My Vision for the Home Performance Industry

Vision sign

It’s time to push for real change and create a market for Home Performance. Here’s my plan.

As consumers, we typically have control over two major fuel users – our cars and our homes. Tesla is working on the cars. Our homes are a far stickier and more complicated problem. The Home Performance industry stands in this gap. Sadly we’ve been here for about 40 years with almost no market uptake. No program to my knowledge has broken 10,000 projects/year. It’s time to change that.

The next 20-30 years is very likely to see civilization move off of fossil fuels. The economics will drive it as fossil fuels are harder to extract/more expensive and renewables, already at parity in many places, move ever cheaper. Because of climate change, resource wars, and so forth, I would like to accelerate that process.

One Knob’s focus, and I believe the focus of the Home Performance industry, should be on consumers with existing homes.

Nothing is going to change with market demand unless we completely change the paradigm. Many approaches have been tried, none have succeeded so far. I’ve been chewing on how to do this for a long time now. We need to think revolution, not evolution.

The following thoughts have been on my whiteboard for months now. As the major conference for our industry approaches, ACI in Austin Texas, I wanted to put the rough draft outline in public view.

As ACI stands today, I don’t believe it is likely to be where change comes from, it is too driven by efficiency programs. Contractor engagement is very low. I wrote about how efficiency programs harm businesses. I decided not to go this year. Having been an insulation contractor and starved to death trying to do good work, and now as an energy auditor/project manager finally making the math work, if we don’t create a market for good work, few contractors are going to go to conferences to get better.

Hence, I’ve been hatching a plan.

I know I’m unlikely to have a chance in the next few months to really flesh these out, so I’m just going to put the outline out there in the three phases I see Home Performance going through. The danger here is the ideas aren’t fleshed out, so it’s easy to latch onto something and argue with it. Please make comments so I can begin to understand how this plan is viewed. Can you see the path? Am I crazy? Am I missing something?

Home Performance: Creating an Industry

Short Term (1-3 Years)

  • Main Actor – Energy auditors drive market.
    • Intrinsic motivation is the primary driver for delivering results
    • Need path to extrinsic reward for high performance
  • Market – Really screwed up houses or consumers with lots of pain
    • 1-3% of market
    • Self selecting clients seek us out
    • Consumer education is key
    • My Home Performance book will create informed consumers, which will drive leads to auditors/project managers.
  • Data
    • Begin collecting energy use data
    • Build consumer and investor confidence in results
    • Create and hone tool to collect, analyze, and publicize results
  • Policy – push ‘easy’ changes
    • EUI and annual energy cost as part of MLS through Trulia/Zillow
    • EnerScore is on this path already
    • On bill financing – with caution, only for projected energy savings
    • Discuss and begin to create incentive payments for Negawatts and other public benefits/externalities
    • Begin positioning for carbon fee and dividend
    • Begin positioning for grid democratization/distributed energy resources

Medium Term (3-7 years)

  • Bigger companies join auditors
    • No longer a boutique industry
    • Integrated building shell and HVAC contractors
    • Work with energy auditors who create projects
    • Contractors create projects as well
    • Home Performance becomes a real industry
    • Extrinsic rewards for performance become main driver
      • Competition for results
      • Rankings become marketing tool
    • Ranking tool brands begin being recognized in market
  • Broader market
    • 3-15% of market
    • Increased home values and on bill financing expand market as more homes make sense to upgrade
    • Non-Energy Benefit framework – stacking value (but not necessarily monetary value) to justify larger projects
  • Data gets good – Low Hanging Fruit Is Poisoned argument becomes provable
    • Confidence in results goes up for consumers and investors
    • Rates go down
    • Project count goes up
    • Project size goes up
  • Policy – Starting to Move
    • Zillow and Trulia are on board
      • Energy efficiency gets valued as part of real estate transactions
    • On bill financing is common
      • Electric utilities make money brokering loans
      • Utilities value customer goodwill, build profitable ancillary services
      • Banks happy to lend because of low risk
      • New loan products combine on bill and project financing
    • Negawatt shift beginning
    • Find and join supporters of carbon fee and dividend
    • Push hard on real time time of use rates
      • Publicize any successes
      • Show cost savings where appropriate
    • Home Performance has reasonable consumer recognition, it’s not esoteric anymore

Long Term (7-15 years)

  • Robust Home Performance market
    • Many profitable auditor companies and integrated HP contracting companies
    • Ranking tool(s) are well known, perhaps like Energy Star brand recognition
    • Solar and storage are tied to HP market.
  • Mainstream market – 50% of homes
  • Data drives the market for upgrades using low interest rates and home values
  • Policy – Robust and getting stronger
    • Home Performance/EE can actually be cost effective with no lying or games via residual value
      • Home values increase for efficient homes
      • Real time time of use makes math work better
        • Load shifting with HVAC and appliances
        • Load shifting with solar and storage
        • Load shifting with electric vehicles
        • Distributed energy resources
        • Internet of things integration
      • Carbon credits become common
      • On bill shifts some of project cost to next owners with accountability, without drama (PACE is showing some failures here)
    • All electric homes and electric cars are common, along with solar/storage

Consumers directly consume 38% of the energy in the US between our homes and vehicles. All of that is a prime target for electrification. It requires little to no new infrastructure outside of homes. When powered renewably there is little carbon footprint. About half of the 80% target reduction by 2050 can be tackled with consumers alone.

Let me repeat. About HALF of the emissions reductions we need by 2050 can come from consumers alone. And our industry stands in the gap for making it happen.

The Home Performance industry could lead this charge if we’re strategic. Who’s with me?

Related:

Putting a Price On Home Energy Efficiency – Kyle Field on CleanTechnica talks about how EUI (energy use intensity, or energy usage/year/square foot) could drive the efficiency market. I wholeheartedly agree. I’ve had a similar article sitting 90% complete for 2 months. He says it better than I would have.

How Low Hanging Fruit Has Poisoned Energy Efficiency – My GreenTech Media article about how if you don’t go far enough, results tend to be disappointing. It’s a point for another article, but we need to stop trying to push project costs down (which fails) and start finding value to justify truly comprehensive projects. These projects easily cost $10-30K. Let’s show $10-30K in value rather than trying to make $10K jobs into $5K jobs and starving to death.

Confessions of an Insulation Contractor – The story of my painful metamorphosis to measured home performance.

How an Efficiency Program Killed My Business – My article on Green Building Advisor generated a lot of comments and controversy. Small jobs kill.

Image Credit: PicServer.org

  • Pingback: I’m Calling Bull**** on Greenies |()

  • Nate, great plan layout. One major item I believe is missing “Health”. Making existing homes better can/will reduce health issues, which can help the health insurance issues we are having every year.

    • Thanks, Rob. I wholeheartedly agree, I’ll adjust that. Health is part of the “stacked benefits”. Any one benefit is often not worth it, enough together are. For example getting rid of ice dams + better comfort + reduced bills + reduced allergies + reduced asthma = $20-30K job. Any one of those on it’s own is a much smaller job.

  • KYLE hartman

    This is a great plan Nate, I have been doing low income work for longer than I like to think about, it’s difficult work at best because we work with the worse of the worse in clientele. I enjoy your blogs, I would like to figure out how to make the efficiency programs work better, but alas any time we have DOE or state monitors we are all doomed. KEEP UP THE GOOD WORK.

    • Thanks, Kyle! My hat is off to the WAP folks, I did about 25 projects when I was contracting.

      Low income could switch to a similar model that is results driven, Indiana tracks utility results for its agencies.

      The key part is to start measuring and publishing. Right now Home Performance is like hackey sack – no one keeps score. Let’s make it something more like golf. Right now everyone claims they shoot 18. The truth is more like 200. Hopefully I shoot about 120 – still lousy, but better than most. If we track, we’ll all get better. All you need are monthly bills before/predicted/after and blower door before/predicted/after. That’s a good start.

      The biggest issue with programs currently is they dictate how things can be done. That means THEY hold responsibility for outcomes, not contractors. Tell contractors what you want and what you’ll pay, then see what they do. That works (potentially) for both WAP and private work.