Deep energy retrofits are whole-building renovation programs that aim to drastically reduce the amount of energy buildings consume.

While they’re applicable to both residential and commercial properties, the residential renovation market has been much slower in adopting the practice than the commercial market.

A new report by the American Council for An Energy Efficient Economy (ACEEE), a nonprofit research group, offers insights about the practice and programs that support it. “Residential Deep Energy Retrofits,” by Rachel Cluett and Jennifer Amann, cites high cost, lack of financing, lack of market acceptance, and a shortage of qualified contractors as obstacles that could be overcome.

Deep energy retrofits (DERs) can reduce a building’s energy consumption by 30–50% or more. In comparison, the Home Performance with Energy Star program, which has been used in more than 275,000 homes, can save 20% or more, according to the U.S. Environmental Protection Agency.

Energy use is under great scrutiny as authorities in countries worldwide look for ways to decrease the energy use of buildings. The city of Melbourne, for example, created the 1200 Buildings program with the goal of retrofitting 1200 buildings—about 70%—in the city to improve energy and water efficiency, and reduce waste sent to landfills. The program aims to cut overall commercial energy use by 38% by 2020.

Many U.S. states have implemented energy targets, as well. One of New York’s statewide goals is cutting energy use of state buildings by 20% by 2020, for example. California has set aggressive targets for energy use, with existing homes to reduce energy use by 40% by 2020, and all new homes must be zero net energy by 2020. Programs that support DERs and Energy Star will be instrumental in meeting those targets. As the report states, “Utility programs that incorporate more than individual measures will be essential to realizing greater energy savings.”

Several government-sponsored research programs have facilitated residential DERs, including the National Grid Deep Energy Retrofit Program, a utility-scale program. This program aims for a 30–50% energy reduction with R60 roof insulation, R40 insulation for for above-grade walls, R20 insulation in below-grade walls, and R10 insulation in the basement floor.

So far, the overall cost and complexity of DERs has kept them from reaching critical mass. Costs of $50,000 to $100,000 and higher are not uncommon for residential projects, and few contractors have the expertise to manage the projects.

In addition, financing for the DERs may not be available, as lenders don’t understand the projects. Furthermore, lenders often don’t know how to value the completed improvements when they’re outside the scope of normal remodeling projects.

As the ACEEE report states, ““While material costs are a significant component, the greatest potential for cost savings lies in increasing a project’s efficiency and working deep energy improvements into planned upgrades.” As few homeowners will undertake the project just to increase efficiency, DERs work best when they’re incorporated into an overall remodeling project. Fortunately, DERs usually increase a home’s comfort and durability along with energy efficiency.

What DERs do:

  • Comprehensive air sealing of the building envelope.
  • Increased levels of insulation.
  • Replacement of heating, ventilation, air conditioning and water heating equipment with units appropriate to the newly improved envelope; locate HVAC units in conditioned space, if possible.
  • Duct sealing.
  • Address the home as a whole coordinated system; piecemeal improvements can result in savings of 15-30%, while DERs aim for better than 50%.

On the commercial side, the trend for aggressive measures such as deep energy retrofits is much stronger. Whereas most homeowners do not set home energy efficiency as a top goal for their remodeling projects, businesses see the projects as an investment. Incentives for commercial projects appear to be more available, as well.

Melbourne’s 1200 Buildings program has included a financing tool called an “environmental upgrade agreement.” This program links building owners, banks, and the city in arranging financing for renovation projects, making the projects much more accessible to building owners.

An EUA loan offers building owners features such as a repayment period of 10 years or more, and competitive interest rates.