Our blogs Blogs home
Energy in Transition

Energy in Transition


Realizing the promise of WH Retrofits

The Promise
Policy makers ranking as high as President Obama have identified the “deep retrofit” of American homes as a key strategy for reducing energy consumption and mitigating greenhouse gas emissions. Such initiatives, often referred to as WH retrofit (WH) or home performance (HP) programs have been deployed by utility ratepayer-funded programs for over a decade. The approach is based on building science research which shows that the average single-family home can reduce energy use by 20–40 percent by implementing all or most applicable energy efficiency measures in a single project, and by ensuring the quality of those measures through post-implementation  inspection and testing. This approach also yields important improvements to home comfort and safety.

The Program Design
To encourage homeowners to pursue these large and complex projects, WH programs typically include the following features.

  • Standardized energy audits using computer modeling to estimate savings.
  • Rebates that require or highly favor the implementation of multiple measures.
  • Identification and vetting of qualified energy efficiency contractors and, in some cases, trades contractors.
  • Dedicated financing programs to fund the project costs beyond the rebates.
  • Quality control services for energy audits and measure installations.

Disappointing Performance
WH programs have not met the energy savings expectations of policy makers and planners for two primary reasons:

  1. Participation in WH programs has lagged well behind projections, and with a few exceptions, has scarcely exceeded pilot levels.
  2. Energy savings per participating home as verified by independent evaluators have fallen well below planning forecasts and estimates generated by the initial audits of participants’ homes.

The remainder of this post assesses potential strategies for increasing participation, based on DNV GL’s recent market baseline study for the California Public Utilities Commission.  We will address issues related to energy savings per home in another post.

Customers are interested
As part of the market baseline study mentioned above, DNV GL surveyed 1,200 homeowners in California and matched comparison areas who had recently undertaken major home improvement work. We found that energy efficiency has become an important objective of such projects. Specifically:

  • Fifteen percent of respondents reported that the primary motivation for their project was to reduce energy costs. An additional 12 percent reported their primary motivation was to improve comfort or indoor air quality.
  • Two-thirds of all reported home improvement projects included at least one bonafide energy efficiency measures. One-third of all projects include two or more energy efficiency measures.
  • For most homeowners, the cost of including energy efficiency measures in their projects was not a deterrent—80 percent paid cash for the work.

Not only are customers implementing energy efficiency measures in large numbers, many also claim to be aware of and interested in WH retrofit concepts. Twenty-nine percent of homeowners in California, where WH programs have been heavily promoted, reported that they were aware of the concept, as did 17 percent of customers in the comparison area. The majority of customers said they were interested in the distinctive offerings of WH programs, including audits, contractor qualification, and quality control.

But why aren’t they buying?
Given existing levels of investment in energy efficiency measures and interest in the supporting services offered in WH programs, why haven’t more customers participated? Piecing together data from the customer and contractor surveys, as well as case studies, the following key barriers emerge.

  • Complex value proposition. Only in areas with severe winters or very hot summers do energy savings pay off the $8,000–$14,000 cost of a whole house retrofit quickly enough to interest most customers. In milder climates, values of comfort, indoor air quality, capital preservation, and environmental stewardship must be sole. This requires extensive one-to-one contact between a skilled contractor sales person and the customer.
  • Restricted contractor search practices. In 70 percent of cases customers used contractors whom they had employed on previous projects or found through word of mouth. Only 2 percent of California respondents reported using contractors found through energy efficiency programs. Thus, it is difficult even for motivated contractors to insert themselves into the project specification process.
  • Costs of marketing and delivery: the value proposition to the contractor. Effective participation in WH services requires costly overhead and significant risk of investment in marketing and sales efforts with relatively low success rates. Only the largest home improvement firms (top 5 percent by number of employees) can afford these expenses.

Strategies to build participation
Given these conditions, successful strategies to build participation in WH programs have included:

  • Contracting directly for marketing, auditing, and quality control services. This builds marketing capacity in a specialized firm but inhibits the growth of an independent WH contracting industry.
  • Concentrate on recruiting the largest home improvement and HVAC contractors into the program. Utilities in California are focusing on this approach.
  • Attempt to capture customers at the time of spending “events”. These include move-ins and preparation of properties for sale.
0 Comments Add your comment

Reply with your comment

Your email address will not be published. Required fields are marked *