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

Aug. 15, 2013
Distrust is one of the single biggest reasons homeowners don’t invest in energy efficiency. Can they be won over? A New York company thinks so.

Distrust 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 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.

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.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of EnergyChangemakers.com. She is co-founder and former editor of Microgrid Knowledge.