Putting the "Performance" back in Home Performance

There is a raging and healthy (most of the time) debate about the future of home performance and energy efficiency more generally.

However, I have found that some of the key terms in energy efficiency and home performance are misused or have many different definitions,  resulting in confusion and impeding our ability to move forward.

Here are some key terms and how I have come to understand them. Please feel free to debate and discuss - that is the point of this blog!

Home Performance:
While “home performance” has come to mean a specific method to conducting whole house energy efficiency retrofits on existing building - generally including BPI / RESNET, energy audits and modeling, combustion safety, etc.  

However, I believe home performance is not about specific tactics, but is instead an umbrella term that refers to a systems based approach, based on building science, that measures success in terms of results not by individual measures. Home performance is not how you do it, but instead is defined by outcomes including energy, health, and comfort.

Performance Testing:
We often confuse performance testing of a building and the overall performance of a project. Performance testing can provide more accurate and site specific inputs into a prediction of results or as a design tool, however real performance of the overall system can only be calculated at the meter (or in comfort or air quality), not in a blower door test or whole house assessment.

Prescriptive Programs:
While the current understanding of “prescriptive programs" tends to focus on programs that specify improvements and values, generally using population averages (deemed savings, product rebates, etc) vs. whole house site based analysis. However, I believe the real definition should be more broadly defined. Prescriptive approaches to energy efficiency, and prediction of savings, include all methods and models that are not calibrated to results at the meter.

Employing a whole house methodology, or a simulation model to estimate overall savings, does not make a performance project. In fact, simulation models and “home performance” as we know it, is entirely prescriptive until such time as there is accountability and transparency to the results.

Performance Based:
“Performance Based” approaches to energy efficiency are based on past performance, calculated by measured performance data (meter data). However, incentives are driven by upfront predictions and performance risk (savings) is still be shouldered by ratepayers and homeowners and paid in advance of actual results.

Past performance may be used to calibrate incentive levels and provide feedback to contractors / vendors / and ultimately consumers to drive improvement in the system, however fundamentally we are still betting with other peoples money, which triggers regulation and oversight - contractors and industry are not sharing the actual performance risk.

 Performance Contracting:
“Performance Contracting” is a system where there is accountability directly to actual savings calculated based on the meter. Rather than ratepayer fronting incentives, and consumers taking performance risk on their investment in EE paying off, private parties will front incentive values to customers and put their money where their mouth is - taking full performance risk.  

Utilities will procure energy efficiency through demand side capacity contracts, and buy real and documented savings from aggregators or contractors directly. This will massively reduce program costs, as managing the risk becomes a private sector activity, and will result in dramatically increased value of the negawatt.

By paying for delivered savings, the program and utilities roles change from defining business models and micro managing programs to attempt to regulate good results, into simple consumer protections, and ensuring that savings being procured are real and calculated correctly. Delivery models, software, measures, training, and quality assurance, all traditional program roles, will become functions of the private sector instead.

Moving Toward Performance:
Many of the internal Home Performance industry debates center on us all using the same terms, but in different ways. In particular, there is a loud contingent focused on getting quickly to “performance.”  However, they tend to want avoid regulations in the process, when in fact what they are proposing is in fact a “performance based” model, where there is scorekeeping on predictions, but risk still flows to ratepayer and homeowners.

Personally, I believe in moving to Performance Contracting and an Energy Efficiency as a Resource model for home performance (lowercase home performance - performance not a specific approach) and that there is a strategy and series of steps that will allow us to move from our current prescriptive approaches to home performance, to a reasonable middle ground where incentives are calibrated to past performance and results are reported transparently on an ongoing basis.  I believe that the dataset that emerges from this Performance Based approach will be critical in defining the actual energy efficiency yields for whatever models work for industry and customers, and will provide the critical actuarial data that will facilitate a move to Performance Contracting business models. We must convert Energy Efficiency from uncertainty to manageable risk before private markets can engage.

However, tracking performance is considerably more complicated than people tend to giving it credit for, and it will take some time to make this transition. Energy Efficiency is not something you can meter or measure and is easy to confuse with a range of external changes like weather, building use, and even resource price changes. Energy Efficiency is in fact a calculation and derivative value that requires relatively significant amounts of data to be statistically valid, and is not nearly as easily to “see” through the noise as many would make it out to be.

Given all of this, I think there is actually a lot more alignment than one might believe reading some of the industry blogs and forums. I would like to challenge everyone to move from high level theory by translating ideas into actionable steps and processes. Nothing happens overnight, and we have to make sure we have a solid foundation in place to support the transition from prescriptive programs to performance based markets.

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