4 Green Building Trends to Watch in 2010

The market for new construction is still struggling to pick itself up, but the growing trend of green building promises a sort of renaissance for the centuries-old industry. That’s the hope, anyways, and if you believe (as we do, though with a healthy pinch of skepticism) the mountain of reports and data pointing to the growth of the green building industry, then 2010 looks to be a pivotal year for transitioning the built environment into one that consumes significantly less energy, water and other resources.

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 (s BRK), 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.