Behind Meritage’s Solar and Energy Sell

Behind Meritage’s Solar and Energy Sell

Meritage Homes sells combination solar PV and solar thermal panels that make the energy conservation sale easier.

If you’re looking for a way to leverage solar and green technologies in new homes, look to Meritage Homes. For several years, the Arizona-based builder has offered solar systems in its homes—and has expanded to net-zero (also known as zero net) home offerings, which produce all of their own energy. The company also offers energy management and home control system installations.

Although Meritage debuted its solar offerings in a big way in 2010, the work began in 2000 with a thorough study of energy analysis and building science as a U.S. Department of Energy Building America partner. With this, Meritage learned the ropes and developed a sound market strategy for building green and energy-efficient homes.

Meritage initially considered foregoing the solar offer, because the company couldn’t find the value in installing such expensive systems. Then it found Echo Solar, now part of SunEdison. Echo combines solar photovoltaic (PV) for producing electrical power with solar thermal for heating water and air.

With the sun shining on solar panels, a lot of heat normally collects behind them. The Echo panels collect that heat and use it to heat water and air. This solar thermal component added enough value for Meritage to sign on.

Meritage offers both the Echo and Echo+ systems, the latter is also capable of heating and cooling a home by passing the warmer air from the solar array through a MERV-8 air filter and into the home’s air ducts during heating season, while cooling takes place largely at night with cool air from outside passing through to help cool and ventilate a home.

Echo bills its systems as BIPV (built-in PV), using a weatherproof underlayment on the bare roof deck, and covering it with a fireproof metal roofing product and the solar array. The basic Echo system requires small penetrations for the electric supply and the heat exchanger, while the Echo plus has collars underneath the array to pull the air from below the panels.


Solar Selling Hurdles

So far, Meritage has built solar into 800 homes, but it hasn’t been easy.

Meritage first looked to offer solar as a standard option on their homes. “Some loved it, some were neutral, and some questioned whether it would be worth it for them,” says C.R. Herro, the company’s vice president of energy efficiency and sustainability. “It’s good for the buyer who is predetermined to have a conversation [about energy conservation], but it’s a tough distraction to have during the buying process. So, now we make it available to all, and those who value it will buy it.”

“We introduce it as a system producing multiple types of energy. Buyers quickly see heating, cooling and electrical costs go down. You’re essentially pre-buying energy at a cheaper rate and reducing the risk of constantly escalating utility costs.”

But buyers want to see the return on their investment.

Even with federal and state tax credits, it often takes 12 years for buyers to break even on a solar system, Herro says. With homeowners moving every seven years on average, builders like Meritage must also explain the resale value of an energy-saving home.

This was tough until the Appraisal Institute announced support for a spreadsheet tool, developed by Sandia National Laboratories and Solar Power Electric. The PV Value form assists appraisers and others seeking to establish the value of a property’s solar-powered features.

“People ask, ‘Will I get my investment back?’ Prior to the Sandia Labs process, the answer was ‘maybe’,” says Herro. “Now there is a really strong linkage between that investment and increasing value of the home.”

In addition to solar, Meritage also offers net-zero home options that effectively produce all of a home’s energy. The solar options include 3.5-kw and 5-kw solar arrays, with the option of enlarging the systems for net zero.


Selling Net Zero

The principals of selling net-zero (or zero net) homes are the same as all energy efficiency, Herro says. You have to do three things:

  1. Make people aware of the opportunity to have net-zero energy.
  2. Validate it, which is interesting today because so much is happening in renewables with solar cost drops and credible lease programs.
  3. Explain the total value to the consumer.

A route to get a home to net zero is to first build with energy-efficient building techniques to a HERS (Home Energy Rating System) rating of about 60. The next thing is to put in a solar system, so you can produce the most kilowatts of power per dollar cost. “Do that analysis, you can get to zero net energy cheaper than [having someone] pay energy bills,” Herro says. That can give a homebuyer total value. But it isn’t the whole story. “We learned by doing it wrong, by talking about stuff and features and not talking about what’s in it for [the homebuyer],” Herro says.

Meritage has found it best not to appeal to a buyer’s environmental concerns or desire to be “green,” but to focus on what’s in it for them. And what’s in it for them is saving money on utility bills and then being able to spend that money on other things.

“Now we’re having conversations about getting more and getting better,” Herro says. In other words, being green and energy-efficient with solar and net zero can be a selfish buy.


Nexia and Energy Monitoring

Meritage is also offering energy monitoring and control systems through the Nexia Home Intelligence system, which can operate thermostats, lights, electronic door locks and more through wireless Z-Wave technologies. The system also connects to a Powerhouse Dynamics’ eMonitor that measures whole-house electricity and circuit-level energy usage with current transformers (CTs) that clamp around the electrical mains and the individual circuits in the service panel. (Because of this, an electrician should install it.) The eMonitor communicates the energy usage via Wi-Fi or Ethernet cabling to a home’s router and offers a web-based dashboard that also sends alerts when a circuit is on for an extended period of time or a preset monthly energy budget has been exceeded, for example.

Meritage offers a base Nexia system package with an eMonitor for 14 circuits, the Nexia Bridge and a Schlage digital door lock for under $1,000. A second package offers internal and external cameras, motion detectors and an additional remote lock for under $1,000 as well.

“After we build these really great homes, there aren’t a lot of consumer interactions and reminders of all the ways we built these homes,” Herro says. “We look at energy efficiency as a value play. … Energy monitoring [in particular] gives consumers an emotional connection to their utility bills.”

The Nexia systems are displayed in Meritage’s Learning Centers, which deconstruct a Meritage energy-efficient home and allow prospective buyers to see a cross-section of a wall with advanced insulation, as well as the Nexia system components and what they do. Sales personnel there are trained to discuss Nexia. And the first six months of Nexia’s $10 per month subscription are included in the package.

“Nexia is an option in all communities, and scheduled to be standard in our high-amenity communities,” Herro says. “We just rolled it out and did the sales training, and there’s a lot of initial interest.”

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