Who agrees a dramatic overhaul is needed? Who think this program is not a great example of “When Your Incentive System Backfires.” Does this EMPOWER silliness offers the answer, or is it simply more of this death by a thousand cuts? How about a system that lets you sell whatever you want, where job approval incentive isn’t about "cost effectiveness pass/fail”?
Seems dissatisfaction with NY HPwES is at an all time high. Production is as low as it’s been in nearly a decade, and people are lining up to leave. Is anybody having fun with SIR, TRC, ProForma Tools, or the ever more confusing “deemed cost effective” tweaks by NYSERDA?
How about a system where you don't continuously wonder what you can sell?
How about a program where the government gets energy savings at the price it wants to pay,
...the consumer gets home improvements for the net cost they were told,
...and we can focus on designs that meet needs, wants, and budget, rather than software games?
How we think about "Home Performance" creates a fundamental orientation to our view of how programs should structure incentive. It can create bias that prevents seeing alternatives....
(amalgam of comments from various interviewee’s)
- What are performance based incentives?
- A method of scaling rebates to the amount of energy savings achieved from performing an energy efficiency project.
- Example Incentive: $.40 per annual kWh saved. This is roughly the extrapolated value currently, without discounting for current program realization failure rate.
- How is this system different from current practices?
- Currently, we operate in a “Threshold” or “Cliff” system where EE projects (or individual “approved” measures) must meet a minimum Savings to Investment Return (SIR). Rebates are based on a fixed percentage of the total project cost (10%, or 50% for lower income).
- Jobs that save energy, but don’t meet “cost justification” thresholds are not eligible for any incentive.
- Performance Based Incentives would remove “cost justification” thresholds while still allowing the incentive paid to meet energy savings value requirements of programs. Incentive pays for the value of energy saved rather than backing into incentive cost effectiveness on project by project basis. Thus, the incentive is always cost effective and requires much less momentum killing scrutiny and modification.
- Cost of “At The Kitchen Table” opportunities is very high and should not be squandered due to programmatic designs attempting to “cherry pick” opportunity. Ultimately it is the homeowner and the consultant that are best suited to collaboratively determine what solutions meet the needs of homeowner and home. Every opportunity with an interested homeowner should be capitalized upon. Instead of telling people “Not Cost Effective” or “Not an Approved Measure” this approach says “The program thinks this is a nice opportunity to save energy and is willing to contribute $X toward the project.”
- Idea of “Net Cost Design” leveraging improvement budget AND energy savings into larger, more effective projects.
- Not cherry picking cost-effective measures and missing the opportunity to provide complete solutions.
- Contractor Predicted energy reduction will be compared to actual post-retrofit usage for each project that participates in the program. A “Realization Rate” will be calculated for each project at regular intervals and aggregated to create a “Contractor Realization Rate.” Contractor Realization Rates will be published and sorted highest to lowest in a Contractor or “Gerardi Registry” that is accessible by all members of the public. The Contractor Registry will also allow other comparative, competitive, and quality management metrics using public project data (auditor name, project cost, estimated savings, blower door #, project zip code, etc.). By allowing graphic representation of this data contractors can compete in ways meaningful to the consumer. (reference to HPXML minimum dataset.)
- One of the purposes of the “Contractor Registry” is to inform consumers about how accurate contractors are at predicting their energy use reduction.
- This will provide homeowners with a way to select the contractor that best suits their needs based on all available information. (Need deep air sealing talent? Sort contractors by leakage reduction results)
- Another purpose of the Registry is a Quality Control Feedback Tool for contractors. It allows them to see how accurate their predictions are, and improve their modeling, construction, bonus best crews, train worst, etc.
- Creates positive opportunities to correct issues when projections fall short, and further strengthen relationships with clients through proactive behavior.
- Creates a “Race to the Top” for contractors as they compete to have the best realization rate in the program.
- Eventually, the program may elect to use the realization rates as determining factor for automatic job approval. Possibly top third of contractors would have the most streamlined approval process, providing yet another reason to excel. The tool would be very effective for identifying contractors who need additional training and support.
- Project Design (Contractor)
- Still perform BPI Energy Audit and be required to model the project
- Contractors could design projects with all of the efficiency measures needed and include other improvements.
- Adding in measures that have NO energy savings don’t cost the program anything, but allow people to improve their homes
- Lets clients include Honey Do List items on their work scopes
- Increases the likelihood of sales
- Reduces the cost/lead of sales and marketing
- Comprehensive projects are more likely to result in customer, contractor, and Energy Efficiency success.
- Dramatically reduce sales and marketing cost by increasing close rate.
- Remove restraints to design of innovative solutions.
- The Contractor Registry encourages/rewards contractors for being conservative with their modeling.
- Although contractors have the ability to overpredict their energy savings (yielding a marginally higher customer incentive), their realization rate will decrease making them appear less competent to future customers, and risking greater scrutiny and difficulty getting jobs approved.
- Contractors who do more diligent work can justify the higher costs through their standing on the registry in metrics of realization, air leakage reduction, and/or modeling accuracy.
- Harnesses the power of feedback loops, transparency, and naturally competitive spirit.
- Make Contractors accountable for Energy Savings. Currently they are simply doing what is required by the program to get jobs approved. This removes accountability for results from the contractor and shifts it to the program.
- Shifting accountability from the Program to the contractors arguably removes a huge and growing liability exposure programs have for realization failure. Studies show programs SIGNIFICANTLY under delivering for a very long time. The longer this goes on the more appealing a class action lawsuit becomes. Lawsuits for unmet energy savings projections are becoming increasingly common and FTC is siding with consumers even when claims made are vague.
- TRUTH and QUALITY are both Great Marketing Opportunities, and encourages salespeople to deliver both.
- Project Approval (NYSERDA)
- Review and approval involves only reviewing projects for health and safety, missed opportunities, and contract language (similar to pre SIR days).
- Burden of project review for TRC, SIR, etc. and kick back for model or contract “redo” would no longer be necessary,
- Funding burn rate very easily adjusted. Increasing or decreasing incentive per KW Saved the program can easily manage funding AND program employment.
- This is a simple adjustment mechanism that can be communicated through all layers of the system. Eliminates complex rules.
- Ability to adjust employment levels state-wide (dial up incentive during lean times, similar to how the FED adjusts money supply) helps avoid layoff, and loss of talent.
- Automatic project approval will be made possible with this system
- A minimum data set will be necessary to allow this.
- Project Construction (Contractor)
- Because tracked realization is ranked and published, contractors are invested in the energy savings of the project and will perform better work
- BD # at or below target
- Contractors are motivated to save even more energy than they model - the idea is that contractors might go above and beyond for their clients (eg. do more air sealing, install CFLs without bother to model, etc)
- Crews have the ability to be individually tracked on the Registry and will be included as part of the competition for excellence.
- The more that the contractors elect to enter more data for the voluntary fields, the more actionable information they will be able to get back.
- Test-In and Test-Out Blower Door Operators will have the ability to be tracked (optional)
- Project Quality Assurance (NYSERDA + Contractor)
- Realization rates are a main driver of quality assurance, and help spotlight projects for review. This offers both QC and learning opportunity.
- Work would still be inspected for quality, and the contractors needing assistance would be apparent, they’d be the ones with low on the realization registry or with significant results scatter.
- Energy modeling software could be flexible. Contractors can use whatever software they want so long as minimum HPXML Dataset is provided. Modeled savings by top of the registry contractors would not be held to scrutiny.
- In order to effectively move to the Performance Based System, and ensure enthusiastic contractor buy-in, a number of transitional incentives should be considered.
- Contractor incentives for high realization projects
- ex. $500 for projects above .85 or the top 2000 projects a year. $200 for the next level, etc...
- Awards for top performing contractors in a region/state-wide, top 1st year contractors, top 2nd year contractors.
- This is designed to encourage contractors to start using the Contractor Registry, and performance of good overall work
- Phasing in Automatic Project Approvals
- Communication of this to contractors
- This is a win-win-win for the customer, contractor, and the program. Contractor and homeowner interests align as solutions design, accuracy, and quality supplant "cost effectiveness". Program interests are served as administration and cost effectiveness goals, and adjusting program volume are vastly simplified.