Energy Savings Guarantees 101 (Part 1b)

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As an addendum to the last post on why energy savings guarantees are important, I want to highlight an important new report published by the Center for Research & Public Policy (CRPP), and prepared for the Vermont Energy Investment Corporation (VEIC).

This report is a follow-up to the survey report referenced in the first blog post around the important of savings confidence. It is a summary of Vermont focus groups focused on trust and confidence in savings. I encourage everyone to read it themselves, but below are a few choice quotes from focus group participants that underscore some of the points made in last blog post.

Difficulties calculating savings

“I have not really computed savings. It’s a little trickier than it might seem because you need to account not only for the time but the number of degree days to figure out one winter is warmer than the other, and so the reduction in spending doesn’t necessarily mean that it’s been the result of saving. So we’re happy with the results. The house is more comfortable and less drafty, but we have not tried to compute an actually payout.” 

“It is hard to measure, though. That’s the – You’ve got variable costs on your fuel source, so it’s – Yes, I think we’ve gained on it, because I know the new wing was Energy Star built and all that stuff, but it’s hard to know how much. You just kind of get a feel that it was better than if you didn’t do it. But it’s hard to measure” 

“Our winters are so variable, that it’s hard for me to compare whether I’ve actually been saving money, or whether it was just a warm year, and I didn’t require as much heat during that time. Same with the energy efficiency.”

Lack of trust in estimated energy savings

Going back to the energy audit thing, I had one, and I was not happy with it either. The estimates were way inflated. I wound up doing most of the things that they recommended, but I did a lot of it myself, or I got other contractors, who were more reasonable, to do it.”

“If you’re not – some of us seem unhappy with the report or untrusting of the reports – how much you could even trust those kinds of forecasts. That’s – unless you really can get into the detail behind it, you kind of don’t know what data are they using to arrive at what they’re saying. Because if it’s a great ROI, you might jump at three or four of the things.” 

“It probably does depend on your house and your particular situation as to whether it will save or not, but I don’t think they have really good ways yet to estimate what you will save in part, as the gentleman over there was saying, it’s very complicated to try to figure it out” 

Attractiveness of a guarantee

“MODERATOR: How many would go with the higher savings, without a guarantee? Raise your hand. So the rest of you the would go with the lower savings that were guaranteed. OK, 100%.” 

“But if I talk to my neighbor, he wants a guarantee. He said – he’s an engineer – he wants it guaranteed that if he did similar work he was going to get these kinds of savings. And I said: ‘Well, I don’t – I can tell you what happened to me. But I don’t have a way of giving you a story that is sort of guaranteed by a larger database that this is how it will work.'”

“Yeah, a sense of accountability. Absolutely…Make a big difference…But it also sounds too good to be true.” 

Type of guarantee

“Third party [Guarantee], yes. Contractor, no.”

 “A third party that was constituted in such a way that you believe that they were operating in your interest and not the contractor’s interest.”

“It’s gotta be somehow in the understanding, the document, that it is what it is at this point in time and if things change then however you address it”

Guarantee challenges

“I just don’t understand how it would work, and I know I’m being difficult but I just – I mean in Vernille [ph] – I used to work in Vernille Energy and there’s no way that, well, it was very – you never really saw companies making guarantees about production for the same reason. It’s just there’s so many variables. There’s no way that you can do that and actually stay in the black.”

“I’d be concerned that if they say you have to keep your heat at 68 degrees or lower, and their system says your heat went up to 70, but you know your thermostat is at 68, like that, to me, to make it void is just way too –”

“And I don’t know how you would factor in the cost of fuel and all that other stuff. It seems like that would be great if someone could do that kind of guarantee, but I think it would be enormously expensive.” 

The focus group participants were also asked to rate different strategies that could improve confidence. Interestingly guarantees scored extremely high except in the “stalled” group.

There are many other good nuggets in the report about trusted information sources, project barriers and investment mentality. I encourage everyone to read the full report to better understand how confidence can impact home performance projects, and ways to communicate with homeowners.

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About the Author:

Andy Frank is the Founder and President of Sealed, a new company that guarantees savings from home efficiency improvements.

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