All of the Above: US Energy Policy in Action

Last month we reported on President Obama’s “All of the Above” energy policy following his State of the Union speech. Especially important for the home performance industry are the parts of All of the Above that apply to residential energy efficiency. Performing home energy audits, and undertaking weatherization, air sealing, and HVAC retrofit and upgrade work can be part of everyone’s personal energy policy.

Secretary of Energy Dr. Ernest Moniz wrote a letter to explaining why and how “All-of-the-Above is Making a Difference Across America.” Dr. Moniz focused on generation in his letter, noting that California’s Ivanpah solar thermal plant will power 100,000 homes thanks to a successful public-private partnership and a loan from the Energy Department.

In Waynesboro, Georgia, a $6.5 billion loan will help start construction on advanced nuclear reactors at Plant Vogtle, powering “1.5 million homes while preventing 10 million tons of carbon pollution annually.” Projects like these will satisfy the supply side of the energy equation. But what about the demand side?

Senators Shaheen (D-NH) and Portman (R-OH) reintroduced their Energy Savings and Industrial Competitiveness Act on Thursday. The bill focuses on enhancing energy efficiency in residential, commercial, and federal buildings. Senator Shaheen told New Hampshire Public Radio that “energy efficiency is the cheapest, fastest way to deal with our energy needs.” She’s right.

On the home front, Shaheen-Portman provides for expanding proven programs like weatherization of existing homes, and a new amendment would pay for the SAVE Act. This bill would require federal mortgage underwriters to account for a home’s projected energy costs when calculating mortgage affordability. This simple rule change would finally tell homeowners the true cost of home ownership, the PITE Payment: Principal, Interest, Taxes, and Energy. Why are energy costs so important to home ownership?

Utility bills are usually larger than either real estate taxes or homeowners insurance, but they are currently ignored in mortgage underwriting.

We agree with the Institute for Market Transformation’s assessment of the SAVE Act, and we support both Shaheen-Portman and the SAVE Act. Shaheen-Portman, the SAVE Act, and President Obama’s All of the Above Energy Policy together will help grow the home energy efficiency market, and they will help us make our homes more affordable, more comfortable, and more energy efficient. And that’s an “All of the Above” home energy policy we can all agree with.

Home energy efficiency program success and challenges

Home energy efficiency program success and challenges

City’s energy efficiency program falls short of goals.” A recent article in the Greensboro, NC News & Record by observed the performance of Greensboro’s “Better Buildings” home energy efficiency program. Lehmert found that 1,280 homes owned by low income homeowners received benefits of $4.7 million: a free home energy audit and $2,000 to $3,000 worth of improvements to their home. That sounds like a pretty good success, but what happens when you look behind the numbers?

Greensboro’s Better Buildings home energy efficiency retrofit and upgrade work focused on the high impact, high return on investment areas of the home: air sealing, insulation, HVAC improvements. One homeowner saw an immediate savings of $50 on his heating fuel bill. He told all of his program-eligible family members. They applied to the program, and received the home energy audit and retrofit work. These families are saving money this heating season, and will for years to come, because of the program. What works?

  • Qualifying homeowners through an initial screening process
  • Hiring local home performance contractors to conduct whole house energy audits
  • Hiring those contractors to make effective repairs and upgrades to the building envelope
  • Using the homeowner’s heating fuel bill as quality assurance verification

These steps are replicable in home energy efficiency programs everywhere, and the homeowner’s immediate savings and word of mouth advertising prove that this approach works.

Residential energy efficiency programs create the market

Greensboro officials estimated that the average homeowner would see a 17 percent reduction in home energy consumption and a corresponding savings in home heating fuel costs. That’s a good deal for any homeowner. Demand was high. At the end of the program 400 low-income families were on a waiting list for 70 remaining contracts. That tells us that a market exists for “bundling” home energy audits and retrofit work.

But that market may be unsustainable. City officials reported that higher-income homeowners who were eligible for rebates and low-interest loans did not participate at the expected rate. 950 fewer households applied for the rebates. 600 homeowners qualified for program incentives but did not hire contractors to do the work. These homeowners were to subsidize part of the program. Their low participation put the program’s overall goals at risk.

Lehmert concludes that

the lack of interest from homeowners who could pay their own way gets to the crux of Better Buildings’ shortfall in private investment and job creation.

Greensboro-area home performance contractors, on the other hand, suggested that a lack of awareness about the program among higher-income homeowners also played a role.

How a home energy efficiency program succeeds

Greensboro’s Better Buildings program did succeed in connecting home performance contractors and low-income homeowners. These homeowners received a free home energy audit, typically a $300-$800 expense, and up to $3,000 in home energy efficiency retrofit and upgrade work. These homeowners will receive long term heating energy cost savings. Additionally, they will find their homes are more comfortable and their families are healthier, thanks to air sealing and HVAC system improvements. All of these are quantifiable measures of the Greensboro Better Buildings program’s success.

Future programs should do a better job of marketing available incentives to higher-income homeowners. These homeowners may not know how to start a home energy efficiency project, but they have the means to undertake larger projects, and create local jobs.

Programs can use performance based home energy assessment tools to quickly qualify existing homes and prioritize projects based on the estimated return on investment. This also helps home performance contractors schedule their teams and equipment to work more efficiently.

Programs should devote resources to business development for home performance contractors. Public-private partnerships help create sustainable markets after program funds are exhausted.

It’s well known that once homeowners pick the low-hanging fruit of home energy efficiency they are likely to take additional steps, including major retrofit and upgrade work. Home performance contractors should look at program participants as future customers.

Home energy efficiency program success and challenges are a major part of our larger energy efficiency debate. We know there is strong demand for home energy efficiency, and that there are steps everyone can take to make their homes cheaper, healthier, and more comfortable. Greensboro’s program is a good case study for future programs and for industry professionals looking to grow their businesses.