[Reposted] Energy Savings Guarantees 101 (Part 3)

(This is originally posted on Mike Rogers’ Omstout blog)

Part 3: To guarantee savings you need #OpenEnergyData

Savings guarantees are important, but are very hard to implement in a manner that is impactful. So where does that leave the home performance industry, policymakers and other stakeholders?

Luckily, there is a lot that can be done to make energy savings guarantees more prevalent and powerful. This starts and ends with data. In order to best guarantee savings, data on homes undertaking home efficiency improvements is needed to quantify actual savings, variance and other aspects of risk. Unfortunately, this data is difficult to obtain, combine and normalize, with various stakeholders holding different pieces of the puzzle.

The first challenge is simply obtaining data related to home performance improvements. Energy usage data is held by utilities, who typically require confidentiality  agreements and/or customer authorization. Obtaining energy usage data therefore either entails long, complicated negotiations with utilities or persuading homeowner’s to find and share their utility account information and/or usage history for the purpose of research. This has to be done for all energy companies, including hard to track fuels like heating oil and propane in many cases.

Once energy usage data is collected, home and project characteristics must be matched. Most utilities do not have this data, which is instead held by individual home performance contractors and the software used for home energy assessments. Homeowners themselves usually only receive a report that summarizes the assessment findings, so they can’t directly provide this data.

After pre- and post-improvement energy usage and the home and project characteristics are combined, the data must be normalized by weather and energy prices, as well as scrubbed for obvious data entry or modeling errors. This is a tall order, and not something most individual stakeholders can accomplish in isolation.

Currently, the only stakeholders that ever have regular access to all of this data are evaluation, measurement, and verification (EM&V) consultants, although they often are not able to obtain all of the necessary data to perform a comprehensive analysis. EM&V consultants are also limited by a mandate to evaluate entire programs, including many considerations like free-ridership that are not relevant to individual homeowners or savings guarantees. Most EM&V reports therefore simply show average savings across an entire program, not the variability or other factors.

So as with most things these days, the answer lies in a hashtag: #OpenEnergyData.

More specifically, #OpenEnergyData means multi-stakeholder efforts to aggregate, clean and sort relevant data sets into a master Energy Data Center, a concept first proposed in California. More recently, DOE’s Buildings Performance Database(BPD) and  the National Renewable Energy Lab (NREL) with the Building America Field Data Repository (BAFDR) have taken national leadership on this front.

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A screenshot graphing a slice of the data from the DOE Buildings Performance Database

Unfortunately, there does not seem to be the appropriate sense of urgency in allowing access to these data sets. The BPD in particular has a policy of only allowing derivative analysis, not being able to analyze the raw (anonymized) data. You can see Sealed’s comments to the BPD here. The bottom line is they should be asking their data partners to allow the raw data to be shared.

The BAFDR (which will theoretically feed into BPD) looks to also have a ton of promise. NREL has gathered a good amount of data around home performance results, and are starting to use it to test the accuracy of various software tools. But it will be several years until this data can be analyzed by anyone other than the government, a proposition that is unfortunate given the value it can serve in the private market.

In the meantime, each state and utility company has the opportunity to become a leader. The Investor Confidence Project has been working with several leading state organizations to publish open data on clean energy loan performance. These stakeholders can go much farther by publishing actual energy usage and project characteristic data like air leakage numbers (in New York this was FOIA’d about a year ago – see Ted Kidd’s results here).

There are also many local laws (including New York City’s LL86) to mandate energy disclosure for multi-family and commercial buildings. These energy disclosure laws have already led to innovation and catalyzed new energy startups like WegoWise, which can now publish cool charts. Sealed is trying to do its part, working with the Town of Babylon’s Green Homes Program to publish the variance in realization rates.

Town of Babylon, Sealed, heating fuel, Realization Rates

It is time to bring this level of data transparency to more single-family homes. Sealed is part of the Cleanweb Initiative, and has started a discussion and draft#OpenEnergyData manifesto. Please check it out, give feedback (google doc so you can edit / comment directly), and let us know if you would be willing to sign the manifesto.

The bottom line is guarantees matter, they are difficult to implement, and we must all work together to build the data sets necessary to create more transparency and trust with homeowners and other stakeholders.

[Reposted] Energy Savings Guarantees 101 (Part 2)

(This is originally posted on Mike Rogers’ Omstout blog)

Part 2: How energy savings guarantees work

Like many things in life, for energy savings guarantees, the devil is in the details. While a guarantee is very attractive to homeowners, offering a guarantee can be difficult. The goal of any guarantee is to give a homeowner confidence in the benefits of the work being proposed. For a guarantee to be valuable, therefore, it must be something that homeowners believe is easy, simple and concrete.

Meeting all three criteria is more difficult than it sounds. Since energy efficiency is by definition the lack of energy, it is hard to measure and manage. Each guarantee balances the value of the guarantee with risk. A guarantee can be valuable to the homeowner, but include unacceptable risk to the company offering the guarantee. A guarantee can also manage all risks, but then be much less valuable to homeowners. A few examples demonstrate this spectrum of risk and value.

One of the first guarantees, cited by Mike in a past post on guaranteed savings, is offered by Bigelow Homes. The Bigelow guarantee can be considered the gold standard of energy savings guarantees. They literally say your annual heating or cooling bills won’t be more than $X each year. If you pay more, they will reimburse you for the difference. The challenge for this type of simple guarantee is that it has to be extremely conservative in order to deal with variance (less of an issue with new homes) and rising energy prices (particularly with volatile oil and natural gas prices). In fact, Bigelow Homes had to make their guarantee more conservative because of rising energy prices.

Energwyise Structures, based in Texas, offers a similar savings guarantee for new construction based on their superior designs. Like Bigelow Homes, they guarantee a cap on energy spending levels. However, Energywise limits the guarantee to HVAC, with metering installed to monitor performance. And while the guarantee agreement references dollar levels, it also cites related energy prices, implicitly making the guarantee neutral as to energy prices.

For existing buildings, a percentage reduction guarantee is much more common. For example, GreenHomes America offers a 25% heating and cooling reduction guarantee, although the details are not available on the website. These details are important, as we will see.

Masco also offers a “Limited Guarantee” to Environment for Living (EFL) homes. This guarantee is also focused on heating and cooling systems, setting a “Guaranteed Usage” heating and cooling amount that the home will not exceed. By defining the guarantee in terms of heating and cooling, EFL then defines the calculations used to determine heating and cooling:

“The following is a description of the method MASCO Home Services uses to estimate your Heating/Cooling Energy use: First, for the claimed Period, MASCO Home Services calculates the average of your three lowest months of energy use when your Home is occupied. MASCO Home Services assumes that this average estimates the energy you used for activities other than heating and cooling your Home. That average is then multiplied by 12 and subtracted from your total energy use during the claimed Period. The remaining amount estimates the Heating/Cooling Energy, which is the energy used to heat and cool your Home during the claimed Period. If appropriate, MASCO Home Services also may adjust the Heating/Cooling Energy to exclude energy use not related to heating and cooling your Home, such as seasonal use of pools and spas, and to account for any change in energy use for heating and cooling your Home related to any change or modification to your Home, its HVAC System or its occupancy.” 

The EFL guarantee also includes a series of homeowner responsibilities that are similar to many of the other guarantees:

“Your actions can greatly affect energy use in your Home. You are not covered under this Limited Guarantee unless you exercise prudent energy management for your Home. As a condition to maintaining this Limited Guarantee, you agree to:

1. Use windows and doors prudently when operating the heating, ventilating, and cooling (“HVAC”) system of your Home.

2. Follow manufacturer’s instructions regarding operation and service of the HVAC system of your Home, including annual inspections and filter replacement.

3. Set the thermostat of your Home at no higher than 72 degrees F during the heating season and no lower than 75 degrees F during the cooling season.

4. Notify MASCO Home Services of any change or modification to your Home, its HVAC system and/or its occupancy after the Start Date so that MASCO Home Services, in its discretion, may re-evaluate and make appropriate adjustments to the Guaranteed Usage. You will be charged a fee for any such re-evaluation or adjustment. MASCO Home Services may, in its discretion, refuse to pay a Reimbursement Amount under this Limited Guarantee for any material changes or modifications to your Home, its HVAC system and/or its occupancy.

5. Submit any claims and notices in writing to: MASCO Home Services, c/o Environments For Living program, 2339 Beville Rd., Daytona Beach, FL 32119. Any claim for a Period must be submitted to MASCO Home Services within 30 days of the end of that Period. For example, any claim for the first year of the Limited Guarantee must be submitted within 30 days after the first anniversary of the Start Date. You must include copies of your actual detailed monthly utility statements for your Home for the applicable Period and proof of the HVAC system maintenance and service work with your claim.

6. Permit MASCO Home Services and your builder to access your Home, upon reasonable notice, to inspect, meter and/or to make changes or modifications to your Home in connection with this Limited Guarantee. MASCO Home Services shall not be responsible for performance of and/or payment for any changes or modifications to your Home by your builder or any third party.” 

These conditions certainly reduce Masco’s risk, but unfortunately few homeowners would consider them easy, simple or concrete. The upside of this dynamic is the fact that, historically, very few homeowners make claims on savings guarantee (<1%).

The downside is that this probably means most homeowners don’t believe or value the guarantee. Since most guarantees make it difficult for homeowners to claim, this dramatically reduces internal calculations that it is “real” and therefore something to be factored into a buying decision. Think about all of the cheesy “money-back guarantee” commercials you see each day, and how realistic you think it is that you would ever actually return something.

Making a quote believable is therefore very important to make it valuable. A quote from a recent focus group on energy savings guarantees summed up this sentiment well:

“I just don’t understand how it would work … there’s so many variables. There’s no way that you can do that and actually stay in the black.”

In the last few years the solar industry has found a way to make guarantees believable in the context of Power Purchase Agreements (PPAs), where homeowners only pay for the power delivered (see an example from SunRun). A homeowner is guaranteed to pay based on actual solar power that displaces their utility bills. This billing is done automatically without any requirements for the customer to call the solar company.

Unlike energy efficiency, however, the size of this displacement can be easily metered and measure. In addition, the variance of solar panel generation is much lower than efficiency. In order to deliver a believable (and therefore valuable) guarantee, the issues of ongoing savings quantification and variance must be addressed.

My company, Sealed, is trying to address these issues in order to offer an energy efficiency guarantee for existing homes that is easy, simple and concrete. We do this by replacing a homeowner’s utility bills (electricity and heating fuel) with a single Sealed Energy Bill that is guaranteed to be X% lower than baseline energy bills, defined as a formula of baseload and weather-variable energy usage multiplied by current energy prices.

Sealed energy savings guarantee tableBy replacing utility bills, Sealed solves several problems. First, we remove the variance challenge, smoothing out the savings for each homeowner. In practical terms, this means that some homes will actually save less than the amount we have guaranteed, and some will save more. But any individual homeowner will always pay a guaranteed percentage less than their baseline amount.

In addition, Sealed automatically delivers these savings so that there is no need for the homeowner to monitor performance and contact us to receive the guarantee. Their Sealed Energy Bill always includes guaranteed savings no matter what they do.

Perhaps more importantly, Sealed visualizes the savings each month, making them a concrete number that can be digested and communicated to others. The goal is to give homeowners consistent reinforcement that they are saving money, making it more likely that they will refer friends, family and neighbor to Sealed or a home performance contractor.

Sealed energy savings guarantee offer

Sealed’s challenge is to appropriately manage the savings risk, both in terms of the project performance and any behavioral or moral hazard risk. We also need to change a 100-year pattern of homeowners paying utility bills instead of a new bill that focuses on savings. I can’t guarantee Sealed will meet all of these challenges, but we are certainly going to try, and hope many others will join us in that effort.

[Reposted] Energy Savings Guarantees 101 (Part 1b)

(This is originally posted on Mike Rogers’ Omstout blog)

As an addendum to the last post on why energy savings guarantees are important, I want to highlight an important new report published by the Center for Research & Public Policy (CRPP), and prepared for the Vermont Energy Investment Corporation (VEIC).

This report is a follow-up to the survey report referenced in the first blog post around the important of savings confidence. It is a summary of Vermont focus groups focused on trust and confidence in savings. I encourage everyone to read it themselves, but below are a few choice quotes from focus group participants that underscore some of the points made in last blog post.

Difficulties calculating savings

“I have not really computed savings. It’s a little trickier than it might seem because you need to account not only for the time but the number of degree days to figure out one winter is warmer than the other, and so the reduction in spending doesn’t necessarily mean that it’s been the result of saving. So we’re happy with the results. The house is more comfortable and less drafty, but we have not tried to compute an actually payout.” 

“It is hard to measure, though. That’s the – You’ve got variable costs on your fuel source, so it’s – Yes, I think we’ve gained on it, because I know the new wing was Energy Star built and all that stuff, but it’s hard to know how much. You just kind of get a feel that it was better than if you didn’t do it. But it’s hard to measure” 

“Our winters are so variable, that it’s hard for me to compare whether I’ve actually been saving money, or whether it was just a warm year, and I didn’t require as much heat during that time. Same with the energy efficiency.”

Lack of trust in estimated energy savings

Going back to the energy audit thing, I had one, and I was not happy with it either. The estimates were way inflated. I wound up doing most of the things that they recommended, but I did a lot of it myself, or I got other contractors, who were more reasonable, to do it.”

“If you’re not – some of us seem unhappy with the report or untrusting of the reports – how much you could even trust those kinds of forecasts. That’s – unless you really can get into the detail behind it, you kind of don’t know what data are they using to arrive at what they’re saying. Because if it’s a great ROI, you might jump at three or four of the things.” 

“It probably does depend on your house and your particular situation as to whether it will save or not, but I don’t think they have really good ways yet to estimate what you will save in part, as the gentleman over there was saying, it’s very complicated to try to figure it out” 

Attractiveness of a guarantee

“MODERATOR: How many would go with the higher savings, without a guarantee? Raise your hand. So the rest of you the would go with the lower savings that were guaranteed. OK, 100%.” 

“But if I talk to my neighbor, he wants a guarantee. He said – he’s an engineer – he wants it guaranteed that if he did similar work he was going to get these kinds of savings. And I said: ‘Well, I don’t – I can tell you what happened to me. But I don’t have a way of giving you a story that is sort of guaranteed by a larger database that this is how it will work.’”

“Yeah, a sense of accountability. Absolutely…Make a big difference…But it also sounds too good to be true.” 

Type of guarantee

“Third party [Guarantee], yes. Contractor, no.”

 ”A third party that was constituted in such a way that you believe that they were operating in your interest and not the contractor’s interest.”

“It’s gotta be somehow in the understanding, the document, that it is what it is at this point in time and if things change then however you address it”

Guarantee challenges

“I just don’t understand how it would work, and I know I’m being difficult but I just – I mean in Vernille [ph] – I used to work in Vernille Energy and there’s no way that, well, it was very – you never really saw companies making guarantees about production for the same reason. It’s just there’s so many variables. There’s no way that you can do that and actually stay in the black.”

“I’d be concerned that if they say you have to keep your heat at 68 degrees or lower, and their system says your heat went up to 70, but you know your thermostat is at 68, like that, to me, to make it void is just way too –”

“And I don’t know how you would factor in the cost of fuel and all that other stuff. It seems like that would be great if someone could do that kind of guarantee, but I think it would be enormously expensive.” 

The focus group participants were also asked to rate different strategies that could improve confidence. Interestingly guarantees scored extremely high except in the “stalled” group.

There are many other good nuggets in the report about trusted information sources, project barriers and investment mentality. I encourage everyone to read the full report to better understand how confidence can impact home performance projects, and ways to communicate with homeowners.

[Reposted] Energy Savings Guarantees 101 (Part I)

(This is originally posted on Mike Rogers’ Omstout blog)

This is the first in a three-part series of posts about energy savings guarantees. Mike has written on this topic in the past, and these posts will dive deep on why guarantees matter, how they work, and their implications for the industry and policymakers.

Part 1: Why guarantees matter

The thing that makes home performance contractors different from your average contractor is the ability to create trust via building science.  Building science breaks down the way homes function, and in particular the way  homes use energy.

Blower door tests, infrared cameras and energy modeling software are all tools that home performance contractors use to demonstrate expertise to homeowners. These tools are important proof points during an energy assessment to show the value of the work being proposed.

Ultimately, however, the proof is in the pudding. If homeowners feel that they received value from the work done they will be likely to refer similar work to their friends, family and neighbors. And just like every other product, the more value they think they receive, the more likely they will be to refer to others.

The good news is that home performance work creates value in a number of ways. Most jobs are sold emotionally on comfort, health and safety. Good home performance contractors listen to homeowners, uncover their various concerns, and design a solution to meet those concerns.

The bad news is that homeowners also expect energy savings. While they may want to get the work done, the rational part of their brain needs to understand and believe the economics of the project. Most surveys show that homeowners overwhelmingly cite saving energy as the primary reason to undertake a home performance project.

But energy savings are not only valuable in and of themselves. They are also a measure of trust. If a homeowner does not believe in the energy savings, they will be much less likely to complete work.

In a groundbreaking survey released last year by GDS Associates and prepared for the High Meadows Fund in association with the Vermont Public Service Department, “Confidence that energy savings would be realized” was rated as the single most valuable hypothetical program feature.

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Savings confidence was rated slightly higher than rebates, and over twice as highly as attractive financing.

While conventional wisdom says that “cost” and “upfront cost” are the biggest barriers to the greater adoption of home performance, it seems that the benefit (e.g. savings) side of the equation is more important. In other words, homeowners don’t think the cost is worth it if the savings are not there.

Sealed quantified that doubt in a national survey using Google Consumer Surveys. We found that, on average, homeowners believe 25% of the savings estimated by home performance contractors.

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The root of this mistrust comes from two primary sources, one qualitative and one quantitative.

Qualitatively, homeowners rarely “see” the energy savings even if they do in fact exist. While the costs of a project are very visible in the form of an upfront check and/or loan payment, the savings are never shown on your utility bill or a separate report. And since energy bills change constantly due to weather and energy prices, determining savings is difficult if not impossible unless you carry a weather-normalization calculator in your pocket.

Quantitatively, the variance in savings and realization rates (actual savings divided by estimated savings) is incredibly high. This means that while the savings communicated to a homeowner may be accurate on average, very few homeowners will actually see those savings. Instead, some homeowners save much more than estimated and some much less.

Energy savings guarantees are therefore an important strategy to fight this mistrust and demonstrate value to homeowners. Part 2 will focus on how savings guarantees work, and how different guarantees are structured.

5 ways policymakers can create green jobs without spending a dime

As primary season for state executives starts to heat up, would-be elected officials and policymakers are again focused on “creating jobs”. Democrats and some Republicans take this a step further and aim to create “Green Jobs”, generally defined as jobs that help the environment in some manner.

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During President Obama’s first term, this was relatively easy. All you had to do was direct federal stimulus funding to cool-sounding projects that would create jobs by spending government money. Solar panels! Electric cars! Algae biofuels!

Unfortunately, now that the spigot of stimulus funding has stopped, politicians and other policymakers are faced with much tougher choices. Raising taxes and cutting spending are never popular, even if money from these activities goes towards programs that create Green Jobs.

Fortunately, there are a number of no-cost policy solutions that could provide big Green Job dividends in the realm of home energy efficiency improvements, which directly employs blue (er, green)-collar workers that cannot be outsourced. 

The tradeoff is that these solutions require a re-thinking of existing (though often nonsensical) policy frameworks and diving into the weeds of implementation guidelines.

 In no particular order, here are 5 things that enterprising politicians and policymakers should embrace:

1. Change the cost-benefit framework from Total Resource Cost (TRC) to Utility Cost Test (UCT)

As Matt Golden has eloquently opined at the Efficiency.org Negawatt Blog, the current framework for allocating ratepayer funding to energy efficiency is ridiculous. Basically, it says that the only benefits from home energy efficiency improvements are energy savings, whereas any home efficiency contractor will tell you that comfort, health and other non-energy benefits (NEBs in industry parlance) are the primary driver of sales, with energy savings serving as a way to justify the cost of the improvements.

In contract, the UCT is simple. Ratepayer funding should be invested in any project where ratepayer benefits (e.g. energy savings and associated demand reductions) exceed ratepayer costs (rebates, financing incentives, etc.). Some states like Massachusetts already have mandates that require utilities to capture all cost-effective energy efficiency, and this policy change would enable another step function in energy efficiency investment.

By switching to the UCT, ratepayer money can be invested on a massive scale within a policy framework that is easily defensible. This gets rid of the perverse incentive of many programs that don’t want to be “too successful” less they run out of money. 

2. Mandate an even playing field for home efficiency contractors

This may seem obvious, but in many states there is a restriction on contractors who want to offer home efficiency services. These restrictions can take many forms, from a single company (Rise Engineering) with a monopoly on home energy assessments (Rhode Island) to an inability to offer rebates unless the home undergoes a $50-$100 home energy assessment (HES program in Connecticut).

More subtle, but pernicious restrictions also include an inability to sell anything not approved by the state (Massachusetts until recently) and subsidized financing that only covers measures approved as “cost-effective” (NYSERDA).

Boston-based Next Step Living represents a great case study of what is possible when restrictions are reduced. A few years ago, Massachusetts was similar to Rhode Island and only one company, Conservation Services Group (CSG), could offer ratepayer-subsidized home energy assessments. After industry lobbying, this restriction was eased, and Next Step Living and others could do what CSG could only do previously.

Since then, powered by private investment, Next Step Living has grown dramatically, directly creating over 700 jobs. And it didn’t cost the ratepayers or the state of Massachusetts anything.

3. Allow contractors to choose their own energy assessment software

Software restrictions may seem like small ball, but any home efficiency contractor will tell you the software they use has a significant impact on their sales process (e.g. 2 visit versus 1 visit sale) and administrative overhead (hours spent inputting data and filling out paperwork), which ultimately translates into reduced net margins and an inability to grow (and sometimes even survive).

Typically, the state Public Utility Commission (PUC) and/or energy department will require software to report certain pieces of data. That’s all fair enough in theory, but in practice this means that program administrators (usually utilities) choose a single software vendor that promises to integrate with all of the requirements.

The absurdity in this situation is that (a) that data is rarely sent in any usable form back to policymakers and (b) the energy savings estimates are not accurate. Much more sensible are states like Illinois that allow contractors to use whatever software they want as long as they fill out relatively simple rebate forms.

Fortunately, the emergence of a new data standard, HPXML, has made software choice much more possible, while standardizing the data format for easier access by policymakers, researchers and others (I’ll spare you the #openenergydata rant today). Companies like EnergySavvy with new data management platforms are accelerating this shift to the HPXML standard.

States like New York and Arizona are embracing this new standard, enabling contractors to choose from any software they find the most useful, while California is even more ambitious, benchmarking the energy savings estimates from all the software vendors.

To accelerate this trend, policymakers should mandate that any HPXML-compliant software can be used by home efficiency contractors.

4. Get rid of credit checks on financing home efficiency improvements

Home efficiency improvements are not cheap (thousand of dollars) and many need to be financed by the vast majority of homeowners. The problem is that this is an annoying and anxiety-driven process that turns off many people. Filling out a credit check form, reporting income levels, and submitting copies of tax returns are slow, unpleasant and embarrassing experiences (I know my tax returns are these days!).

 Banks by themselves won’t lend without a credit check without an exorbitant interest rate, of course, but there are already plenty of financing subsidies that can be repurposed without raising taxes or cutting teachers’ salaries.

Right now, however, these subsidies are geared towards the lowest possible interest rate at the longest possible term. These are good goals, of course, but not at the expense of making it easy to obtain financing. For example, New York offers 15-year, 3.49% interest rate loans to qualified homeowners and Massachusetts offers 7-year, 0% loans. Most contractors would rather sell a 7-year, 4% interest rate loan that did not mandate a credit check rather than a 0% loan with a credit check. 

Sealed’s partner, Powersmith, provides a great case study of this dynamic. Powersmith has been working with the Town of Babylon Green Homes program for many years now. The Green Homes program invests in home efficiency improvements via a PACE-like mechanism. Because of this, there are no credit checks beyond a quick check to make sure they are current on their taxes.

In contrast, the rest of New York works under NYSERDA’s Home Performance with Energy Star (HPwES) program that does require a fairly significant credit procedure. Because of this, Powersmith has to significantly qualify any non-Babylon homes to make sure they have the right credit score, and even then unforeseen problems can come up, delaying and killing sales.

Supporting policies like on-bill financing and PACE can help this issue of credit checks, but at this point it also takes repurposing of state financing subsidies. Thanks to Fannie and Freddie PACE doesn’t give the credit protection it should so states are creating loan-loss reserve pools instead to enhance the credit. And no major banks have pledged to provide attractive interest rates without credit checks under existing on-bill programs.

5. Prompt payment of rebates and financing

Mike Rogers has already covered this issue extensively (and persuasively), so I’ll be brief. Home efficiency contractors live in a cashflow world. They have to meet real payrolls and pay for real materials in order to build their businesses.

Rebates usually represent a significant chunk of the work (15%-75%), and so any delays in payment following completion of work can severely slow growth by requiring high-interest credit lines and/or setting aside cashflow funds that could be better spent hiring more workers.

Similarly, where states or utilities are directly providing financing (e.g. New York), any delays in receiving the loan amount can cause significant cashflow issues.

Changing the game

All of these things require policymakers to change the game in some way as well as really understand the details of how Green Jobs are created in home energy efficiency. Policymakers need to understand that jobs are created when home efficiency contractors make a lot of money, and they should help them accomplish this goal. Unfortunately, many home efficiency contractors I speak to are fed up with the existing system, and are voting with their feet by leaving programs. 

This is a shame because public policy should be supporting home efficiency contractors via ratepayer investment to reduce energy use. With the current system, however, we are close to a Kafka-esque situation where energy efficiency programs simply subsidize their own paperwork.

So if you are a politician or policymaker looking for “fresh new ideas” to create “Green Jobs”, take these recommendations to heart this election season. It is much easier than raising taxes or cutting spending, and much better than doing nothing, allowing our planet to burn and our working class destroyed.

Sealed excited about 2014!

Now that 2014 is upon us, Sealed is excited about the prospects for #guaranteedsavings in the year ahead. 

That starts with a website from our friends at Wasabi Rabbit (formerly Barnum Design) refresh highlighting some exciting developments.

Press

Sealed has been featured this year in one of the most read stories on EnergyEfficiencyMarkets.com, and was also featured on Fox Business.

Cleantech Open

Sealed was a proud participant in this year’s Cleantech Open, and was one of the Northeast region winners.

Team

Sealed has been lucky enough to create an awesome team of smart and dedicated folks excited to provided #guaranteedsavings to every home in America.

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Product

Sealed built an automated #guaranteedsavings billing app thanks to the talented Ryan Ong and our friends at PaySimple

Space

Sealed moved into a great new space at WeWork Bryant Park thanks to Ted Kramer, friend of Sealed.

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The Year Ahead

These developments are nothing, however, compared to what we have planned for Sealed in the year ahead. We look forward in the coming weeks and months to announce some exciting partnerships and developments. 

So stay tuned!

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Sealed a Cleantech Open Northeast Winner!

We are pleased to announce that Sealed was chosen as one of four Cleantech Open Northeast winners that will be representing the region at the Cleantech Open Global Forum in San Jose on November 20/21.

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Big thanks to organizers Ali Adler, Tim Hoffman, Dan Hochman and everyone else (staff and volunteers) at the Cleantech Open as well as crack Sealed mentors Evan Bienstock, Dave Wechsler and Mick Gilbert.

We are incredibly humbled as this year’s Cleantech Open Northeast included many amazing companies that are disrupting lots of dirty industries. Big congrats to fellow winners HEVO Power (fellow NYCers), NBD Nanotechnologies and Refresh, as well as the other semi-finalists LitGreen, Third Power, Visolis, WavElectric and LC Drives, and everyone else who has participated this year.

A few observations from the Cleantech Open process and winners so far:

  • The Cleantech Open (especially the Northeast) is an incredible organization that is doing the yeoman’s work of helping and encouraging early-stage Cleantech companies
  • It is really hard to give a full picture of your company in 10 minutes plus 3 minutes of questions
  • The winners this year have not only developed great technologies, but have also focused on business model innovation, something that is key to truly scale clean energy technologies (read more about that here)
  • Wireless charging is awesome (h/t to HEVO Power) and could be the key to solving the battery charge issue in EVs
  • There were more energy efficiency companies this year (11) than energy generation (10), a trend that I think is telling for the next generation of clean energy 
  • Sealed was the only #cleanweb company to make the semi-finals, but there were many others who are doing some really awesome things (Enmojo, BlocPower, BrightCurrent, Crowd Solar, and Faze1)
  • Hopefully next year will be even more companies representing #cleanweb solutions and business model innovation. Hardware isn’t dead, but it is time for the Cleantech industry to stop the ghettoization of software and services.

We are excited to work hard and represent the Northeast well at the Global Forum. Thanks to everyone that has supported Sealed so far! 

My summer at Sealed [guest post – Crystal Yeh]

Time seems to pass by in a blink of the eye, and before I knew it, the 10 weeks of my summer internship with Sealed has passed. I’ve learned so much about customer behavior, energy auditing, the relative frustrations of energy auditing software, as well as what makes a successful homeowner interaction during a neighborhood canvass or fair. 

Based on my experience, I think that people in the energy efficiency field need to ask more questions based on behavioral economics and marketing, not building science. In particular, we need to ask what motivates people to invest in energy efficiency improvements? There are many benefits to energy efficiency improvements: saving money, reducing emissions/being environmentally friendly, increasing comfort, increasing home value, and reducing noise pollution. (Most people don’t think of noise pollution as an efficiency benefit, but  when you think about it soundproof rooms are characterized by heavy insulation). 

Interestingly, I’ve found (via homeowner interviews, train interviews, canvassing interviews and fair interviews) that homeowners will rarely spontaneously speak about any of the non-monetary benefits except when asked about them specifically. Only when prompted about specific comfort issues, for example, will they reply “Yes, that too.” Everything besides savings is secondary in the mind’s of a homeowner. Money is king.

In a similar vein, how questions are phrased in interviews can make all the difference. Giving an answer prompt will yield different responses than having people respond to an open question. In order to have an unadulterated insight into the motivations of a homeowner, you have to listen to what the homeowner says without a prompt. When you bait a question (known in psychology as “priming”) people will be more likely to agree to ideas they would never have thought of on their own accord. Think about how much easier it was for you back in school to answer multiple-choice questions over free response questions. 

Priming, although not conducive to scientific surveys, is a great tool to use when marketing a product or service. To give an example, when I shadowed an audit yesterday, I noticed that the homeowner was presented with three different options for a new boiler, an 85% efficiency oil boiler, an 85% efficiency natural gas boiler, and a 95% efficiency natural gas boiler. With three different options, the homeowners has already mentally modeled having each of those options in their home and is committed to choosing at least one. 

The audit that I shadowed was one of the most education experiences I’ve ever had this summer. I watched the technician Hip perform the Carbon Monoxide test, the boiler efficiency test (this home was so old that the boiler was 60 years old), the width of wall insulation and the infrared gun test. The last test was performed with the homeowners watching and listening to the explanation, which I thought was great for improving the confidence and trust between contractor and customer. 

The audit helped crystallize one thing I learned this summer, which is that the traditional rational-choice economic model doesn’t necessarily hold up in practice. For example, the homeowners insisted that a proposed 35 gallon indirect water heater might not be sufficient for their family’s needs (“I don’t ever want to run out of hot water!” exclaimed the woman) even though it would be more than enough for them as it’s just a 3 person home. Based on this experience, I think more academics or policy makers should spend some time in the real world in order to better understand how real people think about energy and efficiency. 

These past few months have been so educational and interesting for me as a person. I really feel so empowered at the potential of energy efficiency, the low hanging fruit if you will, to lower Long Island, New York State, and eventually the nation’s emissions significantly. I also realized that I’m really going to miss the coworkers, partners and people I’ve met through this internship, especially my awesome boss extraordinaire, Andy Frank.