The sooner we realize that the ONLY thing that maters is delivered real savings at the meter.  Our current approach says, "you will save 20% Mr/Mrs homeowner," when what we really mean is that an average person will save 20%... meaning many (50%?) will save less than promised.  When you combine this with a bias in our modeling for well understood reasons (like real people in temperate zones don't tend to use there thermostat the way our models think they do), tends to over-predict savings in the first place.  

The current model for energy efficiency pushes this all on the homeowner, who is the LEAST able to manage and understand that risk.  Getting real data on real savings will give us the ability change the paradigm and provide real and meaningful guarantees to consumers.  We can make EE much more similar to Solar, which is booming based on the ability that has been developed through solar leasing and PPAs to give consumers a guarantee of savings with ZERO risk.  Go figure... it works!  Solar will double this year and there is something like $1B of private capital flowing into the ma

NEW YORK TIMES
By JULIE SATOW
Published: November 8, 2011

While the practice of retrofitting buildings with energy-conserving technology like efficient boilers, high-quality windows and compact fluorescent light bulbs has been around for years, data on whether these changes result in any real savings has been virtually nonexistent. Now, a new study shows that these relatively straightforward fixes can significantly reduce spending on fuel and electricity.

Deutsche Bank Americas Foundation, a philanthropic arm of the German bank, and Living Cities, a nonprofit partnership of 22 foundations and financial institutions, commissioned the report, which will be released later this month. It examined nearly 19,000 affordable housing units in New York City that had undergone energy efficiency retrofits and found that these changes resulted in a 19 percent savings on fuel bills and a 10 percent savings on electricity across the portfolio. This translates into $240 in fuel savings and $70 in electrical savings per apartment every year.

“We have been looking for the secret sauce,” said Ben Hecht, the president and chief executive of Living Cities. “This study is definitely the first foray into data, and that is going to be critical to convince owners and lenders of the importance of retrofitting buildings.”

At Terrific Tenements, for example, an 88-unit, two-building affordable housing complex on West 48th Street in Manhattan, the installation of new boilers and heating controls reduced fuel costs by 50 percent. At one of the buildings, at 425 West 48th Street, there was a fuel saving of $551 a year per apartment, while at the sister building at 527 West 47th Street, the saving was $355 annually for each unit.

“These buildings are prewar classics and are representative of a pretty broad swath of the city’s housing stock,” said Marc Zuluaga, a vice president and director of the multifamily energy services group at Steven Winter Associates, a building consultant in New York. The company, along with HR&A Advisors, an economic development and real estate consulting firm, conducted the study.

The retrofits at the Terrific Tenements “was not achieved with any particularly exotic technologies” like solar panels or a green roof, Mr. Zuluaga said. Rather, this is the simple story “of how an owner took the worst-performing building type in the city and turned it into one of the best-performing buildings in the entire city.”

Jeffrey I. Brodsky, the president of Related Management, an arm of the Related Companies, the landlord of Terrific Tenements, said: “This study proves that the assumption that you can’t rely on savings when doing a retrofit isn’t true. It may not be perfect or exact, but you will see savings.”

The company does energy audits on all of its New York City buildings, where building engineers examine the utility usages to expose any opportunity for increased efficiency and savings, he said.

Another project examined in the study is Riverview II in Yonkers, also owned by the Related Companies. The 343 apartments at Riverview, at 47 Riverdale Avenue, were heated with electricity, and the landlord was responsible for paying all of the tenants’ electrical bills. The Related Companies started an electrical savings program, including better windows, lighting upgrades and Energy Star refrigerators, that helped reduce overall electricity usage by more than 25 percent.

In addition, each apartment was responsible for paying its own electric bills, giving tenants an incentive to conserve electricity. As a result, the changes translated into $808 in annual savings for each apartment.

The study’s authors hope the results will go beyond persuading landlords to institute environmentally beneficial retrofits. They hope that lenders will use this data and consider underwriting larger loans to landlords based on the projected savings that come from retrofitting buildings.

Currently, lenders do not consider future savings from retrofits when they are underwriting a loan because there is little data indicating what those savings would be, experts said.

In addition to a lack of data, there is also some doubt whether energy audits, like those conducted by the Related Companies, are accurate. This is in part because some auditors are motivated to overstate the potential savings since favorable results help to justify the audits, and also because there is not sufficient follow-up to determine whether the energy audits were accurate.

To help resolve this, the study also created a tool for lenders to confirm the accuracy of energy audits. Using the data gathered, they divided New York City multifamily housing stock into categories based on a building’s age, heating system, electrical infrastructure and other factors.

Lenders can then apply the data gathered in the study to the building types to determine the potential savings and check the veracity of the energy audits. It also allows lenders to identify those buildings that would have the greatest increase in efficiency, and therefore the largest drop in costs, from an energy efficient retrofit.

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As someone who longs believes in the loading order (EE before RE) it might seem strange that I have a problem with this sort of mandate.  My issue is an attempt by bureaucrats to use regulation to force consumers to change behavior, rather than addressing the core reasons why people are not incentivized correctly to make these sorts of investments.

The reality is that for most consumers, Solar actually does make more sense.  It is more reliable in terms of getting the outcomes that are promised in terms of delivered energy (vs. a much higher degree of variance for EE, especially in CA with its HERSII asset rating system that has a noted tendency to over-predict savings by a large degree).  Mind you Solar also benefits from serious incentives in the form of a 30% off tax credit.  But we should not penalize homeowners for our potentially unbalanced policies... we should rather focus on setting up a market that makes investing in the "correct" order a smart decision for homeowners to make.  This approach detracts from solar, by forcing people to make an investment that in many cases is simply not in their financial interest.   

I believe that at some point regulation will most likely be required to get to our goals.  But if we have to regulate our early adopters to "do the right thing" we are in TROUBLE!  

I would suggest we need to use carrots not sticks, and focus on changing the paradigm so that Energy Efficiency has the same sort of value proposition to consumers as Solar... take no risk and put up no money... and you can save.  Then, when we achieve that and have hundreds of thousands of happy early adopters, then maybe we can start telling people that EE is such a good idea they have to do it.