Many communities across Colorado are enacting aggressive new energy codes to address climate change and reduce greenhouse gas emissions. In several locations, builders are designing and building all-electric communities, typically using air source and ground source heat pumps, which are promoted as reducing energy use by two-thirds, and promoting high-performance induction cook-tops and ranges.
Crested Butte has become the first Colorado municipality to require all new homes and commercial construction to be all-electric, with no heating by natural gas, including hot water and appliances.
Aspen leaders recently adopted an ordinance making changes to the I-Codes that will incentivize all-electric new construction. These code changes will require offsets for energy use of exterior amenities, including heat tape, gas fireplaces, outdoor heaters, snowmelt, pools, and spas, by requiring an equivalent on-site renewable energy system or payment of fees. Aspen also adopted a cap on all exterior energy of 200 million BTUs per year.
Basalt and other Colorado communities are requiring buildings to be energy efficient, electric-ready, and install renewables and provide energy storage on site.
In Denver, a new ordinance will require in 2025 that any replacement of a gas-fired, exterior furnace must be with an electrical system. By 2027, the ordinance will require 50% of heating be generated by electrical systems when replacing gas-fired furnaces.
Many of these goals are to achieve “net zero,” in which the actual annual delivered energy is less than or equal to the on-site renewable exported energy, as defined by the International Code Council.
The “Home Energy Rating System” Index (HERS) is an industry standard by which a home’s energy efficiency is measured. It is a nationally recognized system for inspecting and calculating a home’s energy performance. HERS uses the Energy Rating Index (ERI), which is a scale from 100 to 0 measuring the energy efficiency of a home. The lower the score the more energy efficient it is.
The ERI compares the energy performance of a home to a baseline model (a “reference home”), and it requires the design to be a specified percentage better than the baseline. For example, an ERI score of 100 is the approximate equivalent to a home built under the 2006 International Energy Conservation Code and serves as the baseline. Each one-point change in the ERI score is the equivalent to a 1% change in energy use. For example, if a home reaches the score of 30, it is 70% more efficient than the reference home. The goal is to reach Net Zero by a target date, frequently by 2030 or 2035.
There are flaws in the HERS rating system, however. The reference home does not account for internal amenity loads or external energy use. Hence, an ERI of 0 is not the same as NetZero because it does not account for internal amenity loads and external energy use. Amenity loads are any load that utilizes energy and not captured in the HERS, such as snowmelt, pools, spas, heat tape, fire pits, heated garages, dehumidification systems, oxygen concentrator systems, oversized exhaust hoods, home theaters, outdoor kitchens, outdoor fountains, elevators, building automation systems, additional heating systems, backup generators, and the like.
Accordingly, many jurisdictions are evaluating additional performance standards and requiring more strict or advanced standards, such as accounting for embodied carbon. These changes will have significant impact on the construction industry, homebuilders, and owners who demolish or in some circumstances engage in significant remodeling. As these changes take place, it will be important to understand the impact of the updated energy codes and methods for achieving compliance with the new performance standards. These methods will include increasing the building/thermal energy envelopes of homes, requiring continuous insulation, limiting glazing and requiring lower window U-values, and implementing additional design the building performance standards such as electric ready, EV-ready homes, water efficient fixtures, and roof ready systems.
If you have any questions about this client advisory, please contact a member of our Real Estate group.