How Energy Efficiency, Led by Solar Energy, is Transforming US Building Practices

Solar continues to drive the energy efficient market transformation that has gripped the nation over the last 10 years. Some would argue that Barack Obama should be credited with helping to focus our construction industry on energy efficiency. Many wonder whether Donald Trump will continue to expand this focus on energy efficiency. In the meantime, the U.S. Department of Energy (DOE) continues to promote tax incentives for energy efficient upgrades for commercial properties. Architecture schools throughout the country are now focused almost exclusively on programs pertaining to sustainability.

Experts abound in the subject matter of green buildings and energy advocacy in the marketplace today. These experts are gathering a plethora of information about how the energy-focused marketplace is influencing the construction industry, lending services, property investment, property appraisals, and the carbon footprint of the nation. Here is a short summary of energy-related changes that the U.S. is experiencing because of the increased focus in energy efficiency.

Construction Industry Changes

The construction industry appears to be headed towards performance-driven building codes. Building codes are tending toward pre- and post-compliance requirements. Not only will designers and builders need to design to stricter energy efficient standards but they will soon be expected to do post construction analysis to show that the new building is actually performing to required standards. The change can be described as a move from prescriptive to performance code compliance. Over the last 10 years, LEED standards have set the stage for performance-based assessment of buildings. For more information, visit:

Lending Industry Changes

Fannie Mae, Freddie Mac, and HUD are changing the way energy efficiency is calculated into the lending process and requirements. For example, on Feb. 6, 2015, Fannie Mae announced it would offer lower interest rates on loans made on certified energy efficient multifamily buildings. In an effort to further incentivize property owners to improve the energy performance, and therefore the quality and affordability of multifamily housing, Fannie offered to grant a 10 basis point reduction in the interest rate of a multifamily refinance, acquisition or supplemental mortgage loans. The incentive applied to new and existing buildings, and is a part of Fannie’s Multifamily Green Initiative that “provides financing to invest in energy and water-cost saving improvements that lowers utility costs and improves the quality of housing and lower risk.”

Energy efficiency is now a standard part of the lending protocol for government assisted lending for commercial properties. The Institute for Market Transformation has been given funding from the DOE to help influence other commercial lenders to make energy performance an integral part of a borrower’s disclosure and lending priority. Local and state authorities have already made energy disclosure a key part of property ownership transfer in approximately 10 percent of the country, including California, New York City, Chicago, and many other cities, counties, and townships. For the most part, lenders are still skeptical of energy efficient investment compared to actual payback performance. For more information concerning industry influencers for energy investment lending, visit:

Appraisal Industry Changes

The appraisal industry has actively adjusted to energy efficient buildings by typically increasing the value of a property by 4-8 percent if the property is considered to be energy efficient by Energy Star or LEED standards. Investments in energy efficiency typically show a 1:1 ratio for investment with an increased property value. For more information concerning appraisal industry changes related to energy efficiency enhancements, visit:

Carbon Footprint Changes

The Solar Energy Industries Association (SEIA) just published an update of the solar footprint in the U.S. in 2016. The U.S. installed 2,051 megawatts (MW) of solar PV in 2Q16 to reach 31.6 gigawatts (GW) of total installed capacity, enough to power 6.2 million American homes. With more than 1.1 million residential solar installations nationwide and a contracted utility-scale pipeline over 20 GW, the industry is on pace to nearly double in size in 2016. 

According to the SEIA’s latest U.S. Solar Market Insight report, this marks the eleventh consecutive quarter in which more than a gigawatt of PV was installed. Since 2006, the solar industry in America has been growing at a 60 percent year on year rate. The solar investment tax credit has helped to fuel 1,600 percent total growth since 2006. For more information concerning carbon footprint and solar installations visit:

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Vice President of Building Sciences and Engineering AEI Consultants

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