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Utility Marketplaces Can Improve Energy Efficiency Program Uptake

William Hughes
Sep 21, 2021

Guidehouse Insights

Many utilities and communities offer programs that encourage low and moderate income (LMI) homeowners to upgrade their appliances and weatherize homes to improve energy efficiency. Such programs directly address the challenge LMI homeowners have in funding investments that would lower power bills. Unfortunately, these programs are often underutilized by people that qualify. The growing presence of marketplace tools offered by utilities can help increase adoption of these programs going forward.

LMI Programs Have Been Available for Years 

Examples of such federal programs include the Low Income Home Energy Assistance Program (LIHEAP) and the Weatherization Assistance Program (WAP). The Energy Institute at Haas at the University of California, Berkley values the home improvements at over $5,000 worth of home appliances and insulation upgrades at no cost to the homeowner. 

Despite the significant value to the homeowner, researchers from the Energy Institute at Haas found little interest. A test group of eligible households were recipients of a professionally managed promotion of the program, resulting in a participation rate of 6%. Without the promotion, only 1% signed up. Well over 90% of the eligible population was uninterested in participating.

One explanation for the lack of interest is that participation involves complying with some intrusive conditions, such as in-home inspections. In addition, when appliances are involved, the homeowner must agree not to resell the lightly used appliance. 

On the other hand, there are individuals who may qualify for the LMI category but otherwise have adequate net worth. Some retirees fit this description. Although the percentage of home ownership skews toward higher incomes, the 2019 U.S. Census Bureau report, Percent Distribution of Households by Selected Characteristics Within Income Quintile and Top 5 Percent, found that households in the bottom twentieth percentile of income have a homeownership rate of 41%. Some people that fit in the LMI category do not see themselves as needing federal assistance.

AI-Based Marketplace Apps Can Connect Eligible Participants with the Program

The integration of these LMI programs with marketplace programs offers a novel solution to this low participation rate. The marketplace offerings from Enervee, a frequent collaborator with Oracle, and Smart Shop™ from Bidgely are examples of LMI-oriented solutions in spring 2021. The effectiveness of marketplace programs relies on disaggregating advanced metering infrastructure data from individual homes, evaluating the opportunities where power-related products would be most effective for that homeowner, and presenting that solution for consideration. 

Marketplace apps show the recommended solution with its list price, but also include any applicable discount coupons and rebates available from the utility, ultimately showing the net price for the product. The next step is to include pricing for the solution based upon qualification in a program such as LIHEAP or WAP, which would be as low as $0 for those who qualify. The marketplace would want to make it clear that qualifying for the program involves an application process and that not everyone will qualify. 

Changing the Message to Increase Program Attractiveness 

The strength of a utility marketplace is that is has the power to pinpoint the most effective way to increase energy efficiency. This will be more effective than going through the hassle of completing the LIHEAP/WAP application process and then having a team of auditors come into the home to confirm the marketplace program’s findings. 

Of course, if people want to avoid the hassle of the application, they can just pay the discounted price. In either case, an old appliance is removed from the grid and a new, more efficient appliance takes its place.