Home Energy Scores Can Drive Energy Efficiency Investments

As a new homeowner in Denver, I was eligible to participate in a city pilot program to receive a free Home Energy Score (HES). A contractor conducted the assessment and I received a standard HES report that provides a current energy efficiency score and a potential score for the house after recommended upgrades. 

The HES was developed by the US Department of Energy and launched in 2012 to help homeowners understand their energy use and motivate them to implement energy efficiency measures. Going through the assessment made me wonder whether the score is reaching its stated objectives.

Excerpt From an HES Report

(Source: Home Energy Score)

Early Assessments Have Shown Mixed Results

The score is used by local governments, utilities, and nonprofits across the country to drive residential energy efficiency improvements. However, the programs are young and initial impact assessments don’t form a cohesive picture. 

According to City of Denver data, nearly half (49%) of participants in a pilot HES project say they will implement recommended upgrades within 6 months to 1 year. However, there is no way of knowing who will follow through. The pilot project is for new homeowners and sellers, and is part of the city’s 80x50 Climate Action Plan. An assessment in New Jersey showed that those who receive an HES are more likely to release their information to energy efficiency contractors, but are less likely to follow through on improvements.

Strengthening the Link between HESs and Energy Efficiency Adoption

The results of the initial assessments show that there are opportunities to strengthen the incentives for HES recipients to improve energy efficiency. Some emerging best practices include the following:

• Include low hanging fruit recommendations for homeowners.
  

The HES only looks at fixed assets in a home, such as the building envelope and HVAC equipment, making any recommended upgrades, such as insulation or a new furnace, costly to implement. For example, the cost of a new HVAC system runs between $6,000 and $12,000. 

All recommendations in the report have a 10-year payback timeframe, but it’s often too long given the median length of homeownership is 13.3 years in the US. Meanwhile, many more affordable options, such as behavior modifications or lighting upgrades, often don’t make it into the report. Program managers can structure their programs to educate homeowners on these more affordable options.

• Link HES programs to rebates and financing.
  

Given such a high cost barrier for upgrades, homeowners might be more incentivized if they are explicitly offered rebates, financing, and other options to implement suggested recommendations. While many HES reports include a generic section on available rebates, the information must be explicit and linked to specific recommendations for the homeowner. Partnerships with utilities, contractors, and vendors are required to strengthen the value proposition of these upgrades.

• Incentivize the use of HESs during transactions in buyers’ markets.
  

In buyers’ markets, HESs can be a real differentiator between otherwise similar properties. Buyer consideration of HESs can put more pressure on sellers to make energy efficiency upgrades and discuss energy efficiency during negotiations. Some cities, like Portland, Oregon and Berkley, California, are requiring HES disclosure at different points in the sale process. Training home inspectors to include an HES in their reports can achieve similar results.

Receiving an HES score helped me understand my home’s energy consumption and potential improvements. As HES programs grow in maturity, expect more people to adopt energy efficiency measures as a result.