How home efficiency currently works

Here at Sealed, we aim to completely change how homes pay for energy efficiency improvements. Most people know that these improvements can save money, improve comfort and health, and reduce dangerous pollution, but most people still don’t undertake them. 

Why?

Well, put simply, it’s a long, confusing and complicated process with uncertain benefits. In the real world, people drop off at every stage of this process, which dramatically reduces the potential for win-win home efficiency investments. 

Here’s the typical 10-step process a typical homeowner has to go through to significantly improve the energy efficiency of their home:

  1. Find a qualified contractor. Most people find contractors through referrals from friends, family or neighbors. If you don’t get a referral, however, there is almost no guidance from the government, utilities or other sources about who is good or bad. Oh, and some contractors will only do an energy assessment, while others will also do the actual work. And most will do it for free, but some won’t. 
  2. Schedule an energy assessment. Once you find your contractor, they need to schedule the energy assessment. Many contractors will schedule many weeks or months after you call, by which time you may have forgotten why you wanted the assessment in the first place. 
  3. Undertake the energy assessment. When the contractor gets to your home, they do a lot of cool technical tests of your home’s  efficiency. But unless the contractor happens to bring a sales professional along (very few do), you may not actually know what they are doing and why they are doing it. You just see a guy (not too many women in the industry unfortunately) walking around with a clipboard (tablet if you’re lucky), inputting information, aiming some sort of infrared gun at walls, and putting on a strange inflatable door.   They’ll also probably ask you for your utility bills and/or account numbers. Once the assessment is complete, the contractor will pack up their stuff and say they’ll be in touch in a few weeks.
  4. Pre-qualify for financing. This sometimes happens later in the process, but a good contractor will try and pre-qualify you for financing (typically from government or utilities) during the energy assessment process. This means typical loan paperwork, listing income, tax return info and sometimes mortgage payment records. 
  5. Receive the assessment report & proposed work scope. Assuming you are lucky enough to have a good contractor, you’ll receive the energy assessment report and proposed work scope 1-2 weeks after the assessment. If you’re not lucky, you may be waiting a few months. 
  6. Review the report and scope. Once you receive the report and scope (good contractors will walk you through it in person, but many will just send it to you over email or snail mail), you may (or may not) be surprised to discover that it is filled with technical jargon, language that obviously comes from a government bureaucrat, and a confusing layout. And that’s before you get to the end and see the price tag, typically $7,000 to $15,000. Good contractors will also point out the benefits, particularly the energy savings. But while the costs are guaranteed, the savings are projected (more on that later).
  7. Finance the improvements. While some homeowners choose to pay out of pocket for the “home performance” (that’s the term used in the industry) improvements, most choose to finance through existing government and utility programs. Most of these financing programs are unsecured (e.g. not tied to the mortgage), and have relatively attractive terms (7+ years, <5% interest rate) with few or not pre-payment penalties. That’s the good news. The bad news is that the official approval can take many weeks (4+) and require even more information. 
  8. Schedule and install the improvements. Once your home is approved for financing, the contractor then schedules the actual improvements. A good contractor will schedule within 2 weeks, but some may flake and not schedule anything for months. The construction process typically takes 2-4 days, with minimal disruption because most of the improvements take place on the exterior of the home and in unused parts of the house (attic, crawlspaces, etc.). Good contractors won’t track in mud, swear, or smoke near the home – bad ones will. You may not be able to avoid butt cracks though :). 
  9. Enjoy comfort and health benefits. If done well, your home feels different immediately. You never realized until now how uncomfortable your home was before. Those drafts are gone, the air feels cleaner and there is less noise. There might not be any visible improvement, but you can definitely feel the difference. Yay!
  10. See the energy savings. Whoops! While installing efficiency improvements does in fact save energy, actually seeing those savings can be very difficult. Your bills change each month for all sorts of reasons based on the weather, energy prices and your own behavior (or your lazy uncle’s TV-watching behavior or Thanksgiving). Contractors calculate your savings using fairly convoluted software that does not necessarily have any relevance to the real world. The energy models in the software are based on engineering assumptions, which may or may not apply to your particular home. As a US DOE government report put it, somewhat embarrassingly: 

“Presently, audit tool accuracy is based entirely upon conformance to applicable standards, studies comparing tools to each other, or evaluations of  tools against accepted baseline instruments (such as BESTEST.) As the literature identified in this study does not contain any recent comparison of all the tools, the matrix lists the standards, if any, where the tool complies. All of the tools conform to BESTEST or plan to conform to BESTEST-EX with the exception of Green Energy Compass®, which is not a modeling tool. As of this writing, it is assumed that RealHomeAnalyzer® complies with BESTEST but no confirmation has been obtained from the vendor.  It should be noted that BESTEST-EX is still under development.”

In other words, they have no !@#$^&* idea, but have done a lot of complicated modeling that may or may not have any relation to the real world. 

So where does that leave the homeowner?

Since not even the best existing software actually knows how much energy is saved, the homeowner is left with uncertainty as to whether the savings are real. The home is certainly improved, but it is not clear whether they are paying more or less than before. 

For some homeowners, going through this process is still worth it. They enjoy having a better home, don’t mind paying financing costs, and believe in the energy savings. Unfortunately, this is only about 0.1% of homes. For the rest of us, there has to be a better way!

More on that in the next post… 

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