Thanks to government incentives and fears of rising energy costs, more Americans than ever are weatherizing and upgrading their leaky and energy-guzzling older homes. In fact, between 2010 and 2011, the home performance industry experienced a 40 percent rate of growth.

If the industry continues to expand, it would be upgrading almost half a million homes a year by 2017, and almost a million by 2019, according to a new report from the National Home Performance Council (NHPC). But the boom could lead to growing pains, the report contends. The challenge is to maintain the high level of growth without significant federal funding and with dropping natural gas prices that lead to consumer complacency about energy efficiency.

Below, ECOHOME talks with NHPC executive director Kara Saul Rinaldi, about the challenges and opportunities on the road to energy-efficient housing.

Is the home performance industry at risk right now? What challenges does it face?
The industry has the potential to expand rapidly to a scale that could make a meaningful contribution to increasing the energy efficiency of the U.S. residential housing stock and decreasing the U.S. carbon footprint, but it is facing a number of challenges.

  1. The loss of American Recovery and Reinvestment Act of 2009 (ARRA) funding is resulting in the termination of incentives and related support for many home performance programs across the country.
  2. The Weatherization Assistance Program (WAP) faces severe underfunding, and many home performance contractors have been performing WAP-related work.
  3. The recent decrease in the price of natural gas has left uncertainty about the cost-effectiveness of home performance programs, and many gas utilities have been reining in their investment in residential retrofit programs as a result. Utility cost effectiveness tests around the country are being implemented in a way that is biased against home performance and energy efficiency programs.
  4. Energy efficiency is not being valued as one of the cleanest, cheapest, most readily available resources.
  5. Consumers and third parties experience significant difficulties accessing utility data.
  6. The overarching stalemate in Congress has meant that legislation to help the industry overcome barriers has been stalled.

What are the paper’s top recommendations?
In regards to establishing a robust consumer market for whole-house upgrades, the most significant challenge the home performance industry faces is the lack of a compelling value proposition for homeowners. Despite all the benefits of whole-home upgrades, for many homeowners these benefits are not sufficient to offset the related costs of the upgrade. The industry’s first priority must be to enhance the value proposition, by increasing the benefits to homeowners and/or decreasing the costs.

Our recommendations for improving the consumer’s value proposition include:

  • A significant and well-designed (and, ideally, national) incentive, either in the form of a rebate or tax credit;
  • A coherent strategy focused on a national “recognition system” for incorporating energy efficiency into the real estate value chain;
  • Development of better and more accurate systems for measuring energy savings; and
  • Development of strategies to reduce homeowner costs by tapping reactive markets and staging upgrades over time.

In addition, the following actions would help to create a robust consumer market:

  • Reduction in the costs of data collection and transfer;
  • Greater standardization of program requirements and operations to enhance contractor profitability;
  • Development of a national marketing and branding strategy developed by or in conjunction with the private sector; and
  • Development of appropriate financing programs, particularly on-bill repayment mechanisms and consumer products that can be originated rapidly and easily.

Your report recommends a home performance industry roadmap. Why is that necessary?
There are a number of organizations that are currently making crucial contributions to the home performance industry through a variety of activities. By coordinating this work, we would present ourselves as an organized, cohesive force with a clear vision for profitability and scale.

Despite general agreement on fundamental home performance-related issues, there is no industry-wide consensus on how profitability and growth to scale should be achieved.  In fact, we don’t even have a definition of success–what achieving scale means. This is why the home performance industry needs a roadmap.

The need for a plan is widely recognized among industry experts, and a number of recent meetings and publications have made important contributions to proposing solutions to the challenges the industry faces. Our report builds on these contributions by presenting a number of potential solutions to key challenges that have emerged in discussions with stakeholders and proposing a framework for prioritizing projects and allocating responsibility for undertaking them.  Our report is not envisioned as a roadmap itself – instead, it is intended to facilitate a broad stakeholder discussion towards creating one.

What should a home performance industry roadmap include?
A home performance roadmap should include:

1. A list and description of the key challenges that the industry faces;

2. A delineation of one or more strategies explicitly designed to address and surmount each of these challenges; and

3. A clear and comprehensive process for implementing and testing strategies, including which stakeholders will take on key roles. One organization (or a small group of organizations) should be tasked with providing overall coordination of implementation efforts to ensure that results are more–not less–than the sum of their parts.

What are you hearing from policymakers?
Policymakers have not been blind to this issue. In the 111th Congress, bipartisan leadership in the House and Senate, with support from the White House, put forward legislation to establish the Home Star program to advance $6 billion toward home retrofits, nearly half of which would focus on performance based rebates. In the 112th Congress, the first performance-based residential tax credit was introduced in the Senate (S.1914). In the House of Representatives, the Home Owner Managing Energy Savings (HOMES) Act was introduced with bipartisan sponsorship showing again that home performance is not a partisan issue. Progress continues in the current Congress: The HOMES Act was reintroduced in the House of Representatives in May, and the Senate has been considering a number of bills that call for the refunding of the Weatherization Assistance Program and the advancement of different types of energy efficiency programs, among other initiatives.

As our report demonstrates, programs are well positioned to expand rapidly even in the absence of any new policy or legislative initiatives (though those initiatives are important to addressing key challenges to growth). Implementation of the innovative approaches described in the report could improve many programs’ effectiveness and increase the numbers of homes upgraded under their auspices.

What is your vision for the home performance industry 10 years from now?
In 10 years, home performance will be mainstream. Every state will have a robust home performance market with trained contractors. Homeowners will be able to access utility consumption data securely, and share it with contractors and other third parties at will. Homes will be smart and able to communicate their energy use with the homeowner, the contractors, and the state energy officials that accurately measure the energy use of the residential sector. Home upgrades will get significant incentives because the energy savings is sold into a carbon market that values carbon savings at a high price. American homeowners will choose energy efficiency because it not only makes their family comfortable in their home, but is also a cost-effective option because energy prices are high and the cost of a quality retrofit is low.

In 10 years, this could all happen–with the appropriate policy mechanisms in place. We hope that this report can jump start a conversation amongst home performance stakeholders–from contractors to auditors, policymakers to program implementers, manufacturers to software engineers, NGOs to utilities—and put the industry on track toward developing and implementing a plan to bring profitability and longevity to the home performance industry.

Building on its successful launch in 2012, ECOHOME’s Vision 2020 program continues in 2013, focusing on eight critical areas in sustainability. Track our progress all year as our panel of visionary focus-area chairs, our editors, and leading researchers, practitioners, and advocates share their perspectives on initiating, tracking, and ensuring progress toward sustainable priorities and goals in residential construction between now and 2020. The program will culminate in an exclusive Vision 2020 Forum in Washington, D.C., in September 2013, and with a special edition of ECOHOME in Winter 2013. Click here to see the 2012 Wrap-Up.