Why Homeowners Don’t Trust Energy Efficiency. And What Might Change Their Thinking.

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central-air-conditionerDistrust is one of the single biggest reasons homeowners don’t invest in energy efficiency upgrades. Will the promised savings really materialize? Homeowners are  dubious.

“It is obviously pretty hard to get someone to say yes to a value proposition, if they don’t actually believe in the value,” said Andy Frank, president and founder of Sealed, a company whose business model directly addresses this confidence problem.

The ability to trust in savings topped all motivators in a survey of 615 Vermonters last year. The state and High Meadows Fund commissioned the market study to help gauge what motivates homeowners to undertake energy retrofits.  Survey participants valued “confidence in energy savings estimates” even higher than access to rebates and low project costs.

It’s easy to understand why homeowners worry.

First, predicting, measuring and verifying energy savings is a complicated business. And a look at realization rates – the savings predicted versus the savings realized – show that promise does not always match outcome, even in states with respected energy efficiency programs.

Plus, variations in home construction, age and other building factors influence the level of savings achieved. Frank points out that if the mean savings from a retrofit is $1,000 per year, any given home is as likely to save $400 as $1,600.

“It’s like putting your money in a tech stock,” Frank said.

And then there is the ever present ‘invisibility’ problem. We can’t see, feel, touch, smell or hear electricity. So it’s hard for us to gauge if we’re being lavish or thrifty in its use until we get the monthly bill. And even then, the homeowner may fail to discern that a high bill reflects the unusually hot weather from the month before and not poor performance on the part of the new air conditioner.

“Nobody has a weather normalization calculator in their back pocket,” Frank said.

The confidence problem is not a new one to Frank, who has been analyzing human behavior and energy for a while. He previously worked for Efficiency 2.0, a company that focused on motivating people to save energy, and later at C3 Energy, a smart grid analytics company that acquired Efficiency 2.0 last year.

sealed logoSealed operates under the premise that if people don’t believe they’ll save energy, offer them a guarantee – not the kind that gives money back if a product fails, but one that embeds savings in the monthly utility bill.

The New York company serves as a tool for contractors who make energy efficiency upgrades. Here is how it works. The home undergoes a comprehensive assessment that results in a plan for improvements, which are okayed by the contractor and homeowner.

Sealed assumes the risk that the plan will result in promised savings.  It uses New York’s utility on-bill recovery finance program. Sealed takes over utility billing for the home and guarantees that the bill will be lower than normal.  The company calculates normal usage each month, adjusts it for weather and energy prices, then subtracts the savings it guaranteed. Sealed makes its money by taking a pre-arranged percentage of the savings.

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Sealed has launched a pilot program on Long Island through the New York State Energy and Research Development Authority (Read about NYSERDA’s unique way of funding residential efficiency here.) Not all homes can participate in Sealed’s program– they must be single family, generate energy bills over $2,500 per year and be drafty.  Participants also must qualify for financing.

This is one approach to establishing homeowner trust in energy savings. What others are being tested? Please use the comment section here to let us know.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

Comments

  1. The link to survey is broken, can you provide another?

    • Martha,
      Thanks for your interest in the survey. The link seems to be working now. Email me if you still have a problem. Appreciate you pointing out the break!

  2. This is a gem. It took me this long to find it. yeh Face social media.

    More to the point. Energy conservation is a five fingered hand with the requirement of two hand to get anything done. Money saved can not afford the advertising brainwashing that consumption does. The savings are not in the hands of the advertiser. So we have left it to government. Government is in the hands of the energy wasters. The more the utilities make the more they can control government. Utility energy savings programs are a waste. They are designed to make more money.

  3. I applaud their efforts. However, that will not really change the trust issue. There needs to be a third party somewhere that will clear the confusion (deliberate obfuscation, overinflated and deliberately false claims) that permeates the marketplace for the consumer.

  4. Indeed, trust is a big issue in people’s engagement in any green initiative. The key 3 things are “does this work?”, “does the messenger have my interests at heart?” and “do I like their principles?”. The April 2010 issue of my ezine covers this in more depth at http://awake.com.au/newsletter/

  5. Agree with the thrust of this post. I would also suggest that efficiency lacks the combination of consumer appeal, urgency, and distribution elegance that make other goods and services take off in our instant-gratification economy. Consumers “have to have” the latest IPhone, five-toed shoe, or supersize food processor, and they can get them with a few keystrokes based on a few Google search terms. I live in Charlottesville, and the good news is that if you Google “energy efficiency Charlottesville” the top (non-sponsored) search result is the LEAP program on whose board I sit. And LEAP does a great job of diagnosing and arranging installation of EE opportunities. But even here, the wall is struck when it comes to getting homeowners to take on 4-5-figure investments, even with advantaged financing. There’s not much urgency to do high cost elective retrofits to a house that is standing and working OK. If you have to replace an appliance of HVAC unit, hopefully your contractor will recommend and stock high-efficiency models, but that’s not always the case. And that doesn’t get to the whole-house solutions that we ultimately want. So LEAP is moving toward a more relationship-based model, where homeowners become LEAP members, get initial diagnostics, then maybe install stuff over a period of years as they gain trust, see results, can plan, etc. With today’s web and social media technologies, this is possible, but it takes an active local presence to keep the flame alive. Because let’s face it–there IS no natural market for whole-house EE retrofits. It has to be built, and maintained, like any market infrastructure.

  6. Home Performance and real estate pros know the benefits of an asset-based audit, complete with multi-page checklists and testing equipment. To save time and money on the job, we created a performance based home energy tool on the web that provides an accurate energy rating and annual and mortgage life energy cost estimates. It’s available at https://arevs.us/ and is available for every existing home in the US.

    Oh, we also have a weather normalization calculator, accurate to tenths of a day. It’s on the website, so if you’ve got a smartphone in your back pocket you’re all set!

    Jason Malikow
    Director of Marketing & Operations
    AREVS, LLC

  7. Trust is definitely a big issue when it comes to green initiatives, so this is great to see!

  8. Its really the great risk to invest in Tech stocks and trust plays an important role ………..

  9. Wonderful web site. A lot of useful info here. I’m sending it to some pals ans also sharing in delicious.
    And of course, thanks in your effort!

Trackbacks

  1. […] mentioned in a LinkedIn post last week, this week’s Energy Rant involves an interesting article Why Homeowners Don’t Trust Energy Efficiency.  The paper could also be tweaked a little and re-entitled, Why Customers Don’t Trust Energy […]

  2. […] date, Sealed has been delivering savings on heating bills ranging from 20 percent to 30 percent, said […]

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