New Energy Standard, New ENERGY STAR, New Tax Credits
New Department of Energy Standard for Manufactured Homes
You have probably heard that there is a new energy efficiency standard coming. Starting June 2023 new manufactured homes will need to meet more stringent energy efficiency requirements, as set forth in a new DOE standard. Single-section home energy efficiency will increase slightly, and multi-section homes will need to be insulated very closely to what we do now for the NEEM program’s ENERGY STAR package. MHI is leading an effort in Congress to pass H.R. 7651, the Manufactured Housing Affordability and Energy Efficiency Act of 2022. This bill would delay implementation of the DOE standard, and possibly reduce the energy efficiency targets the industry would have to hit. It also would provide the industry with clarity, as it would charge HUD with all enforcement and rulemaking responsibilities.
New ENERGY STAR Specifications
The EPA released on August 1st a proposed version 2.1 of its ENERGY STAR program requirements (not to be confused with NEEM+/NEEM2.0). NEEM staff’s initial analysis indicates that we likely can continue building ENERGY STAR with the same insulation package we have been using, except we will need to add argon to the windows to achieve a U-value of 0.30, down from the current requirement of U-0.34. Fortunately, all the plants can access this window in all sizes and styles. Some plants already use this window as standard, and the cost increment for others to move to it is pretty small.
The big change will be that electrically-heated homes will need to have a heat pump installed on site. Early discussion with EPA has confirmed that we will still be able to fully certify homes at the factory, if we add language to the home order form that indicates the ENERGY STAR option includes a “heat pump prep package” and that customer initials that they are purchasing a heat pump as part of the home installation. The NEEM program will then follow up to assess whether or not the homes actually get heat pumps. If too many home buyers omit the heat pump, we may need to make changes to the process down the road. Certification for homes up to that point would not be affected. This is an important point, because it looks like the factories will be able to claim federal tax credits to offset the cost of building ENERGY STAR. The NEEM program will soon be reaching out to factories and retailers to help figure out exactly how the NEEM home certification process will work under the new EPA requirements.
Federal Tax Credits to Continue — Larger Credit for the Next Decade (Probably)
As of this writing, the Senate has passed the Inflation Reduction Act of 2022, and the House is expected to pass it with the Senate’s amendments soon. The Act will retroactively authorize the 45L efficient new home tax credits for new manufactured homes and continue the credits through 2031. Manufactured homes that are certified as ENERGY STAR will qualify for a $2,500 tax credit to the factory.
A Future for NEEM+
Our current NEEM 2.0/NEEM+ specs continue to be a step above ENERGY STAR, but the improved windows and increased insulation don’t offer enough whole-house energy savings to meet the EPA’s new requirements by themselves. NEEM+ does continue to allow the industry to demonstrate “thermal equivalence” to site-built homes in Oregon and Washington, which allows homes to be placed in city limits in jurisdictions that enforce such requirements. When we add a heat pump to a NEEM+ home, we still have the most energy efficient manufactured home available in the country. Once the NEEM program gets transitioned to the next version of ENERGY STAR, we will take another look at the NEEM+ specs to make sure they remain relevant and valuable to the industry.