When speaking with clients about sustainable and green remodeling projects, many remodelers are reluctant to discuss return on investment. Some believe the project should speak for itself and that the "green" aspect should trump the investment. Some don't want to be held to a standard that may not be met. But there isn't a client in the world who wouldn't be happy saving money on his or her energy bills.

What follows are a few projects — energy audits, deconstruction, air sealing and insulation, and water heating options — to help remodeling clients realize their dreams, or solve their problems. Some projects offer a quick return on investment and others take a little more time for homeowners to recoup their money. But knowing how to answer or where to find the answers to your clients' questions on energy and cost savings can make any remodeler look like a hero.

HOME ENERGY AUDITS

Although building scientists have been touting it for years, it's not until recently that looking at the house as a system has gained traction among remodelers. "We analytically assess how houses are living and breathing," says Bryan McVay, vice president and general manager of home performance and home repair for Neil Kelly, with several Oregon locations. "We come up with a prescription for a critical path for air sealing and insulating, moisture control, and ventilation."

Early adopters in Oregon, Neil Kelly has been offering home energy audits through a separate home performance division for the past three years. The company is, at this writing, working on the first residential training program for weatherization in the U.S. The audit can be a great way to appear as an expert, gain trust, and get a foot in the door for larger remodeling projects. But doing the audit correctly and making appropriate recommendations is critical.

"The priorities of applied building science are health and safety, number one; comfort, number two; and energy efficiency, number three," says Ed Voytovich, a former remodeling company owner and insulation contractor and now executive director of the Building Performance Contractors Association of New York State. Changing one part of the system will affect another, and remodelers need to learn how to avoid changes that could make a home unhealthy or dangerous. For example, air sealing and attic insulation may greatly improve energy efficiency in a leaky house and show the quickest return on investment, but without also providing for proper ventilation, tightening the envelope could trap noxious gases in the living space. "I've seen cases where the house is tightened up and the family ends up in the hospital the same night," Voytovich says.

For a remodeling company, investing in energy auditing is more than buying blower doors, fog machines, and infrared cameras. Though not everyone on staff has to be certified, people who do auditing work should be certified by the Building Performance Institute (BPI), and HVAC installers and heating contractors should have NATE (North American Technician Excellence) certification or be certified by the National Comfort Institute (NCI).

Neil Kelly's home performance division has three employees, one of whom is certified to do audits. After the company is finished with a project, McVay presents clients with a report card. Using HomeCheck home performance analytical software for contractors, which is available through Energy Star, McVay is able to show clients "what we did and what the improvement was." He then marks a calendar for follow-up. "We take the task away from the client to call us. We call them and check up."

Jeff Titus, a newcomer to home energy audits through his company, Titus Built, in Wilton, Conn., uses clients' energy bills to establish a baseline. "We request a minimum of 12 months and hope to get 36 months of bills to get a baseline for electricity, oil, gas ... whatever is consumed to operate the house," he says. This way he can evaluate the success of the changes made.

Despite your best efforts, there is always a wild card: the homeowners themselves. "They may start taking longer showers with a tankless hot water heater," Titus says, thus reducing their savings on water. Be wary about making promises that may easily be broken through no fault of your own.

Some clients may balk at paying for the audit, which usually costs between $300 and $500, but as Paul Eldrenkamp, who owns Byggmeister in the Boston metro area, says, "If they won't spend $450 on an audit prior to us doing a significant amount of insulation work, then we feel it's a good gauging device for their seriousness." In other words, it's a good way to ferret out clients — early in the process — who may not be a good fit. Eldrenkamp focuses on larger sustainability projects with clients who are mostly "true believers."

For remodeling companies with a different client base, it's good to know about any available financing that would help clients curtail costs for energy audits and recommendations. Earlier this year, Vice President Biden spoke to heads of government agencies to outline strategies for making home energy efficiency a top priority and making access to retrofit financing more accessible and repayable over time.

Pending legislation such as the Property Assessed Clean Energy (PACE) pilot will "allow communities to provide financing to homeowners to install renewable energy systems and retrofit buildings that can be paid off over time on their property tax bills."

More directly, the REEP (Retrofit for Energy and Environmental Performance) program, which is aimed at energy retrofits of residential and commercial buildings, would provide grant money to state energy offices to oversee retrofits. States would likely use the money to provide incentives such as $500 toward an energy audit and $1,000 toward completing the recommendations.

DECONSTRUCTION

There is some debate over whether deconstruction or demolition is more cost-effective, but if you or your clients feel strongly about the idea "reduce, reuse, recycle," then deconstruction — dismantling with purpose — wins the argument.

When you deconstruct a kitchen, for example, all of the materials such as appliances, countertops, cabinets, lighting fixtures, doors, trim, and moldings can be donated if they are in good working order, and the homeowner can get a tax deduction for doing so.

"If the value of the materials is $5,000, and the [homeowner is] in a 25% tax bracket, that's worth $1,000 in tax savings when they file," says Paul Hughes, owner of DeConstruction Services, in Fairfax, Va. "With that $1,000 they may be willing to throw more amenities right back into a job that they [otherwise] might have had to cut to stay within budget."

Remodelers who choose to deconstruct can either have their own employees do the work or they can subcontract it, or the homeowner can hire a deconstruction specialist on their own. For the same reasons that a remodeling company owner subcontracts electrical or plumbing work, most find it beneficial to subcontract deconstruction. Regardless of who does the removal, salvaged materials can be set curbside for pick up by an organization such as Habitat for Humanity, owner of ReStores in 48 states, which sell salvaged materials. Hughes' company has The ReBuild Warehouse, a 501(c)(3) that not only picks up salvaged building materials but uses proceeds to train what he calls "the hard-to-place population — those coming out of prison, for example, or rehab. We can help them get training for environmentally sustainable jobs, lead abatement, green roof installation, weatherization, and solar panel installation."

If the homeowners are not interested in the tax breaks — they may want the work done in February, for example, and wouldn't be seeing any money for more than a year — or don't' want the materials, you can donate the material and get the tax deduction.

How much can your clients expect to pay for deconstruction? Like everything else, it depends on the job — how much comes down to the quality of the material, and whether you're paying your own employees to do the work, which might then take 10% to 20% longer. (Also, some clients might reuse the salvaged materials to rebuild, which saves them money in material costs.)

In a whole-house deconstruction, in addition to plaster or drywall removal, materials that must be removed include plumbing fixtures (toilets, sinks, tubs) and faucets; doors and locksets; existing windows; and lighting fixtures. Typically, all of these are removed manually so there is not much additional cost in deconstruction. Framing materials and plywood, plus wood flooring, require more labor to deconstruct because they have to be carefully removed and cleaned of fasteners. Against this, you need to weigh the cost of renting the Dumpster, tipping fees for the Dumpster, and any fees paid to the city (if it's an urban project) for a Dumpster permit.

The example below, used with permission from the website of The ReUse People, a 501(c)(3) that does deconstruction and salvage for resale, compares the economics of deconstruction versus demolition based on a composite of actual jobs. The composite in the example is a single story, 2,200 square-foot house plus garage, with three bedrooms, two baths, raised foundation, composite shingles, single-pane windows, carpeting, hardwood floors, and a 12 x 40 wood deck. The costs do not include removal of concrete slabs, sidewalks, foundations or asphalt, but do include the site being left rake-clean.

So, in the machine-demolition scenario, the owner pays $10,100, but in the TRP-deconstruction scenario, the homeowner gets $24,640 in after-tax benefits, which is slightly more than the total deconstruction cost of $24,338.

Comparison Between Deconstruction and Demolition

TRP Deconstruction

Demolition

Physical lowering of house
Disposal of trash & debris
Appraisal of salvaged materials

Total Costs

Donation Value*

Tax Savings* (after-tax value of donated materials)

Total Costs (from above)
-----------------------------------

$17,238
4,100
3,000
------------
24,338
=======
88,000
=======
24,640

24,338
----------------

$6,000
4,100
0
---------
10,100
======
0
======
0

10,100
----------

After-Tax Benefit /(Out-of-pocket cost)

$302

$(10,100)

The after-tax difference between the two methods is $10,402

*Total materials (lumber, plywood, cabinets, plumbing and electrical fixtures, doors, windows, etc.) would generally appraise for $77,000 to $112,000 in good reusable condition. Assuming a tax bracket of 28% (federal only - this will be larger in states with an additional income tax), the after-tax cash value, based on a typical appraisal value of $88,000, is $24,640.

But the The ReUse People site notes that there are disclaimers: "Figures vary depending on location, age, and condition of the home and materials, topography, type of siding and interior walls, distance from a TRP or partner retail-warehouse, landfill rates, etc.," the website says. "Still, the economics almost always favor TRP deconstruction over demolition."

AIR SEALING AND INSULATION

The Department of Energy estimates that the average homeowner can save up to 30% on heating and cooling costs with proper insulation and air sealing. Compared to other "green" projects, insulating and sealing — which go hand in hand — are relatively inexpensive and offer consumers their quickest return on investment. Depending on how leaky the building is, air sealing and insulation "can pay for themselves in three or four years," says Dick Kornbluth, director of technical development at Green Homes by EnTherm, a home performance contracting company in Syracuse, N.Y.

For example, depending on the existing insulation in a 2,000-square-foot house with an attic, a client might spend between $5,000 and $6,000 to improve the energy efficiency of the home through insulation and air sealing. "If they have no insulation, they might get [their money back] in two years or less. If they have three-and-a-half inches, it might take six or seven years," says Kornbluth, explaining that adding insulation is like putting on layers of clothes in cold weather. "If you're naked and you put on a coat, you get warm right away. If you put on another coat, you get just a little warmer. After a while you won't notice the difference if you put on more coats. If you start with nothing, the first R-value gives you a really big bang for your buck. The more you start with, the less you save when you insulate on top of it. If you have a floored attic, you could theoretically pile up insulation as long as the ceiling [below] could handle the weight, but there are diminishing returns."

There is, however, an immediate return in reduced heating and cooling costs, and through 2010 there are tax credits available for 30% of the costs of materials up to $1,500. Homeowners may also be eligible for state and local government or utility rebates. The Database for State Incentives for Renewables and Efficiency website has updates on what's happening in each state/region.

Jason McHugh, a sales representative for Perfection Fireplace & Supply, in Houston, insists on looking at the total home performance. "If we can get [clients] to think of their house as a system and let us look at everything, then we can make something that performs better for them." To be more efficient, older homes in the hot, humid Houston market need insulation, sealed chases, and a radiant barrier (which keeps heat from the sun from transmitting through into the attic and heating it up quickly). "We give [homeowners] a set of options — good, better, best — so they'll have a greater chance at ROI," McHugh says.

One of the first decisions is whether to bring the attic into the envelope, a decision that usually affects HVAC equipment. "In Houston, there are no basements," McHugh points out. "If you seal off the entire house with foam ... you have to make sure the HVAC equipment [which is in the attic] is a sealed unit because now you've brought it into the house. Before, the attic was vented."

Common insulation choices include fiberglass batts, spray foam, or cellulose (loose fill). Although most people use fiberglass, which is the least-costly option, McHugh says that he is seeing a trend to cellulose, especially in new construction.

When air sealing the attic floor, Voytovich says that it's important to find all of the air leaks, including the tops of walls; plumbing, electrical, and chimney penetrations; attic hatches and pull-down steps; and soffits not sealed at the top using permanent materials such as foam. "[When you're finished], verify the success of your job with a blower door test," he advises.

Discuss both air sealing and insulation with your clients. "Insulation doesn't necessarily make a house warmer," Voytovich says. "You have to do air sealing along with it. Insulation only stops conduction and does nothing about convection.... If you slow the heat by conduction and it doesn't stop convection, then you'll get a moldy attic and [your client] won't save any money."

Any house "20 years or older probably doesn't have the right amount of insulation," says Michael Kwart, executive director of the Insulation Contractors Association of America. "But you don't insulate blindly."

In the attic, pay attention to things like recessed lights. "Locate those before you add insulation. You don't want to cover those up; if you do, it's a fire hazard. Whoever insulated first should have boxed over the area or built a shield for them. Separate insulation from electrical or heat-producing devices by at least four inches." There are newer recessed lights that are IC-rated (insulation cover), which are designed so they can be buried within the insulation without a problem, but older fixtures most likely won't comply.

Also, Kwart says to find the recommended R-values of the insulation. (R-value measures thermal resistance. The larger the number the better the insulation's effectiveness.) "R-38 is a good number for most insulation," he says, "and it works across any of the insulation types." The Department of Energy has a ZIP code insulation program to help you figure out the most economical insulation level for a new or existing home.

WATER HEATING OPTIONS

There are several options for heating water, all of which have their pros and cons. Storage tank water heaters come in high-efficiency models, and if your clients need only a 30-gallon tank, it might offer them the return on investment that they're looking for without investing more up front with a tankless (on-demand), hybrid, or solar system. (You might look at — or suggest that your clients look at — the website of Michael Bluejay, "Mr. Electricity," for detailed information on ROI for a variety of household appliances, among other things.)

"Payback on investment [for heating water] is going to vary widely based on where you are in America," says Bob Kingery, co-founder, with his wife Maria Kingery, of Southern Energy Management, in Morrisville, N.C. "[Tax] incentives are one part. Part two is, ‘What are you paying currently to heat your water?'" In the New York area, you're often paying 0.16 to 0.20 cents per kilowatt. In the Southeast it's 0.08 cents, and in Hawaii it's 0.35 cents. "The cost of heating your water plays heavily in terms of payback and investment [in new water heating technology]," Kingery says. "The higher your cost for fuel currently in your location means you'll have a quicker payback because you'll save more money."

According to EnergyStar.gov, the average homeowner spends between $400 and $600 a year heating their water. Based on the consumption of a household of 2.6 people, Energy Star estimates a $30 yearly savings with a high-efficiency gas storage tank; $115 yearly savings with a tankless water heater, and $220 in savings from solar heating. Buying and installing a high-efficiency 40-gallon power vent water heater (which runs on natural gas) that doesn't need a chimney costs about $1,000 including installation; the 30% tax credit up to $1,500 is available. The return on investment is immediate if the tax credit can be used. If not, at $30 per year it might take the life of the water heater to recoup any savings.

A tankless heater costs between $2,500 and $3,000 including installation; until December 2010 homeowners can get a 30% tax credit up to $1,500 on purchase and installation. Assuming a $3,000 project with the $1,500 tax credit, if yearly savings are $115, that's about 13 years for ROI. There may also be additional savings from state and local governments and utility companies. For example, in New York State, National Fuel, an interstate natural gas provider, offers a $350 incentive rebate for a tankless hot water heater for its residential and multiresidential-use customers.

A complete solar system with installation can cost between $7,000 and $8,000 and makes the homeowner eligible for tax credits of 30% with no upper limit until 2016. Assuming the tax credit is taken on an $8,000 project; the project will cost $5,600. With the projected yearly savings of $220, it will take 25 years to recoup the investment.

A hybrid water heater — new on the market and not yet recognized by Energy Star — costs about the same to purchase and install as a tankless system. State, local, or municipal government or utility company credits or rebates also may be available for any of these options. (Check www.dsireusa.org for more information.)

TANKLESS WATER HEATING

People call Bryan Patane, owner of BP Plumbing, in Rochester, N.Y., and an installer for Lowe's, "because they're having a problem not getting enough hot water. Lifestyle is the No.1 reason," he says. About 10% of Patane's clients opt for a tankless water heater. An authorized, certified Rinnai tankless water heater installer, Patane says that using a tankless offers a 20% savings per month over a traditional 40-gallon tank. "The typical family of four uses less than an hour a day [of hot water]," he says. "Four showers at 10 minutes each, dishes another 10; laundry only requests water for about 10 minutes. A traditional unit keeps water hot 24 hours a day. With the tankless, you're only requesting hot water for one hour."

A tankless heater can take about six to eight hours to install — longer than for a traditional tank — but there's no chimney required; it vents directly outside of the house. The tankless runs on gas, with electricity needed for display functions, which include an error code if there's a problem, and electronic ignition. If a home has no natural gas supply, the tankless water heater will run off propane tanks. There is no standing pilot light; it turns on based on water flow. "That's why it's so efficient," Patane says. "It's only on when you're using hot water."

You have to discuss water use with clients when talking about costs. For a family of five that finds it is running out of water with a traditional tank, Patane says he doesn't guarantee that the homeowner's bill will come down with a tankless. And if they go from taking five-minute showers to 20-minute showers, they won't see the savings.

There are some issues with water flow with the tankless if, for example, clients are showering and doing dishes and laundry all at once. They also might lose pressure in colder climates where the water takes longer to heat. And, the term "on demand" is misleading. If it takes 30 seconds for the water to heat up with a traditional tank, then it might take 40 seconds to heat with the tankless.

SOLAR WATER HEATING

Solar water heating is not for everyone. Up-front costs might be prohibitive, but recent legislative initiatives may alleviate that issue. In October 2009, the federal government announced support for Property Assessed Clean Energy (PACE) programs, which are public-private partnerships with state and local governments that will allow property owners to pay for energy efficiency and renewable energy improvements through a voluntary property tax assessment. There are also opportunities to teach clients who may be buying a home about the FHA's 203(k) mortgage, which they can use to rehabilitate and upgrade. For example, the "streamlined (k)" loan allows borrowers to finance an additional $35,000 in their mortgage for a variety of upgrades.

In terms of payback, says Kingery of SEM, solar water heating is not a good choice for second homes. "Families living in a house are great candidates," he says. "Vacation homes are not."

Solar collectors — usually flat panels — on the roof use the sun's warmth to heat water. An "active" system relies on electric pumps to circulate the water. A passive system uses gravity. You need tanks on the roof and a storage tank for the heated water inside the house. You may also need a regular water heater to act as a storage backup if there isn't enough sunlight to heat the water. (Velux is working on a hybridstorage tank that includes backup heating capability.)

Roof panels have a 20-year lifespan and the tanks will last between six and 12 years, just like a traditional hot water tank. Materials outlast the four- to seven-year payback period. The solar system should be sized to fit a family's need. "A single-panel system is good for one to two people; the two-panel system is for four people," Kingery says. Generally, one storage tankis all that is necessary, Kingery says. Installation should be done by a certified installer, and most states require installers to be plumbers.

One of the frustrations with the solar panels is that when they are installed — or if they're in need of repair — roof shingles need to be taken off and replaced. After 10 years of use in Europe, Velux recently brought to the U.S. market a panel that is integrated into the roof. "It looks and flashes like a skylight," Kingery says. "The panel integrates into the roof rather than sitting on top of it. To install it, you remove the shingles where the solar panels will go. You install the Velux panels to the roof deck and then you install the flashing around the solar panels on the roof and then reinstall the shingles around the flashing."

It's important to consider how much shade is on the roof, Kingery points out, but "where you live in the country is not as influential as most people think." Yet homeowners should have a conventional backup system to provide water heating. "Solar is usually sized to meet 50% to 80% of your hot water needs," he says. "It's not going to completely replace your water heater. Adding room for a second tank is a prudent thing to do since it will offer your customer the best return." Basically, the solar-heated water can sit all day in a highly insulated tank waiting to be used. "The tank heat loss is little compared to what you'll save," Kingery says.

THE HYBRID WATER HEATER

A recent innovation, the Eternal Hybrid a combination between a storage and tankless water heater. "With a tank you have the capacity and not the continuity... The tankless has no continuity problem but has a capacity problem," says Paul Home, director of product and marketing at Grand Hall, a gas and appliance manufacturer in Garland, Texas.

The hybrid uses an infrared burner to heat the water. "It puts out so little exhaust heat that we are able to use PVC for venting," Home says. "There's almost zero emissions." [As of this writing, Energy Star has not recognized this product because it doesn't have a category for it. However, Home says that it should be recognized in 2010.] The system uses a small four- or six-gallon tank. A gas-fired burner occasionally kicks on to keep the tank hot; the infrared burner "sends heat radiating through every layer of the water. A flow sensor outside the tank sends a signal to the infrared burner to kick on and keep going. As you use up the hot water, the system is continuously replenished by cold water. It continuously makes up to 20 gallons a minute for as long as you like," Home explains. The unit can sit outdoors in warmer climates but can also go in the garage, attic, or "anywhere in the home where you can run venting outside."

The hybrid is easier to install than other systems, says Matt Lawrence, owner of Legacy Plumbing, in Frisco, Texas, who installs Hybrid Eternal water heaters and has one in his own home. "You basically just have to make sure you have the right gas line. Most water heaters use a half-inch gas line; these need ¾-inch."

Lawrence is pleased with the way the hybrid works in his own home and says he's saving $20 – $40 on his gas bill each month, and he's wasting less water. "This is the only unit [on the market] that you can put on a recirculating pump... so you can have instant hot water anywhere in the house. And you can turn on every faucet and it's coming out hot and it's not a trickle [as it would be with a tankless because of flow restrictors]." —Stacey Freed, senior editor, REMODELING.