First, a definition. The phrase “energy efficiency programs” (or just “programs”) refers to any utility-funded or state-funded program that offers homeowners a rebate, incentive, or inexpensive financing to make energy efficiency upgrades in their homes.
We don’t need no stinking programs
It’s important to note that comprehensive home performance retrofits do not require programs. My company (Energy Smart) is proving that right now.
We are selling $15,000 to $40,000 jobs involving both shell and HVAC measures with no program involvement and no special financing, in an area of the country with low housing costs and low utility costs.
Like a bumblebee, a physicist didn’t tell us that we couldn’t fly, so we just did.
But programs can help
Programs could help accelerate market transformation. Rather than dictating details and constraining trades, properly designed and implemented incentive programs can help start and accelerate markets.
Low-hanging fruit is poisoned
A major current problem with existing programs is that they encourage chasing low-hanging fruit. Programs tend to think that individual measures save energy predictably and repeatably, so low-hanging fruit is a good strategy. They do not.
Every situation is unique, and bringing things into balance is different every time. Programs are designed as if the best opportunity is the first, “easy pickings” measures.
We need to go deeper to truly achieve good home performance and energy savings. We have to get pretty good control over heat, air, and moisture flows within a home. No single measure can do this. It takes a mixture of well-thought-out improvements to get there. In our experience, making a few small changes often has disappointing results or unintended consequences.
For now, this concept is largely based on anecdotes. But it meshes with what Lew Harriman, Rick Chitwood, Mike MacFarland, Dan Perunko, and Gavin Healy have found and reported in the book, Measured Home Performance. MacFarland has so much confidence in his energy predictions that he guarantees total energy bills or he pays the difference. He can predict monthly bills within a few bucks a month. His jobs aren’t small, though; the illustrations will show why. It also jives with John Proctor’s study of four homes in California. So please bear with the rather conceptual ideas here; in time, there should be more data to support this hypothesis.
We’ve come up with a way of visualizing “low-hanging fruit thinking” vs. “comprehensive home performance thinking.”
Let’s look at the graph at the top of the page. The X axis shows the number of energy upgrade measures that are implemented (or investments or money spent). For example, attic air sealing, attic insulation, a new furnace, or a new air conditioner would all be things that would go on there.
The Y axis displays the results — for example, energy savings or solved client problems.
The curve on the graph shows how people think that energy savings opportunities look — a game of quickly diminishing returns. This is intuitively how it seems like it should work. A few of the changes should have the largest effect.
Snow tire thinking
Would you buy just one snow tire? Two might help, but most would agree four is really best. The benefit of one is basically zilch, and actually is likely to hurt you when you wreck the car. The real benefit occurs when you reach four. Then you have true control over the car’s movement, just as when home performance work aims to control heat, air, and moisture movement within a home.
In buildings, serious energy savings occur when out-of-balance systems are brought into balance. The whole building is the system — not just the insulation or furnace. This doesn’t always require spending more money, but it requires thinking systemically rather than prescriptively. So the graph at the top of the page is not as true as we might think.
Here is how the comprehensive energy efficiency success/opportunity curve actually looks.
Returns don’t start to occur until you get deep enough to start correcting imbalances.
In systems thinking, everything is interconnected
Energy efficiency requires design that is specific to the situation. Everything has to work together, solving specific and unique problems. The more things are brought into balance, the greater efficiency is realized.
Another way to look at it is like losing weight and getting healthy. If you watch what you eat two days a week, but pig out the rest of the time and don’t exercise, can you expect results? Of course not. Truly improving health requires a tailored mix of diet and exercise. Training to run a half marathon would likely land in the middle of the curve, where four investments leads to six benefits.
Unfortunately people don’t realize that when you just do one thing and results fail, it is a failure of the system design. You can’t replace one snow tire; it is part of a system. You can’t just diet for two days a week; there must be a system of diet and exercise to see results.
In a home, if you just air seal the attic, you may drive up energy costs because the warm attic is no longer a buffer. If you just insulate, mold is likely when the temperature gets low enough for condensation and moisture escapes from inside the house. Put in an efficient furnace in a crappy building envelope, and you will still have uncomfortable clients. Air seal the basement but not the attic, and you could cause backdrafting. Insulate and air seal without downsizing the HVAC system, and you could make an already cold addition colder because the furnace runs less, since it is now wildly oversized. Install can lights in a house with a kneewall attic, and you could cause ice damming and basement flooding.
Everything is interconnected. There is no low-hanging fruit. It’s a system.
To recap, in the low-hanging fruit thinking, the best investment is small (somewhere near number 2 on the X axis). Ironically, in reality that is the absolute worst investment. This size job offers poor results, unintended consequences, and low contractor profitability. These are the jobs that killed my company. In reality, the best investment is the incremental investment made after the low-hanging fruit investment — when you move from 3 to 5 or 6 on the X axis.
Chasing low-hanging fruit is a major cause of poor realization rates
See the problem? Red “low-hanging fruit” thinking causes investment to stop well before Blue goes vertical. A small job is a much easier sale; it can be made in one visit. The contractor and the program walk away happy, claiming the red “win” — except the consumer is left to experience the blue outcome. The truth of this is supported by both low average job size, and the fact that these programs’ own M&V studies show dismal realization rates.
Typically our jobs are three to four times the size of most jobs that seek incentives or rebates from a program. Our jobs are more comprehensive, predict savings with much higher precision, and (most importantly) result in happy consumers. Programs would be better if they encouraged results like this.
Chasing low-hanging fruit is a dead end
Market transformation requires happy consumers. It requires people to get what they paid for — not half measures delivering quarter results. If the home performance industry continues to chase low-hanging fruit, we are unlikely to achieve remarkable results and market transformation.
[Editor’s note: The next article in this series is Hard Truths of Home Performance.]
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.