August 25th, 2010

6 Reasons the High ROI of Energy Efficiency Doesn’t Matter

BOSTON -

All I can say is “Energy Efficiency: Why is the Low Hanging Fruit so High?” the second event hosted by Green Light Distrikt Boston in our Cleantech Kingpins series was a HUGE success. It was completely packed, it was fun, and we learned a ton. Boston insider Aaron Lindenbaum wrote a great follow up about his take on how to make energy efficiency (EE) sexy and Brian Hayden wrote an awesome piece about how the event inspired him to take action in his home and what he learned.

A huge thank you to all the speakers, everyone did an amazing job, and Alex from Wattzy who helped me find everyone. Another shout out to NEXUS for hosting us. The NEXUS Green Building Resource Center is the Mecca of green building in Boston and probably the country, in short, they’re awesome. A third thank you to everyone who came, watched, asked questions and joined in on the conversation at the end. I had a great time meeting you and can’t wait to see guys more in the future.

Here’s the little agenda for post

1) Presentations: Below are both the presentation videos and slides. Note, I’m couldn’t upload Lilah Glick’s presentation from the Cambridge Energy Alliance and I didn’t get Alex’s presentation on video.

Here are the speakers:

  1. Alex Patriquin – Founder, CEO at Wattzy
  2. Martin Flusberg – Founder, CEO at Powerhouse Dynamics
  3. Lilah Glick – Director, Community Outreach at Cambridge Energy Alliance
  4. Brenden Endicott – Senior Manager, Energy Markets at EnerNOC
  5. Geoff Chapin – Founder, CEO at Next Step Living

2) Problem with Energy Efficiency Adoption: The speakers addressed 6 main issues that I’ll summarize that explain why energy efficiency adoption is NOT happening.

1) PRESENTATIONS

VIDEO

Powerhouse Dynamics and EnerNOC Present:

Cambridge Energy Alliance and Next Step Living Present

Question and Answer Panel:

2) PROBLEMS WITH ADOPTION

Local VC Alex Taussig just did a great post on his perspective of the problems of home energy efficiency adoption. The great part of Alex’s article, Who cares about home energy efficiency? Not Homeowners, is its links to information sources and it brings some great, hard numbers that back up a lot of the conclusions we had from the event.

From our event , I noticed 6 themes that answered the question ‘Why is the Low Hanging Fruit so High?

  1. EE is not sexy nor visible. On the residential level, its not scene as ‘cool’ nor is there a symbol that you can show the world, it’s completely hidden.
  2. Current policy programs are opt in and not opt out. Research shows that making a program opt out, as opposed to opt in, will drastically increase participation simply due to human nature.
  3. Ease of Transaction. Energy Efficiency may have a good return but if the transaction itself costs a lot or is confusing, people won’t do it.
  4. Apathy. Enough said.
  5. Still too cheap. Americans, on average, are still to wealthy and for a business or home owners, energy is still not a high expense. Most people want to decrease their cable or cell phone bill instead.
  6. Business to Business and Business to Consumer are two very different animals. B2B is mostly about the cash, the B2C sector needs to learn more lessons from the luxury car market, i.e., selling to homeowners and small business on ROI WON’T WORK!

Did we miss any more reasons that explain the lack of energy efficiency adoption?

More importantly do you know of any companies, countries, organizations that address one or all of these items? I’ll be writing up a follow up post that will use these learning to describe the characteristics of a perfect energy efficiency company.

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Chris Williams

About Chris Williams

Chris Williams is the editor of Green Light Distrikt and Chief Marketing Officer at HeatSpring . He has experience in business development, prototyping and new venture research with a focus on geothermal heat pumps, solar thermal and solar photovoltaic technologies. Chris is an IGSHPA accredited geothermal installer and NABCEP certified solar installer. Chris is focused on solving customer facing issues in the creation and adoption of clean energy technologies and products. Chris has installed over 300kW of solar and tens of geothermal systems. He's invented the PV Pal , developed many trainings at HeatSpring, publishes the NABCEP Study Guide , the Hitchhikers Guide to Cleantech and has done due diligence research for Urgent VC . Feel free to connect with him @topherwiliams , on Linkedin , or through email about new ventures, collaborating, writing, research or whatever is on your mind.

  • Brian Hayden

    This is just one of hundreds of perspectives, but I thought I’d share it…

    My ‘Aha!’ moment at the event is a combination of points #4 (apathy) and #5 (too cheap) above, plus a comment from a contractor who asked, “how can we make this work attractive for contractors? I can’t afford to chase a bunch of $2k jobs all around town” (I’m paraphrasing). Then I tried doing it on my own place and couldn’t believe how hard it was.

    I experienced all this and realized that energy efficiency needs to be rolled up into something bigger. It’s too cheap, annoying, and time-consuming on it’s own to be worth haggling and dealing with on an ad-hoc basis. It needs to be sold as part of a home service plan or 5-year home improvement road map or something that is more valuable for homeowners than a lower electric bill.

    Dealing with paperwork and conflicting information and a mess in my house to save a few bucks a month on my electric bill? I’m pretty sure my time is more valuable than that. Budgeting 1% of my home value to pay a professional to protect the value of my single largest investment? That just sounds like the responsible thing to do. It’s a different conversation that I think would yield better results for everybody involved.

  • http://www.thegreenlightdistrikt.com Chris Williams

    Brian,

    I completely agree, I feel that traditional approach to residential EE is completely flawed and should be re-thought. A new system is needed because the existing systems just seems like it is not effective and takes too much work, or maybe that’s the reality, it IS too much work. The issue is that a lot of the work is dependent on policy, both government incentives and building code. It seems that without these changing it will be hard for the market to adjust as well. What do you think?

    Chris

  • Andy Johnson

    Chris, nice blog, I just came by it through a link on Energy Circle. And I would have like to be there for the gathering, sounds like very interesting and important discussion.

    Our take out here with our new county-level ee/re organization in NE Iowa is this “It’s the delivery system, stupid!” There is no broad-based delivery system with the primary incentive to make residential EE happen, to make it understandable, sexy, on-the-radar, etc. Buffet’s of policy carrots only ever reach a minority, the utilities though often mandated find seriously reducing power consumption to conflict with their bottom line, the auditor has an incentive to get in, drop a report, and move on …

    So we’re trying to develop a locally led delivery system with correct incentives, designed to work as a network of local organizations sharing similar tech tools and training and support from higher levels, but organized, managed, and implemented locally.

    We use the history of the Dust Bowl and development of Soil and Water Conservation District movement as a model, as explained in the about section of our web site: http://energydistrict.org. Hope you’ll check it out and send me your thoughts.

    Best, Andy Johnson
    Winneshiek Energy District
    NE Iowa

  • http://www.thegreenlightdistrikt.com Chris Williams

    Andy,

    Glad you found us! I wish you could have been there, it was an amazing discussion and I’m writing a follow up post about what the perfect EE residential company would look like.

    Very interesting model, I’ll check out the link and get back to you on my thoughts.

    To what extent are you using building codes and real estate laws to change the system?

    I feel like we could apply the process of having your car inspected once a year, and having an MPG rating to the building community. What do you think?

    What have you found to be most useful in the delivery system or are you still in research mode? Would love to learn more about it to see what you’re testing and what works, I like the comparison to the dust bowl and think there are a lot of historical and current examples in other industries that we can use…..just need to figure out the secret sauce.

    Chris

  • Andy Johnson

    Chris,

    We’re in the process of moving from research to implementation, so we’ve learned much and will continue to do so for quite a while. One of the main tenets of our “energy district” approach, as we explain on the web site, is that we need free or low-cost technical assistance available to help folks not only with analysis of their home (or sm. business), but also to develop a plan and lead them through it.

    So we’ve been studying various tools, but this requires a combo of auditing software plus economic analysis plus cost estimation plus marketing and salesmanship… and though there’s plenty out there, much of it isn’t accurate or effective (eg major auditing software that can’t accurately estimate energy savings). Yes we’re working with local officials on bldg codes, and also on a scoring method that would allow energy comparison of homes in the local real estate market.

    One of the best approaches to a true mpg we’ve seen though we can’t afford it at the moment is the Energy Performance Score developed by Earth Advantage Institute in Portland (http://www.earthadvantage.org/programs-services/additional-services/energy-performance-score/).

    Another key aspect of an energy district as we’re attempting to define it is structured local leadership. We all talk of the need for policy, better incentives, sexiness, etc, but that’s all geared at hitting the individual. We’re doing that with tech assistance, but we’re also dramatically raising the bar on energy and economics and ethics in the community, with projects such as sustainability planning, local carbon exchange, home energy monitoring, etc. The idea is the that communities mobilize around certain things at certain times, and when they do, the result is not only changed behavior but changed social norms and expectations. We need to move towards and cross the “tipping point” of social pressures on each other …. which again harkens back to the soil and water district model.

    Food for thought, Andy

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  • http://www.thegreenlightdistrikt.com Chris Williams

    Andy,

    Very interesting. Are you reaching out to other organizations to find/share best practices in other regions of the country? There are a couple in Boston that come to mind re: combining auditing + economics + marketing + salesmanship + policy.

    Chris