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Increasingly, utilities and states are looking to offer energy efficiency programs to meet regulatory obligations, reduce peak demand, and contribute to environmental protection. Voluntary partnerships are a key option for meeting these goals because energy efficiency delivers an impressive value proposition to both consumers and businesses.

ENERGY STAR qualified homes are at least 15 percent more energy efficient than homes built to the 2004 International Residential Code (IRC), and include additional energy-saving features that typically make them 20–30% more efficient than standard homes. Demand savings vary widely with home size, location, and orientation, but homes that earn the ENERGY STAR generally can reduce annual peak demand by approximately 0.5–1.5 kW.

To assess cost effectiveness, it is often easiest to estimate the savings of a typical ENERGY STAR qualified home and then multiply the unit savings by the projected number of qualified homes. Nationally, EPA estimates that 2,000-square-foot qualified new homes save an annual average of 2,000 kWh and 130 therms with electric cooling and gas heating, or approximately 3,500 kWh with electric cooling and heating. EPA also estimates approximately 1kW peak demand reduction per house.

Assuming a 6% discount rate and a lifetime of 18 years, the levelized cost of conserved energy can range from $0.01 to $0.08 per kWh in hot and mixed climates. The cost per kWh tends to be higher in cold climates, since most homes in these areas use non-electric heating and have little to no cooling load. Programs with integrated electric and gas savings realize even higher cost effectiveness. In addition, homeowners enjoy many non-energy benefits that can add to the value of their homes, including improved comfort, indoor air quality, and durability.

These values are only illustrative and vary by climate zone and housing configuration. More refined analysis is often necessary to assess the potential cost effectiveness of programs in specific areas.