Online Extra: Buildings with Built-In Energy Savings

It's getting cheaper and easier to construct greener homes and offices. Imagine...sending unused power back to the grid

When Jerry Wade first heard about new ways to build energy-efficient homes without breaking the bank, he thought: "Who is the fool who thought this stuff up?" About a year ago, engineers from the U.S. Energy Dept. began advising Wade, the president of New Mexico-based Artistic Homes, to overhaul the way he has built homes since he started in the business 35 years ago. Among their suggestions: using a new insulation board that tightly seals the structure, replacing multiple layers of more common building paper, and placing studs farther apart (depending on local building codes).

Despite Wade's initial skepticism, he became a believer. He can build an energy-efficient home for $100,000, and he says owners' utility costs are 30% less than those for comparably sized homes.

It turns out those seemingly minor changes create a domino effect: Wider-spaced framing allows more room for insulation, which means a smaller, more energy-efficient heating and cooling system. To date, Artistic Homes has built and sold 500 green homes in Albuquerque, with orders for 300 more.

BEYOND ENERGY STAR. While energy prices recently have fallen due to slower demand -- occasioned in part by a weak industrial sector -- nagging concerns over scarce energy supplies have rekindled efforts across the country to find more energy and use it more efficiently. Whether the goal is to conserve or to drill our way to new energy supplies -- or more likely, to do both -- new technologies are making energy efficiency and conservation much more effective and cost-competitive than in the past.

The advances go well beyond buying an Energy Star-labeled refrigerator or air conditioner. And they aren't about installing expensive solar panels on a roof, stashing a generator in the basement, or finding some other way to reduce dependence on the local electric-power grid.

Instead, the new technologies focus on seemingly benign items like heating and cooling systems sized to better fit the house. "This is a huge area of energy savings that hasn't been very well tapped," says Bill Prindle, director of Building & Utilities programs at the Alliance to Save Energy. Adds Mark Ginsberg, who focuses on building technology at the Energy Dept.: "There's a revolution going on. Although quiet, it's changing the way buildings operate."

QUICK RECOUP. Prompted by a general goal of building a better house, Wade of Artistic Homes began seeking help, and eventually found Ginsberg. As participants in the Energy Dept.'s Build America program, Wade and his staff were offered training in how to redesign their homes to make them more energy-efficient.

Wade estimates that adding the necessary technology boosts the cost of an average home by about $1,500, which is recouped within four years thanks to lower energy costs. Since the program began in 1995, 250 builders, architects, suppliers, and developers have signed up for it.

The shift to energy-saving technology is also gaining steam in commercial and industrial settings. One high-profile example sits at 4 Times Square in New York City. Developed by the Durst Organization, the 48-story building, most of it headquarters for publisher Condé Nast, makes a strong statement in energy efficiency.

The upper 14 floors feature solar panels. The building's specially designed windows let in light without altering the interior air temperature, and extra insulation and fuel cells are incorporated into the building's power system. Ginsberg estimates that these innovations added 5% to 7% to the buildings price tag. But once the extra expense is recouped -- which should happen in five years -- a half-million dollars a year in energy savings will go straight to the bottom line.

STILL THE EXCEPTION. And there's more. In Battery Park City at New York City's southern tip, Albanese Development is creating a 27-story, 262-unit luxury residential building that will include solar cells, integrated with the exterior walls, to generate 5% of the building's electricity. The air-conditioning system will be free of ozone-depleting refrigerants and will be fueled by natural gas to reduce electricity loads during high-use peak times. The residential project is scheduled for completion in 2002.

Energy-efficient buildings such as those in New York and homebuilders such as Wade are still the exception rather than the rule. But many experts argue that builders and developers will increasingly incorporate energy-conserving technology as it becomes evident that energy-saving technology is not only cheaper than it used to be but also cost-effective in the long run. Who doesn't want to reduce their utility costs, especially when energy prices are both volatile and high?

Among the companies trying to cash in on this desire are Enron Energy Services, the retail unit of energy-trading giant Enron Corp. (ENE ), which manages all of the energy needs of its business customers -- including lowering energy costs and improving operational efficiency. A cottage industry of small businesses is also emerging to sell energy-efficient products for buildings and other commercial and industrial applications.

"WIDE OPEN." Take Electric City Corp. (ELC ) in Elk Grove Village, Ill., whose fastest-growing product line is the EnergySaver, a voltage-regulation system that allows lighting to work at the lower end of its voltage range. The electricity-saving system is used for lighting buildings, streets, and parking lots. Customers include several airports, Chicago's public parks, various universities, and Frito-Lay. Taking energy conservation one step further, ECC CEO John Mitola eventually wants to sell the energy saved as extra capacity in the wholesale electricity market. "This energy-saving business is wide open," Mitola says.

As energy-conserving technology grows more effective, it will gain a firmer -- and eventually, a permanent -- foothold in the marketplace. As Artistic Homes' Wade has discovered, once you learn a better way to build a house, you don't go back.

By Heesun Wee in New York

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