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Breaking down barriers for Zero Energy Modular homes

Juliette Juillerat, Senior Consultant & Alison Donovan, Senior Advisor -

Throughout the United States, rural communities face many challenges. Above average unemployment rates, high housing costs, old inefficient housing stock, and long, expensive commutes are prevalent in these areas. These factors often result in high poverty rates and increased vulnerabilities. For instance, extreme weather events, which are becoming more common, disproportionately affect low income people whose homes tend to be less resilient and who have fewer resources to recover from natural disasters. For these reasons there is a dire and growing need for more single-family, quality affordable housing across the nation.

A modular solution

An emerging housing type, zero energy modular (ZEM) homes combine the benefits of no to low energy costs with the efficiencies of modular construction. All-electric and highly efficient, ZEM homes are often outfitted with rooftop solar arrays and use about as much energy as they produce each year. Currently available in limited markets, ZEM homes have been installed in Massachusetts, Delaware, Vermont, and New Hampshire. 

As new construction costs soar in rural and urban areas across the United States, modular construction offers a solution for cost containment and reduced construction time. These benefits are achieved through a fixed decision-making process, controlled construction environments, and economies of scale – all of which can save between 10 and 20 percent on costs and up to 50 percent on construction time. Combining the benefits of zero energy and high quality modular can expand the clean energy economy to low income home buyers, transform the residential new construction industry, and provide a path for utility programs to achieve predictable energy savings with grid-responsive smart homes.

ZEM housing is a viable option under multiple development scenarios including infill on vacant urban lots, new single-family housing and as a replacement for mobile and manufactured homes. With high-quality construction, a renewable power source, and the option to incorporate battery storage that can be used during power outages, ZEM homes are resilient to natural disasters in addition to being affordable.

In Vermont in the wake of Hurricane Irene in 2011 the Vermont Housing and Conservation Board, High Meadows Fund, and VEIC spearheaded an effort to bring the ZEM option to the state. Modular builder Vermod stepped up to manufacture ZEM homes. Local affordable housing groups provided development expertise and down payment assistance, and USDA Rural Development put together a financing package for homebuyers. Close to 100 homes have been placed around Vermont to date and these ZEM owners and renters have collectively avoided over one million dollars in estimated energy costs.

Examining the market

As an emerging housing solution, it is critical to assess market readiness up front for this transformation initiative. When VEIC starts working in a new state we conduct an extensive market assessment to analyze housing stock, consider regulations governing manufactured and modular housing, identify affordable housing resources, and locate modular factories. We also perform preliminary stakeholder engagement activities to identify potential program partners and opportunities to increase modular capacity in the region.

Over the past several years, VEIC has completed market analyses and successfully designed, tested, and implemented ZEM programs in Vermont, Delaware, Massachusetts, New York, Colorado, and recently started working in Oregon. Our work in these states has consistently highlighted that the limited capacity for building ZEM homes is currently the most significant barrier to advancing the ZEM housing option nationally.

In New York for example, VEIC’s assessment (completed in the summer of 2018) of existing modular factory building resources in the state did not identify any existing builders at that time with a strong interest in developing the skills and infrastructure to build ZEM, though some expressed interest in learning more. In our report, we recommend that effort be invested in further engaging affordable housing developers and entrepreneurs that may be motivated to launch a new modular factory. This recommendation has been put into action and work is now well underway to advance ZEM construction in New York. VEIC’s other recommendations include providing resources for the launch of a ZEM pilot program, and for training appraisers in valuation of the homes to overcome the existing market barriers.

In Colorado, VEIC found that hundreds of affordable units need to be built every year to meet demand. To date, Colorado’s affordable housing developers have had limited success working with out-of-state modular factories to bring in high performance homes. Manufacturing ZEM in-state could help to meet the demand for affordable housing through a mix of small and large factories. We've determined that three steps are vital to the development of a Colorado program:

  1. Provide adequate resources for program launch.
  2. Incorporate strong partnerships and clear roles into ZEM program design.
  3. Support the development of ZEM manufacturing in Colorado.

Facilitating adoption

VEIC has successfully helped modular builders transition to ZEM standards and has provided support to start-up ZEM factories. Through these experiences we have identified four building blocks required for adoption of these homes. The key missing piece in the markets that we have assessed are modular factory partners willing and able to build affordable ZEM homes.

To address the barrier of lack of capacity to build ZEM homes, VEIC developed an open-source manual, the ZEM Factory Initiative to share strategies and lessons learned, as well as guide the business planning for social entrepreneurs and funders interested in launching and operating a local factory that produces ZEM homes. This effort was funded by the New York Community Trust. It was developed in partnership with Louisiana State University and the Healthy Building Network, and references a report recently released by the Vermont Manufacturing Extension Center.

This “How-to” guide includes:

  • An overview of the characteristics of ZEM homes and building assembly options that will meet ZEM requirements;
  • Construction tasks and workflow for homes built in ZEM factories, as well as requirements for site work, delivery, setting, and finishing;
  • A ZEM “Factory Business Plan Toolkit” providing information that will assist a factory developer in creating a strong business plan for a ZEM factory, including start-up costs and staffing requirements;
  • Case studies of factories producing ZEM homes.

The Future is bright, factory-built, and zero energy

ZEM factories can produce homes and sell them directly to affordable housing developers and homeowners, which ultimately helps to keep up front costs down for homebuyers. They can be developed by leveraging existing local, state, and federal economic development assistance programs. In addition to meeting the market demand for affordable housing, these factories can also create manufacturing jobs in rural areas.

Our manual is a first step toward advancing the development of ZEM factories throughout the nation. In the future, we hope to be able to support additional pilot programs in states across the country and to foster the emergence of ZEM factories nationwide.

Connect with us to discuss how you can bring ZEM to your community

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