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Hard Truths of Home Performance

Residential energy retrofit work isn’t cost-effective

Posted on Oct 23 2014 by Nate Adams

If you've been reading my blogs, you know that I have learned some hard truths. You read the warts-and-all implosion story of my Century Club company in How an Efficiency Program Killed My Business.

I’ve been spending a lot of time prepping you, my reader, for the One Knob program design. Otherwise the design will be too scary, too big of an idea, and too foreign of a concept for you to follow and embrace. Hopefully I can save you some pain and give these truths to you the easy way: from my experience. Some of that was already discussed in Designing a ‘One Knob’ Incentive Program and in The ‘Low-Hanging Fruit’ Fallacy.

These ridiculously painful experiences have taught me a lot. And I’ve come to see a number of truths that are counterintuitive and somewhat contrary to the thinking of much of the industry. I view them as truths that we will all arrive at in time.

Before giving the executive summary of the proposed One Knob program, there are some hard truths we must acknowledge.

Hard truths

Here is my list of hard truths:

  • Energy-efficiency retrofit work at residential scale is not cost-effective. And that doesn’t matter; it’s usually not a primary homeowner goal. We need to improve the whole inventory, not the 1 in 20 outliers that represent “cost-effective” opportunities. We need to help every homeowner that allows us into their homes.
  • Energy efficiency programs are failing. Job counts and realization rates are abysmal. They are not experiencing the necessary meteoric growth for market transformation.
  • Programs need to be cost-effective with public funds. Conversely, programs shouldn’t have the audacity to think they can dictate to homeowners how to spend theirs.
  • Homeowners will spend money to improve their homes without false promises of riches. Saying projects “help” pay for themselves leads to larger projects. Saying projects “will” pay for themselves is a credibility killer.
  • Every home is different: the problems are different and the homeowners’ situations are different. Therefore solutions must be custom-tailored.
  • Grabbing low-hanging fruit takes a once-in-15-years opportunity and squanders it. Selling a quick-buck small project with overblown savings is a tremendous wasted opportunity.
  • Until we have adequate control of heat, air, and moisture flows in a home, it is really difficult to deliver true solutions to homeowners.
  • Custom-tailored solutions take good diagnostics and measurement, good understanding of homeowner objectives and budget, plus trust.
  • Trust takes time to build. One-call solutions are one-night stands that usually lead to harm. It is a wasted opportunity to mobilize all these resources and not optimize projects for the homeowner, the contractor, and the program.
  • Without recognition of and reward for excellence, excellence takes a back seat to other priorities.
  • Without recognition of and reward for accuracy, accuracy takes a back seat to other priorities.
  • Without recognition of and reward for savings, savings takes a back seat to other priorities.
  • Excellence, accuracy, and savings cannot be “administered” into existence; they must be paid for. The can be incentivized with recognition and reward.
  • You get what you pay for, so pay for what you want! Pay for “negawatts.”
  • Accountability and transparency lead to trust. Truth is not afraid of the light.
  • Consistent, provable results will lead to trust and interest from the financial sector. This is the path to scale.

Our industry has failed miserably

Those are hard, aren’t they? As was discussed in part one, the home performance industry has failed miserably at creating market transformation. Most of these truths fly in the face of conventional wisdom and practices.

It was through the discovery of these truths that the One Knob program goals — a focus on results, accountability, and market transformation — became obvious to me.

My next blog will include a summary of what One Knob actually is. After that, how such a program is likely to affect you. (Hint: it’s a good thing.)

Nate Adams is a recovering insulation contractor turned Home Performance consultant. His company, Energy Smart Home Performance, is located in Mantua, Ohio. Using a comprehensive design approach, he fixes client woes with a market-driven process that he hopes will lead to market transformation for our industry.


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1.
Oct 23, 2014 7:40 AM ET

Edited Oct 23, 2014 7:45 AM ET.

On cost-effectiveness
by Martin Holladay

Nate,
I appreciate your willingness to share the story of your business, and I appreciate your company's dedication to whole-systems thinking. I have no doubt that your company delivers comprehensive energy retrofit measures that have the result, as you like to point out, of controlling heat, air, and moisture flows in existing homes. All of that is good.

And I'm sure you're right that the work you perform -- generally in the $20,000 to $30,000 range -- isn't cost-effective (when analyzed from an energy savings perspective).

But I'm afraid that you are allowing your business history -- one in which you discovered that the way you sold small jobs wasn't bringing you enough profit -- to lead you to make sweeping generalizations that aren't true for all types of weatherization work.

When I have posted similar comments on other blogs, I have been attacked by some GBA readers who informed me that I am an ass, I am myopic, and that these concepts are beyond my intellectual ability to comprehend. I really don't want to go down that road again, so I will try to limit dialog on these topics. Suffice it to say that we have a difference of opinion.

The services you provide are a great benefit to upper-middle-class homeowners with access to bank credit and the willingness to take on $20,000 to $30,000 of debt. The services are not of much use to low-income Americans, who have to depend instead on the Weatherization Assistance Program. The Weatherization Assistance Program isn't perfect, and it has suffered gravely in recent years due to a boom-and-bust funding mechanism that ill suits long-term program development. Nevertheless, almost all attempts to evaluate the program's cost effectiveness have concluded that the program is, indeed, cost-effective. Not hugely so, I'll admit -- but the program has saved enough energy to more than justify its costs.

For example, one government report concludes, "Over the program’s history, DOE’s Oak Ridge National Laboratory (ORNL) and the Office of Management and Budget have used process and impact evaluation research methods to assess WAP operations and estimate cost-effectiveness. Virtually all the studies conducted through 2005 showed that the program was moderately cost effective."

What does this mean? It means that millions of poor and working-class Americans who have high energy bills have saved energy over the last few decades because of a cost-effective weatherization program that has emphasized air sealing and the use of cellulose to dense-pack empty stud bays and to add insulation to attic floors. I'm grateful for the program, and I'm not yet willing to state, as you are, that "Energy-efficiency retrofit work at residential scale is not cost-effective."


2.
Oct 23, 2014 8:29 AM ET

Martin
by Richard Beyer

100% agree with you! I also think energy retrofits on existing homes need more attention on IAQ and IEQ before these homes are sealed up.


3.
Oct 23, 2014 8:45 AM ET

Edited Oct 23, 2014 8:52 AM ET.

Response to Richard Beyer
by Martin Holladay

Richard,
Thanks for your comments. I agree with you that weatherization workers need to pay attention to indoor air quality. Fortunately, most weatherization programs have good training and good protocols relating to this issue.

For example, see this information from the Massachusetts Weatherization Assistance Program Technical Manual:

"Weatherization activities can have a significant effect on how a home works. As building tightness increases and the infiltration rate decreases, air quality problems can become an unintentional consequence. Low concentrations of pollutants or water vapor may become higher, potentially dangerous concentrations. Combustion and venting characteristics of combustion appliances may be affected, causing the release of unhealthy combustion by-products into the living space. It is crucial that the agency inspector be aware of the interactions between building tightness and potential indoor air quality problems. Ductwork leakage will play a role in this whole formula. An important part of the initial inspection of the home must be a thorough evaluation of potential indoor air quality problems."


4.
Oct 23, 2014 11:13 AM ET

Cost Effective? Please substantiate that claim.
by Ted Kidd

Martin, clearly you want to cling to this "$20-$30,000 projects for the rich" idea.

You also want to cling to claiming Energy Efficiency for the masses isn't "affordable" without supporting that contention, or providing examples of what IS affordable.

Clearly agreeing that most people can afford $50 a month to update and repair their homes would mean too painful a shift in your rigidly cemented schema's, and heaven forbid, that your 1970 mindset is outdated.

I get it, the synapses aren't as elastic as they were 30 years ago. I get it, you can't substantiate these empty words and you aren't open to a new way of looking at things.

But now you are claiming weatherization programs are "cost effective" and implying that those "successes" are based upon energy saved alone, not factoring external benefits, without any substantiation.

SHOW US THE NUMBERS!

Please substantiate that claim - and either do it with third party studies of actual savings or apply the typical realization rate of .5 to "estimated" savings and see how well those "Mission Accomplished" reports hold up to your mythical and completely inexperienced ideas of "cost effectiveness".


5.
Oct 23, 2014 11:17 AM ET

Edited Oct 23, 2014 11:29 AM ET.

Response to Ted Kidd
by Martin Holladay

Ted,
Here are links to 41 papers performed by a third-party lab (Oak Ridge National Laboratory) that evaluate the cost-effectiveness of the Weatherization Assistance Program:
http://weatherization.ornl.gov/publications.shtml

I quote from one of the 41 reports, chosen at random:
"Annual nationwide energy and cost savings from the activities performed by the states and territories during their 2002 program year were estimated to total 47.6 trillion source BTUs and $333.6 million, respectively, for all 17 project areas for which outcomes were quantified (Figure 2). Each SEP dollar that the states and territories reported spending to support their 2002 program year activities was associated with annual savings of 1.03 million source BTUs and $7.22. Each dollar of total expenditures (SEP plus non-SEP) resulted in annual savings of 0.09 million source BTUs and $0.62. Because the effects of the states’ energy-saving activities tend to last for many years, the benefits continue to add up over time and are expected to greatly exceed the total investment required to achieve them."

Another report, again chosen at random:
"With average savings of 29.1 million BTUs annually, a benefit/cost ratio was calculated for a typical gas-heated home. Two different perspectives were used: the program perspective, which compares the discounted value of energy savings to total program costs; and the societal perspective, which compares the discounted value of both energy and non-energy benefits to total program costs. The benefit/cost ratio for the program perspective was 1.30 (assuming a discount rate of 3.2% and the fuel price forecasts shown on the Energy Information Administration's website in September of 2002). The calculated benefit/cost ratio for the societal perspective was 2.70."


6.
Oct 23, 2014 11:35 AM ET

Edited Oct 23, 2014 11:38 AM ET.

back to the future
by aj builder, Upstate NY Zone 6a

Ted any relation to.... No?
... Just kidd-ing a kidd-er...

I can tell you really like and respect Martin. Now may have to have my synopsis's looked over. Any suggestions on cost effectiveness of such? The medical industry to me seems to be several orders of magnitude in worse shape in regards to cost and proper delivered service and design of such delivery. You seem to be a high energy type that we all could use to solve that seemingly unsolvable national disaster. After that solve poverty and social security oh and why teenage daughters like to annoy their mother's.


7.
Oct 23, 2014 1:28 PM ET

Edited Oct 23, 2014 1:29 PM ET.

Weatherization VS Home Performance - these are NOT the same
by Ted Kidd

Martin,

Can I expect absolutely no comprehension or due diligence from you? I specifically asked for real savings, not estimated:

"ESTIMATED ENERGY SAVINGS
Oak Ridge National Laboratory (ORNL) has employed engineering estimates derived from the
Weatherization Assistant residential audit package to estimate annual energy savings resulting from
the installation of cost-effective measures in low-income residential dwellings under the new
parameters established for the Weatherization Program under the ARRA." 1st link - page 7

And I asked that they not include "SOCIETAL BENEFITS" IN COST EFFECTIVENESS TESTING -
"The estimated non-energy benefits are derived
using the same methodology described above and, once again, the societal benefit/cost ratio is the
combination of the energy and non-energy benefits divided by the estimated weighted average cost." Page 9

Again, as I've already suggested - at volume and without sales, marketing, or design cost the improvement work cost is significantly lower, and even then they have to add "societal benefits" to game up cost effectiveness.

Also, there is neither precision nor accuracy of case by case savings - THIS APPROACH DOES NOT WORK FOR HOME PERFORMANCE!

If 100 homes use more energy, 600 use the same, and 300 save energy you have a program that saved energy. The importance of improving the individual case is not important. Yes you will save energy over the dataset - and that is considered OK because the government paid for the work.

IMPORTANT DISTINCTION: When you ask a HOMEOWNER to carry a significant portion of the cost thing change a whole lot. They expect a result for their money, not a results lottery. Individual case results matter.

This seems so obvious to me, how is it I can't seem to make this obvious to you?


8.
Oct 23, 2014 1:41 PM ET

Energy programs
by Stephen E

Matters where you are. I know in Iowa (zone 5&6) I don't participate in the energy programs. The time I tried I had to wait on a 'energy expert' from the utility company. That person knew nothing. The process of submitting paperwork after that requires a accountant level skills. At the end of the day the rebates they offered would cost more time which is money. No saving at the end of the day. To say the government energy programs are a joke is very accurate.


9.
Oct 23, 2014 1:54 PM ET

Edited Oct 23, 2014 1:56 PM ET.

Reply to Ted Kidd
by Martin Holladay

Ted,
From "AN EVALUATION OF STATE ENERGY PROGRAM ACCOMPLISHMENTS":
"An effort was made to keep the energy-savings coefficients conservative by adjusting them downward to account for factors such as installation, savings-realization, and compliance rates, where appropriate."

From "Metaevaluation of National Weatherization Assistance Program Based on State Studies, 1993–2002":
"The state-level studies used a variety of methods to measure natural gas savings. In the majority of cases, savings were identified by tracking monthly natural gas bills for a period of approximately 12 months before and 12 months after weatherization. These natural gas billing records were most often analyzed with a software system called PRISM, which stands for PRInceton Scorekeeping Method (Fels, Kissock, Marean, and Reynolds 1995; Fels and Reynolds 1990). In two studies, data loggers were attached to natural gas heating systems to directly measure pre- and post-weatherization heating system run times with the Achieved Savings Assessment Program (ASAP), which uses DESLog software to do weather-normalization and calculate energy savings (Shen et al. 1996; Minnesota Office of Low-income Energy Programs 1998)."


10.
Oct 23, 2014 2:17 PM ET

Edited Oct 23, 2014 2:31 PM ET.

Response to Ted Kidd
by Allison A. Bailes III, PhD

If you want to argue your point, that's fine. If you want to do it while rudely insulting other people here, that's not OK. I have a feeling the only reason you're not banned from GBA already is that you're attacking Martin, and he doesn't want it to seem like he's doing it just because you're attacking him.

This is a forum where adults should be able to come and air their ideas without being subject to the kind of ridicule you dish out if you don't agree with them. The quotes below, taken from your two comments above, illustrate how childish you're being:

"I get it, the synapses aren't as elastic as they were 30 years ago. I get it, you can't substantiate these empty words and you aren't open to a new way of looking at things."

"...too painful a shift in your rigidly cemented schema's, and heaven forbid, that your 1970 mindset is outdated."

"Can I expect absolutely no comprehension or due diligence from you?"

And on top of the insults, you don't even seem to understand that he's answered your questions and provided the kind of data you asked for. We understand you've got a strong opinion about this, but when you respond to people with insults, it undercuts your argument and makes people want to have nothing to do with you or anything you espouse.


11.
Oct 23, 2014 2:32 PM ET

Response to Martin Holladay
by Nate Adams

I have to say I generally distrust program numbers, since so many of them are deemed or estimated.

Before, I was blind to actual payback. Not anymore. We do energy models and true them. Here is a project that is being executed presently. The simple paybacks are in the 50-60 year range at current energy costs. This is with 50% savings from current heating and cooling costs, which aren't out of control on this house anyway.

Here's my math: goo.gl/iI2aFl

Residential energy efficiency is not cost effective. Period. Maybe if you do it yourself, but then how do you know if you'll do well enough to not cause other problems, mold and moisture being biggies? How do you know if you are actually going to be comfortable? How do you have any idea results will actually arrive?

Home Performance pros can do all this. I can. It's just whole house thinking.


12.
Oct 23, 2014 2:56 PM ET

A step back...
by Allison A. Bailes III, PhD

Nate, I think you need to take a step back and look at what else is going on. When you make generalizations like the following, you're painting yourself into a corner:

"Residential energy efficiency is not cost effective. Period."

A blanket statement like that is easy to disprove. I know home performance contractors who do their work cost effectively and I can easily find a case study showing a cost effective job.

The energy efficient mortgage (which really should be called the energy efficiency mortgage), when used to improve existing homes, has to be cost effective or it can't be done. I can show you some great examples there of cost effective retrofits.


13.
Oct 23, 2014 3:04 PM ET

Cost effectiveness as net present value problem.
by Dana Dorsett

The average American moves every seven years or so, but 1/2 of homeowners have lived in their homes for more than 10 years, and 1/4 of them have lived in their homes for over 20 years.

Weatherization has almost zero affect on the resale value of a home, and the tenure duration of the owner occupants is of uncertain length. Most homeowners don't want to spend their own dime on upgrading the thing unless it's IRR on fuel savings is high enough to have neutral NPV well within their anticipated occupancy term. The folks who figure they'll be moving on in seven years or less typically want to be cash positive in three, at most four years. The discount rate that works on those NPV calculations is well into credit-card interest territory (and beyond!)

But on a lifecycle basis or 30 year mortgage basis it's fairly easy to make the cost-effectiveness numbers work even on very substantial $20-30K USD type retrofits, if not deep energy retrofits.

Deep energy retrofits usually only work if you have substantial energy price inflation built into the calculation, and predicting energy price inflation/deflation with any accuracy has proven illusive.

It only costs a couple or three grand to squirt some cellulose into the wall cavities of an uninsulated pre-WW-II house, and maybe cut it's energy use by 20-25% while making the place more comfortable to boot.. But at buck-a-therm natural gas that doesn't provide a nearly sufficient IRR for short-termers. At $4/gallon oil it might, but maybe not.

The folks across the street from me heat with an oil-fired steam boiler, in a circa 1928 brick veneer balloon framed house that has zero wall insulation. They have lived there for more than 20 years- go figure?

The folks next door to me live in a circa 1930 shingle clad cottage with R50 in the attic, but no wall insulation, heating with a gas-retrofit burner on a 10 year old steam boiler. They've been there maybe 9 years now. A friend across town lives in a circa 1921 brick veneer balloon framed house heated with gas-fired steam heating, with R20-ish rock wool in the attic and no wall insulation.

The folks across the street from her live in a clapboard clad 2x4 framed house that has NO insulation, not even in the attic.

Another friend in a different part of town lives in a circa 1910 house with gas-fired steam, but heated primarily with a wood-burning insert. It had no insulation at all until they built a shed-dormer for a master bedroom, which they insulated to code-min with open cell foam. (That very same friend owns a 3-family rental that underwent a heavily subsidized deep energy retrofit.) He would probably fix up his house more, but they've been talking about moving into bigger digs for at least 3-4 years now, and are reluctant to spend on anything that can't be immediately recouped at resale.)

These are not rare outliers, but rather commonplace situations across New England. If the envelope upgrade has an NPV that only rises to zero in 20 years (or even 10) , fuggedaboudit, not hap'nin'.

Situations with very low hanging fruit abound, projects that have a very reasonable IRR if viewed as a medium to long term investment basis (especially when the fuel savings are in after-tax dollars). It's VERY cost effective on it's own terms on a lifecycle basis, but not within the anticipated time periods perceived as "reasonable" by the owners, given that the resale value needle barely budges.


14.
Oct 23, 2014 3:06 PM ET

Edited Oct 23, 2014 3:47 PM ET.

Response to Nate Adams
by Martin Holladay

Nate,
It's good to be skeptical, but it's also good to read the scientific literature.

Energy retrofit efforts (and energy retrofit research) have a long history in the U.S. The Weatherization Assistance Program was established in 1976.

Energy retrofit workers have been attending technical conferences like Affordable Comfort for decades. Researchers at Oak Ridge, Lawrence Berkeley National Labs, NREL, and Advanced Energy have examined reams of data on thousands of energy retrofit jobs, comparing pre-weatherization energy bills to post-weatherization energy bills.

These researchers have known for decades that most energy modeling programs overestimate likely energy savings resulting from energy retrofit work. They aren't easily hoodwinked by this phenomenon, and they are intelligent enough to look at actual energy bills.

I hope you have had an opportunity, Nate, to talk to some of the old timers who have performed this research or delved into the researchers' data. Even the youngsters like Michael Blasnik are worth talking too. These are people with sharp brains and reams of data.

Cost-effective energy retrofit work is not a myth. Every third-party academic researcher who has looked into the Weatherization Assistance Program has concluded that, on average, this program is definitely cost-effective. This is the consensus of the research community.

Of course you can point to some state programs that weren't well run, and you can point to individual retrofits that didn't pan out. Others, however, were extremely effective, and the averages point clearly to cost-effectiveness.

Nate, it's great to propose a new framework for energy incentive programs. There's a good chance that your program is the best one ever devised. But I hope you are familiar with the findings of respected researchers who have looked into energy retrofit cost-effectiveness -- and I advise you to think twice before making sweeping generalizations that contradict the findings of researchers who preceded you. You don't need to make these generalizations in order to convince us that your program makes sense.


15.
Oct 23, 2014 5:12 PM ET

This isn't so much a comment
by Eric Habegger

This isn't so much a comment on the remarks made here as much as a personal anecdote. Take from it what you will. In my previous home here in a moderate climate it was frequently uncomfortably cold and overly dry inside during the winter. I had zero knowledge of green building techniques at the time but the first weatherization incentive programs were being initiated and advertised through the local utility.

I had some people come by and they cut small holes in the exterior siding and pumped cellulose inside. I had zero knowledge of the technique they used for blowing it because I didn't watch them and would not have known intelligent questions to ask them at that time. I do now. In fact now that I know a lot more I probably would have watched them like a hawk.

The results were spectacular. Even though I don't have the energy savings at hand I would estimate it cut my heating bill by a third. And those dry winters inside the house (I even invested in a humidifier before this) - gone. I attribute that to two things: The lower air infiltration values in cellulose dense packed house (it has some gap filling value) and the hygroscopic attributes of cellulose. Added onto that was the fact that it was a much quieter house afterwards even though it was next to a busy street.

My cost with the incentives was slightly less than a thousand dollars. It was very well worth having done. My experience was very positive.


16.
Oct 23, 2014 7:33 PM ET

Ted Kidd
by Malcolm Taylor

Wow. Who stole the jam out of your donut?


17.
Oct 23, 2014 7:37 PM ET

Response to Martin and Allison
by Nate Adams

OK, you got me, making a blanket statement like that is pushing it. Still, the SIRs on my projects seldom break .6, or 60% of the project will be paid for with energy savings within the useful life of the upgrades. That is my measure of cost effectiveness.

The issue I have with low income weatherization is that the pay scales are too low. I did about 40 jobs or so with that. Having a job just show up was great, but I typically charged about double those rates for private work. Double the cost and cost-effectiveness goes out of whack real fast.

Martin, I really appreciate your engaging me on this, which 'old guys' would you suggest reading or connecting with?

Back to the issue at hand, cost effectiveness is a silly thing to focus on, really. As the argument goes, what's the cost effectiveness of granite countertops? If we focus on what homeowners want, and use the savings to offset part of the cost and leverage into bigger jobs, that is the better way to look at it.

It's really important to be sure we solve problems. If that remains our focus, the job can move around and we can use better methods with higher chances of success than cheaping out.

Yesterday a Carrier Green Speed heat pump went in at one of my client's homes. The job got botched and they put a 4 ton in instead of the specified 3 ton (without consulting me, and then it was a 3 hour fight, but that's another story.) Regardless, that is the most expensive, highest quality heat pump on the market. It gives almost unbelievable levels of control for comfort and humidity. And it's one of the most efficient models, as well. It should run even in shoulder seasons because it meters down to 1.2 tons.

Will the savings from that heat pump pay for the upgrade? Maybe. But the client wanted even temperatures, and between shell upgrades and that heat pump, plus an Ecobee on the wall doing nothing but logging, I'm going to be able to make my client really comfortable. And next year when they put solar panels on the roof, get them much closer to Net Zero. They are actually disconnecting from their gas meter. All that because the solution was custom tailored to what that client wanted. Cost effectiveness is not a big concern. That is the project I showed data for, BTW.

I know I'm shaking things up. I'll keep repeating WE HAVE FAILED. Nobody knows what the heck Home Performance is. We can deliver astounding results. But not for $2K or $5K or usually $10K.

The average American family has $4-5K in savings. We are going beyond that. We must finance. Therefore moving to monthly figures makes a ton of sense, since it will be a loan anyway. It also allows using more expensive products and techniques if the results are better and more energy is saved. The monthly cost can remain the same. The cost effectiveness problem is largely reduced. We need to start thinking and talking this way as an industry, or after another 36 years (my current age), we'll still be failing. I'm fighting like heck to avoid that.

PS Take a look at this article that shows how a $7K upgrade for a client was possible for the same monthly payment. http://energysmartohio.com/blog/7000-free-using-the-power-of-leverage


18.
Oct 23, 2014 7:48 PM ET

Reply to Malcolm Taylor
by Nate Adams

I'm still laughing. Dying here. Ted actually makes a lot of really good points, he's just ticked somebody stole the jam out of his donuts... still laughing...


19.
Oct 23, 2014 8:30 PM ET

Gall-lee...
by Armando Cobo

You guys are making me miss the Riversong days...


20.
Oct 23, 2014 8:30 PM ET

Nate, did you even look at
by Eric Habegger

Nate, did you even look at the anecdote I offered? Yeah, it was about 25 years ago and I'm sure you'll use that as an excuse. But really, it was a real world example that should apply to millions of homes even when accounting for inflation over those years. You're not close to convincing me that the reason your business failed wasn't because you just weren't running a tight enough ship and maintaining a tight enough balance between costs and expenses.

A big part of running any business is evaluating risk when looking at potential customers and just turning down business when you know that what you are offering won't service the customers needs. Along with that one must always keep your overhead in line with that reduced level of business. It seems to me you just never had a good business plan but are having trouble reconciling that failure. Now you'd like to spread the blame for that failure by making overly broad generalizations about the weatherization programs, as Martin suggested. I'm sure this also applies to Ted. Scapegoats are a wonderful thing. It's that dude (or reimbursement program) in the corner that is the real problem. It couldn't be me and how I run my business.


21.
Oct 23, 2014 8:47 PM ET

Edited Oct 23, 2014 8:56 PM ET.

lol, that's exactly how I feel!!
by Ted Kidd

Malcolm, every time I see armchair experts recommending ways to save energy, suggesting Warren Buffet returns are to be had in ways I've actually seen homeowners harmed and no energy saved, I feel my donuts being sucked dry.

There is so much to be learned from experimentation, tracking, and doing follow up. By having feedback loops. By designing solutions to fit specific problems and budgets, then following results and adjusting your aim. This is where innovation comes from, not from doing the same thing over and over and not knowing outcomes, not having accountability for results.

But we have a bunch of people with no clue that generic recommendations are not only hard to sell, they mean smaller projects. Smaller projects generally mean higher likelihood of no noticeable results. We need noticable results! Without noticeable results you have homeowners who tell everyone at the cocktail party what a fraud home performance is.

Bigger projects are easier to sell. Ask Nate. The whole experience is better, for everyone. You have time to focus on quality, and quality makes a huge difference in the results.

ALLISON, I suspect you really DON'T understand the difference between weatherization and homeowner funded projects. I've really pretty much given up on you, but let's see if I can explain in a way that you can understand:

If you are getting a free ride on a bus, you don't feel ripped off if the seat sucks. If you buy a Buick and they deliver a golf cart, you've been ripped off. When you spend your own money you have the right to higher expectations, to get what you paid for. If you paid for $1000 a year in energy savings and get $500 (of $320 in California), I think that sucks. You don't? We'll have to agree to disagree.

When home performance realization rates are 50 cents on the dollar, that's a consumer ripoff of epic proportions and a missed opportunity to build trust. I find this outrageous. Nate finds this outrageous. Mike finds this outrageous. How is it this doesn't outrage you?

We have a process that solves this problem. Rather than helping, you are getting in the way by encouraging the exact procees thats the root of the problem, prescriptive rather than tailored design.


22.
Oct 23, 2014 10:35 PM ET

Of programs and dialogue
by w d

At the risk of biting into a grenade, I'll offer these thoughts:

1) PROGRAMS. A "program" is spending other people's money, whether they like it or not, to achieve my objectives. Is it any wonder there's vitriol?

When I read of problems with this program or that program, I ask myself, "Would these problems be smaller if there were less $ in the program?" Often, my answer is 'yes'. The problems are ones that a market environment handles with less fanfare. Example: I look at an energy project. If I like it and can afford it, I buy it, all things considered. If not, I pass or wait 'til later.

But, there are problems in game theory that are not optimized by having individuals simply following their self interest. Ref.: "tyranny of the Commons". In these cases a higher payout can be achieved when participants "sacrifice" so that the overall outcome is improved. So, despite my preference for market solutions, I know there are cases where "a program" might be worth a try. (Trouble is, a program often develops a life of it's own.)

I'm hearing the following about a program idea:
- One knob program
- Time needed to prep readers. (Not sure I want to be prepped. Sounds painful.)
- Truths that we will all arrive at in time. (Sounds like a campaign line.)
- Executive summary coming
- Too big of an idea for you to follow. (My IQ sounds on the decline.)
- Not experiencing the necessary meteoric growth for market transformation. (Uh-oh).
- This is the path to scale.

It may just be my paranoia but the last time we had grand statements like these we elected a President.

2) THE DIALOGUE.

It doesn't seem so bad to me. I've learned the hard way that GBA is cutting at times. It's value, however, makes it worth keeping. Mr. Kidd may benefit from a charm school revisit but some of his points have merit.

Why hammer a participant in the thread? The editorial staff already reviews user submissions. It says so. Why not clean up any issues before posting if it's that bad? What happened to filtered words being replaced? If it were me, I'm not sure I'd commit to that level of editing and workload in the screening but that's where we are.

I'm not sure Mr. Holladay needs to be defended. As far as I'm concerned, he's a NATIONAL TREASURE. He's usually eloquent, clear, constructive, and patient. He remembers those who work hard and save little. In conflict he gives better than he gets. He doesn't discount anyone. He apparently reads all that we post to GBA. I say applaud him, support him, and challenge him (with respect) when it seems needed. Give him an occasional +1 for "helpful", more if he asks for it.

Meanwhile, Nate has more to show us. I'll keep an open mind.

3) DIY.

"Residential energy efficiency is not cost effective ... Maybe if you do it yourself, but ... ". The warnings are good ones. Still, I have faith in an informed DIY person. I've lived as one.


23.
Oct 23, 2014 10:44 PM ET

Comment to All That Define HP must be Cost Effective
by John Nicholas

Home Performance is about a lot of things. One of which is energy efficiency. I will get to the others later.

I got into HP as an audit only model, in 2010. Initially I got audits from a State Program. It required a cost effective plan, from projections and estimates. Then the homeowner got to get actual bids and you reworked the plan (REM - Improvement Analysis) The agency would then loan a Zero % interest up to $20K to the home owner for a 15 year repayment, monthly on the utility bill.

Audit #50 for me was a 1919 3 story home. I arrived and was treated to a 40 minute lecture from the homeowner about the value of energy efficiency and the great program of no interest and how it would be great. Yes, it was an Econ 101 level lecture on finance and payback. He is a Full Professor of Economics at a College about 45 miles away. I did proceed carefully, with all my measurements and calculations, after al this was a guy that could look at the math in the report and know it was right or wrong. He also had made it clear that he expected a net savings to result from the improvements.

The house had an R-10 attic, R-0 walls, and a CRF Blower Door that tracked to about 20 ACH @ 50.

He completed the attic improvement some basement and crawl space wall insulation and air sealing. He picked a low priced 90%furnace and 15 SEER AC to replace the 80% and 9 SEER. The post work Blower Door came in at 7 ACH @ 50. I projected 12 in the plan.

14 months after the improvements were complete I called to get permission to obtain his utility usage. He said come by. I was treated to a 30 minute lecture about how much the program was worth and how his family liked it. Then he said:

No reason to look at the utility stuff. I'm happy! My wife can use the parlor (we found an disconnected supply and HVAC hooked it back no charge.) My daughter will have friends over to study and she now takes them upstairs to her room, in the middle of winter. That is really cool. I can go upstairs and walk the hall to my office and it is comfortable with that sloped ceiling that you told them to fix. You can see the before and after IR of this clipped ceiling and read the details of temperatures on my blog http://theenergyguy.info/?p=580

Yes, Energy Efficiency is important. Other things are important as well. Not every homeowner will insist on a Positive ROI on everything. So what important things are out there:

Comfort -- EE -- Health -- Doing it right

To get all of those you probably will miss the +ROI. The health issues and doing it right are probably missed by the weatherization programs. ( reduce to 0.35 NACH and no lower for example) Does that mean we should forget efficiency? NOPE! Should we only concentrate on efficiency? NOPE!

I think we need to work for ROI on improvements we make. We need to do the comfort items and the health issues. We certainly should do the do it right issues.

I no longer classify my improvements as Air Sealing, HVAC, Equipment, Insulation. I classify and present them as Efficiency; Comfort; Homeowner Concern; and other. I present a cost estimate as 20XX and an estimated annual savings of 2XX. I skip those on the other classes.

Too many programs use an incentive approach to get people to do something. You are then dancing to someone else's tune. Given the recent EPA 111d goals and carrots and sticks, we need to look at loans that can be repaid with on bill financing. We need to be including Energy in the PITI formula for mortgages.

Finally, no one has the complete story or complete answer. People that claim to usually are wrong. We need to spend more time working together and less time saying, my way or the highway.


24.
Oct 23, 2014 11:30 PM ET

Bravo!!!
by Armando Cobo

Thank you John. Finally someone shows what Green Building is all about. It's not just dollars and cents. Sometimes the discussions gets so technical, that we forget the HUMAN side.


25.
Oct 24, 2014 5:31 AM ET

Edited Oct 24, 2014 10:57 AM ET.

Assessing the "home performance" approach
by Martin Holladay

Nate,
While my instinct and gut favor the "home performance" approach over the traditional "low-hanging fruit" approach -- because I understand the advantages of whole-systems thinking -- recent research data aren't supporting the "home performance" approach.

Two recent studies are relevant. An Oregon study compared the results of traditional weatherization-style work with the "home performance" approach:
2013 Report on Energy Savings and Measure Costs of Existing Homes program tracks: Standard, Home Performance, and Clean Energy Works Oregon.

One key finding from that report: "Energy Trust Existing Homes Standard Track, Home Performance Track and CEWO Track appear to save approximately the same amount of energy per measure. Average costs per measure are significantly higher in the Home Performance and CEWO Tracks."

Here is a link to a Massachusetts study:
HES Realization Rate Results Memo

The study compared the results of work performed by "lead vendors" -- utility jargon for weatherization teams using traditional approaches -- with the results of work performed by HPCs (Home Performance Contractors). As shown in the table below, the "lead vendors [traditional weatherizaton-style teams] generated higher natural gas insulation and air sealing savings (absolute and percent) than HPCs [home performance contractors]."

.

Table showing performance of Home Performance contractors.jpg


26.
Oct 24, 2014 7:49 AM ET

Response to Martin #25
by Nate Adams

Holy cow, so much stuff to respond to from various folks! I'll do LIFO (last in, first out). (I'm getting to the business shot soon, we seem to have a new Ted Kidd...)

Martin, this chart can easily be used to support One Knob. The best contractor on there has an 87% realization rate, which is quite good. That contractor would rank really well and be much more likely to get more and higher margin work because of that reputation.

The Columbia program generally only achieves a 52% realization rate. If that's good for you, like I said on another thread, can I borrow $1 million, I'll pay you back $520K the next day, paid in full. N-Star looks like it's doing pretty decent, but 75% is the highest program realization rate I've seen. Again, let me borrow a million at those terms...

Also, the energy savings are laughable. 15% at most. Mike MacFarland of Energy Docs knocked 70% out of the usage of his 2003 home, one that shouldn't have much 'low hanging fruit' or ability to knock that much usage out of. He has similar results with other clients, too. 15% is NOT going to move the needle, and likely didn't change how those homes live for their clients. I personally am an adherent to Climate Change, and we're all gonna fry with that level of adjustment. The consumer solution to climate change is actually almost free, and is something I'll publish at some point.

If your gut and instinct follow whole-home, which is what we all learned in BPI classes, please listen to it. Low hanging fruit is dogma that needs to go the way of the dodo bird, Home Performance or weatherization or whatever you want to call it has not moved the needle. CA and NY aren't even doing 10K jobs/year. We need to do 100 million homes in the next 20-30 years. The approach has to change. John Nicholas had an excellent anecdote.

Finally, thank you for the praise of the program design, now we just need a program to be gutsy and try it out! The establishment won't like it because it will hurt consultants and implementers like CSG in the short term. But the current designs are not scalable to 100X today, so something has to change.


27.
Oct 24, 2014 8:00 AM ET

Edited Oct 24, 2014 8:02 AM ET.

Thanks to John Nicholas #23
by Nate Adams

"Yes, Energy Efficiency is important. Other things are important as well. Not every homeowner will insist on a Positive ROI on everything. So what important things are out there:
Comfort -- EE -- Health -- Doing it right

To get all of those you probably will miss the +ROI. The health issues and doing it right are probably missed by the weatherization programs. ( reduce to 0.35 NACH and no lower for example) Does that mean we should forget efficiency? NOPE! Should we only concentrate on efficiency? NOPE!"

Yes! A thousand times yes! The client didn't give a darn if the project paid for itself! The house was TRANSFORMED! Once he saw and felt the results, the money didn't matter anymore. Thank you so much for this wonderful example.

Payback and money come in when there is little trust, so consumers have to choose on price. I'll bet the savings from that project were excellent. It would likely rank you very highly. That high ranking would generate trust and there would be less pushback on price, just like ByggMeister in Boston seems to have - their projects aren't cheap and the owner recently laughed at a MassSave audit.

Thank you, John, for the perfect example. That house needed you. And you did an HVAC and shell upgrade simultaneously, which is what my $75-150/mo projects or $20-30K projects include. That is comprehensive, which is exactly what I am promoting. Not deep, but not low hanging fruit, either. In the middle, where few of us have played but where some really good results lie.

John, how would you feel if every project was like this? I sure like what I do now better than what I used to do, and where I too frequently heard I didn't deliver results. What were the energy savings on that project, John?

As Armando pointed out, if we design for the humans, not just for energy, great things happen. Comprehensive home performance is about comfort first. Energy savings is a byproduct and should seldom be a primary goal, it perverts the process to the 15% energy savings in the chart Martin cited instead of the 30-70% savings that are pretty easily possible.


28.
Oct 24, 2014 8:30 AM ET

Response to w d and Eric Habbegger
by Nate Adams

w d - Your comments seem eminently fair, and the grand prose is probably overdone a bit. Look at the pushback I've gotten, though, this idea is a radical shift. If I just came out with it I don't think it would get any traction.

Even if it fails, though, is what we are doing now succeeding? It's like raising an F student to a D-, at least the kid is passing. Right now we're deep into F territory. You're in luck, the job of President looks like it really sucks, so no interest here... =)

Eric Habegger - Sheesh, man. You said in the title 'This isn't so much a comment' so I read it and ignored it, like it sounded like you wanted. Apparently that really ticked you off, because your next comment sounds like Ted Jr. Did somebody take the cream out of your donuts after they took the jelly from his?

I would ask you for proof, 33% from wall insulation is a LOT from the models I've done. I haven't tracked a wall only project, so I don't really know. Modeling them, the air leakage is the big thing that helps, I modeled one friend's house and it was $70 annual savings from R-value, but $250 from air leakage. Air leakage in the walls is not nearly as important as at the top and the bottom of the house, though. Did you change furnaces or anything else when you noticed the change? Was the weather better or worse than the baseline year?

Next, as to my business acumen, no, I ain't perfect. I've been radically transparent so far, but apparently that isn't enough for you. So here is more of what made me fail.

I was trying to build the company up for scale. I bought a second truck and blow machine. I tried harder to be legitimate and registered with cities. I got a 401K plan for my guys. I got a safety manual and employee handbook. I probably overspent a bit on marketing, but I don't think I broke 6-7%. Working 80 hours/week, stuff went through the cracks, especially if I disliked doing it. I did hire an office manager, granted neither one of them was super well qualified, but what do you expect for $13-15/hr. A huge failure of mine was also that I let the structure for scale feed my ego, I thought I was a bigger deal than I was.

One of my biggest failings was employee management, that ultimately undid my crew, which undid me. But a big piece of that was I had to run so hard to get work that I just physically didn't have time to do it enough. I screamed at my wife when she asked for 1 evening a week alone with me. I stopped volunteering at church when I lost my cool there.

The jobs were too small, they took as long to sell as they did to perform. All of my competition stopped using the program when I did, they didn't have to mention it anymore because I was the one that brought it up.

Still, I managed to make $80-100K/yr for 3 years on a $5K investment after my wife and I both got laid off within 2 weeks of each other. I also became a Century Club contractor. My rebate program would secretly recommend me (because they weren't supposed to) because my jobs had fewer callbacks. Then I broke my crew. And my daughter was born. Something had to change, and change big.

At the time, I genuinely thought I was helping people. I have a TON of good reviews on my website and on Angie's List (70). Looking back, while I gave them some results, too many did not deliver as hoped. But I didn't know any better. The whole One Knob thing is trying to show the industry a better way by focusing on results. I'm just some idiot in Cleveland spouting off, but I don't see anyone else stepping up, so here I am.

Now that I have shared more deeply with you, what are some of your biggest failures, Eric? Are you willing to put them out in public like this?

In the end, after lots of careful reflection, I still blame the structure I was working under as a major contributor to my failure. I'm not alone in feeling this way. So I'm trying to change the structure. Are you with me? Or are you going to continue to take shots?


29.
Oct 24, 2014 8:32 AM ET

Squandered Opportunities
by Li Ling Young

Too bad the discussion went so far off the rails, because there are some other thoughts in there that are pretty compelling.
Nate proposes that timid energy work "...takes a once-in-15-years opportunity and squanders it." I'd say it's more like once in 50 years, and as such is an unethical use of the public's money and fails in our collective duty to homeowners and society to do the right thing.
If it's only the wealthy who can afford to think about the future, that is truly a policy failure. Even the most ardent defenders of light-weight efficiency programs would agree that we can and should do more.


30.
Oct 24, 2014 8:50 AM ET

Edited Oct 28, 2014 8:56 AM ET.

Response to Li Ling Young
by Martin Holladay

Li Ling Young,
You raise important issues. Of course the wealthy currently have more options than poor people when it comes to retrofit work on their homes.

Unfortunately, those of us who envision a society that directly addresses the widening gap between the rich and the poor -- by taxing a portion of the river of wealth now flowing upward to the top 1%, and using the funds to help the least fortunate members of our communities -- are not now in the halls of power.

If Nate gets to wave a magic wand to design a perfect program, shouldn't I get to wave a magic wand, too? I want carbon taxes, with the tax money that we collect targeted for mass transit projects and subsidized energy-retrofit work at the homes of America's poorest citizens.


31.
Oct 24, 2014 9:03 AM ET

Response to Li
by Nate Adams

Thank you, Li! Yes, let's get beyond attacks and back to discussing the points at hand. Let's leave cost effectiveness behind us and touch on some of the other things. I'm happy to start with the one you mentioned, others can feel free to speak up on what bothers them.

"I'd say it's more like [squandering a] once in 50 years [opportunity], and as such is an unethical use of the public's money and fails in our collective duty to homeowners and society to do the right thing."

Agreed!

Comprehensive Home Performance does NOT need to be only for the wealthy. If we were actually good at predicting energy use, we could put that piece into On-Bill financing. So $30/month energy savings would go to a $30/mo loan on the energy bill, NY is doing this now. Energy bills would stay the same. That portion would also stay with the house when sold.

Give me $50-150/mo on top of that, or once I train others, any other HP pro, and we can likely do a Comprehensive retrofit. $50-100/mo is doable for many households, likely under the median household income. I don't mean to open a can of worms, but copay savings from healthcare issues caused by our homes may be enough to offset that.

Once energy use is more predictable and trackable, there is a higher chance that it will be valued, and may become part of housing values. It also would likely attract better financing options from the private market. Both would be steps towards scale and away from government programs.

What do you think of that line of reasoning? Can it be for more than the wealthy and not be a 'policy failure'? Can this path potentially lead to real scale, not boutique status?

What other points can we tackle?


32.
Oct 24, 2014 9:57 AM ET

Response to Nate Adams (Comment #26)
by Martin Holladay

Nate,
You wrote, "This chart can easily be used to support One Knob. The best contractor on there has an 87% realization rate, which is quite good."

I think you missed the point. The contractors who obtained the 87% realization rate were following the traditional low-hanging fruit approach. None of the home performance contractors were able to do as well. The home performance contractors had lower realization rates (52%, 69% and 75%).


33.
Oct 24, 2014 10:50 AM ET

Edited Oct 24, 2014 10:55 AM ET.

Pass/Fail scoring - with "pass" just for showing up.
by Ted Kidd

Martin, do you realize your examples are of situations with no feedback on, accountability for, or recognition of results?

That's like saying "We sent everyone out to play golf with no score cards. They thought nobody was keeping score, and they all shot equally terrible scores."

Yeah, no duh. From that are you really concluding:

"Therefore, they all suck equally and couldn't do any better if the game were changed" because that seems pretty weak thinking.

I think this is the critical piece YOU aren't getting. If you have no mechanism to reward excellence how the hell do you expect that you will receive it?


34.
Oct 24, 2014 11:04 AM ET

Edited Oct 24, 2014 11:06 AM ET.

Response to Ted Kidd
by Martin Holladay

Ted,
Q. "Do you realize your examples are of situations with no feedback on, accountability for, or recognition of results? That's like saying, 'We sent everyone out to play golf with no score cards.' "

A. Actually, these two studies could not have been made without feedback on, accountability for, and recognition of results. Accountability was provided by the researchers' comparison of pre-retrofit and post-retrofit energy bills. The data were weather-normalized.


35.
Oct 24, 2014 11:40 AM ET

Edited Oct 24, 2014 12:18 PM ET.

Facepalm. Like trying to reason with a 7 year old.
by Ted Kidd

Martin, Martin, Martin! You just can't see this from the ground level, can you? Behind the data are real contractors and real homeowners who had real work done.

Those studies were performed long after the work, and they went into a file cabinet! They weren't feedback to contractors or homeowners, they were feedback to the program for meeting M&V requirements!

Exactly like the golf analogy, you have to inform the PLAYERS not the folks holding the tournament!

Show me how the guys doing the work received the feedback! Let me see results by contractor and by house. I bet you can't because that's not what happened.


36.
Oct 24, 2014 12:16 PM ET

"People can't afford $77 a month."
by Ted Kidd

Martin, you contented people can't afford comprehensive home performance because "it cost to much". When repeatedly asked what they could afford, you give no answer.

I'm going to take the legs from under your unsupported position:

In NY, below 80% median income people can get $1 to $1 matching to $5k. This means they can get a $13,000 project for $59 a month gross ($13k is my arbitrary tipping point for results, accuracy and precision "goodness" on the sigmoid curve). If this project is likely to save $40 a month in energy, the net to the homeowner is $13,000 worth of work at a cost of $19 a month for a family of 5 earning about $70,000 a year.

You going to tell me they can't afford $17 a month for $13,000 worth of repairs, updates, and improvements?

But what about people poorer than that? Ok, let's look at 60% median and below. In addition to the 50/50 to $5k match, these people can also get $4-7k of work FOR FREE!

This means they can get as much as $17k of work for a $5k liability which - as Nate suggested - they can place "on bill" for $37 a month. "Can't afford $37" you say? Well, it's not going to be a $37 net. Don't go too fast or you won't get the math:

If $17,000 of quality work is done there will be significant energy savings. Let's say they save $60 a month. Remember, these people are investing $5k, not $17k. So they are actually improving their monthly cash flow by $23 a month, and living in a MUCH nicer house with results similar to those so nicely expressed by John Nicholas.


37.
Oct 24, 2014 3:22 PM ET

There is no single good solution
by eric anderson

Ted,
In one particular state there are government incentives that allow projects to be affordable. From this you get the universal truth that it must be affordable everywhere, for everybody.

I agree that every solution should be tailored to the situation- house by house, based on measurements, testing and a comprehensive plan for improvement. At the end of the day some of my customers are going to be ecstatic that that I reduced their heat loss so they only burn 3 cords of wood a year instead of 5 and don’t give a rip if some of the rooms are a bit cold. Others are looking to make deep long term changes to their indoor environment, they want comfort safety durability and efficiency. They get very different solutions and proposals. One proposal is bare bones and offers max bang for the buck- It includes safety items, cost effective blower door directed air sealing, blown cellulose in the attic, and info for future replacement of heating equipment- when the current equipment dies.
The second customer’s package was removal of unvented gas log, installing CO detectors, air sealing, ventilation to 62.2 2010, new bath fans and vents, hard ducting the dryer, Insulating and conditioning the entire basement, changing from oil to propane, much smaller sealed combustion mod con boiler and new indirect, removing the AC and all ductwork from the attic and replacing it with a minisplit system, remove existing attic insulation, airseal, add R 50 of cellulose insulation, Increase the soffit venting, and get rid of a un insulated whole house fan, and remove an attic fan. Lastly, test out so It is all done correctly. Phase 2 is to convert to a Heat pump Pool heater and changing the heated garage from a propane unit heater to a minisplit so they have a fully conditioned and insulated garage- so that the vintage car(worth more than my house) inside can be fully conditioned to prevent deterioration.
Different needs, different problems- different solutions Both are home performance- but at the opposite ends of the spectrum. If you keep an open mind- you can do both.


38.
Oct 25, 2014 6:29 AM ET

On C/E & the Midwest
by Dan Phillips

I think I need to put a few numbers out there for those of you not living in the midwest. We have a pretty big headwind for conservation in the form of relatively affordable energy and regressive utility rates. Here is what you'd pay in Indiana assuming your home is consuming what the typical Wx client uses (which is going to be less than what a paying customer would consume, but this is what I've got number for):

Assuming annual usage of 942 therms and 9,452 kWh, this is what the utility costs are (including distribution, taxes, infrastructure, etc.)

(per therm)
Vectren: $1.01
NIPSCO: $.73
Citizens Energy: $1.07

(per kWh)
Duke: $.14
IPL: $.10
I&M: $.11
Vectren: $.22
NIPSCO: $.15

I wouldn't be surprised if Nate is seeing similar rates in Ohio.


39.
Oct 27, 2014 8:51 AM ET

Response to Martin Holladay #32
by Nate Adams

It appears I read the labels incorrectly on the chart. There is a big thing I don't know about the HPCs (home performance contractors) - how comprehensive was their work? And what were the lead vendors doing? Judging by how small the energy savings were, about 15%, which is dismal, nobody was doing much. The lead vendors could have been doing lighting, changing appliances, wrapping water lines, or other items that are consistent in delivering energy savings, but typically not comfort.


40.
Oct 27, 2014 10:43 AM ET

FWIW Here's Your Low Hanging Fruit
by Kevin Dickson, MSME

IKEA now offers a dimmable A19 bulb with less than a year's payback period.

At $4.49, it saves $5/year under these assumptions:

1. Used 2.5 hours/day.
2. Electricity cost is $0.12/kwh
3. 600 lumens (60 watt equivalent)

The rest of the math is here: http://greenbuildingindenver.blogspot.com/2014/10/how-much-money-can-you...


41.
Oct 28, 2014 8:46 AM ET

Response to Kevin (#40)
by Dana Dorsett

WOW! How did you ever figure that out without months of power monitoring and dis-aggregating the power use profiles! :-)

Yep, some of that low hanging fruit (a lot of it, actually) is so low it's laying on the ground.


42.
Oct 30, 2014 7:26 AM ET

Ikea sucks!
by John O'Brien

"At $4.49, it saves $5/year under these assumptions:"

Was all excited, pop over to the canadian version of the IKEA site, same light bulb. 9$. Weak Ikea. Weak.


43.
Oct 30, 2014 8:16 AM ET

Getting off topic...
by Nate Adams

Light bulbs are the only thing that delivers pretty much every time. By all means, throw out your incandescents in any light you have and get an LED (my favorite) or a CFL (the cassette tape of light bulbs.) Commercially, this saves big money.That argument has been settled for years.

Looking at a house holistically, what do you really get, though? Sure, you saved a little energy, maybe 5% or 10% of total energy use, but is your house better? Is it more comfortable? Is it headed on a path to where our carbon emissions are 80% lower than they are today?

Could it give a sense of false complacency that you did your part?

As Gavin Healy of Balance Point Home Performance says, 'There is no silver bullet, just 1000 silver BBs.'


44.
Oct 30, 2014 1:56 PM ET

There are SO many houses...
by Dana Dorsett

... with air-leaky foundation sills an uninsulated foundations in cold climates, that fixing it always delivers too. (Though on a longer time scale than light bulbs.) It's not fruit laying on the ground, but it's very low hanging fruit. In a typical New England home the heat losses from uninsulated unsealed basements add something between 10-20,000 BTU/hr to the heat load, which is a large fraction of the total in an otherwise insulated house.

Some seem to think that putting insulation between floor joists in unconditioned basements is a suitable alternative, but that is rarely the case in practice. Air sealing the floor is far more difficult to do reliably than air sealing the foundation walls/ sill / band-joist, and insulating the basement walls lowers the mold risk in the basement- it's always a win.

Air sealing & insulating the foundation is the cool climate no brainer type retrofit equivalent of getting the attic ductwork & mechanicals inside the thermal & pressure envelope commonly found in warmer climates. It's not ultra-cheap to do it right, but it's not terrible either.

But there is still resistance form the "heat rises" folks who don't quite get how heat & moisture really moves into & out of a building.


45.
Oct 30, 2014 2:23 PM ET

Response to Dana
by Nate Adams

Define win. Show me an energy model and actual energy bills. What SIR is achieved? What problem was solved that a client called about?

I got dinged for saying always earlier. Sealing the top and bottom of a house is important, of course, but is likely only part of a plan, not the entire plan.

I'm beginning to think you aren't going to see the big picture here. If we think we can recommend one measure in every house to make a big difference, we're going to fail. I failed doing this (attic insulation and often the basement sealing you speak of). We have failed. Our industry is a joke. There are 100 million houses to fix, and we're lucky to do 100K a year. The largest contractor in the largest state program does 700/year. This is not winning. A new approach is needed, not evolution, but revolution (unfortunately). Do you agree?


46.
Oct 30, 2014 5:49 PM ET

Call me crazy...
by Dana Dorsett

But the cost of the energy leaving some of these uninsulated foundations on houses heated with oil or propane often gives foundation insulation a sub 5- year (sometimes sub 3-year) ROI on a simple basis.

The heat loss is readily verifiable to a first-order approximation even using I=B=R spreadsheet tools. The maximum possible efficiency of the mechanicals can be readily verified too.

The cost of insulating foundations is usually less than insulating roof deck (by quite a bit actually), so perhaps "no brainer" wouldn't necessarily be the case for all of those.

Of course even with the more-obvious prospects you a least have to do the napkin math, and compare the return to other possible remedial actions to be taken elsewhere.

I'm not saying it's a great business to be in- it's not hard to sell folks on this stuff when they have more pressing personal issues to be in, and most people don't quite get it. (As in the "heat rises" theory of ignoring the basement.) Even when subsidized cash strapped home owners/buyers would rather spend the money elsewhere.

I do agree that a whole-house approach works better than piecemeal, but it's not clear to me how we are going to get that revolution going, with or without subsidy. The "client acquisition" part is a huge problem given the wealth of ignorance out there.

A few years ago I managed to convince a friend doing a rehab on a 3-family to be converted in to student rental housing to do a deep energy retrofit rather than a cosmetic or code-minimal rehab on that wreck, and found him some substantial subsidy money to execute it, and did a lot of hand-holding and free consulting throughout the process. It worked out fine, but it did take a ton o' subsidy money to get there, even using reclaimed roofing foam rather than virgin-stock as the foam-over for the walls & roof. Its heated/cooled with one mini-split per floor, and the utility bills are less than $100/month for any one unit even during the coldest or hottest months, and electricity costs have run between 15-23 cents/kwh at that location. (It hit -8F the first winter out, proving that the mini-splits are actually a bit oversized for the loads, but who cares? :-) The outside design temp is +5F.)


47.
Oct 31, 2014 8:20 AM ET

Thanks for some project info, Dana
by Nate Adams

It's good you got a DER done, those don't happen much, and frankly they aren't a market solution. Low hanging fruit doesn't deliver well, though. It sounds like we're in agreement there.

The whole point of One Knob is to reward people who deliver results and push the narrative in this direction. Right now we are ALL part of the problem, not the solution. This is a narrative we have control over, especially here at GBA. We have to leave all silver bullet thinking and tell people if they want real results $5K isn't going to deliver, or even $10K. So don't blame us when it doesn't work.

It will be a slow build, but if we change this narrative as an industry, our consulting skills will begin to have real value where now people just want a list of low hanging fruit and we end up looking like charlatans when it doesn't work.

We need to at least offer a comprehensive solution and tell clients that all responsibility for results remains on their shoulders if we go the low hanging fruit path. If they go comprehensive, though, we will take responsibility.

We can give them a plan of basement only work, which can help in some buildings, but the expectations need to be set that if this doesn't work, we still have this, this, and that to do. Or maybe one goal will be accomplished (say warming up a kitchen) but another won't (like warming up a bedroom or stopping ice dams.) Maybe it will work enough, but maybe it won't. It's the client's call how far they go. If we show plans of what to do next and they don't take them, the responsibility remains on their shoulders when results don't happen. Calling to follow up isn't a chore then, because we're not on the hook if it doesn't work, we just show them what the next steps are. It's much more fun this way.

BUT before all that can happen as an industry, we have to admit failure. We have to stop thinking low hanging fruit. We have to change the narrative from prescriptive solutions. That is within our control, and a program like One Knob moves the narrative and rewards those that deliver on results. Fixing the system can help us fix houses.

By the way, you obviously have a lot of knowledge in this, what is your day job?


48.
Oct 31, 2014 8:28 AM ET

Edited Oct 31, 2014 8:38 AM ET.

Response to Nate Adams
by Martin Holladay

Nate,
Most of use don't have a problem with your approach to energy retrofit work. We just have a problem with your absolute statements and generalizations.

You wrote, "We have to ... tell people if they want real results $5K isn't going to deliver, or even $10K."

But as many people have tried to explain, $50 or $100 of LED lamps definitely deliver -- and in fact have a better return than your $15,000 or $20,000 jobs.

Dana is trying to explain that $4,000 worth of basement insulation work in an old house in the Northeast definitely delivers.

I have been trying to explain that $4,000 worth of attic air sealing and cellulose insulation in an old house in the Northeast definitely delivers.

Your way is fine -- but there is no reason to say that other approaches don't work. There's room for all of us in this discussion, without any need to insist that "your way doesn't work."

The reason that we are talking about cost-effectiveness, Nate, is that you brought up the topic first. In your blog, you declared that "Energy-efficiency retrofit work at residential scale is not cost-effective." In fact, it often is.


49.
Oct 31, 2014 8:49 AM ET

If it works... why aren't there more of us?
by Nate Adams

Martin, I understand what you mean, I really do.

Let me ask a question, though. How many contractors show up to ACI? Why don't they?

Also, by replacing light bulbs, are we going to change anything substantially? Absolutely, change them. I have. Is that going to transition us off fossil fuels, which needs to happen from both an economic and environmental standpoint?

You are lucky enough to make a living in publishing, and you have a tremendous amount of knowledge, I've seen that time and again. What I'm speaking of is making a ton of connections between those disparate pieces of knowledge. We need to drive the narrative to where our services have value, and to where we are truly serving clients by fixing problems and not overpromising, then under delivering.

I tried the other path, and it isn't sustainable. I've now tried 4 different insulation contractors in my area, and none even comes close to the quality I want, which really isn't that high. B+ work or so. Since there is no way for anyone to judge quality, they judge on price, and quality seldom happens.

How many times have you seen Grade 1 fiberglass? Could economics be a part? If that contractor got 10 or 20% more, do you think it would be more common? It's a system problem, there are no measurements, and those of us that measure have little control. Should we stay on that path?

Right now I'm kind of the weirdo, but I've gotten A LOT of offline connections and demonstrations of support for this line of thinking. A number of people want to see One Knob become reality.

Every job doesn't have to be huge, BTW, $5K may make a big difference in one client goal. But we shouldn't promise them that every goal will be reached for that.

I've found it's useful to show them a number of future steps so they can understand the effects of various measures and perhaps choose more than I thought I could sell them. Then I'm not on the hook if it doesn't work and I get to see what makes a difference and what doesn't. Otherwise I'm afraid to call for fear of getting roped into more work for free. Doesn't avoiding that problem sound more fulfilling and nicer? I used to HATE my job. Not anymore.


50.
Oct 31, 2014 11:29 AM ET

Selling them on a road-map...
by Dana Dorsett

... is DEFINITELY a lot more satisfying than an in & out "get 'er done" one-off low margin piecemeal job, even if what you initially start off with is just the single piece. Playing just another hamster on a dumbed down utility company subsidy program wheel sounds pretty demoralizing, the way Nate tells it.

But the client-education part of selling them on a road-map can also take a lot of time, and is often met with a lot of skepticism. There are a few companies operating in my area who do the soup-to-nuts retrofit (including solar) programs, but their overhead is pretty high, and their rates reflect that. For those with cheap energy (primarily those on the gas-grid) it's tough to make a purely financial rationale for using their services, and without a demonstrably favorable net-present-value (at typically ridiculous IRRs demanded by homeowners) it requires a much more sophistication/ education on the client's part. I'm glad to see these companies are still around though.

The $100/bbl crude oil era has probably done wonders for their business in New England, but the concurrent parallel universe era of $2/MMBTU wholesale natural gas makes it tougher to land those projects where the gas-grid extends everywhere. If & when natural gas in the US reaches the world price for natural gas (as it pretty much is with oil) the whole-house big picture approach is going to be easier to sell. An artifact of the falling price of oil is that with lower drilling rates in the shale fields due to super low margins and high financing costs for those companies, the glut of natural gas may begin to dry up. Without the liquids fractions fracked gas has to fetch something north of $5/MMBTU to make shale gas profitable. (That's still only roughly half the world price for gas though.)


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