Why You Should Work at Sealed

It is an exciting time at Sealed. We have doubled in size in the last few months and announced a groundbreaking partnership with National Grid. We are building a team that is focused on doing something really special, with the potential to make a very significant environmental, economic, and social impact. Nobody else is doing what we do, and the possibilities are literally endless.

Sealed started over 2 years ago in an apartment in Queens, and we are now closing in on a scalable model to radically reduce the energy and environmental impact of our homes.

As we continue to grow the company, we want to build our team with people who are also looking to make an impact and invest their time and energy in important goals.

Check out our jobs page if you want make the best decision of your life.

 

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The (real) cost and value of energy efficiency

(Nerd alert. This is Andy again, giving another light economic policy analysis of energy efficiency. Feel free to ignore if you are a normal person.)

People in energy policy circles tend to talk in relatively blase terms when it comes to energy efficiency. The conventional wisdom is that energy efficiency is massive, simple and cheap:

“The ‘fifth fuel’, as energy efficiency is sometimes called, is the cheapest of all. A report by ACEEE, an American energy-efficiency group, reckons that the average cost of saving a kilowatt hour is 2.8 cents; the typical retail cost of one in America is 10 cents. In the electricity-using sector, saving a kilowatt hour can cost as little as one-sixth of a cent, says Mr Lovins of Rocky Mountain Institute, so payback can be measured in months, not years.”

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How the **** does Sealed work?? (Andrew McCarthy)

Hello, loyal readers! I’m Andrew McCarthy, and I oversee all of our customer-facing operations at Sealed. As this is my first blog post, a personal introduction is in order.

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Besides being handsome, charming, single, and modest, here are a few fun facts about me (all related to music coincidentally):

  • I once drove a member of the Wu Tang Clan to the airport
  • I not-so-secretly wish I were / think that I am Bruce Springsteen (maybe this is why I’m single)
  • I was part of a Blink 182 cover band in junior high called “8 Stories High”

Prior to Sealed, I taught 7th-grade math in New Orleans (hence my picture above…) and worked with a non-profit in Tanzania. Compared to that, home energy improvements are a piece of cake!

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#OpenEnergyMarkets and the EPA Carbon Rules

Yesterday, the EPA released their long-awaited carbon rules that aim to reduce US carbon by 30% by 2030.  

While there will of course be plenty of partisan bickering about jobs versus our burning planet, the more interesting issue question is how states will meet the carbon mandates given the flexibility in the EPA draft regulations.

In most states, energy efficiency will be the cheapest method to reduce carbon emissions. But these EPA rules should be a catalyst to dramatically scale energy efficiency via #OpenEnergyMarkets. 

Our friends at EnergySavvy made some great points in a blog post yesterday:

Even though the U.S. is on a positive energy efficiency trend – annualized electricity savings are up 82% in 5 years and utility programs saved 126 Terawatt hours in 2012 – the rate of spending has outstripped savings. Spending was up 155% over the same period to $6.9B in 2012.

This spending is almost 100% government and utility run “programs” that involve a considerable amount of planning, bureaucracy and inefficiency. To scale energy efficiency, therefore, the paradigm of command-and-control energy efficiency “programs” must end, and “program administrators” need to transition to “market administrators”. 

This starts with #OpenEnergyData, but also requires #OpenEnergyMarkets, which can be generally defined as the ability for third parties to get paid for generating verified energy savings.

These markets exist in a fairly robust manner in the Commercial & Industrial demand response space, with companies like EnerNoc managing load reductions for large manufacturing plants and businesses, getting paid by Independent System Operators like PJM that are in charge of managing the grid. 

In the residential sector, there are a few models of how #OpenEnergyMarkets can be created and structured. Perhaps the most advanced market is the California ISO, which has created rules enabling third parties to monetize peak demand reductions from residential homes. So far the most innovative company taking advantage of this market is Ohmconnect, which frames their business model this way:

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But while the CAISO market is a great model for residential peak demand reductions, it does not yet cover energy efficiency, or the reduction of energy regardless of time.  

The CT Class III REC market provides one example of an energy efficiency market in action. In this market, third parties can apply to the CT Public Utilities Regulatory Authority (PURA) to get a project certified, and eligible to sell credits to electricity suppliers that are required to buy these RECs. Unfortunately, it is difficult for residential projects not run by the utility companies to qualify, as only 4/35 approved projects are residential, and those are all for lighting.

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Connecticut’s challenge is an ad-hoc process for measurement & verification (M&V), which puts pressure on the regulators to only approve things that have already been approved in previous processes. This makes things easier for regulators, but much harder for innovative companies trying to create new models for saving energy.

Illinois, on the other hand, represents perhaps the most mature energy efficiency market in the country today. Despite relatively low energy prices, Illinois enables third parties to bid energy efficiency programs to the Illinois Power Agency (IPA), which much be accepted as long as they are cost-effective. This simple, but powerful rule was embedded in Illinois’ 2011 smart grid bill to mandate that the IPA procure:

Cost-effective energy efficiency programs or measures that are incremental to those included in energy efficiency and demand response plans

There are now more third-party programs than utility-administered programs for ComEd, the biggest electric utility in the state. 

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This third-party program structure can eventually turn into #OpenEnergyMarkets if policymakers, regulators and utilities can design transparent protocols for measuring savings that meet the standard the EPA has set:

quantifiable, non-duplicative, permanent, verifiable, & enforceable

To reach this standard will require a thoughtful process that leverages the market templates that exist today, a commitment to #OpenEnergyData, and the adoption of a “market creation” mentality that rewards a new generation of companies dedicated to saving energy. 

Real environmentalists guarantee home efficiency savings (kidding…kind of)

Here at Sealed we have chosen to address the home energy efficiency sector by guaranteeing savings. There are a lot of reasons for working to reduce homes’ energy bills, including feeling good about lowering homeowner costs and creating local, green collar jobs.

But on Earth Day, of course, we focus on how Sealed can help the environment by reducing the amount of fossil fuels we need to burn.

As we think about it, Sealed is addressing the single largest carbon reduction opportunity (energy efficiency), the largest market within that opportunity (single-family homes), and the single largest barrier to scaling that market (confidence in energy savings). 

Energy efficiency as a whole represents the single largest carbon reduction opportunity. Based on the most recent McKinsey study, technical energy efficiency represents a 14 gigaton carbon dioxide reduction per year (i.e., a lot). 

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This represents the single biggest “wedge” to meeting our global carbon reduction goals. The best part of this is that energy efficiency has by far the largest “negative cost,” which means that you actually make money by deploying capital to make buildings more energy efficient.

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We can also look at the change in investment of energy efficiency compared to the extraction of fossil fuels in the next twenty years. Based on the latest IPCC report (the international organization that organizes all of the climate science), capital going into energy efficiency is going to jump tremendously, while capital in fossil fuel extraction will plummet.

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In the United States, it is even more dramatic, with energy efficiency representing over 50% of 2030 carbon reduction potential.

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Within the energy efficiency sector, single family homes represent about 50% of the total US energy savings potential.

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And as readers of this blog know all too well, confidence in energy savings is the single biggest value for energy efficiency that single-family homeowners want.

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So that’s why we think Sealed can make a big impact, and one reason why we are all excited to go to work every morning (also the free coffee – thanks WeWork!). 

We know we don’t have all of the answers, and we certainly know that there are many other pieces of the puzzle, but we are doing our best to help keep our planet safe (and cool). 

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!