The United States’ housing market offers tremendous opportunities for energy savings, but capturing these savings has been difficult. High energy-using homes account for a large share of the energy consumption in the residential sector; therefore, implementers have targeted these homes with energy efficiency programs. Single-measure retrofit programs have been minimally effective at reducing energy usage and producing savings; however, some recent whole-house retrofit programs, with multiple energy-saving measures, appear to be more impactful.
To learn about these programs and their impacts, Advanced Energy conducted a literature review of whole-house residential retrofit programs across the United States. Three successful 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 yearly energy savings per house (or 12,000 kilowatt-hours [kWh]), high participation with a 96 percent approval rating, and default rates under 1 percent.
Advanced Energy studied the Upgrade to $ave, Help My House and How$mart programs to identify details that have made them work. Four key attributes seemed to be playing a critical role in their success.
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 commonly 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 positive savings from day one and throughout the duration of the retrofit payback.
Third, the programs made sure that the common installations would be of high quality by ensuring that the details could be consistently followed in low complexity homes. Targeted technical training for assessors and contractors promoted the knowledge, skills and abilities necessary for the retrofit measures being used.
Finally, the programs addressed common cost challenges to large-scale 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. The on-bill financing component of these programs appears to be beneficial for a number of reasons. First, it eliminates the initial cost of participation. Second, having the repayment on customers’ existing monthly bill (which is also where energy savings can be noticed) is convenient. 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 of these monthly savings, 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. Taken together, these features appear to be a win for the customers, utility sponsors and local installers.
Other on-bill-type financing options exist, and each has its own advantages and disadvantages. Selecting the particular method depends on a variety of factors, including a program’s objectives, target market and administrator, but they all appear to help 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.