U.S. DEPARTMENT OF ENERGY
SOLAR MARKET PATHWAYS PROGRAM
VERMONT SOLAR DEPLOYMENT PLAN
FOCUS AREA BRIEF
OUTLINE
HIGH-PERFORMANCE MODULAR HOMES & MOBILE HOME REPLACEMENT
May 19th, 2015
INTRODUCTION
Please provide context on how the focus area enables / or is enabled by an advanced solar market.
High performance modular homes are designed to significantly reduce heating and cooling loads
through air tightness, high insulation levels and heat recovery ventilation. These low heating and
cooling loads can then be met my smaller and less complex HVAC systems such as point source
heating and cooling devices. The most efficient and cost-effective point source approach to meet these
demands is currently ductless cold climate heat pumps. Combined with solar hot water or heat pump
hot water heating, these homes can be all-electric with no reliance on fossil fuels.
A high-saturation of solar when combined with the conservation strategies and all-electric approach in
high performance homes can significantly reduce or eliminate energy costs for a homeowner. A solar
package can be included in the homes financing so, in effect; the homeowner is pre-buying their energy
with the home. Solar energy, either site based or at the community level, can then be part of an
affordable housing solution that protects homeowners from future energy cost escalation and reduces
their carbon footprint.
TECHNOLOGY AND MARKET DESCRIPTION
Please provide a basic description of the technology or (incentive / rate structure) in its current state.
How does it work? This description might include technical details that are relevant such as capacity,
load shape, annual consumption, etc. For net metering, it would include current rules and
interconnection requirements.
Provide some background on the historic trends. Market growth and future projections will be
addressed in the next section. Cite important documents and / or programs in the Vermont or national
context.
For many years there has been a general conversation about what to do to replace older, energy
inefficient mobile homes with more efficient, durable and comfortable models. HUD developed
standards for mobile homes in 1976 and has updated them several times since. Although the HUD
standards have contributed greatly to upgrading the quality of the homes, they do not approach the
energy efficiency requirements of Vermont’s Residential Building Energy Standards (RBES) or
ENERGY STAR Homes for stick built or modular homes.
Members of Vermont’s energy efficiency community have been particularly vocal in making the case
that it doesn’t make sense to replace an older inefficient home with something that doesn’t meet a high
level of energy efficiency, given the price of fuel and the state’s commitment to reducing carbon
emissions. Tropical Storm Irene added urgency to this conversation because 15% of the homes
damaged or destroyed by Irene were mobile or manufactured homes. Replacing poor quality but very
inexpensive homes with homes of better quality that cost more must be considered in the context of the
fact that nationally 41% of mobile home dwellers have incomes below 50% of area median. A survey of
nine sizable mobile home parks undertaken by the University of Vermont finds similar demographics in
Vermont.
Currently, there are over 22,000 manufactured and mobile homes in the State of Vermont. One third of
these homes are located in mobile home parks on leased land while the remaining homes are on
privately owned land. Around 25% of the homes were built prior to 1976 and the HUD Code while
nearly 70% were built over 20 years ago. EIA data from 2009 shows Northeast mobile homes consume
an average of 79.2 MMBTUs per year in energy. In comparison, a high performance modular home will
use around 22 MMBTUs per year in energy and a photovoltaic array around 6kW in size would allow
the home to produce as much energy as it consumes.
Chart 1: Modeled average annual consumption by end use in Vermont comparing new HUD compliant
manufactured home, a home meeting Efficiency Vermont’s High Performance Home (HPH) tier and the HPH
Home with Solar.
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Vermont’s Comprehensive Energy Plan calls for a broader market penetration of net-zero energy
buildings, with a goal of having 30% built to net-zero design standards by 2020 as an interim target on
the way to 100% net-zero buildings by 2030. With this goal in mind, Vermont will be looking to transition
out the energy intensive existing manufactured and mobile home stock and replace it with zero-net
energy modular housing.
Currently, Efficiency Vermont provides a Mobile Home Replacement program and incentivizes the
purchase of high performance modular units at $8500 for buyers </=80% AMI and $2000 for those
>80% AMI. The State also offers a $35k tax credit through our homeownership centers which amounts
to a 0% interest loan with payment deferred until the home, on leased land, is sold. Partners
supporting this effort have also developed statewide financing terms for these homes on private and
leased land with local lenders and the USDA Rural Development program that are as good or better to
typical home financing packages. Currently, low income homebuyers of Vermod homes
(www.vermodhomes.com )can access financing terms as good as 30 years at 1% with a small down
payment.
Chart 2: Housing types at available loan terms highlighting benefit of RD 502 financing in two left bars. Assumes
VHFA loan and Efficiency VT incentive where applicable. Note monthly payment for Vermod would increase by
$15/month if energy costs doubled and Typical Manufactured Home would increase by over $300/month.
What are the current market conditions – costs, market share and / or number of systems or units? Note that this
information will be reflected in Table 1, under the heading Current Accounts – Historic Data for scenarios.
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~$145,000 for a 980 square foot 2 bedroom 2 bathroom unit without incentives or subsidies;
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-
Three factories that can construct these mobile home replacement units in Vermont;
Currently looking at replacing 20 mobile homes in 2015;
Anticipate more than doubling number of units in 2016 and continuing that trend over next five
years.
MARKET CONDITIONS1 — OPPORTUNITIES
AND
CHALLENGES
Growth. What is the scope of the growth of this market over the scenario planning horizons? What would
constitute high growth, low growth forecasts?
High growth would be achieving 1% replacement of the mobile and manufactured housing stock per
year in five years. This would represent around 200 replacement units per year come 2020. The
strategies to achieve this goal are outlined below.
Low growth would be achieving around 50 units per year in five years which would represent
approximately .25% of the current housing stock.
What sources of information and analysis have been conducted?
This is a new initiative and approach to affordable housing as of last year in the State of Vermont and
nationally. We are introducing this concept and specific product to the low income sector for the first
time and do not have prior mobile home replacement efforts of this type to evaluate. In order to inform
the next phase of developing high performance homes of modest scale, market research about the
demographics of the potential market and psychographic characteristics of potential buyers was
conducted. That High Performance Home market research is available on the High Meadows website.
http://www.highmeadowsfund.org/learning-resources/
The main conclusions were:
•
There isn’t a ready-and-waiting market to be served. The market needs to be created.
•
Land costs play a big factor. Finding sites in clustered developments or parks could alleviate
this challenge. Southern Vermont and Central Vermont may offer opportunities because of more
moderate land prices.
•
Even with a financing package, low income Vermonters will not be able to afford these homes,
without significant subsidy. That subsidy can be less than the per-home subsidy for other new
affordable housing options.
•
People who are comfortable with change and taking risks are more likely to be early adopters.
Organizers’ note: Please support each of your responses with data and source material, to the extent possible. If
no data are available, please identify what is needed and note those needs in the final item in this brief.
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•
Visiting a home makes a big difference – people can see and feel the difference in a way that is
hard to convey with printed material.
•
The name, “High Performance Home” or “Net-Zero” home is very weak, not understood in the
marketplace and holds associations that aren’t related to comfort and affordability of a home;
•
Early adopters valued having a “trusted advisor” to guide them in the home buying process someone they knew personally or had been introduced by a trusted source.
Next Phase
Having learned to build a great home and receiving impressive results in terms of energy efficiency, the
next phase of this effort will seek to fully fund and implement an overall strategy for moving the project
beyond the pilot phase by creating a path to a sustainable business model for the small, modestly
priced high performance home industry. Specifically we will:
1)
Implement a marketing plan for both the Vermod product. Identifying obstacles to sales and
what appeals to potential buyers. Working with other team members to overcome barriers identified
both through the market research and in conversations with potential buyers.
2)
Pull together a reasonable financing package for a highly energy efficient small home that may
include on-bill financing or other mechanisms to convert energy savings into a long-term financing
opportunity.
3)
Test whether mobile home parks can be redeveloped in a manner that improves overall quality
of life through utilization of the Vermod model either as individually owned homes or rental housing and
enhances the potential of residents to own an asset that appreciates in value.
4)
Test whether there is a broader market that can be penetrated, whether the Vermod home, in
numerous locations both inside and outside Vermont for early adopters, downsizing elders, and other
buyers who meet the profile outlined in the marketing research.
Technical Advances. Changes in the technology (or incentive structure / rate design) that could support future
market growth
As noted above, a number of current efforts are underway to improve the initial cost and financing
which will make this type of housing more accessible to low income Vermonters:
-
Minimal down payment;
Low fixed interest rates (<4% and down to 1% for homebuyers at 50%AMI);
Long terms (30 years);
2nd mortgages at 0% interest with payment deferred until the home is sold;
On-bill financing – utilizing energy savings to cover portion of mortgage payment through
electric utility;
Higher incentive through Efficiency Vermont for low income homebuyers to support early
adoption and market transformation;
Increasing volume of production which should lead to a 10% reduction in initial cost of homes.
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Building science and technologies change very quickly and approaches to achieve high performance
characteristics in new and more cost-effective ways are introduced regularly. The HPMH team is
continually evaluating the new science and technologies and incorporating new approaches that can
improve the home and reduce either initial cost or life-cycle costs.
MARKET CONDITIONS — CHALLENGES
Barriers. What are the barriers to this growth? (For example, existing business or system infrastructure, market
awareness, financing…)
Broadly speaking, the goal of this effort is to transform the market to the point where high-performance
modular homes (HPMH) are affordable and accessible and have conventional sources of financing.
There are three primary barriers to be addressed:
(1) The purchase price is significantly higher than a new manufactured ENERGY STAR home of the
same size – while the ENERGY STAR standard for manufactured homes still doesn’t meet our
residential energy code, homebuyers consider the product efficient;
(2) The concept of this kind of home is very unfamiliar to most people; and
(3) Vermod as a business needs to be financially viable as the market develops.
Overcoming barriers. How can those barriers be overcome? Identify strategies that can be used to help reduce
barriers.
The HPMH team seeks support in continuing to develop multiple tools to overcome these three
challenges. If we are successful we will develop:
1) A financing package that overcomes initial first cost barriers for moderate income Vermonters to
purchase these homes,
2) Supplemental financing and funding that enables low income residents of mobile home parks to own
or rent a high performance home,
3) A marketing approach, including graphics, a name, and the necessary hand-holding, that makes the
home attractive, and
4) Business planning and support for a company willing to serve this market.
We believe these elements will allow us to begin to transform Vermont mobile home parks into
communities that provide higher quality and higher efficiency options for residents, and see a
substantial increase in market-based sales of high performance, modest-scale homes.
MARKET CONDITIONS — COSTS
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Costs. What cost projections are available? What are plausible high- and low-cost projections? Are cost
projections highly dependent on volume ? Are there identifiable market share or scale thresholds for cost
reductions?
$145,000 today for a 980 square foot 2 bedroom and 2 bathroom home net-zero energy
10% reduction in cost is possible if volume of sales and production is increased.
Reducing Costs. What strategies have been identified to reduce costs? What strategies have been identified to
reduce barriers to market growth?
These questions have been answered above.
SCENARIO INPUTS
Inputs for Scenario Analyses. Using the Current Accounts / Historic Data as starting points, what are the
plausible, initial inputs for the Reference (business as usual), Long-Range Target (assume 2050 as the end point),
and Solar Development Pathways α (the alpha scenario)? These will be starting points for review and possible
revision.
Table 1. Scenario data structure table for high-performance modular homes
Current Account
/ Historic Data
Applicable market
segments (add rows
as necessary)
Number of units
(and identify the
units)
Total capacity
Total annual energy
consumption
Type of growth
Changes in
performance
characteristics
Costs
Note that costs will
be addressed in a
subsequent draft.
However,
documenting and
collecting cost data
and references as
appropriate are
recommended.
22,000 existing
mobile and
manufactured homes
in VT
~20 replacement
units anticipated in
2015
Savings estimated at
~70MMBTUs/unit
per year
NA
Transforming
housing from below
State’s Energy Code
to exceed Code by
75%
High Performance
unit costs twice that
of a typical new
manufactured home
of the same size
($70k vs $140k)
Reference
(Business as
Usual)
Long-range
Target
(LRT)
~200 high
performance mobile
home replacements
per year by 2020
23,000 or 100%
replacement of MH
housing stock by
2050
Linear
Interpolate
Anticipate a 10%
reduction in cost as
demand and volume
of production
increases.
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SDPα
Exponential
UNMET NEEDS
More information needed. Please describe areas for more research or collaboration with other jurisdictions or
experts.
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