Stretch Energy Code Economics
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New Construction Residential Economics 

An average stretch code compliant home in Lexington will generate a first year return of over $3,000 and a tax adjusted return on investment of $41,000 over the first 10 years.

The average size of a new home in Lexington is 4,739 ft2, with 66% of new homes ranging from 3,100 ft2 to 6,350 ft2.  The DOER estimates an incremental cost to implement the stretch energy code of $3 per ft2 before savings from tax credits, rebates, and utility incentives. The DOER also estimates annual energy savings of $0.51 per ft2 before taxes. Assuming the new homeowner finances the home with a 30-year, fixed-rate mortgage with a 5% rate, is in the 28% federal tax bracket, and energy costs rise by 5% a year, the tax adjusted return from purchasing a stretch compliant home will be between $27,400 and $54,400 over 10 years.

The HERS performance inspection is expected to cost $1,500 and the state provides a $750 subsidy for that inspection. That cost is included in this stretch code economics example.

Click here to look at a Cash Flow model for new Stretch Code compliant homes from 2,700 ft2 to 6,350 ft2.  

Commercial Economics 

A 47,000 ft2 office building in Leominster was able to save $0.59 / ft2 or $27,600 in annual energy costs compared to a code based design. The incremental cost to complete the project before rebates, taxes and incentives was $100,622 or roughly $2.14 / ft2. However the building owners received $66,587 in utility incentives, so the net cost to complete the project was $0.72 / ft2 or $34,000. If the company finances that incremental cost over five years, at 7% interest, the annual payment for project will be less than $8,000. The building owners will have a positive cash flow of over $20,000 per year from day 1 and an internal rate of return in excess of 300%!  Click here to read the corporate office case study. 

Energy Efficiency Incentives, Rebates, & Tax Benefits