Sustainable Single-Family Homebuilding: Efficiency and Wellness in the U.S.

1. Welcome!

2. Single Family homebuilder in Southern and Western United States • 4,000 homes per year • Average Square Footage 1,800 to 3,500 • Average Selling Price $180,000 to $350,000 • Serving Entry-Level, Move-Up and Active Adult communities

3. Ice Breaker • Are Residential Photovoltaic Solar Panels Sustainable?

4. Energy Efficiency and Sustainability Are they the Same? • Energy Efficiency - Waste Reduction • Sustainability - is the capacity to endure. For humans it is the potential for long-term maintenance of wellbeing, which in turn depends on the wellbeing of the natural world and the responsible use of natural resources. • Toxicology • Embodied Energy / Limited Resources • Climate Change / Carbon / Carbon Black

5. Endemic / Embodied Energy • Considering the Interconnectedness of Environmental, Economic, and Social Systems • Availability of Material (Finite / Renewable) • Energy / Pollution to generate material • Energy / Pollution to transport material • Energy / Pollution to use material • Energy / Pollution to waste material • Alternatives

6. Top 5 Reasons to Buy a Green Home / Make Green Improvements to Home Cost Savings on Power and Heating 94% Reduced Use of Water 63% Reduce the Impact I have on the Environment 60% Improved Air Quality in Home 53% Increase the Value of Your Home 50% Customer Focus

7. Why Move Toward Energy Efficiency and Sustainability? • Buildings account for almost 40% of the energy and raw materials consumed in the US. • Heating and cooling homes accounts for nearly 60 percent of residential electricity usage in the United States • Every year, building construction waste generates 136M tons, compared to 209M municipal tons. • If the US invests $520B in improving energy efficiency in homes, the country has the potential to save $1.2T Win-Win-Win when done right

8. Old Green (1970 – 2008) • Personal Sacrifice: • Live Smaller • Give up comfort and convenience • Change Lifestyle • Expensive • Ugly • ‘Natural’ Materials • Straw Bale / Rammed Earth • Natural Lighting • Reduced Amenities Green only works if it is better than

9. What is the ‘standard way’ of building homes? • 50% of the electricity consumed by a home provides NO BENEFIT • 50% of the water consumed by a home provides NO BENEFIT • Homes ‘Breath’ (i.e. leak) • Old construction created hot and cold areas (discomfort) Loose – Loose - Loose

10. ‘Green’ can mean different things Green wash Energy Efficiency HERS (Energy Star, EFL …) Resource Management WaterSence, LEED, … Health Indoor Air Plus, … All Green is not the Same Scales of Green

11. Green Marketing • This Decade’s ‘New and Improved’ • Style Before Substance • Undefined Terms • Green Certified • Eco Friendly • Undefined Benefits • Sustainable Materials • Low Energy ‘Greenwash’ has confused Customers

12. Building Science Analogy • 30% of a building’s energy use is lighting. 9X less energy per lumen – lasts 133x longer 4X less energy per lumen – lasts 10x longer 90% electrical usage is emitted as Heat Wa$te Reduction

13. Eating the Elephant HERS 130 HERS 100 HERS 80 HERS 65 HERS 25 HERS 0

14. New Category in Green Homes • Healthier Indoor Air Quality • Better Functioning Appliances • More Comfortable Homes • Reduce Cost of Operation • Affordable • Available • NO SACRIFICES Focus on improving past practices

15. Our New Paradigm – Extreme Energy Efficiency • 100% ENERGY STAR Certified • Home and Appliances, WaterSence, Indoor Air Plus • Redesigned Building Envelope • Polyurethane Spray Foam, Thermal Breaks, Low E2 Windows • Redesigned HVAC • SEER 14, Pressure Management, Fresh Air Management, Advanced Thermostats • Technology Leading Renewable Energy • Integrated Solar Electric, Solar Thermal, Water Heating, HVAC, Fresh Air Management, thermostat, and energy management system Better AND Cost Competitive

16. Moving Forward – Cathedral Insulation 130 F 80 F 75 F 75 F 90 F

17. 67% Reduction in Energy Loss

18. Health Benefits : Clean Indoor Air • Health & well-being are affected by the large amount of time we spend indoors • More than 38% of Americans suffer from allergies* • Between 1980-1994, asthma cases increased 75% to more than 17 million.* • Environmental Protection Agency - “Known health effects of indoor pollutants include asthma, cancer, developmental defects and delays, including effects on vision, hearing, growth, intelligence, and learning; and effects on cardiovascular system.” • Meritage Homes Extreme Energy Efficiency also provides extra protection from pollen, dust, dust mites, and smog that trigger allergy, asthma and known respiratory diseases. Proactive Air Management

19. Resource Management • Weather Based Irrigation Controls • Drought Tolerant Plants • Zoned Irrigation

20. Benefits to Customer • Reduced cost to operate • Included / Integrated into every home • Cleaner, quieter, safer, healthier, more comfortable • EPA/DOE rated and validated • Underwriting, appraisal, labeling • Higher Resale Value Comprehensive Value Strategy

22. Funding Green - PITIEM • Principal (Price Tag) • Interest (Interest Rate) • Taxes (Location) • Insurance (Location +) • Energy (HERS) • Maintenance (Warranty, Life Cycle) The Monthly Cost of a Home

23. Consumer Awareness

24. Market Strategy/Value Proposition Deliver Better Total Value to the Consumer • Retain Lifestyle, Aesthetics, Behavior and Price Point of Conventional Construction • Include Holistic Energy Efficiency and Sustainability • Improve Heath, Function, Comfort, and Total Affordability • Demonstrate Value through: • Consumer Education – Energy Labeling • Validation – Appraisal Standards • Monetization – Mortgage Underwriting

25. Meritage Green Learning Centers Innovative Marketing and Education

26. Renewable Energy • Integrated System: • Electricity (Solar Electric) • Hat Water (Solar Thermal) • HVAC (Air based heat exchange) • Fresh Air Management (ANSI 62.2) • Thermostat / Energy Control System

27. Echo Solar System Schematic and Key Components • Energy Transfer Module (ETM): • Air handler • Manages energy distribution • Solar Array: • Solar panels connected together • Water Side Mechanicals (WSM): • Solar storage tank and pump group • Recovers and stores heat • Echo Controller: • An intelligent control system • Regulates echo solar system operation

28. Echo Delivers > 2 X More Usable Energy Than Basic PV electricity (only) Higher efficiency means more solar energy generated. + water heating home heating home cooling electricity Modeled performance from a 2070 watt STC DC array, offsetting electric water heating, Phoenix/Tucson, 2500 square foot home, HERS rating 75

30. No Sacrifice

31. On Line Resources to Learn More Stakeholder Awareness

32. Future • Consumer Awareness • Code Change Management • Labeling / Appraisal / Underwriting Standards • Competition Cost to Retrofit / Upgrade Design • Credible New Market Category Maintaining Leadership

33. Thank you for your Participation CR Herro VP Environmental Affairs CR.Herro@MeritageHomes.com 480-515-8019 (office) 480-215-7860 (cell)