Megacommunities Stakeholder Report Offers Recommendations To Increase Adoption of Residential Energy Efficiency
We are glad to announce the completion of the Megacommunities Stakeholder Report that brings together recommendations from a wide range of stakeholders centered on residential energy efficiency in Connecticut.
Our drive towards cross-sector engagement and strategic innovation in the field of residential energy efficiency – an area which is integral to ensuring affordable and sustainable homes for today and tomorrow – has enjoyed remarkable support from a host of partners. This report and the successful simulation represent the fruits of the grant which we received from NeighborWorks America last year for the Megacommunities simulation with Booz Allen Hamilton in March 2012 (and the subsequent Simulation Final Report).
Since the Megacommunities Simulation, there has been a flurry of activity centered on energy efficiency led by HDF and other stakeholders. HDF organized a workshop on July 24, 2012 in New Britain, at the CT Public Utilities Regulatory Authority’s headquarters. This was a day of idea generation and best practice sharing on residential energy efficiency programs. Between August and October 2012, HDF, with the EEB, DEEP and others convened a series of stakeholder working groups to bring input to the state’s planning process around residential energy efficiency programs. This process produced a set of recommendations in the Megacommunities Stakeholder Report. HDF has submitted this report to the state’s Energy Efficiency Board, Department of Energy and Environmental Protection as well as the energy efficiency program administrators (the utilities companies) for inclusion in planning for CT’s energy future.
For Connecticut to achieve the ambitious goals of PA 11-80, the Comprehensive Energy Strategy and the Integrated Resource Plan, the stakeholder groups find that the state will need to dramatically increase customer demand, attract and deploy significant sources of public and private capital, and grow a well-trained workforce to deliver quality services to homeowners. This undertaking will require the state to go well beyond the current approaches to residential efficiency.
Given the successful outcome of the Strategic Simulation in March, we believe that cross-sector engagement and collaborative innovation is vital to bringing energy efficiency to scale. A stakeholder-driven process can work in tandem with existing legislative and administrative efforts to drive additional momentum in program and outreach strategies. The following summary describes a set of high-level priorities identified by a group of over sixty (60) stakeholders from the public, private and civic sectors. Additional recommendations beyond those that have been prioritized here can be found in the main report which is attached.
Reaching the Goals
Further analysis is required to envision key steps to achieving the policy goals over the next few decades:
- Model the ramp-up of consumer demand, capital requirements and workforce capacity to reach the state’s weatherization goals through an iterative and stakeholder-driven process.
- Engage a stakeholder group to work with the EEB to evaluate the best ways to allocate customer acquisition costs between public dollars and private dollars.
Focus on Contractors
Contractors serve as the frontline marketing channel for both energy efficiency programs and financing options. As the CES supports the transition towards a market-based model to deliver energy efficiency, program administrators must work together with contractors to drive demand for a product that currently attracts low customer interest:
- Implement a robust contractor- and consumer-friendly HPwES program that greatly increases the number of participating contractors, especially those who are already doing work across the state. We must expand beyond the current HES vendors and tap into the broader marketplace of contractors. To drive consumer demand through HPwES, the customer and contractor cost disparities between HES and HPwES must be addressed, aligning the allocation of ratepayer incentive dollars with contractor and customer incentives to encourage deeper energy savings.
- Restructure HES to align contractor and customer incentives to the state weatherization goal to go deeper with energy savings.
- Invest in marketing materials that are co-branded with EnergizeCT that contractors can tailor for their own use, and educate consumers about professional standards of the home performance industry.
- Invest in building contractor capacity for sales, marketing, back office administration, and expansion. Partner with DECD’s Small Business Express Program, Workforce Development Boards and other existing programs to provide training, assistance, loans, etc. to contractors.
Focus on Customers
Customers are attracted to programs that meet their needs. We recommend implementing customer-friendly marketing strategies that provide targeted information about programs that can be clearly understood and relevant to different customer segments. Trusted messengers, and existing complementary program channels should all be leveraged. One key opportunity for customer education is during time of sale or new lease signing. Legislation supporting energy usage disclosure and building labeling can also be put in place to ameliorate the split incentive challenge between renters and landlords.
- Perform a customer segmentation study on the demographic/psychographic profile of who has done HES, who got recommendations, who moved forward, etc. to better understand HES vs. HPwES customer segments.
- Engage a specialty marketing firm to develop consumer-friendly marketing materials, including “packages” of improvements. Ensure the latest marketing best practices are used including multi-touch/multi-platform/multi-channel approaches, use of trusted sources, testimonials, etc.
- Implement a stakeholder process to define a customer engagement platform and its requirements and potential implementation paths. Include energy efficiency program administrators, DEEP, contractors, and other 3rd parties.
- Outsource community-based outreach to nonprofits and community partners better positioned to serve target market segments
- Coordinate program intake and delivery with social services and health and safety programs.
- Empower building owners to market their energy efficiency via a home energy rating labeling system.
Focus on Capital
We support the use of limited ratepayer funds to leverage private capital for energy efficiency funding. Our survey of seven programs in states such as California (Western Riverside County), Connecticut, Maine, Michigan, New York and Oregon show promising program results in terms of energy savings and private capital investment as a result of financing.
- Provide significantly enhanced support to contractors so that they can better promote financing options to consumers, especially since financing is most successful when integrated with program intake and delivery. Encourage participation in the financing program from a greatly expanded set of contractors.
- Implement a pilot program with local credit unions, community development financial institutions and community banks and provide limited credit enhancement.
- Collect and analyze performance data on existing and future loan programs, including underwriting characteristics, loan performance data, and actual energy savings performance data.
- Pursue a sustainable interest rate (i.e. between 4 to 6 percent) that is competitive with the market and that minimizes use of ratepayer and/or public sector capital, reserving the use of lower interest rates for low-income households or as special offers to catalyze a market.
- Consider implementing an on-bill repayment program or improve existing on-bill offerings for specific customer segments to attract private capital investment at reasonable interest rates to customers. Shut-off authority and staying with the meter provisions should be explored for various customer segments, with consumer protection measures for low-income populations. Such provisions should be incorporated if it can be shown that it is necessary to secure low-cost capital and that the benefits outweigh the potential risks to low-income customers.
We look forward to working with the various stakeholders in the coming months to host another two working groups focusing on supporting the development and growth of a home performance industry and workforce for Connecticut, as well as national best practices in energy efficiency program administration.
Click Megacommunities Stakeholder Report to view the complete report.