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Strategies to Spur the Residential Energy Efficiency Market:

A Market Survey of the Philadelphia Metropolitan Area

by Michael Chasnow This brief analyzes 440+ residential homeowner survey responses to better understand why homeowners do or do not conduct energy efficiency retrofits. Focus areas include how messaging or program structures affect retrofit adoption and how financing options impact homeowner decision-making. Key drivers for retrofit participation include well-trained home contractors, low-cost financing and creating urgency for retrofit action.

June 2012

Strategies to Spur the Residential Energy Efficiency Retrofit Market

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About the Environmental Finance Center The Environmental Finance Center at the University of North Carolina is part of a network of university-based centers that work on environmental issues, including water resources, solid waste management, energy, and land conservation. The EFC at UNC partners with organizations across the United States to assist communities, provide training and policy analysis services, and disseminate tools and research on a variety of environmental finance and policy topics. The Environmental Finance Center at the University of North Carolina is dedicated to enhancing the ability of governments to provide environmental programs and services in fair, effective, and financially sustainable ways.

Acknowledgements This report was a collaborative effort between the EFC, the Energy Coordinating Agency (ECA) and AFC First. This analysis would not have been possible without the expertise of ECA’s Liz Robinson and Elyse Green, and AFC First’s Peter Krajsa and Tessa Shin. Research methodology and editorial assistance was provided by Dr. Bill Lester, Jeff Hughes, and Erin Weeks. This report is a product of the Environmental Finance Center at the University of North Carolina at Chapel Hill. Findings, interpretations, and conclusions included in this report are those of the authors and do not necessarily reflect the views of EFC funders, the University of North Carolina, the School of Government, or those who provided review. Cover photo courtesy of Sam LeVan.

© 2012 Environmental Finance Center

at the University of North Carolina at Chapel Hill School of Government

Knapp-Sanders Building, CB# 3330 University of North Carolina at Chapel Hill

Chapel Hill, NC 27599-3330 www.efc.unc.edu

All rights reserved

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Environmental Finance Center at the University of North Carolina, Chapel Hill | 2

T A B L E O F C O N T E N T S

Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Survey Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Survey Results – Ten Key Takeaways. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20


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EXECUTIVE SUMMARY

Although there are dozens of city and state-led residential energy efficiency and renewable energy (EERE) retrofit programs across the country, little research has focused on how individual homeowners perceive these retrofit programs or decide whether to conduct energy efficiency retrofits. The Environmental Finance Center at the University of North Carolina joined with local partners in the Philadelphia metropolitan area that lead the comprehensive EnergyWorks EERE retrofit program to survey 440+ residential homeowners and learn more about key drivers behind homeowners’ decisions to conduct or not conduct EERE retrofits. Below are seven takeaways from this effort. Why do residential homeowners conduct or not conduct energy efficiency retrofits?

“Energy and dollar savings” are the key motivators for conducting energy efficiency retrofits. Homeowners that conducted retrofits and those that had not conducted retrofits both ranked “Dollar savings through lower energy bills” as the most important factor in deciding whether or not to conduct retrofits.

Lack of upfront money and desire to delay retrofit are key stated reasons for not making energy efficiency improvements. Moreover, 72% of homeowners that had not yet conducted a retrofit plan to within the next year. There are significant barriers to adoption mentioned in the introduction, but the question becomes how can we create the necessary conditions to spur homeowners within this 72% to carry out a retrofit in the near future?

Are good financing options important to whether homeowners conduct these retrofits? What characteristics of a loan product matter most?

40% of EnergyWorks participants used the program’s low-interest loan. 80% of loan users stated they would not have conducted the residential EERE retrofit without the

loan. Of the 75 survey respondents that used an EnergyWorks loan product, 80% stated that without the low-interest loan, they would not have been able to conduct an energy efficiency retrofit. This may indicate that financing is a critical last step for individuals to afford retrofits.

Interest rate was ranked as the most important loan characteristic to respondents that did not know about the EnergyWorks program. For these 121 respondents, ensuring “Energy dollar savings are greater than monthly interest payments” and “Ease of application process (e.g., time spent, number of steps)” rounded out the top three important loan characteristics.

How does messaging or program structure affect retrofit adoption?

EnergyWorks representatives and home contractors made a difference to homeowners, and persuaded respondents to conduct retrofits. Respondents that conducted retrofits ranked EnergyWorks representatives and home contractors as the two most important influences on deciding to undertake an energy efficiency retrofit. This finding highlights the importance of equipping home contractors with EERE program and financing information, as home contractors are often the individuals that meet directly with homeowners considering energy efficiency retrofits.

Age slightly impacts retrofit adoption rate, with individuals in the 60+ age range more likely to conduct an EERE retrofit. Although most of the people who responded to the survey were in the 30-59 age range, adoption rates were higher in the 60-69 and 70+ age range. Within the 70+ age range, 14 of the 19 respondents (73.7%) conducted retrofits through EnergyWorks.



Figure 1:

INTRODUCTION Why does energy efficiency matter?

The steady rise of energy costs places an increasing burden on the lower and middle classes in the United States. For the average person, domestic and international energy debates and crises seem too big to tackle. What can individual residents do to combat climate change on the micro-level and reduce their own energy cost burden? In-home energy efficiency is one of the simplest, fastest, and most cost-effective ways to meet the growing energy demands of urban and rural environments in the United States. The retrofitting industry can make a significant impact on the energy and environmental challenges faced by people in urban settings by improving the energy efficiency of existing buildings and bringing financial savings to the end-user. Home energy efficiency retrofitting is also one of the lowest cost solutions to achieving large-scale greenhouse gas reduction. McKinsey & Company’s 2009 study Unlocking Energy Efficiency in the U.S. Economy estimated that with an upfront investment of $520 billion in energy efficiency measures through 2020, the United States could generate gross energy savings of more than $1.2 trillion. Moreover, this comprehensive energy efficiency program could reduce end-use energy consumption in 2020 by 9.1 quadrillion British Thermal Units (BTUs) – about 23% of US demand – and eliminate up to 1.1 gigatons of greenhouse gases annually. By 2020, the residential housing sector will consume 29% of the baseline energy in the US (and more than 40% of energy consumed within the US building stock), but with effective energy efficiency measures, there could be significant dollar and energy savings. Holistic energy efficiency initiatives could reduce energy consumption by 28%, which would save the US economy close to $41 billion in annual energy costs and eliminate 360 million tons of CO2 emissions (Choi Granade et. al, 2009). Bringing benefits down to the household level Significant household level and job creation benefits also arise at a more granular scale. According to a 2010 Institute for Market Transformation study, the typical U.S. household spends about $2,300 annually on energy – more than the average cost of property taxes or homeowners insurance. By incorporating relatively inexpensive improvements (i.e., insulation, sealing air ducts, weatherstripping and caulking) and undertaking more capital-intensive improvements (i.e., a new heat pump or HVAC system) when appropriate, 20% energy efficiency improvements would be quite attainable (The Save Act, 2010). This translates into an additional $470 per year of savings for the average U.S. family. Beyond the financial returns of retrofitting projects are the added benefits to comfort and health. In addition to reducing energy usage, common energy efficiency upgrades can improve the quality of indoor air. Higher indoor air quality reduces recurrences of allergies, asthma, and sick building syndrome (SBS), which is associated with poor inside air quality. Improvements in residential or commercial buildings can also enhance worker productivity, with benefits such as reducing the number of worker sick leave days. It is estimated that SBS costs the US close to $60 billion in annual sick days, medical costs, and reduced productivity (Choi Granade, 2009).

Source: Institute for Market Transformation, 2010


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Significant barriers to scaling residential energy efficiency retrofits While the benefits of retrofitting—job growth, household dollar savings, and elimination of greenhouse gases—are well-recognized, several barriers have impeded widespread adoption. These barriers include the following, several of which McKinsey & Company identified in its 2009 report:

Retrofitting projects require relatively large upfront capital costs for residential homeowners, typically between $4,000 and $25,000.

Savings are realized over a long time horizon, which adds risk to investment, especially because energy and dollar savings are often only estimated, not guaranteed.

Retrofit project stakeholders—energy auditors, contractors, banks, customers—are fragmented, making the process complex and difficult for potential residential customers to navigate.

Lack of customer understanding regarding benefits of retrofitting and energy consumption behavior necessitates education as a precursor to adoption.

Benefits of energy efficiency accrue in the long-term, with paybacks often in the five to seven year range, which makes it more challenging to encourage people to make these investments.

The Puzzle: What are the key reasons homeowners undertake EERE retrofits, and how should this affect program structure? This study sheds light on why residential homeowners do or do not undertake EERE retrofits and the role of financing options in this decision-making process. Without concrete strategies for improving market uptake, the residential retrofit market is less likely to reach its potential, especially without substantial public subsidies to lower upfront retrofit cost. Understanding the target retrofit candidates within a given city or focused regional area, the messages that best translate into action, and the critical components of a successful retrofit program directly influences retrofit program success across different markets in the US. Through an original survey within the greater Philadelphia metropolitan area, this study analyzes key factors that influence residential homeowner retrofit adoption. This new primary research on the Philadelphia residential retrofit market delves into the process and structure of EnergyWorks—a program administered by the Energy Coordinating Agency and fueled by Philadelphia’s $25 million Better Buildings Grant – (1) to learn more about why prospective consumers who have heard of the program did or did not conduct retrofits, and (2) to survey other Philadelphia homeowners that have not heard of the program to better understand the key drivers behind their potential participation. The original survey conducted for this study includes responses across the five counties served by EnergyWorks: Bucks, Chester, Delaware, Montgomery, and Philadelphia. With over 60% of the residential housing stock built before 1970, the residential building market in these counties is ripe for retrofits with quick investment paybacks. The Philadelphia area has strong experience and resources to increase the scale of residential energy efficiency. AFC First, an Allentown, Pennsylvania-based financial institution, specializes in residential energy efficiency financing, with over 15 years experience. Since 2005, in a Pennsylvania-focused effort called Keystone HELP, AFC First provided financing to more than 5,500 homeowners for a total of more than $40 million (Fuller et. al, 2010). Now, with support from a $25 million Department of Energy Better Buildings Grant, the broader Philadelphia area has created EnergyWorks, a holistic energy efficiency retrofit program coordinating organization to coordinate all stakeholders in the residential EERE retrofit process.. Through the program, AFC First offers reduced interest rates to residential homeowners, typically in the 1% range for loans with five to seven year terms. In EnergyWorks and AFC First, the Philadelphia metropolitan area has a relatively mature energy efficiency retrofit program. Through more focused research on the program and unpacking how target residential



homeowners decide whether or not to conduct energy efficiency retrofits, other cities and organizations seeking to promote similar retrofit programs can learn ways to capture homeowner attention and increase retrofit adoption. Ultimately, this research demonstrates that the following factors positively contribute to program participation:

Trust in home contractor that may conduct energy efficiency retrofit

Importance of messaging to increasing motivation for participation

Higher contractor engagement in marketing translates into higher adoption rates

Low-cost financing

Structuring retrofit program to create urgency in carrying out the retrofit

SURVEY METHODOLOGY

This study uses a quantitative method to analyze survey responses about why residential homeowners do or do not conduct energy efficiency retrofits. Specifically, an online survey was conducted in the Philadelphia metropolitan region. The survey entailed 27 questions, but the typical survey respondent was only required to answer 8-12 questions because the survey addressed specific questions to different types of residential homeowners. Questions targeted the following homeowner groups. People who:

1) Heard of EnergyWorks/Keystone HELP and had conducted an energy efficiency retrofit;

2) Heard of EnergyWorks/Keystone HELP, but had not conducted an energy efficiency retrofit;

3) Have not heard of EnergyWorks/Keystone HELP, and had not conducted an energy efficiency

retrofit; and

4) Have not heard of EnergyWorks/Keystone HELP, but had conducted an energy efficiency retrofit.

To reach these target residential homeowner groups in the Philadelphia metropolitan area, Energy Conservation Alliance (ECA) and AFC First, on-the-ground partners with strong Philadelphia-area networks, distributed the online survey. AFC First sent an email in mid-February 2012 to the 1,900 Delaware Valley homeowners that had qualified for a Keystone HELP/EnergyWorks loan, but may or may not have actually conducted a retrofit or utilized the financing option (see Appendix 1 for survey invite email). ECA sent a similar email to 1,500 homeowner customers or applicants in EnergyWorks’ five-county domain (see Appendix 2 for survey invite email). The survey also included a raffle to incentivize homeowner participation, in which four people could win $50 gift certificates.

Respondent Background Information Although the goal was to obtain a representative sample of Philadelphia area homeowners, survey respondents reported a higher median income than average. Additionally, the fact that that ECA and AFC First disseminated the survey through established networks increased the likelihood of reaching homeowners that were more interested in energy efficiency than the average individual. Homeowners in their databases had made concerted efforts to learn more about energy efficiency retrofits, which may not be representative of the broader population. Moreover, although about 25% of survey participants reported never hearing of EnergyWorks or Keystone HELP, since these individuals were likely either in one of the programs’ databases – unless the email invite was forwarded to the respondent – the participant likely had some prior type of interaction with these Philadelphia-area retrofit programs.


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To frame the analysis, we provide general background information on the 440 Philadelphia metro area residential homeowners that completed the entire survey. Seventy-four percent of the homes were built in 1970 or earlier, which is a little higher than the Philadelphia metro area average of 70.2% (See Figure 1). Nearly 50% of the homes were between 1500 and 2500 square feet (see Figure 2). Moreover, as seen in Figure 3, homeowners often have owned their homes for a short time (26% for three years or less) or an extended time period (33% for 14+ years). Seventy-seven percent of respondent homeowners are within the 30-59 age range (see Figure 4), and the median household income is within the $90,000-$110,000 income range. The income level is higher in our respondent survey than average, as the median income for the Philadelphia metro area is $74,506 for families according to the 2010 American Community Survey (see Figure 5). Figure 1: Age of Home – Respondents and Metropolitan Area

Year Respondent %

# of Responses Phil. Metro Area %*

1950 or earlier (49%)

213 31.5%

1950 - 1970 (25%)

107 28.7%

1970 - 1980 (10%)

45 12.3%

1980 - 1990 (8%)

36 9.8%

1990 - 2000 (6%)

27 9.2%

2000 or later (3%)

12 8.4%

Figure 2: Home Square Footage

Square Feet Respondent %

# of Responses

1000 square feet or less (3%)

15

1000 - 1500 square feet (21%)

92

1500 - 2000 square feet (29%)

124

2000 - 2500 square feet (20%)

85

2500 - 3000 square feet (15%)

65

3000+ square feet (13%)

57

Figure 3: Years Family has Lived in Home

Years Respondent %

# of Responses

0 - 3 years (26%)

114

4 - 6 years (15%)

67

6 - 9 years (13%)

56

10 - 13 years (13%)

56

14 years+ (33%)

145

n = 436 *Source: US Census Bureau, 2010

n = 432

n = 434



Figure 4: Homeowner Age

Age Respondent %

# of Responses

20 - 29 years (2%)

10

30 - 39 years (27%)

116

40 - 49 years (23%)

101

50 - 59 years (27%)

118

60 - 69 years (18%)

78

70 years+ (3%)

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Figure 5: Annual Household Income: Respondents and Metropolitan Area

Annual Income Respondent %

# of Responses Phil. Metro Area %*

$30,000 or less (4%)

16 17.4%

$30,000 - $50,000 (9%)

35 15.1%

$50,000 - $70,000 (12%)

45 14.3%

$70,000 - $90,000 (17%)

62 12.3%

$90,000 - $110,000 (17%)

63 9.6%

$110,000 - $130,000 (12%)

43 7.5%

$130,000 - $150,000 (12%)

46 7.5%

$150,000+ (18%)

68 16.3%

n = 433

n = 370 *Source: American Community Survey Estimate, 2010


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SURVEY RESULTS: Top 10 Takeaways

To distill results from this study’s 27-question survey, this section highlights important takeaways using both aggregate data and statistical analysis. Below are the top ten takeaways from the survey results that tell the story of how residential homeowners decide whether or not to conduct energy efficiency retrofits. Some of the takeaways are solely results from statistical tests to determine whether the differences in a certain group’s responses are statistically valid (e.g., whether age impacts likelihood to conduct retrofit).

#1: High perceived degree of energy cost burden

Forty-one percent of respondents perceived energy cost burden as “high” or “very high”. Generally, respondents perceive energy costs as a major burden on their household budgets.

Figure 6: Perceived Energy Cost Burden

#2: Energy and dollar savings key motivators for conducting energy efficiency retrofits Our survey outreach partners wanted to know whether “energy savings” or “home comfort” were greater motivators for conducting energy efficiency retrofits. Sixty-three percent of survey respondents stated that saving energy would be (or was) the primary motivator for conducting an energy efficiency retrofit, while 25% selected home comfort and 12% chose “Other” (see Figure 7). Some of the comments left in the “Other” field provide greater depth to answering this question, as many people noted the dollar savings within their comments. Accordingly, “Energy savings & dollar savings” may be more accurate, when rated against other factors.

Figure 7: Question – Are you (or would you be) primarily motivated to conduct an energy efficiency retrofit for your home to:

Motivator

Responses %

Save energy

275 63%

Increase home comfort

110 25%

Other

54 12%

Total 439 100%

Representative “Other” Comments: - Save energy & dollars

14%

27%

28% 22

%

10%

n = 429



- Both of the above

- Save money

Additionally, when the survey asked this question among several other possible factors, “Dollar savings through lower energy bill” and “Home comfort/drafts” ranked in the top two in importance for those who have conducted a retrofit and those who have not yet conducted a retrofit. Interestingly, “Trust in a specific contractor” ranks more important for those who have not yet conducted a retrofit (see Table 1). Table 1: Question – How much would (or did) the following factors affect your decision to conduct an energy efficiency retrofit for your home?

Factor (Rank from 1 to 5, 5 “very important”) Top 3 Bolded to the Right

No Retrofit, No EnergyWorks

EnergyWorks & Conducted Retrofit

Dollar savings through lower energy bill 4.67 (1) 4.39 (1)

Trust in a specific contractor 4.35 (3) 2.95

Neighbor or friend influence 2.82 1.89

Availability of lending product 3.56 3.18

Lending product features 3.61 3.05

Environmental benefits 4.14 4.12 (3)

Home comfort/drafts 4.57 (2) 4.36 (2)

Planning to do other work on house at same time 3.12 2.61

Just bought the property 1.90 1.83

To determine whether the “No Retrofit, No EnergyWorks” group answered this question in a statistically different or distinct manner, chi-squared tests of independence were conducted for the highest ranked factors and factors with the largest difference in rankings (e.g., trust in a specific contractor). Both “Trust in a specific contractor” and “Home comfort/drafts” possess strongly statistically significant differences of .000, meaning that the “No Retrofit, No EnergyWorks” and “EnergyWorks & Conducted Retrofit” groups are independent of one another (see Table 2). Takeaways from this analysis suggest that the group that had not conducted retrofits more highly values 1) Trust in their contractor and 2) Attractiveness of lending product features than those that have heard of EnergyWorks and already conducted a retrofit.

Table 2: Factors Affecting Retrofit Decision – Chi-Square Tests of Independence

Factor Pearson Chi

Square Value

Significance Value

Dollar savings through lower energy bill 6.78 .148

Trust in a specific contractor 62.499 .000

Lending product features 23.648 .000

n = 85 n = 184


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Home comfort/drafts 4.809 .307

#3: Lack of upfront money and desire to delay retrofit key stated reasons for not conducting retrofits For respondents that were unfamiliar with EnergyWorks and had not conducted a retrofit, 72% planned to conduct retrofits within the next year (see Table 3). For respondents that heard of EnergyWorks and had not conducted a retrofit, lack of upfront money, and once again planning to conduct a retrofit, ranked as key reasons for not yet conducting an energy efficiency retrofits (see Table 4). Taken together, these results demonstrate the importance of identifying strategies that create urgency and move people from planning to executing retrofits. Table 3: Question – Do you plan on making energy efficiency improvements to your home in the following time periods (asked to those who had not heard of EnergyWorks & had not conducted a retrofit)?

Amount of Time Responses %

The next 3 months 19 22%

The next 6 months 15 17%

The next year 29 33%

I do not plan on making energy efficiency improvements to my home in the near future

24

28%

Total 87 100%

Table 4: Question – What factors have influenced your decision to NOT improve the energy efficiency of your home to this point (1 to 5 scale)? (Question asked to respondents who knew of EnergyWorks & had not conducted a retrofit)

Factor (Top 3 Means Bolded) Responses Mean

Planning to conduct retrofit in the future 117 3.03 (2)

Uncertainty about energy savings/dollar payoff 116 2.59 (3)

Hassle of construction/renovation 116 2.47

Lack of upfront money for retrofit/too expensive 115 3.44 (1)

Unsure of how long will keep home, and whether retrofit will pay off before selling

114

2.39

Uncertainty about the economy 112 2.30

Uncertainty about personal and/or family economic stability

113

2.45

n = 127



#4: About 40% of Respondents who conducted retrofits used AFC First’s low-interest loan Of the 440 respondents, 321 heard about the EnergyWorks/Keystone HELP retrofit program. Of that group 184, or 57%, conducted energy efficiency retrofits through EnergyWorks. As seen in Table 5, of those 184 respondents, 75 used the low-interest loan from AFC First (through EnergyWorks) to finance their energy efficiency retrofit. Table 5: Question – Did you use an EnergyWorks loan product to help pay for your energy efficiency retrofit?

EnergyWorks Loan Response %

Yes 75 41%

No 109 59%

Total 184 100%

#5: Without EnergyWorks loan, 80% would not have conducted retrofit Eighty percent of the 75 survey respondents that used an EnergyWorks loan product stated that without the low-interest loan, they would not have been able to conduct an energy efficiency retrofit (see Table 6). This suggests that financing is a critical last step for some individuals to implement retrofits, although it is hard to test this definitively. Respondent comments summarize this sentiment, as seen below:

- “Too costly and too complicated to find financing otherwise”

- “The loan was the only way I could afford to do an extensive energy efficiency retrofit”

- “I didn’t have the upfront cash to afford the retrofit”

Table 6: Question – Without the EnergyWorks loan product, would you have done an energy efficiency retrofit?

Answer % of Respondents

Responses

Yes (20%)

15

No (80%)

60

Total 75

#6: Interest rate most important loan characteristic For the 121 survey respondents that did not know about EnergyWorks or Keystone HELP, interest rate stood out as the most important loan program characteristic. Dollar savings being greater than monthly interest payments and ease of application process were the second and third most important components (see Table 7). Table 7: Question – What components would be most important to your potential interest/use of a loan program?

Component (Top 3 Bolded to the Right) Mean (1 to 5, 5 is “Very Important”)


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Interest rate 4.54 (1)

Ease of application process (e.g., time spent, # of steps) 4.06 (3)

Extended loan term (e.g., 5 years instead of 2 years, lowers monthly repayment)

3.94

Energy dollar savings greater than monthly interest payments

4.22 (2)

Collateral required vs. collateral not required 3.71

#7: Respondents that conducted retrofits more highly rate experience with EnergyWorks program Across three of the four EnergyWorks program evaluation areas, respondents that knew about EnergyWorks (n=321) and conducted retrofits rated their experience more highly than those that did not conduct retrofits. The exception was interaction with the “EnergyWork/Keystone HELP loan representative”; this may be because some loan applicants that conducted retrofits were denied loans through the screening process. Conducting a Spearman’s rho test for comparison of ordinal data shows that the difference between ratings according to whether a person did or did not conduct a retrofit was significant for all four of the key EnergyWorks’ professionals that individuals interacted with during the retrofit process (see Table 8). Table 8: Question – How would you rate your overall experience with the following EnergyWorks professionals? Rate on a “1=not very good” to a “5 = very good” scale.

Contact Person

No Retrofit

Retrofit

Spearman Rho Test

EnergyWorks Customer Service Representative

3.52

4.05

Independent at significance of .000. Yes to “Retrofit” has a .3383 correlation with increase in rating.

EnergyWorks Home Audit Analyst

2.65

4.03


EnergyWorks Contractor

2.30

3.28


EnergyWorks/Keystone HELP loan representative

2.90

2.50

Independent at significance of .0124. Yes to “Retrofit” has a .1415 correlation with a decrease in rating.

n = 133 n = 173

n = 121



#8: EnergyWorks Reps and Home Contractors top retrofit influences Respondents that conducted retrofits ranked EnergyWorks representatives and home contractors as the two most important influences on deciding to undertake an energy efficiency retrofit (see Table 9). This finding highlights the importance of equipping home contractors with program and financing information, as they are often the individuals that meet directly with homeowners considering energy efficiency retrofits. Table 9: Question – Who/what were the most important influences on deciding to undertake an energy efficiency retrofit? Rate from 1 to 7 with “1” being most important and “7” being least important.

1 2 3 4 5 6 7 Avg. Rank

Home Contractor 26 25 17 17 12 17 4 3.26 (2)

Neighbor 11 14 14 11 15 27 12 4.29

Advertisement 12 18 16 15 18 19 7 3.90

Local government 6 6 18 19 17 26 9 4.48

EnergyWorks representative 18 34 29 16 11 17 2 3.21 (1)

EnergyWorks event 21 18 10 9 11 30 10 3.92

#9: Age associated with likelihood of conducting EERE retrofit Although most of the people who responded to the survey were in the 30-59 age range, adoption rates were higher in the 60-69 and 70+ age range. Within the 70+ age range, 14 of the 19 respondents (73.7%) conducted retrofits through EnergyWorks. To determine whether the “Conducted Retrofit” group was statistically independent from the “No Retrofit” group that had also heard about EnergyWorks, a chi-squared test of independence was conducted. Using age groups (e.g., 20-29, 30-39) as the categories for evaluation, there was not a statistically significance difference, meaning that age does not necessarily predict independence between the “Conducted Retrofit” and “No Retrofit” groups (see Table 10). Table 10: Analysis of Retrofit Adoption by Age Categories

Age

Respondents Conducted Retrofit Through

EnergyWorks (%)

No Retrofit (%)*

20-29 13 30.8% 38.5%

30-39 133 42.1% 33.8%

40-49 116 34.5% 31.9%

50-59 138 37.0% 30.4%

60-69 93 45.2% 24.7%

70+ 19 73.7% 10.5%

n = 163


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#10: Income not associated with likelihood to conduct EERE retrofit There does not seem to be a distinct difference in retrofit rate due to income as most retrofit percentages by annual income hovered between 40-50%. The only outliers were respondents with annuals incomes of $30k or less, which had the lowest retrofit adoption rate at 37.5%, and individuals with annual incomes of $130-$150k, which conducted retrofits 54.3% of the time (see Table 11). To determine whether the “Conducted Retrofit” group was statistically independent from the “No Retrofit” group that had also heard about EnergyWorks, a chi-squared test of independence was conducted. Using annual incomes categories (e.g., $30,000 or less, $30,000 – $50,000 etc.) for evaluation, there was not a statistically significance difference, meaning that income does not necessarily predict independence between the “Conducted Retrofit” and “No Retrofit” groups. Table 11: Analysis of Retrofit Adoption by Annual Income

Annual Income

Respondents Conducted Retrofit

Through EnergyWorks (%)

No Retrofit (%)*

$30,000 or less 16 38% 25%

$30,000 – 50,000 37 41% 27%

$50,000 - $70,000 47 47% 36%

$70,000 - $90,000 65 45% 43%

$90,000 - $110,000 63 49% 35%

$110,000 - $130,000 45 44% 33%

$130,000 - $150,000 46 54% 30%

$150,000+ 68 44% 35%

n = 329 * Other % not included here is those respondents that had not conducted a retrofit and had not heard about EnergyWorks ** Pearson Chi Square value is 7.985 with 5 degrees of freedom and a significance value of .157.

n = 387 * Other % not included here is those respondents that had not conducted a retrofit and had not heard about EnergyWorks ** Pearson Chi Square value is 2.344 with 7 degrees of freedom and a significance value of .956.



CONCLUSION

Ultimately, this research demonstrates that several factors positively contribute to residential EERE retrofit program participation. Messaging matters, and should be crafted to increase motivation for participation. Additionally, equipping home contractors with knowledge about program and finance options increases a given program’s reach. Lastly, low-cost financing seems to be an important last step for many program participants, and could also be used as a tool to create urgency to and increase homeowner retrofit adoption. More detail on these three key findings can be found on the following page. Stress “dollar and energy savings” and individual success stories to improve messaging effectiveness For energy efficiency program administrators and policymakers, there are several key takeaways from this Philadelphia metropolitan area study that can help guide energy efficiency retrofit program messaging and structure. With regards to messaging, quantitative data and respondent comments show that “dollar and energy savings” is the top motivator for individuals conducting retrofits through EnergyWorks and also for survey respondents that have not yet conducted retrofits. Home comfort also ranks as very important, but a distant second. Moreover, although respondents state that neighbors and friends do not influence their decision to conduct an energy efficiency retrofit, research shows that respondents likely understate the importance of peer influence and instead are very influenced by others’ actions (Boomgard & Snook, 2011). Accordingly, highlighting specific instances of neighborhood retrofits and the increasing pace with which residential retrofits are occurring in a given city or metropolitan area could also increase messaging effectiveness. EERE program administrators should actively engage home contractor networks to improve outreach Home contractors are the individuals most likely to directly interact with homeowners that will potentially conduct retrofits. Within this Philadelphia metro area survey, home contractors were the most common outlet through which residential homeowners learned about the EnergyWorks program, and respondents that conducted retrofits stated contractors were the second most important influence in deciding to conduct a retrofit (with EnergyWorks representatives being the most influential). EERE program administrators should actively engage their contractor networks, efforts should include training and equipping them with marketing and loan information to enable home contractors to more effectively communicate program features with potential homeowner retrofit participants. Use financing options and rebates to compel urgent action For those who have not conducted retrofits but knew about the EnergyWorks program, lack of upfront money and plans to conduct retrofits in the future were the top two factors for not improving a home’s energy efficiency. Both of these problems relate to possible programmatic solutions. Low-cost financing can help residential homeowners overcome the barrier of lack of upfront funds. Of the 75 homeowners that used the EnergyWorks loan program, 80% stated they would not have done an energy efficiency retrofit without the low-cost (~1% interest rate) financing available through EnergyWorks and Keystone HELP. Moreover, survey respondents stated that interest rate is the most important component to spur their interest or use of a loan program. Not every EERE initiative can subsidize loan programs, but if it is an option that a given program decides to invest in, retrofit programs should highlight this offering. The other key stated reason for not conducting a retrofit yet, “planning to conduct retrofits in the future”, presents a tough challenge as 72% of respondents that had not conducted a retrofit “planned to” within the next year. For program administrators, the question should be how do we create urgency and get some


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of these 72% of respondents to take action? This study’s survey did not explore the types of urgency tactics that could be utilized, but marketing literature shows that limited-time promotions and discounts increase customer uptake. In a similar vein, retrofit program administrators should think about how to create time-constrained urgency for retrofits, whether it be through limited-time free energy audits or tiered financing options dependent on when a homeowner conducts a retrofit (e.g., 2% interest rate through August 2012, and then a 4% interest rate from August to December 2012).



APPENDIX 1) AFC First Survey Participant Outreach Email


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2) EnergyWorks Survey Participant Outreach Email

Greetings from EnergyWorks! Please take this short, 5 minute survey to help us better understand why Philadelphia area homeowners conduct energy efficiency retrofits. Your input will help improve our energy efficiency retrofit program. Survey participants can enter a raffle to receive one of four $50 gift certificates to Reading Terminal Market! Energy Retrofit Survey Thanks in advance for your participation, Elyse



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