A blog about the Business of Energy

Full Disclosure – I am a RESNET Board and Quality Assurance Committee Member

For several years now I’ve listened to and watched as numerous parties have complained that no one is ever taken to task by RESNET.  That’s not ever been true, but the public perception of that was definite.  The discipline undertaken by RESNET has been largely behind the scenes and out of the public eye.  Recently however, there has been a change in process that has made this far less true. It is now possible to view HERS Providers that are either under suspension or revocation.  This new level of transparency bodes well for the future.

Though it remains true that while cases are being adjudicated, they are still private. Once decisions are made, those decisions are made public when a punitive measure is adopted.  Obviously, when no action is taken, there is no reason to make decisions public.  I can attest from my work on the Quality Assurance Committee that a great deal of attention is being paid to these issues and that positive modifications to the process are ongoing.  It is always a balancing act to address the need to protect the industry with due process for those who find themselves the focus of attention of the organization.

Primarily, I’m pleased to see that we are achieving greater transparency around the work of the organization.  That is my personal objective as a member of the board, to drive transparency to the greatest possible degree.

Steve Byers
CEO
EnergyLogic, Inc.

What is the role of government or regulating bodies to encourage or mandate energy efficiency in our lives? That is a question many of us have asked at various times.  I’ve been pondering the pros and cons of it all, and questioning the success and failings in reaching the goal of reducing energy demand.  So the question is which is more effective in influencing behaviors and choices the typical homeowner, landlord or builder make.  Is it the carrot or the stick?  In order to not offend (at least not too much) in this age of hyper-partisanship and our overly litigious society, I am trying to think about this in an objective way… if that is at all possible. But I digress, that’s a conversation for another day.

Let’s start by looking at the Energy Independence and Security Act of 2007 (aka the stick) which is being phased in over many years (note its passage was over 6 years ago). Two of its most controversial provisions were the high efficiency furnace and boiler requirement for most northern states (Colorado included) and the compact florescent or high efficiency light bulb provision.  Contrary to many people’s belief it did not entirely ban incandescent lights but required them to be 25% more efficient.  This is now the requirement as of January 2013 no thanks to the kicking, screaming, and misinformation of a few.

The requirement that all furnaces and boilers installed after May 2013 be 90% or higher has been delayed in implementation just recently.  This is due to several power companies and manufacturers arguments that the added necessary cost of installing the new condensing style venting (estimated at an additional $1500 to $2500 per install) may actually cause more energy use.  This may make lower income customers buy cheaper units like electric or kerosene heaters, which cost more to operate than the older 80%+- that many houses and multifamily units currently have.  Amazing how considerate these utility companies are…but I digress.  The Department of Energy estimates that upgrading to energy efficient boilers and furnaces would have saved homeowners 17 billion dollars, and as much as 60 billion saved due to the lighting upgrades.  These estimates are based at current energy costs, and I would bet as you are that the cost of energy hardly goes up at all in the next 10 years.

Now for the carrots turn. Many rebate programs offered through the tax code and local utilities have been around for years and have had varying degrees of success.  There are different schools of thought to utilities offering either audits at cost to the homeowner or offering them completely free, and what the follow through is after upgrade are recommended.  It still seems that information as to why homeowners should take this or that action and how much money they will save, is the key to getting people to buy into whatever it is that us as energy professionals are selling them, be it through a utility sponsored program or convincing a new home builder to go beyond the current minimum energy code they may be building to.  (Actually getting many builders to just this basic level is quite a feat in some areas).

As to the carrot, stick question when related to the new home building industry it seems quite apparent that only the most forward thinking and the well informed homeowners are currently pushing the industry forward to a more efficient path.  Minimum building codes seem to be the only thing really pushing the majority of builders to even consider how much energy their buildings will consume once built.  I also have to unfortunately conclude that most owners of existing homes likewise will only decide to make real choices to become more efficient when there are real economic or possibly more cataclysmic consequences.  With the current outrage over bumping up standards for the light bulb and now furnaces and boilers and the fights being had every time new building codes are proposed, it seems that this question is not easily answered.  If human nature is any guide, then forcing people to do something many times may get the opposite result desired.  However leaving everything to the “free market” also doesn’t seem to get the results we need if we are serious about becoming energy independent as a country or living in a more sustainable way.  At minimum you would think most people would like to keep more of their money in their own pocket… the ultimate carrot.

Phil Drotar
EnergyLogic, Inc.

Got an axe to grind? Express yourself on the RESNET Standards!

If you are a HERS Rater (or even if you’re not and you’ve got an axe to grind) and you’ve ever moaned, griped, complained or whined about the Mortgage Industry National Home Energy Rating Standards; more commonly known as the RESNET Standard, now is your time to stand up and make your voice heard.

That’s right.  Look here:

RESNET PROPOSES FIRST ANSI STANDARD FOR THE CALCULATION AND LABELING OF THE ENERGY PERFORMANCE OF LOW-RISE RESIDENTIAL BUILDINGS USING THE HERS INDEX (RESNET STANDARD 301-2012)

What’s that mean?  It means you have a golden opportunity to make your voice heard in influencing the future RESNET Standard.  You don’t have forever to do this.  The deadline for comments is October 9^th.  That’s plenty of time to get your two cents of opinion (I know that most of you have at least three cents worth of opinion) in for consideration.

I suggest coming with good, sound, well-reasoned arguments.  I’m not on the committee, but I’m guessing that opinion without foundation, poorly reasoned arguments, half-truths, self-serving positions and other such folderol will not make it past the committee.  Of course, it’s a public comment period, so you can, of course, do as you wish.

Here is the link to get started: http://www.resnet.us/professional/standards/proposed_consensus_standards

And here’s some further food for thought.  This is a discussion on the RESNET LinkedIn group:

http://www.linkedin.com/groupItem?view=&gid=3540707&type=member&item=135001488&commentID=89879825&trk=group_search_item_list-0-b-cmn&goback=.gna_3540707#commentID_89879825

This discussion thread (scroll down), eventually gets to a topic regarding the RESNET Standard.  David Butler, our esteemed colleague, who does a fantastic job of moderating the RESNET BPI Energy Audit and Home Performance group, also on LinkedIn, brings up a point of fact in the standard that seems ripe for change.  Did you know that you don’t have to perform a blower door test or do duct leakage testing to have a valid HERS Rating?  It’s true, the Standard doesn’t require it.  It is the purview of the HERS Provider to create such a requirement.

Truth be told, I don’t know any HERS Providers that do so.  At the same time, I don’t know any Raters that use this loophole, but it’s there and it seems like an excellent time to fill that hole.  The reality is that RESNET Rating compliant software imposes a penalty if you choose not to test.  However, those penalties aren’t as severe as you might think.  I firmly believe that blower door testing should always be required for a valid HERS Rating.  I’m comfortable with the current requirements for duct leakage testing (I’m well aware of the debate around the issue).

I’d like to make a final point that I believe does get lost in the discussion.  The Standard is like code in the sense that it is a MINIMUM.  Providers can always set higher standards for anything that they believe merits such.  However, I believe we do all want a Standard that sets an appropriate and defensible minimum set of expectations.

What do you think?

And don’t forget… October 9^th.  This is like voting in an election folks.  You probably ought not complain if you don’t speak up.

First – Get yourself some new windows.  This will save you about 50% on your energy bills.

Okay!  50% to go right!  (nudge, nudge, wink, wink – don’t get all “mathy” on me for those of you who are thinking “but, but, you can only save a percentage of what’s left, not the remainder!” – tell it to the marketing department)

Second – Get yourself one of those Amish space heaters.  Good for another 50%!  Sweet!  Technically we’re done.  But let’s go ahead and be sure we’re all the way there.

Third – Paint your house up with some of that fancy NASA ceramic paint.  Now these boys have toned down their claims so we can feel real good about getting another 20% of our energy saved.  Whoo Hoo!  Dang, we might be turnin’ the meter backwards!

Cue – Cold Shower, Slap the Face, Ridiculously Loud Alarm Clock.There is a Sucker Born Every Minute.  PT Barnum didn’t actually say that, but oh my is it true.  Or, in the words of Dean Vernon Wormer, “Fat, drunk and stupid is no way to go through life, son.”
It’s really time for folks to wake up about the simple math; whether it be deficit spending, basic understanding of energy or too good to be true scams.  Stay tuned for some simple back of the napkin ways to show homeowners why the items above are too good to be true.  Can we coin a new acronym for this?  We have TBTF for behemoth Wall St. banks, how about TGTBT for energy scams!

In getting this tongue-in-cheek exercise together I found this site http://www.nlcpr.com/index.php  referenced above as well.   Nice work!

We’ve been at this a long time.  EnergyLogic and its predecessors have been doing HERS ratings since 1998.

As a matter of fact, we’ve done something north of 15,000 HERS Ratings over that time frame.  So, we think we’ve got it down now.  We’ve long wanted to do something that we believe is bold and has yet to be done.  This won’t be our first venture into uncharted waters, that’s really part of our DNA.  We’ve had a lot of firsts, but this one feels special as it is so tangible to our builder clients.

Starting immediately, for a modest fee, EnergyLogic will offer a guarantee of the heating and cooling energy use for any home that carries our HERS Rating.  This is a logical, if bold, step for our company.  It is a reflection of confidence in:

• Ourselves – our staff, processes, training and systems
• Our builder clients – who working with us build excellent and energy-efficient homes
• Building Science – in that it gives us the framework to have confidence in our evaluations of homes

There are some details of course, but we set ourselves the goal that the “fine” print would fit on one side of one page in 14 point font.  We think that should do the trick.  Basically the fine print says that the occupant will behave in a rational way and operate the house within commonly accepted standards.  That’s about it.  Simple.  Powerful.  Easy.  What’s not to like?

In 2012 we plan to make this available to our Rater Partners around the nation.  We’ll have a simple vetting process and a small amount of training to participate.  We believe that this simple tool will bring real, tangible value to the HERS Rating that it hasn’t enjoyed before.  While we certainly believe in a HERS Rating’s value without additional bells and whistles, we do think this will resonate more concretely with those less engaged in our world!

Please find a flyer describing this service right here - EL_EnergyGuaranFlyerOct2011.  Contact us if you’d be interested in this program in the future.

At dinner last night, my twelve year old daughter related the following story (paraphrased a bit):

In science class, the teacher asked, “Who can name some root vegetables?”

My daughter was the only one in class who could respond.

She answered, “Well, carrots, potatoes, beets.”  Her teacher praised her and her classmates asked how she possessed such mysterious and arcane knowledge.  She told them that we have a garden in our front yard.  They were flabbergasted.  Specifically they said, “Weird!”

What else do you grow?  She related a number of other strange crops like cabbage, strawberries and (okay this is a little weird) Brussel sprouts.

“Weird!”

photo credit Deanne Fitzmaurice

“You guys are hippies!”

Hmmmm.  This summer a nice lady walked by our (weird) front yard garden and asked my wife what a particular type of plant was.  It was esoteric I suppose; If tomatoes are esoteric.  Sigh.

Where does food come from?  The grocery store of course.

Since when is it weird to grow some of your own food?  Does that make one a hippie?  Here is a picture of me from our website (scroll down just a bit).  I know that a picture doesn’t tell you everything (in fact, I have a substantial amount more gray hair now), but this image is pretty much what you get.  Hippie is not a term that many would use to describe me.

So, this made me reflect on energy, as I am wont to do.  The same phenomenon exists in the public conception of energy, where it comes from, how it works, how much we waste (about half), etc.

The same thing exists with money.  We do not understand money any more than food or energy.  Where does it come from, where does it go, how is it created?  How much of it is required to do various things in our society; provide for the common defense, fund entitlement programs, feed pension plans.

We don’t understand simple math.  We don’t seem to grasp that a nation that maybe will eke out 2% growth this year doesn’t square with pension plans that are predicated on 8% growth.  How is that going to play out?

I could go on, as I’m sure most of you could.  I don’t think it is actually a failure of our educational system, though that is certainly a part of the issue.  I do believe we’ve become intellectually lazy and in some cases downright intellectually dishonest (see the current cast of characters we’ve elected to office with few exceptions).

I don’t have the answers (well maybe a couple, but I’m sure you do too!).  I’m not expecting a leader to ride in on a white charger and save the day (see intellectually lazy and dishonest).  But I do want to see a leader that will stand up and tell the truth.  That will be a painful exercise.  It will be exceptionally difficult for anyone telling the truth to be elected (see intellectually lazy and dishonest).  In some instances, one might say, “I’m not asking for much.”   In this case, I am and I know it.  But that is what I want and I intend to demand it from anyone expecting to receive my vote in the future.

If you are looking to the Federal government to provide leadership, funding, guidance, standards – really, anything that you might think is necessary to drive energy efficiency forward – stop kidding yourself. To be blunt, the Federal government is broke. Many downstream governments are broke as well.

This could lead to another conversation about the term broke, obviously related to broken. Bankrupt is a term that may refer to more than just money and that term probably applies equally well. Apologies in advance to those few who aren’t – but morally bankrupt would be equally appropriate. The system is broken; gridlock and petty partisan politics have completely circumvented leadership.

If you are building a business, a program, a utility DSM plan, etc. on the promise of legislation that has a financial mechanism to drive adoption, you are on a fool’s errand.  Not only is this legislation highly unlikely to happen, but even if it does, it is a crap shoot as to whether it works or not.

Here is the harsh truth. The one proven thing that moves consumers to change their behaviors is higher energy prices. California is the obvious example. Other factors may move the needle on energy efficiency and conservation, but they pale in comparison. As Winston Churchill said, and sadly, it’s true, “You can always count on Americans to do the right thing – after they’ve tried everything else.” I’m not the first to point this out or even to use this quote to describe our response to energy efficiency. But again, if you are building a business model on hoped-for legislation or mandates, you are misguided. The political climate for mandates is almost non-existent.

This isn’t the worst thing that could happen. At the end of the day, what is most sustainable is a stable market for our industries services. Show me a company that has built itself on the back of subsidies, tax credits and rebates and other give-aways and I’ll show you a company that is extremely vulnerable.  Markets are distorted by policy every day. Some distortions are less egregious than other, but all distortions confuse the value of services.

What is the solution? Set standards, demand quality and minimize market distortions. This industry is mature enough to succeed without government largesse. We should promote policy and programs that are designed to support long-term success and avoid short-term fixes that are simply window dressing and solve few problems, if any.

I’d love to engage in a dialogue on this issue, so let’s start here. What are your thoughts, solutions, or challenges? I am anxious to hear about them.

Can we  agree that the vast majority of residential energy audit programs are designed without a shred of entrepreneurial potential?

Programs become fortress like in their imperative to protect themselves and their designs.  But I’m afraid the castle walls must be breached.  A program design should be exactly as sacrosanct as its performance justifies.  No more, no less.  Question assumptions.  Regularly.  And especially in the early stages of a program.

How would Google run an energy audit program?  What about Apple?  Or perhaps Zappo’s?  Do you think that programs that they would design would look like the ones that we have today?  I doubt it.  But just as Google runs trial balloons and then lets them go, programs should do the same.  In marketing, A/B testing is commonplace.  Test Idea A against Idea B.  In energy audit programs, we often run pilots, but only on Idea A. Where is the A/B testing?   Yes, it would take longer and be more expensive.  How much time and money is wasted on faulty assumptions that wouldn’t stand the up to a rigorous test?

Here’s an idea.  The next time a DSM program is designed, make it a competition.  Much like architects might enter a design competition.  And don’t send it to just the usual suspects.  Throw the doors open wide.  The winner might surprise.  They might not be the right entity to RUN the show, but you can pay them for their effort.  Prize money!  A bounty for innovative, entrepreneurial designs.

Then, fund the best two or three and think of it as an incubator for program proof of concept.  Encourage cross-disciplinary teams.  Bring together the engineer and the anthropologist, the marketer and the statistician.  This is how it’s happening in business, cross-disciplinary teams are forging unexpected and new paths in all manner of fields.  Let’s grab a little of that mojo for our industry.

Of course, you know the answer is none.  It really isn’t even a good trick question.  However, I think it’s important every now and again to refresh our memory of this somewhat inconvenient reality.  A lot of us in the industry are working to alter this equation, but it is really ea

sy to forget in drive to stand up energy audit programs.

I’m not as old as some of the old heads in this industry, but I’ve seen enough now to wonder just how often programs meet their stated goals.  I don’t believe that anyone has a sense of the overall success or failure rate for the industry.  And that brings me to the core of the question.  What is success for an energy audit program?

If I ran a program and delivered exactly the number of energy audits that I proposed to do, how much energy would I have saved the client?  None of course.  Now of course, the inverse is even more true, if I fail to meet my goals for audits, I can hardly achieve success.  So, not to be too terribly simplistic, but sometimes we need to get out of the trees so we can see the forest.

So, we can improve the Energy Audit Success Ratio by either increasing the amount of energy saved per audit or we can try to do a lot more audits that save less energy.  There isn’t a right answer per se.  It will depend on the program.  We can design a spectrum of programs that look to leverage success in different ways.  Ultimately though, you simply can’t escape the fact that Audit to Action℠ ratio is the primary driver.

I know that many programs have remarkably poor Audit to Action℠ ratios.  Yet they persist.  What should the ratio be?  10%?  25%? 33%?

I think that we should collectively strive for at least 50%.  That’s ambitious, but we know that programs and companies achieve it, so why should low numbers be tolerated?  One problem of course is the length of time involved in feedback loops to program administrators and participants.  When you get once a year evaluations of performance, what do we expect?  It’s a bit like annual performance reviews for your employees.  Egad.  But that is another subject.

I’d like to see programs designed to be extra

ordinarily flexible.  Programs get  locked into attempting to prove their designs.   Again, if you ran your company this way, you’d develop a business plan, stay with it doggedly, regardless of what the market was telling you and revisit every two or three years.  Of course, that is a formula for being out of business.  And there are a lot of programs out there that should be put out of their misery.

If we ran DSM programs like “real” businesses, we’d have Key Performance Indicators (KPI’s) that we would monitor, react to, fret over, work to improve and work to modify to give us the best information to guide our program efforts.  I’ve yet to see a program that operated in anything that remotely resembled a n entrepreneurial enterprise.    What would that look like?  What do you think?  Subject for the next post…

I love good science fiction.   Call it escapism or serious geekiness, whatever, I love it.  Not all of it of course, there’s poor sci-fi like any other genre, but the good stuff is wonderful diversion.  Here are a few of my very favorite and most recently read authors:

• Robert Charles Wilson
• Peter F. Hamilton
• China Miéville
• Cory Doctrow
• Connie Willis
• Neil Gaiman
• Neal Stephenson

I could go on for quite awhile, but a short list is fine for this purpose.  If you like Sci-Fi, I recommend all of these authors.

There is one thing that I often find troubling in some works of Science Fiction that I’d love to see the community of writers address with a simple manifesto.   It might go something like this:

I will not write about energy intensive activities in my work without giving some indication of where the energy to do these great (or not so great) things comes from.

Perhaps no group of writers is more suited to envisioning alternative yet plausible sources of energy.  Whenever its ignored, I find it disturbing.  Most of our current energy policy has a strong resemblance to either science fiction or fantasy, depending on the parties involved.  It would be great if we left the plausible but fictional sources of energy to the writers and demanded that policy makers stick to something more closely resembling reality.  Science Fiction is one genre that requires us to engage in a willing suspension of disbelief.

We can’t do that with energy policy.

Thanks to you great authors for a few hours spent away from business books.  Both involve dreaming, but of very different natures.