Thursday, May 3, 2012

NO MORE CHASING SIR - Dear Contractors, Now We Can Build!!

Group E-mail sent 5/3/2012 - With SIR basically gone, we can re-focus on accuracy, and build a program that delivers on promise:

Dear Contractors,

I'm going to talk about 4 things:  
  1. The recent positive program changes. 
  2. Many haven't fully grasped the changes - some ideas to help with that. 
  3. How this change allows us to get back to focusing on continuously improving the accuracy of our modelling.
  4. Finally, modeled to actual energy consumption ratio is in the area of 1.369324, and this needs to get fixed quickly.  

1. Program Changes - SIR goes away (for the most part)  -  No kidding, no more chasing SIR!!!  

Effective April 1 a change occurred that I think people don't fully grasp.  (Continuous changes to the program had left a lot of people overwhelmed and confused, including me).   Pre-approved Measures no longer require SIR -or- TRC for 10% hemi or 50% aHPwES.  Cost effectiveness of measures is pre-determined, doesn't matter what SIR you get.  

I've heard a lot of complaints about models having no resemblance to the home when they finally get approved, these model contortion efforts can stop.  Now that SIR and TRC are no longer required for pre-approved measures, we can now run everyone through the program for SOME incentive, which is fantastic! 

Even more fantastic - we can run 50/50 (aHPwES) without SIR (something I've never seen before).
And even the loans are not completely off the table for sub 1.01 jobs.  You can "buy down" the loan which means you can borrow up to the project cost TRC and SIR would justify.  Basically they will loan based upon project energy savings.  In other words, if that $10,000 project would make the bar at $6,000, you can borrow that amount and only need to find $4,000 from other sources.    

2.  Getting our heads around this change - Not many attended the webinar, and even if you did the true meaning of recent changes are such a serious easing of restrictions that they may not be very clear.  If it's not clear to you, it's probably not clear to your sales force.  

So how do we convey this to the sales force?

Some are saying "Just don't do it".  I think if clients are looking for financing, direct them to it but encourage/require completion of your standard financing application also.  Make sure they understand the financing is challenging, and they may not get the whole amount financed through the program.  And remember:  Customers have the option to “buy down” the project cost so that the financed amount meets the cost effectiveness criteria.
We lobbied hard for this, and it's a great program.  Again, have your standard financing paperwork.  Explain that clients can buy down the total cost of the job by what the energy savings pays for, so they will only have to get outside financing for the difference. 
This means the additional net monthly cost of improvements to homeowners will only be the monthly cost of the amount not financed through on-bill.  On Bill requires very true TREAT, so this should help provide confidence to clients until we get to Published Realization Rates. 

Now that NYSERDA has removed SIR and TRC hurdles for a significant amount of work, accurate modeling is not an impediment to getting incentives.  Please re-focus on accurate modelling instead of "tweaking to get approval" so when results tracking does occur, you don't put yourself and the program in a difficult spot.  

Please everyone, begin rigorously truing your models, or Realization Rates will continue to deviate from reality.  $1 promised = 63 cents saved does not engender confidence.  When results tracking by contractor becomes public, companies who are not diligent with their modelling run the risk of looking incompetent or worse, fraudulent.  Conversely, those with good realization will have the most powerful sales tool imaginable.

REVIEW THE 3/30 WEBINAR by clicking here: No more chasing SIR!!!

3.  Improve Modelling Accuracy - This requires truing to actual consumption.  

For over a year we've been truing our models.  Not chasing SIR because we see transparency of realization around the corner, and we perceive eventual competitive advantage opportunity here.  That meant very very few 1.01 SIR opportunities.  These program changes means we can finally sell jobs!  

This change means the only reason a contractor might want to game TREAT is to over promise savings to make improvements "payback" better.  I don't think that's something any of us wants to risk.  Leave that for "guy with van, dog, and six pack."  ON BILL has such rigorous modelling requirements I don't think significant gaming can occur.  So pressure on accurate modeling is again going in the right direction!!!

4.  Fix Accuracy of "Promise" - SOME DATA YOU SHOULD ALL BE AWARE OF:

TRUING NOT REQUIRED.  Since the program never required truing, it's something many don't know how to do.  It's extra work.  (PSD has videos showing how to do it.)  Unfortunately, initial models typically grossly overstate consumption.  Overstate consumption and you overstate savings.  So everybody needs to learn to TRUE UP.

From data on completed jobs post GJGNY audit, it appears the models overstate reported consumption by about 36.9324%.  This would lead to the conclusion that even if improvements are accurately modeled, and energy savings % is correct, actual energy & dollar saving will be pretty dramatically overstated.  Truing was optional, that eventually will not be the case.  May as well start truing now for reasons that I hope to make apparent.  

I have calculated consumption overstatement by contractor as well.  If someone else doesn't start ranking contractors using these numbers, I will.  Numbers will be from here forward, not looking back.  SIR cliff made the playing field incredibly unfair, but as of April 1, 2012 that's gone.  From here forward NYSERDA has dramatically fixed the turf, so bad numbers are not justifiable.  

Think of this:  When we can prove $1 promised = $1 saved, selling big jobs becomes child's play.  Winning jobs away from the non- HPwES low bidder will be easy.  Now is the time to correct our modelling so we can point to policy as cause for inaccurate promise during this small window of time, rather than our practices, ethics or cultures.

Again, your audit's modeled and reported energy consumption are publicly available data.  If someone else doesn't start ranking contractors using these numbers, I will.  Eventually I will get Realization Rates as well, the long term goal is to track Realization.  

So accuracy may be a metric you want to think about from a competitive advantage/disadvantage perspective henceforth.  

Cara at CSG added reported consumption to page two of the approval, which makes truing much easier.  She has also added square footage, which allows us to quickly understand the opportunity before the audit.    

Results tracking is coming.  We have time to prepare if we start now.  Please start truing up your models.  Thank you for your time!

Ted Kidd

If TRANSPARENCY is the answer and FEAR is the barrier, how do we help put fear aside?  ~Ted Kidd, 2012

(Bryan, maybe someone could update the most recent eligible measures list to reflect the changes.  Most recent one on contractor portal is 1/1/12, still states projects must have sir greater than 1.)

****  Note - in looking at the data - there are a fair number of projects that project annual energy savings GREATER than the total annual consumption reported by the customer.   You would think the SIR of these projects would be tend to be predominantly in the 1.01 area, but this appears not to be true.  Possibly due to GeoThermal installs?

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