Perspective from the Field: Mike Rogers Senior Vice President Scaling Home Energy-Efficiency GreenHomes America

Retrofits © Copyright 2010, GreenHomes America

              

       

    

         

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What I’d Like to Cover • Observations about important program designs considerations and effective approaches.

• What works • A few myths • Where program support would be helpful

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AC retrofit Sealing 

      

           

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About GreenHomes America

• Comprehensive Assessmen

• HV

• Duct

Fully Comprehensive Services • Reduce Air Infiltration

• Insulation

• Replacement Windows • Indoor Air Quality systems • Solar PV & Thermal

                                         

            

         

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Existing Home Retrofit Experience

25% Total Energy Savings is achievable‐‐in fact, we guarantee it! Costs average $10,000‐16,000

• Challenge is not a lack of technology, it’s a lack of will

• Beyond 25% quickly bump into typical cost‐effectiveness ceiling.

• But cost‐effectiveness is a red herring

        

   

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To Succeed

• Leverage existing transactions • Leverage private sector investment Homeowners & Businesses

          

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Markets Don’t Like Uncertainty!

Consistency / Alignment Messages & Branding

Standards Requirements

Stability

Understandability

                

                        

 

        

   

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To Succeed

• Don’t ignore behavioral economics • Get over the program obsession with cost effectiveness Fine to insist on cost‐effective use of public dollars, but don’t hobble the market

• Establish/Arrange/Facilitate Financing

• Leverage existing transactions • Leverage private sector investment Homeowners & Businesses

                      

                                                               

             

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Who should we tap to lead this?

• Raters? What’s the hook? Financing? • Home Inspectors? Do we wait for someone to move? Who’s going to arm wrestle with the real estate community?

• DOE? How many residential projects does the govt. SELL every year? (And selling is very different than giving away.)

• One Answer: Enlightened HVAC Contractors. We’re in thousands of homes every day.

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But shouldn’t it be third party?

Fix it? No sir, we’re independent third-party consultants. Fixing your car would be a conflict of interest. However, we can tell you that it should get 32 miles per gallon. That will be $550

                  

                                

                

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But shouldn’t it be third party?

• Homeowners don’t want to pay for it. • Homeowners don’t want the inconvenience. • Third party audit‐focused approaches don’t lead to action

• Third parties do a poor job generating accurate and actionable work scopes

• If owners pay even a percentage, a sale must be made.

• Benefits—but at a very real cost

           

                                

                      

                            

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Fallacy: Logic and Rational Arguments win the Day

“If we give people good information—the right audit and a way to identify the right equipment or products—they’ll make the right choices.” “People make choices that are in their economic self‐interest.”

WRONG! We’ve seen exactly the opposite in more than 30 years of programs, including “free” audit programs.

                                           

                         

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Believe good information rules the day? That rational economics rule?

• How many have tested your home for radon?

• What percentage of adults smoke?

• How many Americans are overweight/obese?

• Why don’t the most people drive more fuel efficient cars?

• Why do I own six different tents?

                            

              

                      

                  

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Factors that influence decisions. We are: • More sensitive to losses than to gains • Biased toward the status quo

• Overwhelmed by too many choices • Controlled by own our habits • Overly optimistic about our own performance

• Overly confident that we’re making the right choices

• And believe it or not, energy isn’t always the big driver!

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People don’t want heating fuel or coolant, people want cold beer and hot showers.

--Amory Lovins

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The Audit

• Free audit programs aren’t free! • 45 minutes? No diagnostics?

Sure, if all you want is a report. • But the audit isn’t about the report! • The audit is an invaluable time to

educate the homeowner—experientially

• The audit is the time to develop the specific work scope—with precise measurements, needs, and pricing (and limiting risk).

• The audit is the time to make the sale!

                            

              

                           

                    

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Three important lessons from the field

1. If we limit ourselves to people who are asking for home performance/whole‐house, we miss most of the market.

2. Many who self‐diagnose, self‐prescribe, or call for single measures will consider more appropriate measures and deeper projects, if presented with the opportunity.

3. Cost‐effectiveness from a limited energy perspective is very often not the driver.

                                

                             

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So, to scale in the market…. • Leverage existing transactions in the home • Align everything! • Don’t ignore behavioral economics • Point out the full range of benefits, not just energy‐savings

• Educate the homeowner and don’t assume they won’t go deeper.

• Deliver quality so the you can guarantee results

        

                                 

                      

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Program Features That Don’t Work So Well

• Confusing messages • Unclear and Byzantine program requirements— and frequent (or unannounced) changes

• Changing rollout timelines and rollercoaster incentives here one day, gone the next, but coming back soon.

• Large paperwork and reporting burden • Modeling for modeling’s sake—and software that doesn’t work

     

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How our business works

Home/ClientTrade Contractor

Finance Vendor

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Training Vendor

Home/Client

HP Consultant (Rater Level 2)

Trade Contractor

Finance Vendor

Home Improvement Project

Program

Training or Certification Requirement

Program Standards Eligibility Requirements

HP Evaluation

Recommendations

Test Out Final Inspection

Diagnostic Tests

Participation Agreement (Includes quarterly quotas)

Rating/QA Provider

Detailed Work Write-up

Finance Application

Detailed Work Write-up/RFP

Win Bid

Request

Approval

Bid

Verification Work Completed

Payment

Web Site Approval

To Start Work Lead

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Too cumbersome to work?

I work as an Independent Contractor for various other HPwES contractors who have realized that the in-house administrative costs of this program have become cost prohibitive.

     

              

                   

        

   

             

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Good Program Design 101

To be effective, a program needs: • Incentives/structure aligned with goals • Sufficient quality standards • Clear messaging and requirements • Practical consideration of needs of contractors and homeowners

• Consistency—over time and across areas Including consistent communication

• Read the LBNL report, “Driving Demand for Retrofits”

                                

       

                      

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To sell you need Financing • Most customers can’t—or don’t want to—pay cash for big ticket jobs.

• More attractive rates help,…

• BUT ease of access is critical Simple, quick, and hassle free

• Having multiple financing tools is a big plus Need ways to reach hard‐to‐qualify homeowners

                   

    

                        

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Build on a base of strong standards • Work must be done well, ensure safety, and deliver results

• Consistent standards BPI Certification/Accreditation

DOE’s Workforce Guidelines

• Best Practices—based on what we know

• BTW—why doesn’t DOE insist on consistency in the WAP program?

                        

                  

                            

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Program Marketing • Marketing is about more than energy/cost savings We can tackle a huge variety of problems Homeowners care about—and are willing to pay for—a lot of things Cost‐effectiveness?

• Need a sustained presence. One splash won’t do. • Co‐op marketing works • Need consistent messaging and branding across jurisdictions.

                

                            

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We need help countering bad information

• “Replace your windows and save 50% on your energy bills”

• “A new furnace should cost you $2,700” • Eden Pure and the Amish Mantle

• Cool Surge and Mira‐Cool • “Audits save energy”

            

• Use it!• But protect its in

A hodge‐podge of   conflicting,     state, utility, and   

‐market          

   

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National Brand Recognition • ENERGY STAR has high brand

awareness and credibility

tegrity

competing, overlapping federal,

supported private programs, initiatives, labels, brands, logos, does not help!

        

        

                

        

   

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Good Program Design 101 It’s worth repeating!

• Incentives/structure aligned with goals • Sufficient quality standards • Clear messaging and requirements • Practical consideration of needs of contractors and homeowners

• Consistency—over time and across areas Including consistent communication

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Thanks!

Mike Rogers Senior Vice President GreenHomes America

mike.rogers@greenhomesamerica.com