What’s in a guarantee?

As anyone who reads this blog should know by now, Sealed is working to solve the largest barrier to greater adoption of home energy efficiency: confidence in the energy savings. 

So instead of throwing more black-box mumbo-jumbo at homeowners, we just guarantee the savings, making money when and if savings are actually there.

But what’s in a guarantee?

The idea of guaranteeing savings from clean energy is not new. As one long-time efficiency warrior / guru Mike Rogers pointed out in a recent blog post (in the comments), an energy savings guarantee was first tried in the 1980s with Perry Bigelow (great name!) in the context of new construction. [Sidenote: Mike’s post is worth reading on the difficulty / impossibility of selling efficiency based on “projected” savings]

Green Homes America (another Mike Rogers production) has also offered a savings guarantee for many years. And smaller companies like Bright Home and Eco-Intelligent Homes also advertise a savings guarantee. 

So why isn’t every home receiving energy efficient upgrades if the savings can be guaranteed today?

Well, as anyone who has watched a Walmart or Men’s Warehouse commercial knows, not all guarantees are created equal. There is a big difference between a “soft” and “hard” guarantee.

A “soft” guarantee relies upon the consumer to collect (think “we’ll beat any price” commercials). This kind of guarantee is valuable as a signal of confidence, but most people never think they would actually collect on the guarantee.

A “hard” guarantee is explicitly integrated into a contract so that if a certain event happens (or doesn’t) it is very clear what will happen. Pensions and most insurance products fall into this category. 

The solar industry has also embraced the idea of the “hard” guarantee. SolarCity’s Power Purchase Agreement (PPA) contract, for example, guarantees homeowners that they will only pay for the power actually generated:

Within 45 days of the end of each calendar year, SolarCity will compare the System’s actual production and the estimated production and either (i) send you a refund for any overpayments you made; or (ii) invoice you for the extra power the System produced.

Unfortunately, the guarantees offered today in the home efficiency industry are not seen as a “hard” guarantee by most homeowners. To collect on these guarantees, you have to call, send your bills, and allow a contractor back in your home. And unlike most other products, it is difficult to tell how much energy you are saving, and therefore whether you need to “call in” your guarantee. For better or worse, most people don’t have weather normalization calculators and plug-level meters lying around. 

Very few of today’s savings guarantees are collected upon because of these barriers. The result is much lower home efficiency adoption because homeowners don’t believe that (a) the savings will be there and (b) they would realistically collect on any guarantee.

Sealed offers a “hard” guarantee by building the savings into a real Guaranteed Savings Agreement that is shown on each and every Sealed Energy Bill. Homeowners never have to worry about “collecting” on a guarantee, but simply have it.

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