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Program Details of the One Knob Proposal

Can we envision a better incentive program for residential energy-efficiency improvements?

Posted on Nov 3 2014 by Nate Adams

Has your experience working with an energy-efficiency program felt like the scene depicted in the photo at right? Did you feel that the correct and smart path departed from the paved path?

Having many colleagues on both the program and contractor sides, it’s pretty clear that utility incentive programs, as they stand today, fail. Let’s do better. Better for homeowners, better for contractors, and better for programs too! The One Knob program design is an attempt to pave a path where people want to walk.

In my earlier blogs, I talked about how a good program should have three goals: a focus on results, accountability, and market transformation.

I also examined how "low-hanging fruit" thinking is an impediment to good design when it comes to home performance. This thinking is a big factor behind the dismal realization rates of energy-efficiency programs.

I discussed how bigger, more comprehensive jobs have a higher likelihood of achieving good results because they gain better control of heat, air, and moisture flows. Bigger jobs are better for homeowners, contractors, and programs interested in energy reduction.

In my last blog, I touched on some hard truths of home performance that are holding our industry back from scaling up. Markets cannot be administered into existence. Capitalism doesn’t work that way. Trust and confidence in positive outcomes, where the benefits are greater than the effort, is critical for scale. Currently there is no confidence that home performance programs will deliver results.

The key aspects of the program

So without further ado, here are the key aspects to my proposed One Knob program.

  • One Knob = negawatts. One simple adjustment. One easily interpreted market signal. No management from above, no program tweaks: just adjust the volume of the negawatt incentive. Just pay for saved energy in negative watts, or negawatts. Raise and lower as needed, just like the volume knob in your car.
  • A focus on results. Excellence, accuracy, and savings are all incentivized, which means they are likely to occur. These do not truly exist now, except via false proxies. The proposed “One Knob” program would deliver the desired results.
  • Pay for projected savings. If 10,000 kilowatt-hours are projected to be saved, and the rebate is $.40 per kWh saved, then the homeowner gets a check for $4,000. Convert savings from all fuels to kilowatt-hours, meaning negawatts.
  • A prompt rebate process. After the project is completed, the homeowner rebate is paid. Once per year, contractor ratings are updated and published. Updates could be continuous with the “Energy Savvy” platform.
  • Accountability. Contractors have the most control over results, so let them make the energy savings projections. Let them choose the software. Let them choose the measures. It makes kitchen table transactions much simpler.
  • Publish contractor metrics and rank them. HPXML will collect the needed data, and the industry is moving that way. Promote the rankings so contractors can use them to build trust and confidence at the kitchen table. Excellence becomes its own reward and failure becomes a public badge of incompetence. Data is critical.
  • Build intellectual capital. By giving contractors authority for design and accountability for results, you create an intensely competitive environment where huge gains in workforce talent occur.
  • Leverage desire for better homes. Homeowners will make large investments to fix problems. Good incentive design can harvest energy savings from these improvements at the savings value. One Knob’s simplicity allows and encourages scale. Focus on comfort, health, and safety messages, not energy savings.
  • Win-Win-Win. Homeowners get problems solved, contractors make a living, and the other parties get the cost-effective energy savings they need (without puffery). One Knob aligns interests.
  • Not punitive. Humans react far better to positive than negative reinforcement. Multiple ranking metrics can be promoted: good air sealing, good realization rates, highest energy savings, best energy savings per dollar spent, etc. Everyone is likely to have something good to point at. Still, since no one wants to rank on the bottom, it’s an incentive to do well.
  • Breeds mutual respect. Contractors are not treated like children, as is often the case now. All parties act as equal partners working towards common goals.
  • Fuel-agnostic. Small changes crush contractors; they need one track to follow. No crazy rules about fuel switching, or different “incentives” for different fuels like electricity, propane, or natural gas. Just pay for energy savings in negawatts. An “energy bank” could create a buffer to perversity introduced by funding sources.
  • Nothing new is needed. Except accountability and a transparent results ranking system. Today’s contractors, employees, software, equipment, etc. will all work with One Knob.
  • Future financing. Financial markets need some certainty of savings showing up to offer low rates. One Knob will provide this data and ever improving certainty. One Knob rewards accuracy and precision in a space where accuracy and precision have never been an objective. Market transformation is far easier once low-cost financing that stays with the house, i.e. "on-bill" financing, is available.
  • Align interests and incentives. Homeowners, contractors, programs, utilities, and PUCs all have different objectives, but can be pulling in the same direction. One Knob achieves this. No perverse incentives.
  • Substantially less administration. If market transformation is to occur, there is no way that current administrative systems can scale with it. High ranked contractors will get automatic job approval (remember, their results will still be ranked, so they still can't skimp) leading to less administrative work for both contractors and the program. One Knob is scalable, and more effectively puts ratepayer funds back in ratepayer hands.

So, what are you thinking?

If you are feeling a ton of objections, that’s normal. Remember in an earlier blog, when I asked about your reaction to new ideas? I advised that and if you are a “no, no, NO!” person, you should move on. This is why. The One Knob idea is new, and questions are normal.

Here are a few common questions:

  • Isn’t paying for negawatts too simple?
  • Won’t contractors attempt to cheat the system?
  • Why will anyone use the registry? Will consumers see it?
  • Aren’t accuracy and precision impossible for home performance?
  • How can a program be fuel-agnostic?

Isn’t paying for negawatts too simple?

What is it that programs, utilities, and public utility commissions (PUCs) want? Energy savings to meet their goals. Incentivizing saved energy directly is the fastest and simplest path there.

Why the heck do we create these wildly complicated structures of “Simon Says” and “Mother May I” to deliver those savings, and then fail at it? Most programs have 30-70% realization rates. In manufacturing, Six Sigma requires 3.4 failures or less in 1 million.

Programs fail to deliver pretty much every time; for-profit businesses would be in lawsuits and out of business with these results. It’s clear that something isn’t working.

Peter Drucker says, “What’s measured gets managed.” So why not incentivize and measure actual energy savings by paying for actual energy savings, or “negawatts”? (A negawatt, by the way, is a term coined by Amory Lovins that means saved energy, or negative watts.)

Of all the parties involved in an efficiency upgrades, who has the most control of final results? The contractor, of course. The contractor should be incentivized to save energy. The contractor also has the responsibility to solve the problems that the homeowner called them for. Where does all of this need to happen? The kitchen table. Right now, continuously shifting program rules make this transaction onerous. Why not give contractors the power to predict energy savings and determine the negawatt incentive?

This will result in bigger jobs that save more energy more accurately and more precisely, for much less public cost. Where current programs spend $1 to $4 per negawatt, this would work really well at 50 cents.

Keep complexity out. This is critical. Programs can no longer make monthly or weekly adjustments to the program, complicating kitchen table transactions. At 50 cents per negawatt, the program is a junior partner and needs to behave as such. Fuel-agnostic (everything converts to kWh), improvement-agnostic, software-agnostic: be sure to avoid influencing the “how,” or failure and blame will rightfully continue to fall on programs.

Won’t contractors attempt to cheat the system?

This question — an appeal to the “adverse consequences” fallacy — implies they aren't cheating the system now. The question should be, “Will less cheating occur?” And the answer is a resounding yes! By removing reasons for cheating, cheating will diminish.

The first year will be a bit wild while everyone figures out how to achieve accuracy, but it will be like being freshmen in high school: everybody will be lost together, and by sophomore year, everyone will know their way around.

Results will be published. Contractors will project energy savings first and then will be rewarded based on how accurate they were. This means that contractors will be incentivized to be as accurate as possible. If they overstate savings purposely, they will pay a price when their accuracy ranking drops, just as car companies pay a price when their J.D. Power rankings drop. Cheating is counterproductive; overstating savings means a lower accuracy ranking and other potential penalties (more rigid job approval process, etc.). So the risk of contractor cheating to get consumers a few additional dollars incentive is quite low.

Currently, programs attempt to manage this risk themselves through rules. Unfortunately, they end up artificially limiting job sizes, a result of chasing low-hanging fruit, as discussed in my earlier blogs.

Paying incentives one year after the job (after actual energy savings are determined) would be absurd. Homeowners are unlikely to move forward with that much uncertainty. It will not serve as an incentive at all. Incentives need to be paid up-front with the job.

Paying for the contractor's energy predictions is the simplest way to pay incentives up front. Homeowners will never have rebates taken back from them, but contractors who consistently overestimate savings will drop in accuracy rankings. If a contractor has a 90% realization rate, that might be the best that year; others may have 50% realization rates from overestimating savings, and be ranked lower. Lower rankings will cause jobs to be challenged more by programs, slowing the sales process. Higher rankings will eventually lead to automatic job approval. So there are multiple reasons to play it straight.

Accountability is the answer, since it focuses on results

The solution is simple: publish results in a registry. If a contractor wildly overstates predicted savings, it will push that contractor down the rankings and make it harder to sell projects next year. The focus stays on the results: solving client problems and saving energy. We have found that well designed projects solve homeowner problems and save substantial amounts of energy, so all parties get what they want.

Why will anyone use the registry? Will consumers see it?

Rankings are a marketing tool. Even if consumers don’t know about the registry, high-performing contractors will tell clients about their rankings. “Oh look, we can show this at the kitchen table.”

If you are an Angie’s List Super Service Award recipient, or a Century Club contractor, are you likely to say something about it? Of course. So if you ranked #1, or even #4 in the region for predicted energy savings results, would you be likely to bring that up when you find out you’re bidding against #20? And would #20 want to go higher the next year?

J.D. Power rankings are sought after by consumers and automakers alike. Not long ago, the industry was poorly measured, and made poor products. J.D. Power elevated Honda and Toyota, nearly bankrupting the Big Three. Today cars are of far higher quality, and manufacturers brag about their rankings. Isn’t the same thing likely in home performance?

Aren’t accuracy and precision impossible for home performance?

How would we know when they’ve never been an objective? If you don’t track and reward accuracy and precision, why would you expect it to exist? Furthermore, there are indications both in academia and in the wild that when you are truly comprehensive, high levels of accuracy and precision are possible.

Danny Parker of the Florida Energy Center, Rick Chitwood of Chitwood Energy, and Mike MacFarland of Energy Docs in Redding, California, all have tantalizing evidence that home energy savings are not hocus-pocus.

Parker analyzed a ton of data from Home Energy Saver and found that slightly deeper operational energy audits that included a thorough homeowner interview were accurate within about 1.5% on actual usage, where even a standard energy audit (labeled “Asset::Full” in the table below) was still off substantially. (See 32:30 in this video.)

Rick Chitwood did a study that showed that when you do truly comprehensive home performance work, the results actually exceed expectations. A surprising result is the stellar reduction in peak energy demand.

MacFarland guarantees energy use in client homes. Mike can predict energy bills to a few bucks a month, which he then guarantees. He tracks so tightly that when a client buys a plasma TV, it throws his results off and he sees it.

Parker found through analysis of Home Energy Saver data that consumption is very predictable, Chitwood found that more comprehensive jobs result in surprising societal benefits, and MacFarland is confident enough in his work he guarantees crazy low energy usage. Does this make them DaVinci, Galileo, and Columbus?

As discussed in my blog about low-hanging fruit, significant energy savings are not likely to occur until adequate control over heat, air, and moisture flows in a home is achieved. Until then, large variations in results are likely. This lines up with Chitwood and MacFarland’s experience as well.

Accuracy and precision can be had in the home performance industry. We need to incentivize larger jobs that get us to the point where good results are likely. HVAC(Heating, ventilation, and air conditioning). Collectively, the mechanical systems that heat, ventilate, and cool a building. upgrades and building enclosure upgrades need to be planned for, and preferably happen, simultaneously. I am not the only one to argue for simultaneous instead of staged upgrades, Dan Kartzman of PowerSmith does a great job here.

How can a program be fuel-agnostic?

In order for One Knob to work, it must be fuel-agnostic. Designers must stay client-focused. The client is the homeowner, not the program. Designers must develop a practice that focuses on best results for the client and not be enticed away by changing incentives. There is mounting evidence in New York that fuel bias has significantly harmed homeowners who participated in the program by shifting them from electric to propane instead of to heat pumps. (Heat pumps are not an “approved measure.”) In California, if a client switches from gas and electric to electric-only, they likely don’t qualify for a number of rebates.

It’s vitally important that programs that adopt the One Knob approach are completely agnostic to methods, materials, and fuels, so that energy efficiency remains a primary objective. The only thing that matters is results.

Programs often have shifting funding sources. They may get money for electric savings; then later, they may get money for oil savings. To be fuel-agnostic may require an “energy bank” where energy savings for every job, regardless of fuel source, are banked then sold as efficiency purchasers show up. A PUC could buy a gigawatt of negawatts from a utility. The utility receives credit for their goals, and then the PUC can sell those savings for whatever fuel is saved: propane, electricity, natural gas, fuel oil, etc.

In New York this might be relatively simple, since NYSERDA receives money from all utilities and other sources such as RGGI. There is already a central pot. For other states with limited funding, this might be more challenging.

That’s the basics of One Knob. How will it affect you?

One Knob is designed to be beneficial for everyone. Programs at first will have less work because the proposed program is far less complex, but as things scale up, this will change. In a future blog, I’ll touch on how it will affect you, whether you work for a contractor, utility, PUC, BPI, or a program.

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.
Nov 3, 2014 11:02 AM ET

Edited Nov 3, 2014 11:04 AM ET.

Clarifying questions
by Aaron Birkland

Is it correct to say that there are three sets of relevant numbers involved in the one knob program?:

  1. 1) Pre-improvement energy usage
  2. 2) Predicted energy usage, post improvement
  3. 3) Measured energy usage,post-improvement

If so, then I have a few clarifying questions.

  • Is (1), pre-improvement energy usage, an estimated or measured value?
    That is to say, would one or more years of data (e.g. e.g. a years worth of utility bills) be required to establish a baseline of pre-improvement performance, or may this be estimated by the contractor? If so, would the period of data be defined to be exactly one year prior to retrofit, or would the contractor be able to chose the parameters (e.g. averaging the last five years)?
  • What are the rules for measuring (3), post-improvement? Is this measurement defined to occur over the course of exactly one year after the retrofit? Does it consist of the sum of all consumed energy from utility bills? What happens if this year of measurement happens to coincide with unusual weather pattern (e.g. an unusually brutal winter, requiring, say, 20% more heating than average)?
  • What happens if the energy efficiency improvements are concurrent with changes that would invalidate baseline energy consumption, like putting on a new addition that expands the living space? Would data points (1), (2), or (3) be modified so as to minimize the influence of out-of -scope work (i.e. putting on an addition)? Would there be any way for contractors to realize incentives for energy efficiency (better than code) in living space expansions?


2.
Nov 3, 2014 12:15 PM ET

Edited Nov 3, 2014 12:16 PM ET.

Response to Aaron Birkland
by Nate Adams

Great questions Aaron! Those are really insightful You're really chewing on this, aren't you? Yes, those 3 metrics are key. It's mostly about realization rate.

Some of your questions would end up at the discretion of the utility/program, but here are my thoughts:

“Pre-Improvement Energy Use” - Measured prior use is pretty critical. Otherwise it's just a guess and the utility/ratepayer could get cheated out of rebate money. Much of the honest inaccuracy in energy models comes from not truing models to actual consumption. It requires time and skill that many modelers in this young industry don’t have.

Utilities will need to give up usage figures for newly bought existing homes. 3 years of prior data would be ideal, since that would smooth out bumps. Utilities have incentive for this, though, otherwise I could say use is 10 times what it is, get a huge rebate for the customer, and deliver on savings estimates, cheating the utility and ratepayers out of Negawatts not delivered. All numbers need to reconcile, so actual use is needed. This is an existing home program, so new homes are not a major concern.

“Unusual Weather Patterns” - Keep in mind that everyone’s projects performed around that unusual weather pattern experience the same handicap, so for comparative purposes they are graded on a curve. This addresses competitive accuracy but not realization accuracy. Perfect accuracy to the KWH may be impossible to define. We could use the range between normalized and non-normalized consumption as the target.

In golf analogy terms, we make the hole big enough for a basketball. You still have to get to the right area of the green to get in the hole. When people start hitting a lot of holes in one it’ll be time to shrink the size of the hole.

“New Additions” - This is probably an outlier example. I can count the number of times I’ve been called on to do a new addition on no hands. You could do accuracy of consumption, there may or may not be savings depending on how much the house used before, how big the addition is, what the upgrades are, and other factors, but it could still be modeled and have realization rate calculated.

Thanks for thinking on this!


3.
Nov 3, 2014 10:48 PM ET

Nate
by Malcolm Taylor

What happens if the energy savings don't materialize and the contractor feels this is due to client (or occupant) behaviour?


4.
Nov 3, 2014 11:31 PM ET

Funding the rebates
by Andy Chappell-Dick

Nate, this idea is great. One strength of your proposal lies in the monthly amortization of upgrades. That's how we pay for energy, after all. But I worry about reliance on rebates to make that monthly payment seem more palatable.

Since the One Knob program relies on rebates, have you addressed exactly where the rebates will come from, whether that source is reliable, and whether that is also scalable? Through federal and state government mandates (or tax policy, or whatever) utilities are incentivized to subsidize energy efficiency upgrades. I worry that it's mostly a song and dance, and heading into tomorrow's election I am somewhat skeptical that these mandates will last. We don't live in a society that strongly embraces "programs." They are allowed to proceed as long as they don't represent a serious challenge to the status quo. That is, taxpayers/ratepayers/PUCs have only enough stomach for a little bit of subsidy action, and if One Knob--or any program--sees any growth at all, the program subsidies will be reduced accordingly and kick the feet out from under it.

I think energy costs alone will drive this market, unless we as a nation can agree that efficiency of use rather than abundance of supply is good policy. And that is not looking likely!


5.
Nov 4, 2014 11:46 AM ET

Response to Malcolm Taylor and Andy Chappell-Dick
by Nate Adams

Malcolm, everyone will have the same public to work with, and some clients are going to skew things, but the odds are every other contractor will have clients doing the same. Some occupant training is needed, I've written about Ecobee thermostats, you and the client can see what is going on and make suggestions. One of my clients noticed that his furnace only engages high stage when he turns it up, so he decided to turn the thermostat up all the time a degree or two for comfort. In houses that are 'fixed' this usually has a very small energy penalty, and possibly a gain. So he is adjusting his behavior from feedback, which all of us could help with as well. In time, much of 'user error' could be corrected, and we are all on a level playing field, anyway. Does that make sense?

Andy, great questions! Could the funding die at some point? Yep. Could the funding die for any program? Yep. The money will come from today's efficiency mandates. Other sources could come in, too. If there are carbon taxes, that money could be used to buy carbon credits that apply to One Knob. The unemployment office may kick some money towards it to head off unemployment in slow construction seasons. The money is there now, though, so the question is probably too far down the road to worry about today.

As far as how the rebates are paid, I'm wondering if there is a disconnect. The rebates will be a lump sum paid just after the project is completed and submitted. They aren't monthly in nature. (That sounds like a administrative nightmare...) I try to break costs down to a monthly level for clients, though, because as you said that is how bills are paid.

What COULD be monthly would be an On-Bill piece of financing equal to the projected energy savings. So if you are likely to get $50/mo in savings, your bill goes up $50/mo and there is no change in utility costs, but the work gets done. That part would stay with the house, so the only piece the homeowner would really be on the hook for is over and above the energy savings, which often comes to $75-150/mo.

Energy costs will only drive the market once they go back up again, which seems likely in the next 5-10 years. Political will is indeed fleeting. Lots of scary reports keep coming out, just last week the UN report on climate change which was rather terrifying, and it was quite conservative being a lowest common denominator type of thing.

The key is to move within the constraints of what we have today, without requiring anything political. If we wait on that we may all be dead the way things are going. If you have a better idea, or more tweaks to One Knob, please speak up! =) I'm just a guy in Cleveland trying to put something constructive forward.


6.
Nov 5, 2014 1:27 PM ET

Seeing a loophole...
by Brent Eubanks

Nate,

Based on your description, I see the potential for a very specific abuse scenario. What is to prevent a situation in which a contractor approaches a homeowner, and basically gives them two "savings" values. One is the savings they will actually expect to see, and the other, much larger, is the savings for which they will submit the rebate.
The result is that the homeowner gets a nice fat check to subsidize their home improvements, and the contractor gets the job. True, the contractor's ranking drops because their savings estimates are (intentionally) too high, but as long as they do a good job on the contract, they'll get great recommendations from previous customers who benefitted from their fraud.
Also, we can expect that a high-ranking contractor would use their ranking in marketing, but a low-ranking contractor can simply sweep the rankings under the table and focus on selling based on other metrics (such as the size of the expected rebate). I didn't see any mechanism whereby low-ranking contractors are penalized. In fact, that seems to be a feature in your mind; while I can see the general value in a "point positive' approach, the fact remains that unscrupulous people will try to game the system, and there needs to be a mechanism to prevent that. I didn't see one in your proposal.

Also and separately, on the topic of fuel-agnosticism: From the contractor and homeowner point of view, I understand the preference for fuel agnosticism. But that desire doesn't reflect the reality on the ground. These rebate programs are intended to accomplish a number of goals, one of which is helping avoid the need for further expansion of existing utility infrastructure. If your state's gas infrastructure is ample but your electrical grid is groaning under the load, there is a very sound policy reason to encourage fuel switching.
And, of course, if you want to compare negawatts to negawatts on an level playing field, you have to account for site vs. source energy use: electricity is much more expensive in terms of total BTU input, and an energy efficiency rebate program should reflect that fact.


7.
Nov 5, 2014 3:27 PM ET

Edited Nov 5, 2014 3:30 PM ET.

Fantastic! Please keep chewing on this...
by Ted Kidd

Brent, it's really great that you are working the noodle on this. There are a lot of interconnected pieces, so at first blush obvious loopholes may seem to exist, but they don't. To your comments:

1. You will not stop fraud.
2. There is widespread and systemic fraud now (gaming models for SIR, project cost shifting, etc...), and who wouldn't feel defrauded by a 34% realization rate?!? Be nice if good design limited fraud to just the really bad apples.
3. Getting job approval requires model review. Blatant exaggeration is easily caught and kicked back. No change to current process - it's very onerous to recontract a declined model, high risk of losing the job all together.
4. Contractors are unlikely to game so consumer can get a few hundred extra dollars in incentive for reasons beyond looking incompetent when compared to peer performance. Streamlined approval process for the most accurate contractors is a significant administrative cost savings (a Nega-expense). Contractors will compete to gain this significant headache avoidance status.

For the other issues, you propose spending consumer funded incentive to promote consumer harming switching because it might somehow be "good for the grid?" That presumption fails on a lot of levels. But in any case true comprehensive is good for the grid as well as the consumer, peak load goes down even more then total consumption: http://bit.ly/rickchitwood

As this sinks in you may come across not-obvious loopholes that do need to be figured out. Please keep at it, your interest and help are greatly appreciated!


8.
Nov 5, 2014 8:49 PM ET

Edited Nov 5, 2014 8:59 PM ET.

Keep chewing, Brent!
by Nate Adams

Wow, the softer side of Ted! Good to see.

Brent, I think Ted addressed your objections well, is anything still unclear? Every model still has to be approved, but it's a cursory look to see that you aren't promising $5K in energy savings on a $2K total energy bill. If you want to overpromise, go for it. And yes, some cheating will remain, but is it ever eliminated? Right now it is REQUIRED by many programs if you want to get a job approved. Realization rates show it.

One other reason not to cheat, though, is that low ranking contractors will get a lot of scrutiny. New contractors will get a lot of training to get them up to speed, some will be on site. Low ranked contractors will get their jobs checked a lot more often. If their realization rates stink, the program will need to go and find out why, likely generating a callback. Callbacks suck, as anybody in the contracting world knows. The point is not punitive, it's to help a contractor learn how to improve, but it may feel punitive.

Good contractors, on the other hand, will have automatic approval. Do the audit, sell the job, and start work the next day. No waiting. Don't fall in rankings, though, or the sales process slows down. Over time the % of contractors with automatic approval could go up, as more get good at it. Everything gets to float, it's very flexible and scalable. Of course there will need to be random quality assurance checks to be sure things are right.

As far as fuel switching, I'll tip my hand a bit. I'd like to see everything go all electric. To me it's the obvious future path, fossil fuels are destined to get more expensive, but electricity prices will be capped by renewables, which are not far off from parity. Even with the tax credit removed I can see fossil fuels going up to reach parity again within the lifespan of the next set of HVAC equipment. So reduce your load, get a comfortable, healthy, long lasting, and efficient home, and put panels on the roof. Your carbon footprint just practically disappeared. Then get an electric car. Consumers have a solution to climate change. And it won't stress the grid, in fact it will shore it up if houses have batteries in them. If done correctly, this can all be cashflow neutral, depending on utility costs.

Regardless, incentives for fuel switching are often contrary to homeowner interests. Energy banks could solve this issue, NY is trying to set one up right now.

Please keep looking for loopholes, is there anything that got missed? I'm comfortable the ones you mentioned have been addressed in the design. There are some things that aren't in here for length reasons. It's a little long already for an outline... I tend to be a bit long winded, I apologize. =)

You can read my full argument here in an article I called Oil Is Dead.
http://energysmartohio.com/blog/oil-is-dead-and-its-no-big-deal


9.
Nov 8, 2014 2:53 PM ET

Great idea!
by Roger Williams

I really like this concept.

I did some work on my home three years ago that cost about $8,000.00 has saved me about 7,000 Kwhrs a year. The rebates I got from government were $2900. So my part was $5,100. 10 year loan (heat pump part has 10 year warranty).at 3% was just under $51.00. Power bill reduction $60.00. Worked out well.Heat pump is a mini split and the replacement cost would be about $4,000.every ten years or so.

A thought on contractor honesty and accuracy: what if the homeowner rebate was tied to the contractor accuracy rating on his estimates. If his accuracy of estimates is 90 to 100%, then the homeowner gets 100% of the rebate. 80 to 89% then the homeowner gets 90% of the max rebate.etc.

I did what I thought was best, but would have loved to have the choice to do anything I wanted.


10.
Nov 8, 2014 3:26 PM ET

Response to Roger Williams
by Nate Adams

Thanks, Roger! Those are some serious savings, what was the initial usage? What percentage did upgrades knock off, and what upgrades were included in that $8K? It's impressive that your monthly costs went down, that doesn't happen all that often in my experience. Is your home all electric? Did the upgrades accomplish the goal(s) you were trying to accomplish? If you could have done more, what would you have done?

I like your idea, the same thought had occurred to me when pondering the whole thing. The tricky part is then it truly is punitive for the contractors that perform worse, where the goal is to have the registry be much more a positive motivator than a negative one. Discounting contractor rebate percentages will put new contractors (what do we give them % wise?) and lower performing contractors a distinct market disadvantage. The few big top players will likely dominate at that point, and those folks don't need any help, markets shake out naturally like that. If Home Performance is going to scale, we need LOTS of newbies, and their on ramp needs to be as smooth as possible.

At first realization rates will only be OK, but they stink now, so it's tough to get any worse. My guess would be within 3 years realization rates would be 85%, maybe more, so any penalty wouldn't matter anymore. What do you think, does that make sense?


11.
Nov 8, 2014 8:17 PM ET

Response to Nate Adams
by Roger Williams

Nate,
Original usage was around 19,000 Kwhrs.

Upgrades included:
Air sealing to bring 6.5 ACH50 to 3.5 ACH $ 100
Mitsubishi 12,000 BTU Mini split heat pump $4500
Replace an air exchanger with an HRV with some extra ducting. $ 1500
Both exterior doors replaced $ 1500
Interior stretch plastic storm wiindows $ 50
New hot water heater and pipe insulation $ 350

$8000

There are a number of other things we have done over the years.
We now have a front load washer and dryer. We tried a combined washer/ condensing dryer that was a hoot, but it took four hours to wash and dry. As needed we replaced our appliances with energy star.
Replaced our light bulbs with CFL, But saw no difference. Judy hated the CFl light, so we now have LED throughout the house. Provincial government had a subsidy on those, so the 20 bulbs we replaced cost $75 total. That may be saving something since we put in the heat pump. With baseboard electric I feel you are replacing hot bulbs with baseboard heat.

One thing I should mention is that we now keep the house a little warmer than before we retired. We used to keep it at 68F and now we keep it at 72F.

I must also say that I am 69 years old. I am tired of people saying we cannot penalize non performance. If you can't perform in one thing, go and look for something else. Before I went with the heat pump, I was told by three different window installers that I could save 40% of my heating costs by replacing my double pane sealed windows with new ones. Costs on all three were about $5,000. I went with the plastic storms.


12.
Nov 8, 2014 9:17 PM ET

Performance is rare, currently
by Nate Adams

Roger, thanks for all the details! Was there an original goal, like a room that didn't heat or cool? Also, how did you get killer air sealing like that for $100? Is that DIY with foam? How did you measure leakage? And thanks for the detail...

I understand your frustration with performance. The thing is, today, there is NO measurement of actual performance. Not that I am aware of. Contractors get 0 feedback. Those window guys would have gotten the snot dinged out of them on the registry for promising 40% savings. If they went to 3rd out of 30 contractors, isn't that penalty enough for pressing their luck?

With your proposal, how would you handle new contractors? Spot them 50% or 100%? Could that keep new guys from gaining a foothold?


13.
Nov 9, 2014 12:24 AM ET

Edited Nov 9, 2014 12:48 AM ET.

Wife did the air sealing
by Roger Williams

Nate,
I was working when this started.. We had the original air door test done and the tech basically said that we were leaking all over. They suggested taking all the trim off and sealing with foam or calk, depending on the gap. My wife followed through and sealed everything.This included baseboard and ceiling trim, windows and doors. We have no access to our attic, so we have the leaks due to electric wires and such.
She did seal all the light fixtures that penetrated the ceiling .The $100 was spent on foam and calk.

All our home was comfortable before the changes, but we could not afford to run the air unit. My wife has asthma and the HRV helps with that problem. I must admit that her attention to detail was amazing.

New contractors are a huge problem, because they can register a new company without much problem.I have no solution to that problem. I would probably feel that we should rate on time in business and performance. Spot a new business with no former members 90%. So their rating would be 190. More than 10 years would be 9xx. 999 being the highest rating.

I guess I have little sympathy for non performance because I started by doing maintenance on helicopters. If I didn't perform, people died. Nobody was lost due to my work.

Our home went from an energuide 72 to a 79.


14.
Nov 9, 2014 7:27 PM ET

Hire that woman!!! ... & the "new contractor problem"...
by Ted Kidd

Roger - your wife is 1 in a million. She could teach an air sealing class. Tighten things up and a lot of good things can happen. Love to know your before and after blower door numbers. I'm glad she was rewarded by greater air quality control.

I love your view of performance. We need a reconciliation audit of our audits so accuracy becomes the primary goal. We need energy savings fact to replace energy savings fiction as primary objective.

The "New Contractor" problem is grossly exaggerated. I think it's an urban myth - I haven't seen it. If it does happen it's about as common as getting struck by lightning - not worth creating additional administratively expensive and unproductive hurdles for. Even if it exists, I've yet to see a well thought out argument for punishing the consumer for contractor past performance. Let's keep things as simple for the consumer as possible. They are already carrying disproportionate amount of risk and cost uncertainty - the incentive should be a certainty, particularly since it doesn't carry that much of the cost.

One Knob has plenty of levers to encourage and reward good performance.

Building Performance Institute educational process is pretty fair hurdle already. In NY you must go through a lot of hoops and get at least 2 certifications, then you need to go through a bunch more and get your company Accredited. Time consuming, expensive.

Next there is getting energy models built and projects approved. This process shouldn't include making hidden adjustments nobody will catch to meet "investment return" requirements.

You will not see people go to the trouble of creating businesses and doing crappy work, then doing that all over again because it's more profitable than simply doing good work. It just isn't true. Businesses are like airplanes, really a bad idea to let them stall.


15.
Jun 13, 2015 2:10 AM ET

NegaTonnes, not NegaWatts
by D Wilson

I thoroughly support your idea of a fuel-agnostic approach. As you note, it leads to "perverse" incentives (governments are notoriously poor at picking winners). Although energy savings help utilities with the grid and reducing /delaying upgrades, the REAL problem is GHG reduction and I suggest that rebates/incentives should be based on the GHG reduction, or NegaTonnes of CO2. I realize this may be more politically charged, especially in the US, but we have to do something NOW to avoid disaster!


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