Market Value of Energy Efficiency: What Have We Learned? What Do We Still Need to Learn?

The Environmental Protection Agency (EPA) and the Department of Energy (DOE) at the National Renewable Energy Laboratory (NREL) are investigating the market value of energy efficiency in residential homes. The demonstrated market value for energy efficiency is crucial to the success of EPA's ENERGY STAR Homes Program, providing market information to builders who are deciding whether to constructENERGY STAR Homes, to lenders who may want to understand the performance of mortgages for energy-efficient homes, and to homeowners seeking returns on additional investments in energy-efficient homes. This paper discusses the current dilemma facing the ENERGY STAR Homes Program and the need to demonstrate the value of energy efficiency. The paper presents a brief literature review of paststudies on the market value of energy efficiency, as well as recent analysis on the American Housing Survey. This study suggests that property values increase by $20 to $24 for every $1 reduction in annual fuel bill. Finally, the paper concludes with a summary of a joint research project between EPA and NREL on the market value of ENERGY STAR Homes, and the potential implications of thisresearch.