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Will 2010 be the Year Home Efficiency Finally Takes Off?

andy mannleIt’s a perfect storm out there for residential energy-efficiency retrofits, and many of the pieces of this tricky puzzle are coming together. But there’s one big catch – us. Here’s why:

Efficiency is Cheaper, Safer, Faster and Smarter

Okay, so we’ve known this since efficiency guru Amory Lovins first coined the term ‘negawatt’ decades ago. But it makes even more sense now. You can get the same reductions in energy costs with $40 worth of CFL bulbs or $1000 worth of solar panels. In a down economy, it doesn’t take an economist to tell you which is the better deal. By switching bulbs, reducing power consumption, and tightening up leaky buildings, we can save 30% – 50% of the nearly $140 billion American homes spend each year on electricity. These are efforts that can take place simultaneously in every community across the country, putting tens of thousands of people back to work. As the tragic accident recently at a new power plant in Connecticut demonstrated yet again, power-production projects are long-term, capital-intensive, and dangerous.

This doesn’t mean we don’t need new sources of power. It just means that increasing energy productivity is safer, faster, and cheaper. For recovering from a recession in an era of waning fossil fuels, and increasing environmental imperatives that also makes it the hands-down smarter choice for immediate investment.

Technology is Making a Difference

The ability to change people’s behavior through simple awareness has attracted the attention of the software sector. Apple, Google and Microsoft are all getting into the Home Energy Monitoring business, and utility companies are actively rolling out SmartMeter programs that give utilities and customers much better information and control over when and how they use power. Companies like oPower are combining sophisticated software with simple psychology to let people know how their energy bill compares with their neighbors. Low-cost devices like the Kill-A-Watt or the Power Cost Monitor which demonstrate the power you’re using in real time, have also proven effective in reducing power usage. The cost of energy-efficient technologies from LED bulbs to solar panels continues to drop, even as their performance and versatility improve; and the same is true of less high-tech products ranging from better windows to more effective insulation.

The Carrots and Sticks Are Coming

Across the country, incentives for efficiency are already being offered by over a dozen states and many utility companies for high performance lighting, energy-saving appliances, better insulation, and weatherization. The success of programs like Energy Star and “Cash for Clunkers” have inspired a “Cash for Caulkers” program called Home Star that is likely to be included in upcoming jobs legislation currently running through Congress. In February, the US EPA and the DOE announced the new State Energy Efficiency (SEE) Action Network to help states improve and expand their efficiency efforts. Meanwhile building codes are getting tougher. CA’s stringent new green building codes calls for higher standards on water, energy and waste; but also includes provisions that make it easier to get your home certified as a green building without the expense of third-party certification like LEED. Tighter national controls on energy use and carbon emissions are only a matter of time. And home energy use, which accounts for 21% of the nation’s carbon footprint (twice that of passenger cars!) is already in the cross-hairs.

The Big Players Are Getting On Board

Not only are states and the Feds getting involved in efficiency efforts, but utilities are coming under mandate to reduce energy consumption from laws like California’s AB32. The housing crisis has taken an enormous toll on sectors including construction, real-estate, and architecture. These hard-hit industries are quickly retooling to focus on energy efficiency. Major home-supply retailers including Home Depot, Lowe’s, Masco’s and others are creating home efficiency services. Even the Venture Capitalists, who’ve been drooling over solar for the last several years, are scaling back, and investing in efficiency. The Cleantech Group reports that in 2008 VC investment in solar dropped 64%, while money on efficiency rose 39%. The smart money is shifting because capital-intensive solar is hard to push in a down market, and the field is flooded. Speaking to the Mercury News in Silicon Valley, Kevin Surace of Serious Materials sums it up, saying:

“All the cleantech conferences are efficiency, efficiency, efficiency…When you really break it down, every dollar spent on energy efficiency pays back the investment four or five times. It saves people money and creates jobs. And it has bipartisan support.”

So where are the customers? Despite all these trends, demand for home efficiency retrofits is still weak. Companies that simply do energy audits without providing solutions often leave customers overwhelmed with options but confused about where to begin, and loath to spend money. High-end home-performance companies charging $10K – $15K for a whole home performance package, are understandably having trouble getting customers, and won’t be practical for millions of homeowners. New financing packages like the Property Assessed Clean Energy (PACE) program extend retrofit loans to homeowners. These programs were originally designed to finance solar programs by removing the high-upfront costs. Now they’re being applied to retrofit projects – but often require a minimum loan of several thousand dollars or more, and of course many homeowners are underwater and don’t want to go further into debt. Even a progressive city like Boulder, CO, which has unsuccessfully tried incentives, ad campaigns and free audits is now launching “Two Techs in a Truck” to literally go to people’s houses and make simple efficiency changes – for free! The result? Complaints about Big Government.

To meet our energy and environmental goals, we need to retrofit millions of homes a year. But to spur customer demand, we need to offer easy, affordable measures that significantly reduce utility bills. Neither business nor government can do either of these alone. It can’t be done simply with audits, gadgets, advertising and financing. But it can’t be done without these things either. It may be too early to tell whether the movement will take off this year, but one thing is certain – these are our homes we’re talking about here. And unless we collectively take responsibility for improving their performance, the bright future of energy efficiency will remain just that.

Andy Mannle is a writer and consultant dedicated to exploring sustainable policy, innovations, and solutions. His clients include New Leaf America, West Coast Green, and the ETHOS fund among others.

Andy Mannle
Andy Mannle is a writer and consultant dedicated to exploring sustainable policy, innovations, and solutions. He is the Education Director for West Coast Green, and an adviser to New Leaf America, UrbanGreen, Adam Capital and others.
 
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5 thoughts on “Will 2010 be the Year Home Efficiency Finally Takes Off?

  1. The article misses an important point. The way to make solar energy most affordable is with a three step approach: energy efficient equipment + low waste strategies + solar energy = a cost-effective, durable, maintainable, user-friendly solar energy system. So energy efficient equipment is the first step to solar. Not just because it gives the most bang for the buck, but also because it means you need a smaller less expensive solar energy system!

  2. You’re exactly right Jonathan – energy efficiency is the first step toward renewable energy, and it’s exciting to see it so close to getting its day in the sun. With a few low-cost, easy steps homeowners can see immediate savings on energy. Money they can put toward a solar panel if they want!

  3. Andy,

    When it starts to hit the consumer in the wallet with more impact that’s when you’ll see the market move. As more expensive energy sources come on line like wind and biomass you’ll see consumers reaching for conservation tools like the PowerCost Monitor. We’re just now starting to see the uptake and interest at the consumer level as they realize how much they’re spending to run their house.

    I’m very bullish on this sector and believe that as big name players like Google and Microsoft start making headway you’ll see the consumer reaction quite quickly.

  4. Andy,

    This is a great summary of the status of a hoped-for movement. We need both efficiency and generation now – lots of it and the hoped-for jobs that come along. I am watching for the trim tabs (to use a Buckminster Fuller analogy) the small movements that will start to turn the ship. The google and microsoft technology and other investor ideas are great and the two guys in a truck solutions are great too. May all flourish.

  5. In my opinion, what we need now is a campaign to win over the “hearts and minds” of residential customers with regard to energy efficiency. For the past thirty-odd years, utilities and governments have focused on promoting the cost-effectiveness of efficiency upgrades for the home (and providing financial incentives to increase the cost-effectiveness), and yet a huge gap remains between what consumers actually do and what would be cost-effective for them to do. It’s time to accept the fact that consumers don’t always make the rational, cost-effective choices. All the great technologies (efficiency, smart grid, in-home energy monitors, etc.) are useless if we can’t get consumers to accept them and use them. These technologies require some behavior change and engagement on the part of the end-users. It’s great to see so many of the major players start getting more interested in residential energy efficiency technologies, but I hope that they do a better job communicating the benefits to consumers so that instead of grumbling about interference (see the public backlash towards smart meters in CA and TX), consumers embrace these energy-efficient opportunities with enthusiasm.

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