The U.S. housing market offers tremendous opportunity for energy savings, improved quality of life, a cleaner grid and more. Capturing these benefits, unfortunately, has been difficult.
In the residential sector, homes that use a lot of energy account for a disproportionately large share of total energy consumption. Said differently, the top 10 percent of homes in terms of electricity usage make up nearly a quarter of all electricity usage.
Utility program implementers, therefore, have targeted these homes with energy efficiency initiatives. While single-measure retrofit programs have been minimally effective, whole-house programs, with multiple energy-saving measures, appear to be more impactful.
To learn about these efforts, we conducted a literature review of whole-house residential retrofit programs across the U.S. Three programs stood out: Roanoke Electric Cooperative’s Upgrade to $ave program in North Carolina (2015-present), South Carolina cooperatives’ Help My House program (2011-2012) and Midwest Energy’s How$mart program in Kansas (2007-2015).
These programs have been able to average greater than 30 percent annual energy savings per house (or 12,000 kilowatt-hours [kWh]), high participation with a 96 percent approval rating and default rates under 1 percent. Here are four key details that seem to have made them work.
First, these programs targeted low-complexity homes with high energy usage (e.g., at least 30,000 kWh per year) that would be more likely to benefit from high-impact energy efficiency upgrades. A site assessment verified that participating homes were all-electric and either single-family detached, site-built or manufactured.
Second, the programs used common, high-impact retrofit measures and a commercially available, validated energy modeling program to project and confirm cost-effective savings. Air sealing, duct sealing, and heating, ventilation and air conditioning (HVAC) system replacements were the most frequently implemented measures. The modeling software was used to increase the likelihood that the retrofit installation costs plus the post-retrofit energy usage resulted in monthly bill payments that were no more than 86 percent of pre-retrofit payments. Therefore, on average, customers experienced savings from day one and throughout the duration of the retrofit payback.
Third, the programs made sure that the installations would be of high quality by ensuring that the details could be consistently followed. Targeted technical training for assessors and contractors promoted the knowledge, skills and abilities necessary for the retrofit measures being used.
Finally, the programs addressed cost challenges to participation by using on-bill financing methods. With on-bill financing, the upfront cost of energy efficiency measures is deferred and repaid over time through customers’ electric bills.
On-bill financing appears to be beneficial for several reasons. First, it eliminates the initial cost of participation. Second, having repayment on customers’ monthly bills is convenient and makes it easy to notice savings. Homes in the Upgrade to $ave, Help My House and How$mart programs have been paying less per month post-retrofit (after factoring in retrofit costs, financing, energy savings and energy usage) than they did pre-retrofit. As a side benefit, the average financing term associated with the implemented measures is projected to be fulfilled more quickly than originally thought. And third, to bring confidence against defaults, repayment is tied to utility service; if a customer does not pay, service can be suspended or disconnected.
Other on-bill-type financing options exist, and each has its own advantages and disadvantages. Selecting the “right” method will depend on a program’s objectives, target market and administrator, but they all appear to increase customer participation by reducing the initial cost needed to benefit from energy efficiency measures.
Programs containing these four key attributes — low-complexity/high energy-use homes, streamlined home energy assessments, high-quality installations and on-bill financing — have resulted in high energy savings, high customer satisfaction, high participation and low default rates. In other words, these ingredients create a recipe for a successful whole-house residential retrofit program.