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Assessing the energy-efficiency information gap: results from a survey of home energy auditors

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Abstract

Commercial and residential buildings are responsible for 42 % of all U.S. energy consumption and 41 % of U.S. CO2 emissions. Engineering studies identify several investments in new energy-efficiency equipment or building retrofits that would more than pay for themselves in terms of lower future energy costs, but homeowners and businesses generally do not have good information about how to take advantage of these opportunities. Energy auditors make up a growing industry of professionals who evaluate building energy use and provide this information to building owners. This paper reports the results of a survey of nearly 500 home energy auditors and contractors that Resources for the Future conducted in summer 2011. The survey asked about the characteristics of these businesses and the services they provide, the degree to which homeowners follow up on their recommendations, and the respondents’ opinions on barriers to home energy retrofits and the role for government. Findings from the survey suggest that the audit industry only partially is filling the information gap. Not enough homeowners know about or understand audits, and the follow-through on recommendations once they do have audits is incomplete. But the survey findings suggest that low energy prices and the high cost of retrofits may be more responsible for these outcomes than failures of information.

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Notes

  1. See Gillingham et al. (2009) for a list of the many explanations for the efficiency gap that have been discussed in the economics literature.

  2. Although some home energy professionals prefer “home performance” and other terms that represent more holistic approaches to assessing and improving building energy performance, we use “audit” in this paper as a general term to encompass all related home energy assessment activity.

  3. The effect of energy price on homeowner uptake of audits and retrofits is not well understood. Regions with high energy prices also tend to be regions with more financial incentives for retrofits so sorting out the effect of prices alone requires substantial amounts of time series data.

  4. In October of 2011, the Home Performance with Energy Star program was transferred fully to US DOE.

  5. Comparing pre- and post-retrofit bills was asked in a later question and we discuss those findings below.

  6. The most common computer software packages listed by survey respondents were REM/Rate, REM/Design, TREAT, EnergyPro, and Real Home Analyzer. Most have been developed by the private sector. However, the market share of some software may be partially attributable to requirements from government and utility programs. For example, respondents reported that EnergyPro is required by Energy Upgrade California and Real Home Analyzer is required by New Jersey’s Home Performance with Energy Star program.

  7. Information on auditor fees was selected through use of categorical ranges. The mean fee was calculated by assuming that the value for each range was the mid-point of that range and the value assigned to the top range, $700 and above, was $750.

  8. Firms with more than $1 million in revenues looked markedly different than other firms in our survey. For instance, only 15 % of firms reporting at least $1 million in revenues listed their primary business as energy-efficiency consulting or building analysis.

  9. The Keystone HELP program in Pennsylvania is one example of a program that works through contractors. The program has a list of approved contractors; those contractors handle the paperwork for the loans with homeowners. See http://www.keystonehelp.com/ for more information. Several other programs emphasize their contractor relationships. See Palmer et al. (2012) for descriptions of several programs and a general discussion of energy-efficiency financing.

  10. Each respondent provided an estimate of the percentage of customers who use each method of payment. Over the entire sample of respondents, 56 % reported that at least some customers (i.e., a percentage greater than zero) use energy-efficiency financing; for the group who offer financing or act as a gateway to a program, this percentage rises to 76 %.

  11. One of the three public policy initiatives that the Efficiency First lobbied for is improved access to financing for home energy retrofits. The other two are industry standards and federal incentives, such as rebates. See http://www.efficiencyfirst.org/about/.

  12. The scorecard looks at six policy areas: (1) utility and public benefits programs, (2) transportation policies, (3) building energy codes, (4) combined heat and power, (5) state government initiatives, and (6) appliance efficiency standards. States can earn points in each area, and points are based on potential energy-use impact (ACEEE 2010). See Appendix B for the quintile breakdown of states.

  13. Forty-two percent of respondents reported that their local utility or government conducted its own evaluations independent of the respondent.

  14. Note that there may be substantial variability across the respondents in the threshold comparison of savings to up front cost that causes the auditor to recommend a particular measure and this would affect the likelihood that households will undertake all recommended measures.

  15. Some evidence exists that high-efficiency commercial buildings can charge higher rental rates than those with low efficiency (Eichholtz et al. 2010). Whether high-efficiency residential properties are also more valuable is unclear. Nevin and Watson (1998) find that real estate markets do capitalize efficiency into sales prices. In other words, the present discounted value of the stream of future energy savings is included in the sale price of homes. However, some experts argue that mortgages cannot be differentiated for properties with different energy characteristics because loan-origination requirements do not explicitly account for energy expenditures; some of these experts have argued for legislation to rectify this problem (Institute for Market Transformation 2011).

  16. See, for example, Home Performance Resource Center (2010b)

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Acknowledgments

he authors wish to thank Ian Shapiro of Taitem Engineering in Ithaca, New York, Richard Burbank of Evergreen Home Performance in Rockland, Maine, Troy Tanner of The Home Energy Detective in Manassas, Virginia, and Elizabeth Crabtree of Efficiency Maine Trust for comments and suggestions on draft versions of the RFF Survey and Joe Loper of Itron, Inc. and Chandler von Schrader of EPA for comments and suggestions on draft versions of this discussion paper. All remaining errors are our own. Funding for the survey comes from RFF’s Center for Climate and Electricity Policy.

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Authors and Affiliations

  1. Resources for the Future, 1616 P St NW, Washington, DC, 20007, USA

    Karen Palmer, Margaret Walls, Hal Gordon & Todd Gerarden

Authors
  1. Karen Palmer
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  2. Margaret Walls
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Corresponding author

Correspondence to Margaret Walls.

Appendices

Appendix A: Survey Questions

  1. 1.

    Tell us about you and your company:

Your Name:

Company:

Company Address:

Company Address 2:

City/Town:

State:

ZIP:

Email Address:

Phone Number:

  1. 2.

    Company Website:

  2. 3.

    Your Position or Title:

  3. 4.

    Please list the primary city, county, or metro area in which you work:

Your Company

  1. 5.

    What best describes you or your company’s primary focus?

General contractor

Utility company

Windows, siding, and doors

Insulation

HVAC

Plumbing and/or water heaters

Energy efficiency consultant/building analyst

Municipal or State Government

Training

Non-Profit

Other (please specify)

  1. 6.

    Do you or does your company perform home energy “audits” or similar assessments on residential properties?

Yes

No

Note: Respondents who answer “No” are sent directly to Question #27.

  1. 7.

    What types of buildings do you perform energy audits on? Select all that comprise a significant portion of your business.

Single-family homes

Multi-family homes

Commercial buildings

From this point on, please limit your responses to only single family residential audits, installations and retrofits (do not consider commercial or multifamily energy efficiency projects).

Certification

  1. 8.

    Do you or does your company hold certifications or accreditations from the following organizations (check all that apply):

BPI

RESNET

Other (please specify)

  1. 9.

    Does your company participate in the Home Performance with Energy Star program?

Yes

No

The Audit

  1. 10.

    Does your company, as a standard part of each home energy audit: (check all that apply)

Choices: Never, Rarely, About half the time, Fairly often, Always

Perform a blower door test?

Use infrared (thermographic) scanning?

Obtain utility bills from the homeowner or their utility?

Provide a HERS rating index or other energy index for the home?

Use computer modeling software to project energy usage and/or energy costs before and after improvements are made?

  1. 11.

    If you use computer modeling, what software do you use?

Audit Fees

  1. 12.

    On average, how much do you charge for an audit? Do not include any incentives, rebates, or subsidies you, the government, or the utility provides. If you have a variable fee, please attempt to calculate an approximate average.

No fee (free)

Less than $100

$100–$249

$250–$399

$400–$549

$550–$699

$700 or more

  1. 13.

    If your fee varies by house size, geographical area, or other factors, please explain:

  2. 14.

    Are there incentives/rebates/subsidies for the audit provided by the government or the utility?

Yes

No

  1. 15.

    If yes, please provide a brief description:

  2. 16.

    Do you discount the cost of the audit if the customer enlists your company for energy equipment installation and retrofit services?

Yes, partial refund

Yes, full refund

No

The Audit’s Results

  1. 17.

    In the home energy audits you perform, how often do you recommend the following items for improvements or retrofits. If you do not cover a particular item in your audit, mark N/A.

Choices: Rarely, Sometimes, About half the time, Fairly often, Always, N/A

Windows

Doors

Attic Insulation

Walls, pipes, or other insulation

Heating system

Air Conditioning

Thermostat

Water heater

Refrigerator

Other appliances

Computers, TVs, or other electronics

Lighting

Air duct seals

Caulking, weatherstripping, and sealing of windows/doors

Attic or other air sealing

Other (please specify)

Reasons for the Audit

  1. 18.

    In your opinion, which of the following are reasons why more homeowners do not have energy audits?

Choices: Not important, Of minor importance, Moderately important, Of major importance, Critical issue

Unaware that energy audits exist

Know about audits but don’t know what they are and the info they provide

Think they know everything about energy efficiency already

Think that audits are inconvenient

Don’t trust that audits are reliable and accurate

Concerned about conflicts of interest with auditors who also provide energy services and installations

Not worried about lowering utility bills (i.e., energy costs are a low priority)

High actual or perceived costs of audits

Can’t afford upgrades and retrofits that audit may recommend

Other (please specify)

  1. 19.

    In your experience, of the homeowners who could benefit from an audit, what percentage do not know about audits?

<20 %

20–40 %

40–60 %

60–80 %

>80 %

Don’t Know

After the Audit

  1. 20.

    Do you have some knowledge about the actions homeowners take after you perform an audit?

Yes

No

Note: Respondents who answer “No” are sent directly to Question #35.

Follow through

  1. 21.

    How often does a homeowner follow through within 6 months on each recommendation? If you do not make recommendations for a particular item, mark N/A.

Choices: Rarely, Sometimes, About half the time, Fairly Often, Always, N/A

Windows

Doors

Attic Insulation

Walls, pipes, or other insulation

Heating system

Air Conditioning

Thermostat

Water heater

Refrigerator

Other appliances

Computers, TVs, or other electronics

Lighting

Air duct seals

Caulking, weatherstripping, and sealing of windows/doors

Attic or other air sealing

Other (please specify)

More Follow Through

  1. 22.

    In general, how often does a homeowner:

Choices: Never, Sometimes, About half the time, Fairly often, Always

Make at least one of the improvements you recommend?

Make all of the improvements you recommend?

More Follow Through

  1. 23.

    In your opinion, which of the following are important reasons why homeowners undertake specific improvements after getting an audit?

Choices: Not important, Of minor importance, Moderately important, Of major importance, Critical issue

The specific improvement/investment is low cost

Projected savings on utility bills are high

Installation is convenient and nondisruptive to the household

The improvement provides other benefits (attractive windows, home temperature comfort)

Financing is available for the improvement

Homeowner values “green” investments (strong environmental values)

Homeowner is interested in increasing property value

Other (please specify)

  1. 24.

    If you answered “of major importance” or “critical issue” to the “improvement/investment is low cost” option in the above question, was a government or utility subsidy or financing program a reason for the low cost?

Yes

No

  1. 25.

    If yes, can you supply specific examples?

Increasing the adaptation of energy efficient practices

  1. 26.

    Provide a ranking of what you believe the least important to most important factors are that would induce more homeowners to adopt energy efficient retrofits and improvements. Rank them from 1 (least) to 6 (most).

Better understanding and awareness of audits

Better access to financing

More government rebates and subsidies

Better (or cheaper) options for improving energy efficiency

Higher price of energy

Less uncertainty in cost savings from energy efficiency investments

Installation and Retrofits

  1. 27.

    What type of installations/retrofits does your company offer? (check all that apply)

None/do not do retrofits or installations

Heating and A/C

Water heaters

Insulation

Air duct sealing/taping

Air sealing

Window Replacement

Lighting

Appliance installations

Other (please specify)

Note: Respondents who answer “None/do not do retrofits or installations” are sent directly to Question #35.

Financing

  1. 28.

    Do you offer financing (or act as a gateway to financing) for energy-efficient retrofits/investments? Check all that apply.

Offer financing

Act as gateway

Neither

  1. 29.

    If you act as a gateway, what company or government agency provides the financing?

  2. 30.

    What is the interest rate and loan term?

  3. 31.

    Is the interest rate a below-market interest rate due to a government or utility incentive program in your area?

Yes

No

N/A

  1. 32.

    In you experience, approximately what percentage of customers pay for their energy efficient retrofits/investments using the following methods? (put in whole number only…do not use % signs…try to make numbers add up to 100…skip only if you cannot make an educated guess)

Cash/check

Credit Card

Home Energy Financing Program

Home Equity Loan

Other

Other Incentives

  1. 33.

    Are there other incentives/rebates/retail buydowns offered by the state or local government or utility incentive program in your area? Do not include manufacturers’ rebates.

Yes

No

Don’t know

  1. 34.

    If there are, please provide their names and a brief description:

Ex-post analysis

  1. 35.

    How often do you compare actual energy savings after retrofits and improvements to the energy savings predicted in the audit? If you do not perform audits, mark N/A.

Choices: Never, Rarely, About half the time, Fairly often, Always, N/A

  1. 36.

    If you do compare actual savings after retrofits and improvements have been made, how often do you use the following methods?

Choices: Never, Rarely, About half the time, Fairly often, Always

Ask the homeowner directly about savings (phone or email)

Compare pre and post-improvement energy bills

Compare post improvement energy used to predictions from computer model

Other (specify method and frequency)

  1. 37.

    Do any of your federal/state/utility programs require an evaluation that compares actual energy savings to predicted energy savings?

Yes

No

N/A

If so, which ones?

  1. 38.

    Do any of your federal/state/utility programs conduct their own evaluations of actual energy savings to predicted energy savings?

Yes

No

N/A

If so, which ones?

Final Comments

  1. 39.

    Please provide comments you may have on what, if any, changes or improvements in the audit industry could increase homeowner adoption of energy efficiency improvements:

  2. 40.

    Please provide additional comments you may have on the government’s role in increasing homeowner adoption of energy efficiency through audit and implementation incentives.

  3. 41.

    Would you like a copy of our research results of this study when it is completed?

Yes

No

  1. 42.

    If you own or manage your own company: (please use only numbers and omit dollar signs and commas)

How many fulltime employees do you have?

How many part-time employees do you have?

What was your (estimated) revenue in the most recent year in US Dollars?

What was your total revenue from energy audits in the most recent year?

  1. 43.

    As a thank you for completing this survey, would you like to be entered into a drawing to win $500 for the charity of your choice? (If you win, we will contact you by email)

Yes

No

Appendix B: American Council for an Energy-Efficient Economy State Energy Efficiency Scorecard

First Quintile:

  1. 1)

    California

  2. 2)

    Massachusetts

  3. 3)

    Oregon

  4. 4)

    New York

  5. 5)

    Vermont

  6. 6)

    Washington

  7. 7)

    Rhode Island

  8. 8)

    Connecticut

  9. 8)

    Minnesota

  10. 10)

    Maine

Second Quintile:

  1. 11)

    Wisconsin

  2. 12)

    Hawaii

  3. 13)

    Iowa

  4. 14)

    New Jersey

  5. 15)

    Utah

  6. 16)

    Maryland

  7. 17)

    Pennsylvania

  8. 18)

    Arizona

  9. 19)

    Colorado

  10. 20)

    District of Columbia

  11. 21)

    Nevada

Third Quintile:

  1. 22)

    New Hampshire

  2. 22)

    New Mexico

  3. 24)

    North Carolina

  4. 25)

    Illinois

  5. 26)

    Idaho

  6. 27)

    Delaware

  7. 27)

    Michigan

  8. 27)

    Ohio

  9. 30)

    Florida

  10. 31)

    Indiana

Fourth Quintile:

  1. 32)

    Texas

  2. 33)

    Montana

  3. 34)

    Virginia

  4. 35)

    Tennessee

  5. 36)

    Kentucky

  6. 37)

    Alaska

  7. 37)

    Georgia

  8. 39)

    South Dakota

  9. 40)

    South Carolina

  10. 41)

    Arkansas

Fifth Quintile:

  1. 42)

    Louisiana

  2. 43)

    Missouri

  3. 43)

    Oklahoma

  4. 43)

    West Virginia

  5. 46)

    Kansas

  6. 47)

    Nebraska

  7. 48)

    Wyoming

  8. 49)

    Alabama

  9. 50)

    Mississippi

  10. 51)

    North Dakota

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Palmer, K., Walls, M., Gordon, H. et al. Assessing the energy-efficiency information gap: results from a survey of home energy auditors. Energy Efficiency 6, 271–292 (2013). https://doi.org/10.1007/s12053-012-9178-2

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