The bill, dubbed “Building Star” and  playing off the name of the Environmental Protection Agency’s Energy Star program, would cover about 30 percent of the cost of energy-related equipment and services including energy audits, building envelope insulation, mechanical equipment upgrades, lighting and energy management and monitoring equipment. If passed, the program is expected to save building owners more than $3 billion on their energy bills annually by reducing enough peak electricity demand to avoid the need for nearly three dozen 300 MW power plants, according to a statement by Sen. Jeff Merkley, a cosponsor of the bill.

Buildings account for about 40 percent of total U.S. energy use, with the commercial sector, such as office, retail and healthcare facilities, making up 18 percent of the total.

While the energy-saving portion of the proposal will resonate with some, the bill’s supporters appear to be largely focused on its ability to stimulate job creation. The Energy Future Coalition, a Washington, D.C.-based advocacy group that was heavily involved in Building Star’s drafting, says it would create at least 125,000 jobs (see this 13-page white paper by the coalition for a more detailed look at the Building Star proposal). Much of that work would be for the construction industry, which has taken a particularly tough beating in the economic downturn. The coalition estimates the program would spur $15 billion-$20 billion in market activity.

Patrick Hughes, a spokesman for the Energy Future Coalition, said Building Star could get wrapped in with the Home Star bill, which Senate Energy and Natural Resources Committee Chairman Jeff Bingaman said earlier this week he wants to move quickly to launch. President Obama, who has called saving money through energy efficiency “sexy,” touted Home Star program in a speech on Tuesday.

The announcement marks the first commitment by a major homebuilder to construct all its homes in a region to the GreenPoint Rated standard, an important validation for the nonprofit that was established in 2004 (so far more than 10,000 single- and multi-family homes in California and Nevada have been or are being built to meet Build It Green’s green building criteria). But more importantly, the move shows that giant homebuilders are beginning to believe that there are enough mainstream buyers interested in green to warrant a shift toward building homes with features like highly insulated windows and walls and the use of recycled materials.

“Consumers want homes that will save them money in operations and that are green,” KB Home spokesman Craig LeMessurier, told us. “The two go hand in hand.” Over the last three years, KB Home has built about 1,100-1,200 new homes in Northern California, and the company operates in 11 U.S. states. LeMessurier wouldn’t say if the company might expand the commitment to other regions, nor would he say if the new green homes in Northern California would cost more to build than conventional construction. If there is a premium passed to buyers, however, KB Home clearly believes it can win over customers with lower energy and water bills and the marketing power of green.

KB Home isn’t alone in its shift, albeit still slow, to green building. Miami-based Lennar, a leading U.S. builder, has unveiled a line of green homes called PowerSmart Homes that are designed to save up to 40 percent on energy use. The company says it aims to have all its new homes in Minnesota achieve its PowerSmart criteria. Pulte Homes, which calls itself the nation’s largest homebuilder, is increasingly focused on adding green features to its structures and last year won the U.S. Green Building Council’s “Outstanding Production Builder” award for its Villa Trieste project in Las Vegas, which includes 185 single-family homes that met the council’s highest standard, LEED Platinum.

The announcement by KB Home is also noteworthy because the company chose to hang its hat on an independent rating system, in this case Build It Green, rather than brand its homes green based on in-house criteria. GreenPoint Rated, like LEED, depends on third-party verification and that means KB Home’s structures in Northern California will have to show that they’ve been built to standards developed by independent experts.

In particular, Pike forecasts that the home energy auditing market will nearly triple to $23 billion by 2014, up from $8.1 billion last year. The market for efficiency improvements along the lines of roofing and window replacements and upgrades for HVAC systems and appliances will increase to $50.2 billion by 2014, up from $38.3 billion in 2009, the firm predicts. And Energy Star refrigerators and clothes washers could generate revenues of $21.9 billion to $33.2 billion between 2009 and 2014.

After what Pike describes as “a long period of obscurity” for energy efficiency — not to mention a major slowdown in new home sales and remodeling — what’s driving this growth? A big part of it comes from federal, state and local governments offering incentives, tightening building codes (one of our 4 Green Building Trends to Watch in 2010) and developing new green building requirements.

But there’s more to it, says Pike managing director Clint Wheelock. “A number of factors are converging to make energy efficient residential products and services a hot sector over the next several years,” he notes in today’s release, including environmental awareness among consumers and new offerings and rebates from product makers. And As Geoff Chapin, chief executive for home energy retrofitter Next Step Living, told us recently, rebates from utilities for homeowners to get energy audits, install insulation or take other steps to reduce their energy use are also helping to boost business for energy efficiency companies.

But Pike voices concern that the residential efficiency market could see short-lived growth if government programs like President Obama’s so-called “cash for caulkers” initiative supporting home energy retrofits comes to an end at some point. However, regulations like California’s new green building code, adopted last month and taking effect next year, have staying power. And there’s nothing like the simple progression of time to spur interest in some of these technologies and services: Pike anticipates that the aging U.S. housing stock, along with rising utility prices in coming years, will help buoy demand for energy efficiency products.

Photos courtesy of Flickr user O b s k u r a

Rather than using wood chips and shavings and an adhesive that contains urea-formaldehyde, e2e produces a similar composite material — lightweight, durable and low-cost – using fast-growing plant fibers like jute, flax and kenaf, along with a resin made from soy proteins. The resulting material can be used for applications such as floors, walls, furniture and vehicle interiors. So far, customers have included the Syracuse Center of Excellence in Environmental and Energy Systems, as well as skateboard maker Comet Skateboards.

According to CEO Patrick Govang, e2e Materials’ process requires two-thirds of the energy needed to manufacture conventional particleboard. “We operate at about half the temperature required to produce typical resin-based panels,” he told Green Building Advisor last spring. “We also require none of the OSHA equipment to mitigate fumes. So we use less energy, less material.”

Of course, one of the main selling points for pressed wood products is cost, and e2e Materials claims it can compete on that level, too, by using waste products.

Zachary Shulman, a managing partner in the Ithaca-based firm Cayuga Venture Fund who also lectures on venture capital and entrepreneurship at Cornell, is listed as an investor in today’s filing.

Building codes have long been an effective stick for governments to push the construction industry toward higher standards, for example to make structures safer in the event of a fire or earthquake. The new regulations announced this week, dubbed CalGreen and taking effect Jan. 1, 2011, tackle the environmental impact of buildings. They require builders of new residential and commercial structures in California to install plumbing fixtures that reduce indoor water use by 20 percent over current standards, to recycle half of their construction waste, and to use low-pollutant options for interior finish materials like paints, carpet and vinyl flooring.

Nonresidential buildings will need separate water meters for indoor and outdoor water use, with a requirement for moisture-sensing irrigation systems for larger landscapes, and larger commercial buildings will need to have air conditioning, heating and other mechanical equipment inspected upon completion of construction to ensure they work efficiently. Buildings that pass the state’s inspection can label their facilities as “CalGreen compliant.”

Some groups, however, such as the U.S. Green Building Council (USGBC), which develops the popular green building rating system LEED, have expressed concerns about certain provisions in the new code (while also supporting many of its measures). The USGBC’s Northern California chapter posted a statement on its web site saying that the code contains a “voluntary quasi rating system” that “will likely create significant market confusion.” The comments were referring to provisions in CalGreen that allow cities to adopt more stringent goals such as around water use and waste diversion, effectively creating two tiers for the new code.

Elizabeth Echols, director of the chapter, rejected the notion that her group has reservations because it’s trying to protect its position as the country’s leading rating system for green buildings, the San Francisco Chronicle reports. Echols declined to comment for this article, instead referring me to USGBC’s Washington, D.C., office because this has become a “national” story. She wrote in an email today that the statement on the chapter’s web site is now “out of date.”

Jason Harkey, vice president of national policy for the USGBC, told me that the group has “long supported improvements in regulatory code” and that California’s move is a “great achievement.” He said the USGBC still has some concerns around “implementation,” but the group looks forward to working with the state. Harkey also said that LEED, a voluntary system, attempts to “push the ceiling” of the green building industry while codes set the “floor.” LEED, for example, has much more expansive requirements related to energy efficiency and the use of recycled materials in construction than California’s new green building code.

Still, state officials clearly feel the need to defend CalGreen against the criticism. The Governor’s office released a memo that includes a chart specifically contrasting California’s green building code with “point-based systems” such as LEED and GreenPoint Rated, a separate system which is focused on homes. The memo effectively criticizes point-based systems for a lack of transparency and high certification costs compared with CalGreen (the memo mentions LEED in particular), and it emphasizes the state’s “stringent, successful and cost-effective” methods for building inspections.

“We wanted to highlight the differences and show that some things being said weren’t true,” Dave Walls, executive director of the California Building Standards Commission, which is responsible for administering and adopting the state’s building codes, told me. He said he didn’t believe CalGreen would cause market confusion.

California’s new code will likely bring more attention to sustainable practices in the construction industry, and it tells innovators and investors that green building is now a mandatory feature when it comes to the state’s building infrastructure. It’s too soon to say with certainty if CalGreen will muddle the market for LEED. In the meantime, the USGBC should be happy with the existing rule that requires all new construction of larger California state buildings to achieve the group’s certification.

Image courtesy flickr user Wonderlane.

Smart windows are based on a simple idea: decrease the amount of heat taken up from the sun, and you can rely less on energy intensive air conditioning. But it’s executed with sophisticated technology. Switch, which plans to use its new funding for research, development and product commercialization, says it’s developing new materials based on “organic molecules that ’switch’ optical properties on command.”

Put simply, Switch says its windows “darken when exposed to the sun and rapidly bleach on command when stimulated by electricity” (a combination of  ”photochromism” and “electrochromism,” while it claims competitors rely on only one or the other).

Windows often account for a tremendous amount of heat loss or gain, forcing heaters or air conditioners to work harder and consume more energy depending on the time of year. And if dynamic controls get paired with high insulation, windows could also help minimize heat loss during cold days.

It’s fertile ground for the green building industry, and according to a recent report from venture capital firm Nth Power and the Fraunhofer Center for Sustainable Energy Systems, companies that develop better predictive and adaptive algorithms, faster response times and interconnectivity with a building’s automated systems will have an advantage in this space.

Companies working on smart window tech include Soladigm, a tight-lipped startup in Milpitas, Calif., as well as Sage Electrochromics and EControl-Glas, which already sells smart window systems.

A big hurdle to growing the market for this technology comes down to cost. That’s part of why the Department of Energy awarded a $4.9 million grant a few months ago to ITN Energy, for R&D focused on reducing the cost of manufacturing electrochromic films by using “roll-to-roll production.”

Switch sees this challenge as an opportunity: developing more affordable option (for both buildings and automotive applications) holds the key to a large chunk of the market. BDC Venture Capital Director Geoff Catherwood predicted in the company’s announcement that Switch will be able to “gain a leadership position in a large untapped market” by producing smart windows at a lower price point.

Below we present four of the most important trends that we see shaping the industry in 2010. Since energy use, at least so far, has been the primary focus of innovators and investors, we’ve largely limited our view into the green building crystal ball to that slice of the industry.

Modular Green Homes Go Mainstream: When Warren Buffet makes a bet in energy-efficient modular homes, it’s a good sign the market is set to grow. Clayton Homes, one of the largest builders of manufactured housing in the U.S. and a subsidiary of Buffet’s Berkshire-Hathaway, launched its i-house earlier this year. The homes, which will be constructed as modules in a factory and then assembled in the field, are billed as “affordable luxury in a green, energy-efficient package.”

Besides Clayton, a number of startups like Zeta Communities and Blu Homes are getting into the prefabricated market. So far, these companies have built a relatively small number of “prefab” homes, but 2010 could be the year that this industry finally becomes a serious player. “It’s going to change — there is no question,” Michelle Kaufmann, whose firm, Michelle Kaufmann Studio, designs prefab homes, tells us. “The technology is there, it’s just about embracing it.”

The industry will really take off once the country’s largest home builders start using modular construction. That time is probably not too far off, as Kaufmann says she’s been approached by two of the nation’s five biggest home builders (she wouldn’t give names because of nondisclosure agreements) to advise them on modular construction.

Besides cost savings in labor and materials compared with conventional building, modular construction can help developers reduce risk, Kaufmann says. A developer can build homes on a large site as sales come in rather than investing a large amount of money upfront to build all the planned homes at once and before most are sold. This should prove attractive at a time when financing is hard to come by and the market for new construction is lagging.

Building Materials Get Smarter: Tech-oriented innovators and investors are finally starting to embrace the building industry, and one of the most exciting areas is smarter, more energy-efficient building materials. Serious Materials, which raised a $60 million third round of venture funding in September, already has built a bustling business out of energy-saving windows and environmentally friendly substitutes for sheetrock.

But a host of “revolutionary innovations” are in the pipeline, according to a report earlier this year by venture firm Nth Power and the research firm Fraunhofer Center for Sustainable Energy Systems. High-efficiency insulation systems such as walls with micro-encapsulated phase change materials are being developed, according to the study. These materials could help stabilize the indoor temperatures in buildings by, say, releasing heat absorbed during the day at night when the outside air cools.

A number of companies (such as the stealthy Soladigm) are using electrochromic technologies that can darken or lighten the tint of a window when in contact with an electrical current and manage the sunlight that passes through. The study also points to the development of ventilated double-skin facades, systems that use inner and outer glass walls with a thin gas cavity in between for the exterior shell of a building. The facades provide insulation, and heat absorbed within the cavity can be used to warm cooler areas of a building. Double-skin facades have already found a fair amount of traction in Europe, but they’ll need some tweaking before they’re widely adopted in the U.S.

Energy Retrofits Become Big Business: “Efficiency” may have been the most popular word for 2009, and nowhere was its meaning so loud and clear as in the building industry. The country’s building stock is largely old and wastes energy, and the measures needed to make structures run more efficiently — say by adding more insulation in the case of homes or replacing aging heating and cooling systems in office buildings — often pay for themselves in reduced energy bills in a handful of years. Add to that the buzz in Washington (and likely financial incentives to spur them on) about creating jobs through these projects, and you’ve got a powerful force driving this industry.

Geoff Chapin, chief executive of home energy retrofitter Next Step Living, tells us he expects his business to grow 300-400 percent next year. Chapin said electric utilities are giving the industry a boost by offering more rebates for homeowners on measures like energy audits, insulation and duct sealing. The U.S. home energy retrofit market will grow about 15 percent per year to $35 billion by 2013, up from $20.7 billion in 2007, according to SBI Energy.

And look out in 2010 for movement at the national level to help correct what are widely seen as three major barriers to the industry: limited information for consumers about the energy performance of homes, difficulties accessing finance for energy retrofits, and a lack of skilled workers in the field.

The market for nonresidential building retrofits is also set to explode. Research and publishing firm McGraw-Hill Construction published a widely circulated report earlier this year that said nonresidential “green building retrofits” represent in the near-term a better opportunity for designers and builders than new construction. The market for these retrofits -– defined in this report as over $1 million in total cost and employing at least three aspects of green building such as energy, water and resource efficiency –- could grow to as much as $15 billion by 2014 from less than $4 billion this year.

Retro-commissioning, the practice of optimizing a building’s operation and maintenance activities such as around its heating and cooling systems, has become a sort of mantra for the industry. While the practice should be seen as just one piece of a comprehensive energy retrofit, retro-commissioning’s rise in popularity is for good reason since it can often lead to energy savings as high as 30 percent, says David Leathers, senior vice president of energy services for mechanical contractor Limbach. Leathers says that any commercial building in the U.S. five years or older can likely benefit from a retrofit with payback for most measures taken in less than five years.

Energy Codes Will Demand Greater Energy Efficiency: Ever since the energy crisis of the 1970s faded out of memory, energy codes adopted by states and other jurisdictions across the country have been making small, incremental steps toward demanding more efficiency out of buildings. But a consensus is forming that there needs to be more strict standards for building energy efficiency, says Jim Edelson, who runs the codes program for the New Building Institute, a nonprofit that promotes improved building energy performance.

The new versions of the “model codes” currently under development — ASHRAE 90.1 and the International Energy Conservation Code (IECC), which are typically but not always adopted by jurisdictions — will likely require a 30 percent increase in energy efficiency, what Edelson calls the “most significant” increase in a generation. ASHRAE 90.1 is planned to be available in 2010, and the IECC is targeting a 2012 release.

But just because ASHRAE or IECC develop new codes doesn’t mean jurisdictions have to adopt them, and that’s led to a patchwork of energy standards across the country. (For a full description of the map, see this page on the Department of Energy’s web site.)

One issue to look out for in 2010 is if Congress decides to mandate that all states raise their standards to the newest codes. The American Clean Energy and Security Act passed by the House this year includes a provision that would effectively create a baseline national building energy code by mandating the adoption of a standard set by the Department of Energy, which would presumably point to ASHRAE or IECC. Consistent codes across the country would be good for anyone selling products or marketing services related to building energy efficiency, but it’s unclear if this provision will be part of the Senate’s version of the bill or if it will make it through any compromise legislation.

Photos courtesy of Flickr user O b s k u r a, ZETA Communities, McGraw-Hill Construction, and the Department of Energy, in the order they appear in the post.

Startups know those metrics pretty well already. Lucid Design Group, for example, has been selling its energy management system for years to the commercial sector, as well as governments and universities. But while the company has always discussed plans to eventually work in the residential market, Lucid Design has yet to make a big push into homes. As Michael Murray, Lucid Design’s CEO, has maintained in conversations with me over the past couple of years, the energy management market for large commercial buildings is much more accessible compared to energy management in homes.

Think about it this way: Lucid can focus on selling its energy management system to companies like Yahoo, which is using the product for its five building offices in Sunnyvale, Calif., where more than 3,000 Yahoo employees work. That’s one deal and a custom job. Or Lucid could work on packaging its software and sensor product into a relatively low-cost (some think it has to be dirt cheap to sell to consumers), probably low-margin box to sell to a market that’s still in a very nascent stage.

Businesses are also often more eager to save money on their lighting and heating/cooling costs than consumers. The return on investment is much higher for a large building that uses a lot of energy than it is for a single family home. In addition, regulations and shareholder demands increasingly require companies to report their carbon footprints, and energy management systems will help them gather and report that data.

That’s not to say that the market for residential homes in the U.S. isn’t attractive — it’s the holy grail for many energy management firms with dreams of turning their brands into a household name. It’s just a lot more difficult.

Buildings account for about 12 percent of water use in the country, according to the U.S. Geological Survey, and green building ratings systems like the U.S. Green Building Council’s LEED encourage more efficient use of water, such as through low-flow toilets, drip irrigation and on-site water reuse. Typically more water is consumed outside commercial buildings and homes (see charts below taken from the report) — for landscape irrigation and cooling towers — than is used inside by things like toilets, faucets and showers, according to the report. With that in mind, we’ve summarized the three areas in green building design noted in the report as the most promising for reducing water use outside buildings:

Smart Landscape and Irrigation: Landscape irrigation can be as much as 60 percent of water use in homes in arid climates and more than a third in more water-rich areas, the report says. Newer technologies, like weather-based irrigation (Rockport Capital-backed HydroPoint is one example), are helping building owners reduce water use. Instead of watering according to a preset schedule, these “smart” systems take into account weather conditions, current and historic evapotranspiration, and soil moisture levels to deliver water based on the needs of the plants. Other water-saving landscape features emerging (besides the low-tech solution of selecting drought-resistant plants) include bioswales and vegetated roofs.

Rainwater Reuse: The bulk of U.S. building projects miss out on one of the most potentially significant water conservation opportunities by failing to put in place rainwater catchment and reuse systems, according to Building Design+Construction. For every inch of rain that falls on 1,000 square feet of roof area, 600 gallons of water can be collected for harvesting — where water is collected either from the roof or the ground and then diverted to storage tanks. If just 10 percent of the roof area in arid Texas were used for rainwater harvesting, 38 billion gallons of water would be conserved each year, says the report. Moreover, rainwater harvesting is relatively simple to execute, especially for irrigation and cooling tower applications.

While many rainwater harvesting systems are custom-engineered from various components, a growing number of packaged systems are now available, such as those from BRAC Systems and Watertronics. One emerging trend in rainwater reuse is the application of siphonic roof drainage technology, in which negative pressure is used to draw water along horizontal piping. Proponents of siphonic roof tech say the process can be less expensive than conventional systems that depend on gravity and require more piping to move water.

Cooling Tower Water Recovery: Cooling towers for chillers are often the largest consumers of water in commercial buildings. (They typically rely on water evaporation to provide cooling for air conditioning.) A large commercial building with 1,000 tons of refrigeration will use 3,000 gallons of water per minutes, the report says.

Newer cooling technologies like variable refrigeration volume systems, which cool individual rooms of a building depending on the need, show promise for reducing water (and energy) use, as do cooling tower water management techniques, such as automated controls. Water treatment technologies (such as Dolphin WaterCare’s system) increase the recirculation rates in cooling towers before the need for a so-called blowdown, when water is removed from the system to reduce mineral concentration and scaling that occurs as a result of the evaporation process.

There is a “potential opportunity” for whole building water savings, according to the report, in the reuse of wastewater (blowdown and condensate) from cooling towers and other mechanical equipment for irrigation. But condensate recovery has not yet caught on all that well in the building industry.

Image courtesy of Wikimedia Commons.

The U.S. market for energy-efficient roofing retrofits will reach $2.5 billion by 2013 from $1.4 billion last year (SBI deems roofing materials efficient if they meet Energy Star criteria, which is based on the amount of solar radiation a roof can reflect away from a home). Metal roofing, accounting for about 8 percent of the residential roofing market last year, up from 4 percent in 2000, is currently the most common type of material used for cool roofs, according to SBI. Green, or living, roofs, where plants cover part of or the entire roof (pictured above), are another option, but the high cost premium (about two times) over metal roofs is a barrier to market penetration.

Both industries – HVAC and roofing production – are currently dominated by a handful of large manufactures, such as Carrier for residential and light-commercial heating and cooling equipment and Owens Corning for roofing material. But these trends should provide opportunities for startups. Home energy retrofitters, for example, like Sustainable Spaces stand to gain, as do companies with innovative materials like Clean Tech Open finalist tru2earth, which is developing roofing tiles from recycled plastic.

The primary driver of home energy retrofit growth in 2010 will be the stimulus package, SBI predicts in its report. The bill includes $5 billion to weatherize low-income houses, a tax credit for homeowners for 30 percent of the cost of home energy-efficiency improvements, and $300 million to promote energy-efficient appliance purchasing. It’s not surprising that energy-saving heating, cooling, and roofing products would gain traction as the residential green retrofit market picks up steam. But beyond 2010, growth will come from the “natural rise in the construction and remodeling cycle,” coupled with consumers’ growing interest in reducing their energy bills.

Green roof installation photo courtesy of Flickr user Greenforall.org

This comes at a time when the global market for green building materials is expected to grow 5 percent a year to reach $571 billion by 2013, up from $455 billion last year, forecasts NexGen Research. And the stimulus package, which includes more than $10 billion in funding to make buildings more energy efficient, should drive demand, at least in the near term, for these technologies. The Fraunhofer Center and Nth Power say these five innovations, all of which are in the “pipeline” (though no specific dates were given), could make structures easier and cheaper to build and more energy efficient.

High-Efficiency Insulation Systems: For years, building-product manufacturers have been making windows filled with gas to increase their insulating properties, but only recently have efforts intensified to use similar technology in wall systems, the report said. Some gas-filled panels under development use small vacuum-sealed plastic bags filled with low-conductivity gas and can yield thermal efficiency ratings as high as R-20 per inch, compared with traditional fiberglass installation of about R-3 per inch. But the newer systems still have issues around longevity and high cost.

Phase Change Material: These materials are capable of storing and releasing large amounts of energy as they change from solid to liquid. New building products are being engineered, the report authors note, to contain micro-encapsulated phase change materials, or PCMs. This could help stabilize the indoor temperatures in buildings by, say, releasing heat absorbed during the day at night when the outsider air cools down. Conventional concrete and masonry are currently used in this way in some building designs, but newer materials, such as those being developed by Aegis Building Technologies, could be lighter and cheaper and produce the same effect.

Reflective Coatings and Nanostructures: Building surfaces, especially roofs, absorb a lot of heat and drive up cooling costs in the summer. New reflective coatings and nanostructures can be used to reduce or promote heat absorption in building surfaces. Energy Seal Coatings, for example, has been working on building better reflective coatings since the mid-1990s. These technologies can be integrated with existing materials to produce more efficient, longer-lasting, self-cleaning systems while still looking the same as conventional products, the report said.

Smart Windows: Automated blinds or sunshades can limit the amount of sunlight that passes into a building, but these features restrict outdoor visibility, are expensive and often unreliable, the report said. Smart windows, designed to dynamically change their properties to block sunlight, can reduce cooling demand and prevent glare at the same time.

Nth Power and the Fraunhofer Center list two approaches: Electrochromic technologies (being developed by companies including stealthy Soladigm) use electrical voltage to darken or lighten the tint of a window and manage the sunlight that passes through it. The second type, gasochromic technologies, inject hydrogen gas into a sealed cavity, which reacts with a metal layer on the window pane to control solar transmittance. According to Monday’s report, the energy savings from these new windows will depend “strongly on well-tuned control system settings.” Companies that develop better predictive and adaptive algorithms, faster response times and interconnectivity with a building’s automated systems will have an advantage in this space.

But the biggest hurdles for widespread use of these windows are high upfront cost and uncertain product lifetime. One company looking to overcome these barriers is Littleton, Colo.-based ITN Energy, which received $4.9 million in DOE funding to develop “roll-to-roll” manufacturing technology for making low-cost elecrochromic windows.

Ventilated Double-Skin Facades: These systems use inner and outer glass walls on a building with a thin cavity between the two. This provides insulation, and heat absorbed within the cavity can be used to warm cooler areas of a building. To be most effective, the system should be coupled with other technologies like active blinds, natural ventilation and automated lights. But without careful planning to integrate these technologies, the report cautions, these systems can actually increase a building’s energy use. Finding ways to simplify component integration, optimize design and improve control algorithms could speed adoption of this technology, according to the researchers.

Photo courtesy of Flickr user Payton Chung

ZETA constructs buildings as modules in a factory and then assembles them in the field, cutting construction time in half and using about 50 percent less material in the process. The startup aims to construct multifamily housing and mixed-use commercial structures that are net-zero energy — meaning they produce as much or more energy than they consume — and that are priced competitively with conventionally made buildings. zTherm is an important part of the firm’s energy-saving and pricing goals. The technology, which has so far just been installed at a demonstration home in Oakland, Calif., is what Porat calls ZETA’s “central nervous system” because of its ability to make choices about economizing heating and cooling settings to reduce building energy use by 10-15 percent.

ZETA says the proprietary system will cost about $200 to install (it won’t, at least initially, be sold as a separate product). zTherm automatically takes steps to achieve the desired indoor temperature, starting with the least costly approach, such as opening a skylight or fresh air vent (a sensor detects if it’s raining). If that doesn’t do the trick, said John Stockton, an engineering consultant to ZETA for zTherm, the system will take an intermediate step like turning on a fan to cool the building or, if the concrete basement has absorbed and retained a large amount of heat during the day, closing the vents and allowing the heat to rise and warm the interior. These “passive” measures will be used first before air conditioning or heating — the most energy-intensive and costly actions — are taken, according to Stockton.

ZETA has plans to add more features to zTherm that could be ready in about 18 months, said Shilpa Sankaran, VP of business operations, who described the system as an “ongoing innovation.” They may include controls of additional systems such as lighting; a front-end, web-enabled dashboard (the current version is controlled through a wall-mounted unit, but ZETA is open to partnering with existing energy dashboard developers); and smart grid interoperability, such as the ability to communicate with smart meters and appliances and reduce energy use during peak demand.

The zTherm energy system is part of a host of other technologies that ZETA employs to achieve its promise of net-zero energy, Porat said. Others include wastewater heat recovery, a heating, cooling and ventilation system that uses a high-efficiency heat pump and an air-to-air heat exchanger, and a super-tight building envelope with high-performance windows and insulation. Such features allow ZETA buildings to use 40-60 percent less energy overall than conventional, site-built structures, according to Porat. To achieve net-zero energy, ZETA adds solar panels – which would generate as much renewable energy or more than is needed by the building over the course of a year and then feed it to the electric grid (for example, ZETA’s currently building an environmental center and lab in San Francisco that will use a 3.6 kW PV system to achieve net zero). ZETA’s clients can choose to have a third party validate the net zero target, and the startup will monitor actual energy usage for all projects for an entire year and make any needed adjustments.

The goal of building net zero-energy buildings has been gaining momentum in recent years. The Department of Energy launched a zero-energy initiative last year aimed at developing “marketable” commercial buildings that produce as much energy as they consume by 2025, and in June the DOE set aside $100 million for research projects that will help “achieve net-zero energy buildings.”

Last September, California adopted an energy efficiency plan that calls for all new residential construction in the state to be net-zero energy by 2020 and all new commercial construction to be net zero by 2030. And the White House issued an executive order this October requiring all federal buildings planned after 2020 to be designed to achieve net zero.

The construction industry as a whole, however, has been hit hard by the economic slump, and as a young startup ZETA faces an uphill battle to win major deals. Financial services firm Canaccord Adams, in a recent green building newsletter, quoted Ken Simonsen, chief economist at the trade group Associated General Contractors of America, as forecasting that nonresidential construction spending this year will shrink by 3-7 percent and possibly remain flat or grow by as much as 5 percent in 2010. Meanwhile, total U.S. construction next year is expected to range anywhere from a 4 percent contraction to a 2 percent expansion, according to Simonsen . The good news for ZETA: the chief economist for the professional association American Institute of Architects says energy efficiency will remain a priority in home design due to rising energy costs, according to Canaccord.

But even green prefab hasn’t been immune to the downturn in the market. Oakland, Calif.-based mkDesigns closed this May after having built 51 prefab buildings since 2004. Two of mkDesigns’ factory partners went out of business and several clients lost financing for projects, forcing founder Michelle Kaufmann to sell the assets of the company (she soon launched a new green prefab firm, this time targeting larger community developments).

ZETA, like Kaufmann in her newest venture, believes that prefab can only be successful by achieving scale. Porat told us that the firm is mostly focused on large multifamily developments of between 30 and 300 units a piece. As part of the effort to scale, ZETA opened its own factory last month in Sacramento, a 91,000-square-foot facility that will be able to crank out 400-500 units per year.  And the startup’s business plan, Porat said, calls for establishing similar factories elsewhere in the country, at around $2 million apiece, that would serve communities within a 200-300 mile radius.

Image courtesy ZETA Communities

Business leaders surveyed earlier this year expressed a belief that a turnaround for energy efficiency startups could hinge on more incentives and legislation from the government. So in a time when interest in energy efficiency among North American businesses is growing, but oftentimes is not leading to actual investments in the technology, the types of policies factored into ACEEE’s report this week are of critical importance to many startups.

A broad cross section of the cleantech companies stand to benefit from these policies. Raising the bar on building energy codes, for example, can help drum up business for more efficient lighting and products from companies like Serious Materials, a green building materials company that last month announced one of the largest VC deals in the country for 2009.

When it comes to helping utilities meet energy savings targets and take advantage of “the removal of disincentives,” as ACEEE put it in last year’s report (allowing utilities to make more money selling less energy), information technology-based tools from companies like Powerit Solutions, eMeter and Efficiency 2.0 also have a big role to play.

The 10 states in the group that “most needs to improve,” according to ACEEE’s analysis, are Alabama, Alaska, Georgia, Louisiana, Michigan, Missouri, Nebraska, North Dakota, Oklahoma, South Dakota, West Virginia and Wyoming. Lacking the level of government support for energy efficiency improvements that the top 10 states have, of course, this second group of states may have the most need, if not the easiest market entry, for efficiency tech and tools. We’ll know more on Wednesday about how all 50 states measure up.

Image courtesy of Flickr Creative Commons.

The 14-page document, titled “Recovery Through Retrofit,” identifies three broad barriers to growth of the industry: limited information for consumers about the energy performance of homes, difficulties accessing finance for energy retrofits, and a lack of skilled workers in the field. The report also proposes a number of strategies for overcoming them, some of which are summarized below.

Develop home energy performance labels: New homes can qualify for an Energy Star label, but there is no similar label for existing homes that have undergone retrofits. Much like with appliances that recieve the EPA-administered label, prospective home buyers would know that a retrofitted home with an Energy Star rating had met a nationwide standard. The report calls for the feds to develop a home performance label for existing homes that would be accompanied by a national marketing campaign to increase consumer awareness.

Support municipal energy financing: The high turnover rate of housing in the U.S. has meant that many homeowners are reluctant to invest in retrofits due to fears they not being able to recoup the upfront costs when they sell. But a number of financing mechanisms have been implemented by municipalities (for example, Berkeley, Calif.’s FIRST program) that permit homeowners to tie financing for energy retrofits (or renewable energy systems) to a special annual tax assessment on their property, essentially passing on the cost to the new homeowner. The report calls for the feds to encourage these Property Assessed Clean Energy programs by working with state and local governments to develop safeguards and criteria for their use, as well as by collecting data on best practices.

Improve energy efficient mortgages: These enable home buyers and homeowners to refinance their properties to add the cost of energy-saving upgrades to the underlying mortgage. This permits energy retrofits to be financed over a longer period of time, with lower monthly payments. But the adoption of such mortgages has been slow. To that end, the report proposes some fixes, including HUD working with Fannie Mae and Freddie Max to establish uniform procedures and the feds working with the home appraisal industry to develop ways to assess homes that more accurately reflect energy efficiency.

Develop consistent workforce certifications and training standards: In order to rapidly expand retrofit capacity, the report says a national effort is needed, one that identifies required job skills upon which certification will be based and sets standard training goals or methods. The report calls on federal agencies to develop and deploy model training programs for workers and leverage existing workplace training, labor management partnerships and other public-private partnerships to link workforce training to job opportunities.

According to the report, an interagency Energy Retrofit Working Group will submit an implementation plan to the Vice President’s office within 30 days that follows up on these recommendations.  The group is tasked with tracking the progress made on the report’s recommendations over the subsequent few months.

Talk, however, is cheap. I’d like to see a nationwide home energy label program that isn’t voluntary. And there’s always the fear of regulatory overreach. Let’s hope Vice President Biden, who made the request for the report, remembers that it’s business that will create jobs, business that will do this work, and business that will eventually succeed or fail at making this a “self-sustaining” industry.

Image courtesy of NREL.

Energy Secretary Steven Chu spoke earlier this year about the need to provide this kind of technology via open source. “We should be inventing a new way of designing buildings,” he said at an event in San Francisco, describing an idea for a program that would pinpoint things like the most efficient window orientation for a particular site, and help architects tweak their designs to maximize a building’s energy performance. Google SketchUp, with NREL’s ongoing work on the OpenStudio plug-in, is a step in that direction (see a video demo below the break).

Google has been quick to promote the potential for SketchUp (which the search giant acquired along with startup @Last back in 2006) to help bring environmental factors into the building design process early on. As Celeste has explained over on GigaOM, smooth integration with Google Earth means SketchUp users can punch in the actual latitude and longitude of their project site to visualize buildings in their real-world setting, and thus accurately model how landscape features and structures will cast shadows over the building.

That can be useful for fine-tuning a building’s site orientation or window placement to cut energy use, or for positioning solar panels, but NREL’s OpenStudio plug-in, first launched in April 2008 and downloaded by 700 users per month, could go much further. It relies on integration with an energy modeling program from NREL called EnergyPlus, which simulates building heating, cooling, lighting, ventilation and other energy flows.

The OpenStudio update released this week is designed to work with version 4.0 of EnergyPlus, just launched on Monday with a host of new features (such as  the ability to define a window glazing system) and compatibility with Windows 7, Linux and Snow Leopard.

At this point, developers at the national labs are working to increase speed and offer additional functions for OpenStudio — linking up with a construction-cost database to compute building costs, for example, or with standards for the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) certification program. The hope, NREL engineer Nick Long said in a release from the agency, is that designers will “start throwing away designs at the very beginning of a project, saying: ‘This is not a good design because we’re going to use too much energy.’”

In May, amid the economic downturn, Kaufmann closed mkDesigns after two factory partners went under and several clients lost financing for projects. The experience was “devastating,” Kaufmann said, but after some soul searching she committed to pursuing her passion for making “thoughtful, sustainable design accessible.” Kaufmann launched a new firm, Sausalito, Calif.-based Michelle Kaufmann Studio, and sold the assets of mkDesigns to Waltham, Mass.-based Blu Homes. Her new firm will design prefab homes, but now Kaufmann is focusing more on larger community developments, which she says will benefit from economies of scale. We sat down with Kaufmann during last week’s West Coast Green conference in San Francisco to discuss the prefab industry.

What opportunities do you see for startups in the prefab space?

It is the perfect time to be starting a business. You have to be smart about it, surgically focused and hard working. I think there are more opportunities now than ever before because the playing field has been leveled. I think the prefab home market, in general, is ripe for innovation. Builders and developers are looking for alternative methods of construction. They want it to be green, and they are looking for prepackaged solutions. It helps them with risk management and inventory control.

How much does technology play in prefab, or is it just a new way of doing architecture?

There is so much broken with the standard architecture and construction process for single family homes. Only 3 percent of homes are designed by architects. We as builders and architects can complain about it or do something about it, and technology is a critical part of that.  We’ve been using innovation and technology in every other industry to bring good design to the masses, yet we’re still building the way we’ve been doing it for a hundred years. The model is broken and wasteful. Have you ever heard of someone saying that I just finished a house and it was done on time and on budget?  You never hear that. That is wrong. Imagine if we said that about our phones. That product would not last. There is just so much we can improve because it is so broken.

What were the main lessons you learned from mkDesigns?

You need to be smart about prefabricated green building, to make it easier for people to have a green home. Not just for the families living in them but for the builders and developers. It isn’t a question if they want a green home. They want healthy homes, but we have to make it easy. We can’t make them cost more or take more time than a non-green home. Those are the right elements to target. That is what makes it all happen. Scale is the key issue I think for any company approaching the idea of prefab green homes. It’s tough to do it with one-offs, which is why I’m now focusing on communities. I don’t see how you could make it accessible without scale. If companies are going to be successful, they have to figure out how they will address scale.

What would you have done differently in the way you executed with mkDesigns?

I don’t know that I would have done anything differently. We had a lot of successes. It was the timing and the lending crashing as well as the factories going out of business. Maybe in hindsight it may have been better to build everything in our factory and not trust factory partners. But that would have been impossible to tell at the time. We thought they were healthy enough to stay in business, but in one case their backers backed out and in another they didn’t share the true story of what was happening.

What will it take for prefab homes to become a significant portion of our built environment?

Financing is a key part. I was fortunate enough to spend the day with the founder of Patagonia, Yvon Chouinard. It was interesting to hear him talk about the work he’s doing with Walmart. He’s trying to get them to do all organic food. If Walmart does all organic food, that changes the world’s production of food. I realized that it is important to have a grassroots movement to do proof of concept, but the thing that pulls it off is working with seemingly unlikely characters who have the scale capacity. It will be the bigger home builders embracing offsite technology, which they’re starting to do, that will change this industry. I think that’s why it is a really interesting time now. The big builders are now concerned about what they’re building — they need differentiation — and rethinking their models to figure out how to do more with less.

Will the scale-up require big investors?

Different businesses have different business plans. Some will take on investment money, some might be self-financed. What needs to be rethought is the lending practice. When we come out of this [economic crisis], we will have a totally different lending model. I think we’ll see more private companies rather than the big banks lending to individuals. Maybe a builder might look to take on investors to build a project rather than going to the banks. The most successful companies in the building world will be the ones who figure out how to do it without being dependent on the banks.

Photo: Sunset Breezehouse in Marin County, Calif., by mkDesigns. Credit: John Swain.