Home-performance contracting, a concept that goes hand in hand with the practice of building science, is a relatively new area that is attracting remodelers who want to differentiate themselves and offer a service that homeowners may be increasingly willing to consider.
For those unfamiliar with the term, home-performance contracting usually involves energy and comfort improvements with emphasis on building components as an interrelated system. Typically, before and after testing is employed to identify problems and verify their remediation.
A remodeler looking to include home-performance contracting in his or her portfolio of services should first become thoroughly familiar with the nuances of the concept. Professional associations have always been an avenue for learning and sharing knowledge, and Washington, D.C.-based Efficiency First is one to which a remodeler may turn for information about this burgeoning field.
Public vs. Private
Efficiency First and the home-performance contracting industry occupy a unique position on the public/private continuum. Private homeowners have an interest and constitute a market for energy-saving home improvements while public policy that encourages energy independence and energy conservation to combat global warming is increasingly evident.
The public policy aspect is well illustrated by the soon-to-expire Federal Energy Tax Credits for home energy-efficiency improvements, such as energy-efficient windows, insulation, HVAC and more. Those tax credits, many hoped, would be replaced by a program called Home Star, a national incentive program for residential energy-efficiency retrofits. Home Star also was referred to as Cash for Caulkers after Cash for Clunkers, an earlier program to stimulate new-car sales.
Efficiency First has been one of the organizations advocating Home Star legislation, a measure that was attached to various bills during the past year but has yet to gain enough Congressional support for passage. Although the initial Home Star proposal called for rebates to consumers, Efficiency First Chair Greg Thomas, president and chief executive officer of Ithaca, N.Y.-based Performance Systems Development, thinks it may move ahead as a tax-credit program in the divided House and Senate.
Even if Home Star doesn’t pass, Thomas says the bill created a lot of interest about energy efficiency. “There has been a lot of positive industry activity as a result of that effort in terms of raising the profile and getting it in the news,” he says.
Nevertheless, home-performance jobs aren’t solely dependent on incentive programs, Thomas says. He explains: “I wouldn’t say it depends on them; I would say it’s accelerated by them. There are home-performance contractors all over the country. Efficiency First has members in all 50 states and we only have home-performance programs in 10 or 15 states. Members already are doing this work all over the country.”
Efficiency First members include home-performance contractors, energy-audit companies and allied supporters, which are defined as affiliated businesses or services not directly involved in home-performance retrofitting. These include nonprofits involved in promoting energy efficiency and training, local governments, consultants and product manufacturers or suppliers.
There are, besides national programs, a host of state-, local- and utility-sponsored energy-efficiency programs and an extensive body of reports written about them and how to motivate consumers to invest in upgrades. “The programs need to leverage the business activity of the contractor, not the other way around,” Thomas says. “It may be that the program starts off with a higher profile, but fairly quickly it becomes about the contractor bringing the customers in themselves as opposed to the program bringing in the customer.”
“Contractors are the key point of sale for home-energy improvements,” a report authored by Berkeley, Calif.-based Lawrence Berkeley National Laboratory concurs. “They already understand the traditional renovation and home-improvement market and have access to customers who initially may want to replace a furnace but may be open to other improvements. It’s imperative to design a program that contractors want to sell—and convince them that the opportunity is worth the time and money to get appropriate training and equipment.” The full report, “Driving Demand for Home Energy Improvements,” is available at drivingdemand.lbl.gov.
“I think there is an enormous opportunity in the day-to-day renovation of our housing stock that is not in energy-specific upgrades but which integrates energy and performance testing into the renovation process as opposed to it being the renovation specifically in and of itself,” Thomas says.
Home-performance upgrades can lead to referrals, Thomas notes. “Remodeling, especially for smaller companies, is very referral-dependent, and when you deliver a whole-house upgrade that really transforms the house, people will refer you for years because they feel like they are living in a different house,” he explains. “The drafts are gone, the air quality is better and the building heats more evenly. It’s like they are in a different place. They’re not fighting their house anymore, so they talk to people about it.”
Thomas also remarks a lot of buildings have combustion-safety issues, including excessive carbon monoxide—something that home-performance contractors may detect when testing a building. New York state, he says, finds 10 percent of buildings that contractors check have combustion-safety problems. It’s one more area that contractors can remedy and a part of delivering a high-quality renovation.
He admits that HVAC may not fall within a remodeler’s usual area of expertise, but it can’t be divorced from the building system. “The general thinking is to get control of the envelope first and then look at what to do with the HVAC system,” he says.
That shouldn’t be a problem, he adds. “Remodelers are accustomed to using subcontractors and bundling work together, so the customer has a single point of contact. The remodeler works with the heating contractor to make sure the work gets done, and they make a markup on it,” Thomas explains.
Remodelers, in fact, have an advantage over a contractor who specializes in heating exclusively. A remodeler, at least one who has added home-performance contracting to his skill set, “listens to the building and the customer to uncover flaws with his knowledge and testing,” Thomas comments. “The homeowner is like a sensor walking around the building. What can he tell me about the building that I can use to solve the problem?”
According, to Thomas, this approach is not hard for a remodeler to adopt. “It’s more difficult for a single-trade contractor,” he says.
Efficiency Is Core
Although energy efficiency and green issues are related, energy efficiency is the core of Efficiency First, Thomas says. “We didn’t want to be the green contractors association because green is not as well defined,” he explains. “We very much believe in whole-house approaches and the use of building science and performance testing. That means you can’t just look at energy only. I can’t just tighten up houses indiscriminately because that will have an effect on the health and safety of the building.”
Testing is a critical part of performance contracting and it really has to do with accountability. Thomas concludes: “We are testing to make sure we understand what the problems are and then we’re testing to make sure we actually solved the problems and did not create new ones.”
Although it was written for agencies promoting public home-energy incentives, “Driving Demand for Home Energy Improvements,” a report authored by the Environmental Energy Technologies Division of Lawrence Berkeley National Laboratory, Berkeley, Calif., also provides insight for remodelers selling energy improvements.
Language matters, the report says in a chapter by that name, advising the avoidance of terms, like audit and retrofit. Audit, for some people, evokes negative visions of an IRS audit, and retrofit has little meaning for most people. Instead, the report suggests terms, such as energy assessment, home-energy improvement or energy upgrade. However, the report’s authors admit there has not been rigorous testing to show these words work.
In addition, how the message is communicated matters. California-based Pacific Gas & Electric offered free home-energy assessments and zero-interest loans for home-energy-efficiency improvements as far back as the 1980s, yet found less than 20 percent of the homes requesting assessments actually followed through with improvements. It was found that the assessors visiting the homes were not trained in effective communication and merely provided homeowners with dispassionate, factual information based on the assessment results. Assessors who were taught to use vivid, personalized examples to induce commitment were able to persuade 60 percent of their customers to follow their recommendations. To read the full report, visit drivingdemand.lbl.gov.
Efficiency First Policy Initiatives
As prescribed in the Retrofit for Energy and Environmental Performance (REEP) legislation, Efficiency First believes that government incentives are the key to driving a surge in consumer demand for home-energy retrofits. The REEP performance-based incentives—deployed as direct consumer rebates—reward modeled energy savings, not specific products or technologies, and leverage private investment to minimize the burden on public-funding sources.
Access to capital is one of the keys to widespread adoption of home-energy retrofits. A trend is allowing homeowners to amortize upfront investments over time, often achieving positive cash flow when loan payments are offset by reductions in monthly energy bills. Efficiency First supports diverse lending programs, like this, that will make it easy for consumers to invest in cost-effective home-energy improvements.
Efficiency First supports the Home Performance with Energy Star program as a model for efficiency retrofitting, including third-party verification. It also supports strong contractor standards and certification based on Building Performance Institute (bpi.org) contractor accreditation. (To learn more about Home Performance with Energy Star, see “Building Science,”.)
For more information, visit Efficiency First at www.efficiencyfirst.org.