Finding Opportunities With Energy Star
September 10, 2007
Contractors participating in locally sponsored Home Performance with Energy Star programs are finding themselves able to offer homeowners substantial savings, as well as improve home comfort. Better yet, these same contractors are selling more energy-efficient products and systems, which translate into more income, along with more business opportunities.
“It’s a win-win situation for everyone,” said Charlie Carroll, co-owner of Austin, Texas-based AirTech Energy Systems, which participates in the Austin Energy Home Performance with Energy Star program. “We believe in the whole-house concept as it deals with every aspect of the home, rather than just HVAC.”
The whole-house evaluation approach is not new, but HVAC contractors have not necessarily embraced the concept. Chandler von Schrader, with Energy Star’s Home Improvement Program, believes the time is right for program strategies that promote whole-house energy improvements, such as Home Performance with Energy Star.
“Unlike typical energy audit programs, the goal of Home Performance with Energy Star is to turn recommendations into improved homes,” explained von Schrader. “Participating contractors complete the needed renovations themselves or work closely with other participating contractors who can.”
Von Schrader believes HVAC contractors are “uniquely positioned” to adopt additional home performance services that buttress their HVAC delivery.
“If an HVAC contractor is truly concerned about delivering comfort - let’s say he discovers leaky disconnected ducts, poor insulation, or envelope infiltration issues - but leaves these issues unattended and sizes up to accommodate, the homeowner has not been duly served,” he said.
KEY COMPONENTSTo participate in a Home Performance with Energy Star program, trained contractors need to sign a participation agreement with the program sponsor and agree to deliver whole-house services, report jobs, and participate in a quality assurance program. Participating contractors then can use the Home Performance with Energy Star logo and other marketing resources.
In the eyes of von Schrader, key components of Home Performance with Energy Star include:
• Whole-house energy assessment. Participating contractors have to be trained in building science principles. They are required to perform a visual and diagnostic energy assessment of all the home’s thermal and mechanical systems, including attics, exterior walls, infiltration, windows, basement, heating, cooling, and hot water systems.
“An evaluation of appliances, lighting, and the potential to use solar or other renewable energy technologies is also encouraged,” said von Schrader. “The home-owner receives a comprehensive list of recommended improvements and a cost estimate to complete the recommended work.”
• A network of qualified contractors to improve home performance. According to von Schrader, participating contractors must follow industry best practices to install the recommended improvements selected by the homeowner.
“Recommended improvements typically include additional insulation, air sealing, efficient heating and cooling equipment, duct sealing and repair, replacement windows, lighting, and appliance upgrades,” he said.
• Verification inspection. Participating contractors are required to perform diagnostic tests at the completion of work to verify that renovations have improved home performance and that safety standards have not been compromised.
“Diagnostic testing includes measuring air infiltration and duct leakage, and evaluating combustion safety,” said von Schrader. “The homeowner receives a report summarizing the improvements completed, test results, and estimated energy savings.”
• Independent review of contractor work. Program sponsors monitor the quality of work performed by all participating contractors under a quality assurance plan. According to von Schrader, Energy Star currently requires sponsors to either provide a rigorous technician certification and contractor accreditation process or 15 percent on-site inspections delivered by a third party.
PROGRAM IS WORKINGMost participating contractors are happy to report they have, among other accomplishments, increased profits, reduced seasonal lulls, improved employee retention, experienced higher closing rates, increased customer satisfaction, and have differentiated from the competition.
The home performance approach has certainly helped Strand Brothers Inc. grow. The Austin, Texas-based contracting business was generating $4.5 million in sales in 1999. By 2006, total revenues reached $10 million. Service Experts, now owned by Lennox International, saw its value and purchased the company, which is still family operated with a staff of more than 60 employees.
“Once they [homeowners] get the taste of how comfortable and efficient their houses are, and how they’re saving so much money, they almost can’t live without it,” said Chris Strand.
Strand credits much of his company’s success to being able to work in a city that supports his business model. Through Austin Energy, the city began an aggressive home and business energy conservation program. Out of this program grew Austin Energy’s local sponsorship of the Home Performance with Energy Star program. To have a Home Performance with Energy Star program, a local sponsor is needed - typically a utility, state energy office, municipality, or nonprofit organization that promotes energy efficiency and renewable energy. (See sidebar on page 50.)
In the case of Austin Energy, approximately 1,500 homes participate in its home performance program each year. The utility has more than 60 participating home performance contractors working with it. Strand Brothers said it performs approximately 1,000 whole-house retrofits a year through its building performance department.
Without financial incentives, Strand said work could still be done as part of his company’s air conditioning business, “but it would be more difficult to get people to do a whole package.” Austin Energy offers rebates of approximately 20 percent of the cost of certain improvements, with no maximum, or 0 percent fixed-interest rate loans up to five years so customers can finance the improvements. Austin Energy Home Performance with Energy Star program offers incentives for correctly sized and super high-efficient air conditioning units, heat pumps, home sealing, duct sealing, duct insulation, duct replacements, duct air flow balancing, solar screens, and attic insulation.
Helping out is Texas Gas Services, which now gives additional rebates through Austin Energy’s Home Performance with Energy Star program.
Marketing help for home performance contractors often originates from the national Home Performance with Energy Star office. The national program tries to develop strategies that its local sponsors and contractors can use to promote the program in their regional markets. These include a marketing tool kit with pre-designed sales and marketing materials, and sales training for participating contractors.
“Local sponsors and contractors such as Strand Brothers are delivering services that are transforming the way people use energy,” commented Marsha Quinn, who is with the Department of Energy’s Building Technologies program. “Homes are more comfortable and America is on the road to energy independence.”
HAPPY HOMEOWNERS, TOOOverall, participating homeowners are overwhelmingly happy with the results. For instance, Austin, Texas, homeowner Michael Wright is pleased with his experience with the program. He came to AirTech Energy Systems, unhappy with the comfort level in his home. It just wasn’t staying cool enough. At the same time, the electric bills from air conditioning his house was outrageously high. “Something had to be done for both the sake of our family’s bank account and comfort,” said Wright.
Carroll’s team assessed Wright’s entire house and found a lot of room for improvement. First, there were inadequate levels of insulation in the attic. Also, the air conditioning equipment needed replacement, and the heating system needed a tuneup. Finally, the ductwork throughout the house was leaky, and a lot of conditioned air was lost to unfinished crawlspaces and the attic.
“If we only looked at the HVAC system, we would not have served our customer,” explained Carroll. “But we believe you have to look at the entire picture. It’s the only way.”
To solve the indoor comfort issues, insulation was blown into the entire attic, which Carroll said increased the insulation value to R-30. In addition, the air conditioning system was replaced with a higher-efficiency model and the furnace was repaired and serviced. The most dramatic improvement was the replacement of leaky ductwork.
To make matters even better, solar screens (a special type of exterior shade) were installed on every window, designed to keep out more than half of the Texas sun and heat. At the same time, each window was caulked and sealed to cut down on the loss of conditioned air.
“The temperature throughout the house now stays at its thermostat setting without the wild swings we used to experience,” said Wright.
AirTech Energy Systems is smiling, too, because it sold more energy-efficient products and systems thanks to taking the total systems - or, home performance contracting - approach.
“We’ve been doing it for some time,” said Carroll. “We believe in the whole-house concept.”
Strand is just as happy to have jumped into the program.
“Austin Energy’s Home Performance with Energy Star program has been a huge market-changing force,” he said. “Because of those incentives, our customers routinely retrofit their entire house instead of using a piecemeal approach. Everyone wins. The homeowner is more comfortable with substantially lower energy bills, the city of Austin offsets the need for more power plants, and Strand Brothers is able to do what is best for the customer.”
For more information, visit www.energystar.gov/hpwes.
Sidbebar: Local ProgramsOver the past few years, the Environmental Protection Agency (EPA) and the Department of Energy (DOE) have worked with states, utilities, and others to implement and pilot Home Performance with Energy Star programs. To date, the program is available in 16 states and active in 20 markets. According to officials, 26,000 homes have been retrofitted under the program through 2006.
The first Home Performance with Energy Star programs were established by Austin Energy, Wisconsin Focus on Energy, and the New York Energy Research and Development Authority (NYSERDA). Each has had success. From 2001 to the middle of this year, authorities said over 150 contractors participating in NYSERDA’s Home Performance with Energy Star program have helped New Yorkers invest over $110 million to improve the energy efficiency of more than 15,000 homes and save over 16,000 MWh of electricity and over 600,000 MMBtu of fossil fuels.
Phoenix is the most recent addition to the Home Performance with Energy Star fold. According to Chandler von Schrader, who is with Energy Star’s Home Improvement Program, new programs are under development in Missouri, Ohio, western Philadelphia, Maryland, and the city of Atlanta. Officials are always looking for sponsors to run local programs.
For those cities and utilities interested in starting a program, the following three steps are recommended:
1. Conduct market research. Start by establishing an advisory group made up of key stakeholders to assess market conditions and make preliminary plans for developing the program and marketing program.
2. Develop policies and procedures. Specific policies and procedures are needed for quality assurance, contractor participation, contractor reporting, and financing or other incentives.
3. Partner with Energy Star. Interested parties are to submit a signed Energy Star Partnership Agreement and Program Implementation Plan to the Federal government. The Program Implementation Plan should document how the local program’s policies and procedures will meet national program requirements.
For a list of current locations, or to find out more regarding how to start a local Home Performance with Energy Star program, go to www.energystar.gov/hpwes.
Sidebar: What to KnowContractors that can deliver whole-house retrofits are essential to the Home Performance with Energy Star program. One common market barrier is a limited supply of qualified contractors with the skills to diagnose and sell whole-house energy efficiency improvements. Therefore, opportunities do exist.
In regard to training, contractors must meet minimum skill requirements to participate in the program. Most local sponsors provide contractors with some level of technical training. This can include classroom and field sessions, which cover building science principles, diagnostic testing, and installation best practices. Sometimes written exams and field testing is used to ensure that contractors are skilled to begin performing work under the program.
In addition to technical training, some program administrators offer sales and business process training to help contractors succeed in selling and delivering home performance services.
Participating contractors are required to sign a participation agreement that explains program policies and procedures. The agreement usually covers issues such as general liability insurance, maintaining appropriate business licenses, and homeowner complaint/dispute resolution procedures.
Some programs offer discounts on training or financing to purchase equipment. The New York State Energy Research and Development Authority (NYSERDA), for instance, has offered financial assistance to help participating contractors purchase necessary diagnostic equipment and become accredited through the Building Performance Institute.
For more information regarding contractor participation requirements, or to find a list of current local Home Performance with Energy Star program locations, go to www.energystar.gov/hpwes.
Publication date: 09/10/2007