning curve—to meet consumer demands for energy savings and sustainable features.
In Lexington, Mass., Oaktree Development partnered with a green-savvy design and construction team to deliver a project that would provide a healthy environment and convenient city access for the building’s occupants.
The result is Lexington Place at the Center, a luxury, 30-unit mixed-use project completed last June and officially designated as LEED Silver in the fall.
“Oaktree and the project team as a whole have been ahead of the sustainability curve, and it became evident that a lot of the green practices outlined by the owner would work well toward the marketability of the project and its LEED certification,” says Benjamin Goldfarb, vice president of
Nauset Construction, Needham, Mass., which acted as construction manager at-risk for the job.
Nauset met with the development and consultation team early in the game—attending several pre-construction meetings, town meetings and group discussions on green building system options.
The subcontracting team also guided materials selection and helped improve project efficiency, Goldfarb says. National Lumber, for example, produced wall panels offsite, leading to efficient delivery and no excess wood on the jobsite. Waste Management led the process to recycle 76 percent of material waste.
Open communication inspired project-driven ideas on how best to implement green construction practices. “We asked a lot of questions and involved the owner in decisions,” says Matt Capone, Nauset’s project director. “We even arranged for the owner to tour the manufacturing facilities to preview products and fabrication. This required a lot of extra time, but it paid off.”
Lexington Place’s efficient heating and cooling system, low-flow faucets and smart landscaping, as well as its compatibility with the downtown streetscape, makes it an appealing fit for the area’s eco-aware consumers.
The project also helped Nauset Construction gain insights and best practices it will bring to the groundbreaking of a similar multifamily project in Cambridge, Mass.
“These are unique projects in desirable locations. Green components add to the end result and yield more success in selling the units,” Goldfarb says. “And for a contractor, this repeat business is telling.”
Tapping into Public FundingContractors with green building experience have a leg up when competing for multifamily projects in the public-private arena. Many new residential developments incorporate some public funding through local community and U.S. Department of Housing and Urban Development (HUD) grants, so contractors should become more comfortable with the rules and regulations that come with the territory. One powerful requirement is sustainability.
Harkins Builders, Baltimore, got the green light in March to proceed with a project to demolish and renovate 269 units at Guilford Gardens in Columbia, Md., a subsidized housing development built in the 1970s. Demolition began in May, and structures will be removed and replaced in a phased delivery, with final occupancy in December.
Howard County, Md., and Shelter Development, LLC partnered to develop the concept for a new Guilford Gardens: sustainable, multi-age and multi-income rental apartments supplemented by a swimming pool, clubhouse and volleyball court.
All the residential buildings are designed to meet Green Communities design standards, and the clubhouse is designed to achieve a LEED Gold rating. Features include geothermal wells, efficient light fixtures and rain-harvesting cisterns funded with federal money.
The green components of this project are the direct result of leadership by Howard County Executive Ken Ulman, who created the Howard County Office of Environmental Sustainability and instituted a successful new countywide curbside recycling program.
“Basically, sustainability is a passion of [Ulman’s], and he has chosen department heads who share his passion. This is also the direction the construction industry is moving, and so we’re right there with him,” says Dave Miller, construction vice president at Harkins Builders, which worked with the developer throughout the design phase to target feasible green goals for the Guilford Gardens site.
The project is being financed by a combination of private dollars and public funds from HUD, the Maryland Economic Development Association and the Maryland Department of Housing and Community Development, as well as low-income housing tax credits.
“Because the project is government-funded, it has helped bring the green building goals to reality,” Miller says. “And regardless of whether we pursued green certification, a lot of the required sustainable construction practices would be important to improving the way we do business. It just makes economic sense.”
Geothermal systems are five times more energy efficient than conventional heating and cooling systems, and can help save up to 70 percent on utility costs for heating, cooling and hot water by tapping into the limitless supply of energy stored deep in the ground.
The geothermal system at e300 Grand in Des Moines, Iowa, for example, features a series of buried loops—double pipes with a U-bend extending 420 feet in length—that are inserted into 66 vertical wells.
After the loops are inserted, the well is lined with grout to provide good contact around the pipe and to seal the well. Next, the vertical pipes are connected to a horizontal header system a few feet below the surface. Then, the pipes are filled with environmentally safe antifreeze and connected to a heat exchanger or heat pump.
During the heating cycle, the system automatically pulls heat from the ground via the antifreeze in the loops and sends it to the heat pump, where the heat is transferred into the air and distributed throughout the dwelling via the ductwork. At the same time, the antifreeze constantly cycles back through the loops, where it reheats, and the process is repeated.
When air-conditioning is needed, the system reverses. Heat is extracted from the dwelling and is directed to the water heater or moved back into the ground where it is stored for heating during cold weather months.
Geothermal systems also represent a significant tax incentive for homeowners. Under the American Recovery and Reinvestment Act of 2009, homeowners can recoup much of the cost of installing a geothermal system in the form of tax credits and rebates. If a geothermal system is installed before Dec. 31, 2016, homeowners are eligible for a one-time 30 percent tax credit, with no ceiling cap—helping save several thousand dollars upfront. Plus, homeowners can expect to recover the remainder of their investment in a relatively short period of time through energy bill savings.