Over the course of several years, there’s been a lot of thinking about deep energy retrofitting existing homes, or DER, for short. Deep energy retrofitting—to quote a common definition as “remodeling that reduces a home’s energy use by 50% to 70%” (i.e., R-40 walls, R-60 roofs, good windows, air-sealing)—has emerged as a practice of interest, and today it seems like just about everybody knows about—and how to spell—DER.

By last year, not only did DER enter the common vocabulary among energy-efficiency parts of the building trade, but by then there was also a growing understanding that DER was just too damn expensive to likely ever become a common practice, even to the point where some expressed the opinion that DER was only ever likely in the small numbers that reflect demonstration projects enjoying significant subsidies and in-kind contributions from self-interested businesses and organizations. The good news with such an emergent perspective is that it helps focus DER efforts on the issue of the high costs and what is needed to identify as precursors for any possible advancement in cost reduction.

Yet another perspective on DER has been given voice, and a good example of such speech is Martin Holladay, long-time NESEA star, author of many energy-efficiency building articles and blog writer, and—recognizing that this summary is very incomplete—senior editor with Taunton Press’s Green Building Advisor, one of the energy-efficiency-in-the-built-environment’s leading publishing efforts. Martin’s latest musings about DER focus on the reasonably anticipated costs of energy through photovoltaic, and he argues that if DER costs as much or more than a PV system that could provide the energy required to heat the home being considered for retrofitting, then it makes sense to go PV.

The fact is that DER cost factors are often considered without adjusting for related target factors, such as the building’s physical condition and characteristics, climate zone location, and heating fuel options. I love it, for instance, when I hear someone argue that DER is too expensive because the home they are considering for DER already has a new roof and siding.  Um, yeah, doubling your roofing and siding costs by doing them twice is, like, going to raise the cost quite a bit.

Of course, all sides in this dogfight can be a bit silly: DER’ers point out that there are 120 million or 180 million existing homes in the U.S., as if somehow these homes are all candidates in one huge market, and that DER is the single-handed solution for averting climate crisis, amen.  Fortunately, the market realities are impressive enough without polly-anning them. The Northeast region of the U.S. (co-incidentally, the bailiwick of NESEA) has tens of millions of 60-year or older houses, with a big chunk of those using oil fuel.  In order to draw a more accurate portrait of the potential DER market, the market sizing questions must also address the following conditions:

• Insulation level of house
• Air-sealing of house
• Roof condition
• Siding condition
• Style and structure of house
• Climate zone location
• Window efficiency

So, considering that some of the hundred-something million existing homes in the U.S. may be newer homes, have good insulation, are located in warmer climate zones, and so forth, then obviously not all are actually best-suited for DER.  But DER market size claims in the Northeast region of our country—as well as the upper Mid-West and many parts of Canada—reflect higher percentages of older homes very suitable for DER consideration, to the tune of many millions. Of this gross number, a small percentage will need new roofs and/or residing every year. While real remodeling market specifics are hard to get, remodeling magazine recently announced the following that helps put gross market share potential into annual numbers:

The number of estimated remodeling and replacement projects for 2011 is just a little over 10 million, a 5% decline of the 10.5 million completed projects estimated for 2010. For 2012, however, Hanley Wood is predicting just over 10.1 million large, pro-worthy remodeling and replacement projects. For 2013 the news is even better as 10.5 million projects are projected.

If you want to spend $12,000 or so for an industry report, Principia Reports will be happy to sell their roofing or siding markets reports to you, and you’ll have all the data behind such findings as “cliff-noted” here:

• There were 10.1 million significant-sized remodeling projects last year (2012), which, assuming 120 million homes, means that each year around 8-9% of U.S. homes have some remodeling done;
• That $11 billion a year (2011) in the U.S. was spent primarily on residential reroofing material, which does not include design, logistics, or construction cost;
• That 5.9 billion a year (2011) in the U.S. was spent primarily on residential siding and trim material, which does not include design, logistics, or construction cost.

According to the latest census (American Community Survey, 2009), there are about 7 million single unattached housing units in the Northeast, which represent just under half (48.75%) of all housing units there. If we assume that half of these meet the key conditions of being built before 1979 and with oil heat—this is a very conservative percentage—then 3.5 million homes are good potential prospects for DER.  (Please note that single attached homes are not included in this count, nor small nor medium multifamily structures.)  We can further assume that somewhere around 4-5% of these units will receive some remodeling each year, which makes that the annual market in the Northeast to be 157,500 homes, and if only 10% of these units each year are having significant roof and/or siding work done, then the true DER market size in the Northeast could be 15,750 homes each year.

Keep in mind, too, that there are some significant changes afoot as 2012 IECC code starts to get adopted, as the Principia Report summaries tell us, including “a 30% increase in energy savings and mandatory air infiltration testing in all homes to ensure building envelope efficiency. In addition, colder climate zones will require exterior rigid foam insulation or another wall insulation strategy in order to reduce thermal bridging. This will have a major impact on siding installation methods including material selection (based on R-values and ease of installation), systems (with insulation, fasteners and installation methods and costs).”

Don’t expect that the Northeast region will start seeing ten thousand DER projects in play each year any time soon, even while these numbers of homes each year are getting some significant roof or exterior work done.  The high cost problem of DER is a very real current problem, but there’s nothing to say that the cost problem will remain an intractable one. Fortunately, the market sizing for DER is good news on the cost front, if for no other reasons than that this presents opportunities for efficiency of scale cost reductions, as well as the market motivation to find other DER-related cost reduction solutions. There is already evidence coming out of the NYSERDA DER research and other efforts that DER costs per building drop when a group of buildings are being tackled together.

Indeed, it is far too early to dismiss DER. It is far too early to dismiss most options for improving energy efficiency in the built environment and for knocking carbon in the atmosphere back to safer levels. The choice isn’t between DER and PV, but rather “all of the above,” and more.