March 2009
Doris Iklé, CMC Energy Services
Consider Energy Efficiency Programs from the Private Sector
While the Northeast Energy Efficiency Partnership (NEEP) correctly identifies the many challenges faced by New Jersey’s residential programs, it misses the mark when it calls for mandating a time-of-sale rating disclosure policy rather than offering energy audits. The 90,000 existing homes sold in New Jersey per year is the most promising market sector for energy efficiency upgrades. Most home improvements are made during the first year of occupancy, and virtually all home-buyers make some changes. Mandating a rating program for existing homes, when neither the real estate industry nor buyers or sellers for existing homes want ratings, is, as stated in the Report “politically challenging.” Moreover, based on the experience over the past decade, ratings for existing homes seldom save energy.
Ratings are useful to encourage home builders to construct more efficient new homes. However, when it comes to older homes, the difference between an energy audit and an energy rating is that a rating gives buyers of existing homes the bad news: that the home is not efficient and will cost a lot of money to make it so. On the other hand, given the right audit and appropriate long-term financing, buyers learn the good news: upgrading the energy efficiency of the home will, in most cases, save more on the monthly energy bills than the cost to finance. Thus energy savings and cash savings go hand-in-hand.
The NEEP Report fully recognizes that the current programs for existing homes, Home Performance with Energy Star (HPwES) for home-owners, and energy ratings for home-buyers, have been unsuccessful in reaching their past -- very modest -- goals, and that they must be drastically changed to meet New Jersey’s current goals. CMC recommends that NEEP examine other program designs that promise more energy savings at lower costs. As the report states, “even its new goal of 3,000 participating homes barely scratches the surface of the energy savings potential.” The report fails to mention creative solutions that have been developed in the private sector, both for home-owners and for home-buyers of existing homes.
The energy efficiency program described below has a goal of upgrading at least 30,000, (not 3,000) homes during the first year. The energy savings and the cost of the upgrades will be higher, while the subsidies required will be lower. This program is ready to launch within one month of a contract.
Home Energy Tune-uP®
CMC’s residential on site audit program, Home Energy Tune-uP® (Tune-uP) is a nationwide program designed to identify, not only the opportunities to upgrade the energy efficiency of homes to meet today’s standards, but also to identify the group of upgrades that will actually save more money in lowered energy bills than they cost when financed. These are the improvements that everyone can afford since no out-of-pocket down payment is needed. Home Tune-uP is available to home-owners and home-buyers. It is particularly appealing to home-buyers, the market sector that makes most home improvements but has the least money to spend. No longer must home-buyers decide between a fancy kitchen and insulation or, in fact most energy efficiency improvements, they can have both!
The Advantages of the Home Energy Tune-uP Program
1. Increasing the Market from 1 out of 1,000 homes to 1 out of 10 homes by:
a. Using home inspectors rather than contractors to sell the program
Homeowners are extremely wary of contractor advertising “come-ons”, and believe that contractors – even BPI certified ones – may have a conflict of interest. Home inspectors, on the other hand, are trusted by home- buyers and have no conflict of interest. Furthermore, home inspectors are generalists, trained to look at the whole house, whereas most contractors specialize in one specific area.
b. The Free Audit
The Tune-uP program does not charge customers for the audit, since it is the sales tool used to persuade the customer to invest in energy efficiency. While the price of the New Jersey HPwES audit has been lowered, even a $15 cost will sharply reduce participation. In a 2008 Tune-uP pilot program with the Tennessee Valley Authority (TVA), 50 percent of those receiving free audits implemented most of the recommendations made in the audit report. This was twice the implementation rate of HPwES.
c. The Utilities As Marketing Partners
Electric and gas utilities are a natural choice for marketing energy efficiency programs for homes. Utilities have credibility with customers as energy experts, and have generally established broad market awareness about their involvement in energy efficiency through public benefits programs. Additionally, the cost of marketing is substantially lower for utilities than for others, due to existing channels of communication, i.e. monthly bills, e-mails.
2. Increasing the Implementation Rate from 20% to 80% for Home-buyers by:
a. Marketing to Home-Buyers
Most home improvements are made during the first year of occupancy, and virtually all home-buyers make some changes. While an 80% implementation rate may seem incredible, if utilities offer their new accounts a free audit that shows how they can make their house more comfortable and more valuable while saving more on their energy bills than the improvements will cost, it becomes quite credible. With 90,000 existing homes sold per year in New Jersey, there would be 72,000 home-buyers investing in energy efficiency improvements per year!
b. Financing
A key barrier to homeowner participation is that homeowners have not been sufficiently aware of financing options for energy efficiency loans. They continue to believe that a significant down-payment of several thousand dollars will be necessary. The Tune-uP report includes information on financing opportunities that require no down payment and save more on the energy bills than they cost.
3. Reducing the Ramp-up Time from 3 years to one month
The ramp-up time required for HPwES is about 3 years. In the private sector, the research and development is done before the product is brought to the market. For a recent pilot program with TVA, CMC staff were able to customize the Tune-uP software and train 60 auditors to meet the needs of the program within weeks of the contract award, making the program operational within one month.
4. Reducing the Barriers to Entry
a. Training and Equipping Auditors
One of New Jersey’s chief concerns is to “build a trained and certified energy workforce infrastructure”. CMC has trained over 2,000 energy inspectors nationwide. In New Jersey we have trained 40 inspectors and certified 18. We have a mature training center, a detailed textbook, a complete set of slides and workbooks. The skills required to upgrade the energy efficiency of homes varies with the job being done. For auditors who measure and survey the home , we train certified home inspectors who already know how to inspect a home and how to speak to the homeowner, but need to learn the basics of energy efficiency. For weatherization technicians, who are supervised by the auditors, we train apprentices in the building trades or high-school graduates. For post-installation inspectors, BPI trained contractors or utility personnel work out well.
b. Certifying the work rather than the worker
CMC recommends that all homes upgraded in this program receive a post-installation inspection. This ensures that an investment in energy efficiency results in the anticipated energy savings. Since post-installation inspections are required on all projects that receive financing, these post-installation inspections add nothing to the cost.
New Jersey Can Do It
New Jersey can achieve the 2020 Master Plan Goals for saving energy in existing homes, but only if it realizes that there are promising alternatives to the government programs that should be considered. Home ratings for existing homes have never been successful, but with new federal stimulus financing and CMC’s Home Tune-uP program, auditing existing homes at the time of sale can be a major source of energy savings. If CMC’s energy audit were offered to all New Jersey home-buyers free of charge, the current goal of upgrading 3,000 homes could be raised to at least 33,000 homes, while the cost of the energy savings would be reduced. This program is shovel-ready.
About CMC
CMC Energy Services, a pioneer in promoting energy efficiency nationwide, has developed the tools to persuade millions of homeowners and businesses each year to stop wasting energy. Our core business is the design, administration, implementation and evaluation of energy efficiency programs for electric and gas utilities, government agencies and thousands of households throughout the United States.
CMC has a long track record of service in New Jersey, starting with a contract with PSE&G for residential energy inspections in 1979. This quickly grew and CMC was soon conducting a portion of the Residential Conservation Service (RCS) audits, followed by the Commercial and Apartment Conservation Service (CACS) audits for all New Jersey utilities. We now provide inspections for the Comfort Partners Program, as well as for our current audit program for Clean Energy and technical services and staffing.
Last year CMC was voted best ESCO for audit honesty in Energy Efficiency Markets' ‘best of' contest. The contest spotlights "the most innovative energy efficiency projects of the past year." In 2007 CMC won the American Council for an Energy Efficient Economy’s Exemplary Low Income Program Award for our 10,000 households/year low income audit and weatherization program for PECO. Since our founding in 1977, CMC has been awarded over 100 utility contracts and completed more than 325,000 residential energy audits and 30,000 commercial audits.
