Expert Blog Robin Roy -

Manufactured housing: A strong consensus for energy savings and affordability

Major energy efficiency gains and improved home affordability are within reach for new manufactured homes in America following a strong consensus agreement reached by the Manufactured Housing Working Group.  (The U.S. Department of Energy established the Working Group earlier this year, with the expectation that diverse stakeholders were willing and able to work together, to learn from each other, and to negotiate a good outcome; that expectation has proven right.)  With over 60,000 new manufactured homes being built this year, and sales heading back up to pre-recession levels, this is a big win for consumers and the environment.  

The consensus agreement, if adopted by DOE over the next few months, will deliver energy savings of 20 percent to 35 percent relative to the current, outdated energy-saving standards.  The new standards will achieve these savings through more insulation, better windows, reduced air infiltration, and other well-proven practices.  

These new manufactured homes will also save energy compared to ENERGY STAR™ manufactured home criteria, and approach the efficiency of the 2015 International Energy Conservation Code, which is the model for site-built homes. Consumers will benefit, with payback times of 5 to 10 years (i.e., the energy bill savings will recover the up-front costs within 5 to 10 years, with savings continuing for the life of the home) and lifetime savings typically ranging from $1,000 to $3,000 per home despite the high financing costs that owners of manufactured housing often face (lending rates for manufactured housing are often far higher than the mortgage rates for site-built homes). Expected increases in purchase prices relative to current construction are generally under 10 percent and recovered relatively rapidly. While the expected energy and cost savings depend on climate zone, home size, and heating type, the results are strongly positive across the country.  

The impact of new efficiency standards on purchase price and on funding-strapped first buyers was a key consideration in coming to a consensus. In particular, Working Group members greatly appreciated that a subset of potential buyers have severe funding constraints and low incomes, and might be priced out of home ownership despite the strong cost-effective savings, if the purchase price rises too much. As a result, some potentially cost-effective savings were ‘left on the table,’ although those represent measures that are relatively higher cost, slower payback, more uncertain, or more variable than the measures adopted.  

While outside the scope of the negotiations, there was some discussion of whether stronger standards were needed, given that many manufacturers already offer higher efficiency homes than the current minimum standards, including those meeting ENERGY STAR criteria. We generally agreed that stronger standards provide significant volume-based production cost savings that simply aren’t possible when energy efficiency is only offered as an option. As a result, standards deliver much stronger cost-savings benefits for manufacturers and homeowners.  

The consensus was nearly unanimous, supported by 21 of the 22 Working Group members.  The Working Group support was broad-based, with representatives from major manufacturers representing about 80 percent of the industry, the largest industry association, equipment suppliers, leading industry consultants and service providers, utilities, home-owners, and environment and efficiency organizations. DOE and its contractors provided excellent, timely and responsive analytic and administrative support and legal advice throughout, and the discussions were wide-ranging and covered all topics that anyone raised as relevant, including members of the public (who were invited to speak at each meeting).  While Working Group members often held differing views on matters of fact or objectives, those disagreements were discussed, assessed and addressed to the satisfaction of nearly all.  I, for one, learned a great deal, changed several pre-existing views, and found the process enormously productive and rewarding.  The Working Group members showed great good faith and goodwill.  I particularly appreciate the industry’s open and transparent provision of cost and technology information, which underlaid much of the economic and energy analysis.  

The consensus agreement comes in the form of a ‘Term Sheet’ (to be published by DOE this week), and will be discussed by DOE’s Appliance Standards and Rulemaking Federal Advisory Committee in a public meeting in early December.  There are several steps before a new standard will come into effect, including consultation between DOE and the Secretary of Housing and Urban Development, review by the Office of Management and Budget, and two rounds of public comment on a proposed and final rule. If all goes as smoothly as the negotiations, better standards should come into effect by 2016.  

Looking beyond the DOE energy standards, there are additional untapped energy- and cost-saving technical opportunities related to manufactured housing that merit further effort. These include site installation measures, which are outside of DOE’s authority, further development and adaptation of heat pumps for water and space heating, development of ductless heat pumps, other emerging technologies, and simply optimizing the cost and techniques used to achieve the new standards when they come into effect. There is also great prospect to improve financing for manufactured homes in general, and also to recognize the significant utility bill savings that higher efficiency can deliver as a factor in lending decisions. There are also great opportunities to build on and expand some leading utility and other efficiency programs, and to update ENERGY STAR criteria. 

All of this adds up to a great outlook for manufactured housing, a key component of the nation’s affordable housing mix that is home to nearly 20 million Americans.  

About the Authors

Robin Roy

Director, Building Energy Efficiency and Clean Energy Strategy, Energy & Transportation program

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