Building Your Budget and Identifying Resources

1
Building Your Budget and Identifying Resources

• Michael LEcuyer
• Project Manager, ICF International
• Beyond Energy Audits with HPwES
• September 20, 2007

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Home Performance with ENERGY STARs Whole-House
Solutions

• Can save substantial energy across population of
  homes
• Flexibility with wide range of eligible measures
• Deliver additional customer benefits
• Affordability
• Comfort
• Health and safety,
• Improved durability of the home
• Provide better peace of mind
• Improvements less likely to cause new problems

3
Broad Societal Benefits Result from Effective
Program Designs

• Market based focuses customer attention on
  implementing a practical home improvement plan
• Homeowners find contractors they can trust
  because they get real help
• Helps local economy by creating higher-skilled
  jobs and saving consumers money
• Helps regional/national economy by reducing gas
  usage in high gas-heating areas (gas prices
  sensitive to demand)
• Helps regional/national economy by reducing peak
  electricity usage in air conditioned homes
• Helps environment by reducing emissions
• Helps national security by reducing use of fossil
  fuels

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But Capturing the Holistic Benefits of HP
Requires a Holistic Program Design

• Barriers to Home Performance Contracting Have to
  be Addressed
• Lack of Contractor Infrastructure
• Lack of Customer Awareness
• Higher Overheads Associated with Home Performance
  Contracting
• Test in
• Comprehensive home performance assessment
• Multi-measure and multi-trade job scopes
• High-efficiency measures cost more
• Higher quality installations cost more
• Test Out

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Program Design Elements
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Incentives - Important to Jump-Start and Build
Market

• Contractor incentives reduce risk of getting into
  home performance contracting
• Training
• Certification (and accreditation)
• Diagnostic equipment
• Per job (bonuses for performing assessments
  and/or completing jobs
• Cooperative advertising
• Homeowner
• Financing
• Emphasis on unsecured loans that with minimum
  paperwork and approval time
• Can be complemented with secured loans as well
• Incentive is buy-down of interest rate
• Rebates
• Some people have hard time getting whatever loans
  are offered

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Resources for Incentive Design

• Can follow examples from existing programs
• Reduce risk for contractors but dont give away
  the store (i.e., dont give away training,
  certification, equipment for free!)
• Examples NY, OH 75 cost share on training up
  to 50 cost share for equipment purchases
• Existing financing sources (WECCs EFS, EGIA,
  local community-based lending sources)
• Lesson learned in NY unsecured loans were more
  successful when the buy-downs resulted in stable
  loan rate (first 4.99, then raised to 5.99)
  easier to communicate to customers
• Job-based customer and contractor incentives
  dont have to be huge 5 to 10 of job cost
• Coop ads 25 to 50 cost share

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Infrastructure Building Key to Deep Energy
Savings and Market Transformation

• Contractor Recruiting
• Must reach out to insulators, HVAC, remodelers,
  general contractors
• Development of strong business proposition
• Can get introductions through
• Contractor Training
• Contractor Certification and/or Accreditation
• Training and support on program procedures and
  tools (such as home assessment software)
• Sales Training
• Assistance with organizing operation for strong
  home performance effort
• Ongoing quality assurance efforts need to be
  focused on continuing to build contractor
  competency
• Much more than just policing

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Existing Infrastructure Development Resources

• Target existing players in the market who have
  been exposed to at least some of the elements of
  applied building science
• Home energy raters already have good
  understanding of building science
• HVAC contractors whove received training
  developed within their industry to improve
  quality (NATE, NCI, ACCA Quality Installation)
• Building Performance Institute (BPI)
  certification and/or accreditation
• Most comprehensive set of guidelines for
  integrating building science into home
  improvements
• BPI currently updating certifications and
  creating at least one in partnership with RESNET
  (expected to be called Home Performance Analyst
• Raters will gain skills in testing combustion
  equipment
• Accreditation model also evolving
• Includes BPI-led quality assurance can lessen
  burden on program

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Existing Infrastructure Building Resources (cont.)

• EPA is devoting significant resources to help
  standardize key elements of home performance
  contracting aim is to have some of them adopted
  by BPI and RESNET in new certification standards
• Home Assessment guidelines get everyone on the
  same page!
• Test-in and Test-out guidelines and form
  templates
• Bill disaggregation tool
• Quality assurance guidelines and resources
• Etc.

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Marketing and Communications

• Residential program marketing and communications
  inherently challenging
• Low awareness of home performance contracting
  process and its many benefits must be overcome
• Elements deployed depend on budgets few
  programs can afford aggressive TV advertising!
• Radio
• Print
• Search engines on Web
• Home Energy Makeover Contests
• Projects for Charity
• Cooperative advertising
• Public relations

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Existing Marketing and Communications Resources

• EPA Marketing toolkit and contractor sales
  presentation materials
• EPAs free sales training workshops
• Existing programs often share concepts and
  materials
• Interest in energy prices, environment and
  national security yield huge PR opportunities
• Papers and TV news programs have shown great
  interest in articles or segments describing the
  home performance process

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Reporting

• Linked to Contractor, Homeowner Incentives or
  Financing Process
• Unified delivery of information for homeowner and
  contractor incentives
• Same forms / reporting for quality assurance
• Simple Reporting Form / Integration into Software
  (if required)
• Time requirements for reporting has been an issue
  for contractors
• Ensure easy process that will encourage timely
  reporting
• Quarterly Reporting to EPA
• Number of jobs, energy savings, quality assurance
  inspections
• By contractor participant

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Program Administration

• Project review and oversight is first key element
  in quality assurance
• Goals of program administration and oversight
• Ensure contractors/consultants are performing
  quality assessments and providing customers with
  comprehensive recommendations
• Review work scopes for measure eligibility
• Ensure that the home is tested out after work is
  completed and that home is left in compliance of
  standards addressing health and safety
• Ensure that incentives payments are accurate and
  timely
• Existing Programs provide wealth of program
  administrative process templates, forms and
  software

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Quality Assurance on Completed Work

• In-field Quality Assurance Inspections
• Repeat diagnostic tests, visual inspection of
  work
• Customer Satisfaction Survey
• Sent with job completion certificate
• Focuses in-field quality assurance inspections
• Corrective Action
• Addressing issues in installation / health
  safety
• Contractor De-listing / Termination of
  Participation

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Quality Assurance on Completed Work

• In-Field Inspections
• Customer interview - level of satisfaction with
  work
• Perform diagnostic tests to corroborate
  contractor test results
• Inspect quality of work
• Evaluate whether contractor provided customer
  with comprehensive set of recommendations
• Customer surveys
• Programs have used phone and written surveys
• Feedback to Contractor
• Can include directives to fix problems such as
  inadequate work or failed health and safety tests
• Handle delicately take any negative findings to
  contractor rather than customer (unless theres a
  serious and imminent health and safety threat)
• As long as contractor is acting in good faith to
  do job right, should be regarded as part of
  contractors ongoing education, not just an
  enforcement action

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Quality Assurance Available Resources

• Existing programs have developed QA protocols,
  forms and even scoring systems and will often
  share them
• EPA is developing national guidelines based on
  these existing programs and will make them
  available to Partners

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Program Reporting and Evaluation

• Program reporting and evaluation should capture
  all projected fuel savings
• HPwES is a fuel blind approach
• Example NYSERDA evaluation in 2005 indicated
  that about ¾ of energy savings were gas (program
  was funded by electric system benefit charge)
• Evaluators should take into account as many
  benefits as a possible
• All fuels
• Improvement in customer awareness and education
• Do-It-Yourselfers, jobs not reported to the
  program
• Improvement in contractor skills and focus
• Health and safety benefits
• Environmental benefits
• Many programs reporting comes straight out of
  use of home auditing software because contractors
  upload their data into central program tracking
  and reporting database

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Program Planning and Roll-out

• Use existing programs for design ideas,
  materials, etc., to extent they are able to share
  them
• EPA offers program design guidance and assistance
  for Partners
• If program timeline permits, run a pilot in a
  geographically targeted area
• At the least, phase the program in market by
  market
• Helps program implementer build a local program
  delivery infrastructure (building program
  infrastrucure is as necessary as building a
  contractor infrastructure)

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So, Whats It All Cost?

• Unfortunately, theres not a lot of consensus
  developed yet more experience needed
• Comprehensive pilot targets at a geographic area
  500,000 to 1,500,000
• Bare-bones program budget per EPA 4 million
  over three years
• FirstEnergy Ohio 8.5 million for under 2 years
  for their service territories (mostly northern
  Ohio)
• Austin, TX 1.7 million per year
• MA utilities 5-6 million per year
• NYSERDA gt8 million per year not including
  marketing and communications