Beyond Home Energy Audits with Home Performance with ENERGY STAR

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Beyond Home Energy Audits withHome Performance
with ENERGY STAR

• AESP 18th National Energy Services Conference
• Presented by
• Mark Dyen
• Conservation Services Group
• 1/28/08

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What Is Conservation Services Group?

• Implementation contractor for Home Performance
  with ENERGY STAR for
• NYSERDA
• The Long Island Power Authority
• The Honeywell Team in New Jersey
• Energy Trust of Oregon
• City of Anaheim, California
• NGRID and NSTAR in Massachusetts

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Market Transformation or--

• There is a market for refrigerators and a market
  for light bulbs, so the market transformation
  aims to push people who want to buy a light bulb
  or a refrigerator to buy a more efficient model.
  There is a natural market for refrigerators and
  lighting, and the public policy thrust is to get
  people to buy more efficient models.

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Market Creation

• There is no natural market for a comprehensive
  energy efficiency upgrade of a home. The idea for
  the service itself is the result of public policy
  analysis. We are dealing with market creation as
  much as market transformation.

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Strategy for Market Transformation and Market
Creation

• Create a network of trained and qualified Home
  Performance Contractors
• Facilitate these Contractors selling and closing
  large scale comprehensive jobs
• Market the brand name for these contractors to
  distinguish them from the un-certified
  competition

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Home Performance Brings Three Different Players
with Different Goals

• Sponsors (utilities, public agencies) want
  verifiable improvements in energy efficiency
  increasingly want significant, system-wide energy
  use reductions
• Contractors want profitable higher dollar sales,
  improved public perception of the firm, access to
  new markets
• Customers have a whole variety of goals

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Customers Have a Variety of Motives

• Some want to cut high fuel bills
• Some want to replace an old furnace or air
  conditioner
• Some want improved comfort
• Some want a healthier home
• Some want to save energy for environmental reasons

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How a Sponsored Program Can Help a Contractor

• Public awareness of the Home Performance services
  and approach
• A call to action to potential customers to use
  Home Performance services
• Access to training
• Access to certification
• Access to measurement equipment
• Legitimacy through Program participation
  agreement and/or BPI accreditation

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What A Contractor Has to Provide

• Skilled staff to be trained
• Administrative staff for data entry
• Internal quality assurance system
• A staff retention plan (certified staff can shop
  around)
• Building science equipment (blower doors, duct
  blasters, combustion safety analyzers, infrared
  cameras)

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What a Contractor Has to Provide

• Continued
• SALES!

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Sponsored Programs Encourage Sales

• ? Contractors actually make the sales

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Insights Gained

• Understand the differences between what motivates
  the Program and what motivates the contractor or
  the customer
• It takes the right kind of contractor
• Know the customers

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Program Motivators

• Program wants to
• Save energy
• Reduce consumer costs
• Cut pollution
• Meet regulatory demands
• Reduce arrearages

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Contractor Motivators

• Contractors want to
• Do the right thing in quality and energy
  improvements
• Make serious money out of participating in the
  Program
• Differentiate their firm from the cut rate
  competition
• Use Program incentives to offset the risk of
  participation and increase profits
• Avoid being left out

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Customer Motivators

• Customer may or may not be interested in those
  things may be driven by
• Concerns about safety
• Wanting improved comfort
• Curiosity and interest in new technologies
• Prestige
• Concern about future prices or reliability
• Simple need to replace heating system

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The customer may or may not care about cost
effectiveness

• More often than not, the customer sees the money
  saved by energy efficiency as a way of helping to
  pay for the home improvements, not as the reason
  for the home improvements

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You must be the right kind of contractor

• Already active and successful in home improvement
  market - Home Performance is a good place to
  learn building science, but a tough way to learn
  the contracting business

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Right kind of contractor (cont.)

• Insulation company with a residential retrofit
  emphasis
• General Remodeler
• HVAC company which already promotes high
  efficiency equipment
• Solar Installer ??

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Right kind of contractor (cont.)

• Ambitious firm aiming to grow
• Already has administrative capability small
  office with staff to handle administrative
  reporting requirements
• The boss likes promoting high quality/energy
  efficiency/green services the boss has to be
  100 on board

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Who are the Customers?

• People who need to replace a furnace or air
  conditioner, or who want to solve a problem like
  a cold/hot room, moisture problem, ice damming
• Homeowners who want to improve home comfort
• Homeowners who want to improve home health/safety
• Homeowners who feel that energy costs are out of
  control
• Green Up Customers

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Who are the Customers?

• So far, the customer base has been made up of
  people who want to
• Replace a heating or cooling system,
• Correct a specific problem like a cold room,
  moisture problem or ice damming
• Improve home comfort

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Who are the Customers?

• Some contractors look for customers who have
  specific health problems mold, excess moisture,
  poor indoor air quality

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Who are the Customers?

• With growing public concern about climate change,
  carbon emissions and related issues --
• There is already a growing customer interest in
  Green new homes that is unprecedented.

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The Dynamics of Program Development

• The Program has to build contractor capacity and
  consumer demand in parallel.
• If the contractor capacity is built but there is
  no demand, the contractors will take the training
  and leave the Program.
• If customer demand comes before there is
  qualified capacity, customers will find some
  contractor who will give them poor service and
  not inform the Program.

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The Dynamics of Program Development

• Program sponsors are most worried about unmet
  demand.
• -- But there has to be some market tension
  (customers seeking contractors) or the
  contractors wont make the leap to Home
  Performance.
• Whether its Apple marketing the iPhone, or a
  sponsor marketing comprehensive home energy
  makeovers a bit of unmet demand is a good thing.

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The Dynamics of Program Development

• Build Contractor Network
• Training, certification, equipment, financing,
  incentives for contractor reporting
• Quality assurance system
• Public Launch
• Marketing (paid and as big as you can afford) on
  public education
• Call to action push customers to act now

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The Dynamics of Program Development

• Program Launch strains the network
• waiting lists develop
• prices go up
• contractors start to be selective about customers
  they serve.
• -- And new contractors are attracted to the
  Program.

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The Dynamics of Program Development

• Champions Emerge
• Contractors who are ambitious, volume-oriented
  and committed from the top person down.
• The Champions take over sales immediately, and
  work their way into taking over marketing.
• The Champions marketing efforts drive the
  market, attract competition and reduce Program
  costs.

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• NY Home Performance Contractor Ads
• - Examples -

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• Reduce Energy Costs

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• Protect the Environment

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• Focus on Home Comfort, Health Safety

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• Offer Comprehensive Measures

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The Dynamics of Program Development

• When Champions take over
• The Program role changes
• Marketing is aimed at emphasizing the brand
• Make sure you have a genuine Home Performance
  Contractor
• QA and QC become even more critical

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The Dynamics of Program Development

• After Champions emerge
• The Program role changes
• Contractor recruitment and technician training
  become a means of feeding the network, and
  preventing monopoly from developing.

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The Dynamics of Program Development

• Once the Champions have emerged,
• and the market is partly self-sustaining
• The Program can launch special marketing efforts
  or incentives to boost production.
• The Program can introduce new technologies.

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The Dynamics of Program Development

• But - you cant skip steps.
• Infrastructure development
• Public Launch media/ direct sales through audit
  Program / public relations
• Incentives for training, loans for customers
• QA
• Long term commitment

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• For additional information
• Mark Dyen
• Senior Vice President
• [phone] x13215
• mark.dyen_at_csgrp.com
• www.csgrp.com