The Home Performance Industry in 2016: Predictions from the Experts

Each year, we survey the home performance intelligensia (aka our friends, colleagues and clients) for their soothsaying on the year ahead. Feast on an especially prescient and juicy set of predictions for 2016:

The Rise of Efficiency in the Real Estate & Building Markets

“Home performance will become a higher priority in 2016 than ever before. I believe the construction and real estate industry has learned many lessons on how to articulate the benefits of home performance in public education and advertisements. I strongly believe this will be the trend because of the growing interest I’ve seen in 2015 from the real estate industry. It still has a long way to go, but we have come so far!

The biggest threat we face is something that easily becomes the opportunity. The lending world and many in the real estate world still have a limited knowledge of the new building science and what it means to dollars-per-month savings, comfort, and a better way to live. If everyone in the building, energy rating, and green industry could educate one real estate agent, appraiser, or lender, this threat would be greatly decreased. Now, let us all become part of the solution!”

- Sandra K. Adomatis, SRA, LEED Green Associate | Adomatis Appraisal Service, Punta Gorda, FL

“Real Estate Integrates Energy: I expect we'll see some major developments to how the real estate industry recognizes and values energy, making the value more visible for home buyers and sellers. That's the big one.”

- Jacob Corvidae, Manager of the Residential Energy+ program | Rocky Mountain Institute, Boulder, CO

“2016 will see the long-anticipated marriage of real estate and energy efficiency. In our new and existing homes, it’s important to make energy efficient features visible for an entire chain of stakeholders during the real estate transaction so that energy efficient features become visible and can be accurately valued when a home is sold. As a key partner of the U.S. Department of Energy’s Home Energy Information Accelerator, Elevate Energy is assisting with seven (yes, seven) pilots across the US to encourage the marriage of data between efficiency organizations and multiple listing services (MLSs). Our prediction is that with the right stakeholders in place, the Accelerator pilots will help demonstrate how we can expand the availability and use of reliable home energy information at relevant points in the residential real estate process. Once we are able to consistently populate MLSs with this data, the growing inventory of energy efficient or high performance homes will sell for more money, leading to an increase in inquiries to energy efficiency programs and home performance contractors in coming years.”

- Pamela Brookstein, Market Transformation Specialist | Elevate Energy, Chicago, IL

“Bigger is not better. In new construction, builders will continue to push their construction practices to be better and more efficient and will be forced to start looking at small, right-sized heating and cooling systems. Currently, there are not many manufacturers making small capacity systems. This is a significant future need in the industry, and if we don't start innovating now, we will miss this opportunity.”

- Anthony Grisolia, Managing Director, Innovation Programs | IBACOS, Pittsburgh, PA

Efficiency Programs 2.0

“The industry will begin to transition to markets, from programs, this may take reeducation camps for some. More home performance contractors will make the decision not to involve themselves with utility programs.”

- Bruce Manclark, Director | CLEAResult, Portland, OR

“I think decisions about how programs are run and marketed to customers will start to shift more toward meeting the customer where they are already making buying decisions rather than trying to get the customer to fit into a particular program model. This is part of the utility of the future concept where customers will be able to interact with their utility more directly through an app or an online portal. It will remain to be seen how this manifests itself over the next few years, but I think that 2016 will see more utilities moving in this direction.”

- John F. White, Senior Manager | ICF International, Columbia, MD

“Small numbers of well-run businesses will grow, fix more houses, and strengthen their profitability in 2016 by focusing on business fundamentals. As interest in home performance programs wanes, many “home performance” businesses will suffer and fold because they haven’t figured out how to operate in the market.”

- Mike Rogers, Principal | Omstout Consulting, Burlington, VT

“It’s fairly clear that in 2016, fuel prices are likely to remain at near historic lows. If you’re making a strictly economic pitch to prospective clients, you’re making it hard on yourself! Programs need to be more responsive to adjusting cost criteria or they’ll find themselves making poor, uninformed decisions; aka NYSERDA vis-a-vis their contractor base.”

- Steve Byers, CEO | EnergyLogic, Berthoud, CO

“The incentive programs out there right now are  lacking in general. I’m personally trying to build my company further and further away from incentive programs a) because they are unreliable, and b) because we feel that they are misdirected. We believe there will be a ‘day of reckoning’ if the program is more concerned with getting rebate numbers out the door rather than focusing on quality work. We’re feeling very fortunate that our company was never really tethered to the programs; we’ve done relatively the same number of projects each year and we haven’t seen much change with upticks in incentives anyway. In Maine we have air sealing rebates, and other specific measures, but no additional rebates for performance-based incentives. The indoor air quality expectations and requirements are very lax. Sadly, I don’t see that changing in 2016.”

- Josh Wojcik, Founder & CEO | Upright Frameworks, Wilton, ME

“Utility resource battles: The utility of the future is arriving, and we’re not prepared. The Clean Power Plan and steadily falling prices of renewables are reshaping traditional utility economics. Are we, as an industry, ready to demonstrate our value through more accurate and less expensive quantification of savings, and by creating more compelling consumer value propositions? If not, utilities may start viewing renewables as more attractive than efficiency, or begin a new lurch towards the nuclear option. So, again, to both predict and cajole: 2016 should/will be the year we develop a coherent, industry-wide strategy for ensuring that energy efficiency is utilities’ first choice for meeting their customers’ energy needs, and fulfilling CPP and other mandates. It’s not going to happen automatically.”

- Robin LeBaron, President and COO | PEARL Home Certification, McLean, VA

“Utility programs will continue to unnecessarily increase pre-sale and post-installation testing data and gathering of useless data for HPXML software that will continue to be a barrier to participation by contractors and consumers that don't have time and resources to partake in such bloated programs. The goal should be to simplify and streamline to get more contractor participation and convert more customers to buying energy efficient upgrades and reduce energy consumption and lower carbon footprint.”

- Drew Cameron, President | HVAC Sellutions

The Continued Rise of the Interconnected Home

Connected Strategy & Healthy Homes

“The Internet of Things (IoT) will disrupt the home services market in 2016 like we have not seen before. With that will bring both opportunities and threats. As the big players (Google, Comcast, Verizon, Amazon, etc.) develop their strategic direction, it will invariably be to “own” the home and to be the conduit through which all customer interaction flows (which may leave us to fall by the wayside). This will certainly impact home services contractors if we don’t develop our own “Customer Stickiness” strategy.

The progressive contractors will develop programs to connect to their customers’ homes and bundle the smart thermostat (the hook) into all service/home performance packages. It will be like a page out of the cell phone company’s playbook where the thermostat is low cost/no cost when purchased with a PM plan or retrofit (who buys an iPhone 6S Plus without a cell plan?). As the connected home gets traction, the layering of additional sensors and devices will become more commonplace and cheaper in 2016. When this happens, we will have the ability to move away from the “ROI/Energy Savings” battle cry to health outcomes where pre and post sensor samples are evaluated and celebrated. If we get this right, we will see doctors stop writing prescriptions for medication and start writing prescriptions for home energy audits. What a cocktail party conversation....I can’t wait!”

- J. Scott Needham, President | Princeton Air Conditioning, Inc., Princeton Junction, NJ

“The Connected Environment: In 2016, we will start to understand that HVAC companies will take connectivity seriously. While Google Nest has been spearheading the arena of connectivity in a home, the larger HVAC companies are going to take the threat seriously and begin to integrate connectivity into their suite of products. We will also start to see ventilation, filtration and dehumidification as part of an integrated HVAC system.”

- Anthony Grisolia, Managing Director, Innovation Programs | IBACOS, Pittsburgh, PA

“Web connected CO sensors will replace excessive CAZ testing.”

- Bruce Manclark, Director | CLEAResult, Portland, OR

Increasing Importance of “Big Data” & Energy Monitoring

“I think that there will be a shift toward using big data to identify which customers are the most likely to participate in energy efficiency programs. Utilities in particular have a ton of data that they can use to identify customers who are more likely to participate in their programs and should take advantage of that data to further hone in on those customers. This should lower marketing costs to reach those customers. Coupled with the modifications to programs I mention above, this can have a drastic impact in the market.”

- John F. White, Senior Manager | ICF International, Columbia, MD

“2016 will be the year of “first date interrogations”. Energy efficiency advocates have grumbled for years that the real estate industry doesn’t understand or value efficiency. But that’s changing rapidly, due both to steadily growing consumer demand for efficient homes, and by the real estate industry’s newfound passion for data mining. As a result, the question “how big is your data?” is almost certain to come up in the dating process. I think it’s fine if our collective response is that size doesn’t matter, the key issue is data quality. But as an industry, we need to be able to provide one or the other if we want to be taken seriously by our real estate agent and appraiser friends. So, somewhere between prognosis and prayer: 2016 is the year energy efficiency gets its real estate-facing data infrastructure in order.”

- Robin LeBaron, President and COO | PEARL Home Certification, McLean, VA

“Accurate representations of realized savings is only getting more important and track with advanced monitoring evolving to extend all the way to the appliance level. The proliferation of  EE metering efforts, that can put negawatt savings on the map in the same neighborhood as distributed generation, will be vital to fully capitalizing on the savings yielded from home performance. I'm excited to see the outcomes of early adoption in places like California.”

- Sammy Chu, Chief Innovation Officer | EnerLogic, Long Island, NY

Home Performance Expertise Will Be Increasingly Valued & Necessary

The Climate Forum Industry Experts

Jacob Corvidae of Rocky Mountain Institute's Residential Energy+ Program talking market transformation.

“Home performance is a building science-based approach to home improvement. While it is debatable whether practitioners and theorizers of home performance make up an “industry”, it is certain that those who believe in home performance are leaders in a variety of industries in that they see how using a science-based strategy to find and fix the root-cause of problems is the best way to advance toward better quality and improved performance. However, as honest scientists will tell you, there is a lot of art to developing solutions, including improving home performance...at every level. As love of art is subjective, appreciation for the solutions offered to improve home performance will not be universal. I believe, however, that the vast majority of art we create is offered in an honest pursuit to do good work. In 2016, this pursuit will grow in strength and number through new partnerships with healthcare and finance and renewed effort to improve validity, reliability and transparency of measurement of energy savings.”

- Ely Jacobsohn, Program Manager | Home Performance with Energy Star, US Department of Energy, Washington, DC

“More contractors are going to realize that comfort, indoor air quality and energy problems cannot be solved by equipment alone.

Customers are going to continue to struggle with understanding what home performance, building science, weatherization, energy audits, whole house Performance, etc. is and what [these things] can do for them and why they should consider these services. Contractors will continue to be challenged to create effective marketing messages and channels because of this.

Contractors are going to see more opportunities to leverage home performance leads for HVAC and vice-versa.”

- Drew Cameron, President | HVAC Sellutions

“Not sure if I believe or wish what 2016 will bring…

I believe 2016 will be the year when we will see us moving from just doing work right, to doing the right work. From doing prescribed, single measure work to a work process that performs. Performance-centered, and away from just carrying out work. The customer, funder, utility and contractor…all will-win.”

- John Tooley, Senior Building Science Consultant | Advanced Energy, Raleigh, NC

Non-Energy Benefits (NEBs) Will Become Increasingly Recognized

“NEBs get rolling: While this concept isn't new, I think in 2016 more homeowners will be motivated by non-energy benefits (NEBs) to pursue home energy upgrades. I predict that this happens because more contractors mature their messaging and get more savvy about communicating benefits like comfort, health and safety and to expand the popularity of home performance.”

- Jacob Corvidae, Manager of the Residential Energy+ program | Rocky Mountain Institute, Boulder, CO

“Contractors are missing opportunities to increase sales and profits by focusing on selling items versus resolutions to problems. They are [too] technical for customers to appreciate the new life experience they could realize by resolving diagnosed problems. Sales training would greatly help in this area.

A great opportunity exists for contractors to sell more HVAC systems to customers that choose to invest in home performance solutions by packaging HVAC installation materials, labor, overhead, and labor profit with home performance solutions and pricing HVAC systems based on equipment only with tax and profit which will make their systems more aggressively priced than competitors not offering home performance solutions. Customers typically elect to do the entire scope of work when solutions are priced in this manner.  The results are higher closing ratios, higher average tickets and more satisfied customers, referrals and great reviews.”

- Drew Cameron, President | HVAC Sellutions

“Unrelated to energy savings, I think home performance is so undervalued as a tool that just make homes better. I really hope that 2016 is the year where we really start to see more creative approaches to selling and marketing non-energy benefits of HP, such as health. This may require a new approach to sales, diagnostic testing, and installation, but I think that such a shift could prove to be very powerful in growing the customer base for HP.”

- Sammy Chu, Chief Innovation Officer | EnerLogic, Long Island, NY

“Equity in programs will be the NEB (non-energy benefit) that delivers us from the TRC [total resource cost].”

- Bruce Manclark, Director, CLEAResult | Portland, OR

More Demand for Net Zero Homes, Retrofits & Other High-Efficiency Products

Push For a Zero Carbon Future

“1. Net zero energy will continue to provide a clear goal for housing developers, contractors and retrofitters. I believe that this concept will motivate and be easily grasped by consumers, as well energy regulators and policymakers. Add renewables and non-energy benefits, and you’ve got a winning combination!

2. There will be an increasing demand for low-load HVAC systems. This trend will be partially driven by the first trend, because airtight and well-insulated homes need fewer Btus of heating and tonnage of cooling, and less frequent system cycling. The lowered heating and cooling rise, temperature stratification, humidity and energy use make for another winning combo.

3. The previous two trends point the way to a vision of performance that I believe will provide one of the many steps needed to achieve a zero carbon future. The old vision is bigger equals better: oversize HVAC systems that need to cycle frequently with large rises in temperature, caused in part by leaky and/or poorly insulated homes. The high performance vision: less equals more, or another way to look at it: low (load) equals high (performance). To achieve net zero or zero energy ready homes takes a smarter, more efficient whole-house systems approach that requires a mindset shift from achieving code minimums to achieving maximum performance goals. This high performance mindset equals better occupant comfort, improved building durability and resilience, more energy savings for consumers and more profits for contractors.”

- Tom White, Publisher | Home Energy Magazine, Berkeley, CA

The Rise of Retrofits & Remodels

“Opportunities for energy efficient retrofits are bountiful in the existing home market. Existing homes must compete with code-built homes that are more energy efficient than ever before. (IECC 2006 Code compared to 2015 IECC Code shows a 31% increase.) When you consider more than 20% of the new construction market is high performance (higher than code), it screams of opportunity. If property owners with existing houses knew the facts and realize that their older house could not even begin to compete unless they do employ energy efficient retrofits, the number of retrofits would grow dramatically. The field is wide open and the economy is better in most parts of the country.”

- Sandra K. Adomatis, SRA, LEED Green Associate | Adomatis Appraisal Service, Punta Gorda, FL

“The market seems like it’s changing heading into 2016. We work on everything from basic home performance and home envelope work to turnkey general contracting. Because of low oil/energy prices, we’re seeing an expansion of full remodeling or development projects with housing additions. These larger projects can range from roof replacements to attic insulation and complete home additions and new siding. We’ve been around for 7 years; over that time, ¾ of our revenue came (in some years) from retrofits, whereas this year, new construction/renovation has grown considerably and constitutes ⅔ [of our revenue].”

- Josh Wojcik, Founder & CEO | Upright Frameworks, Portland, ME

Enclosure Upgrades

“Manufacturing is a must. Lastly, I see the home performance market needing a boost from manufacturers and manufacturing to help support this industry by componentizing enclosure upgrades that will help home performance contractors provide a much better value proposition to the homeowner. This will not only include energy efficiency and comfort but will also include exterior aesthetics and a cheaper, more impactful solution. To do this, we need to demonstrate that the market opportunity to manufacturers is huge!”

- Anthony Grisolia, Managing Director, Innovation Programs | IBACOS, Pittsburgh, PA

Distributed Energy Storage

“With a lot of conversation happening around the enhanced viability of energy storage and distributed energy resources as true alternatives to traditional generation, the home performance community will have an opportunity to capitalize in several ways:

Energy storage will make distributed energy resources as powerful a tool as they have ever been to address demand side management for utilities in real time, but as with any install, properly sizing systems will be critical to the value proposition for homeowners and utilities. Load reduction and load management will be an integral part of sizing systems appropriately and maximizing the opportunity for savings and carbon reductions. The HP industry's energy wonks could be well positioned to identify these opportunities and solve for them.”

- Sammy Chu, Chief Innovation Officer | EnerLogic, Long Island, NY

Demand for Mini-Splits

“We continue to see a huge demand for ductless mini splits. On the thermal side, with increasing code and energy standards we’re looking forward to increased pipeline for activities related to the work that we do. For our part, we’re expanding our geography and starting a mechanical installation services (pipe and duct insulation) primarily. Labor pool is different for us because we aren’t an HVAC company per say but we are really willing to train employees for what we need (still tough to find sourced skilled workers). We are incredibly busy this year, so just trying to keep the wheels on the wagon so to speak!”

- Tom Rossmassler, CEO | Energia, Holyoke, MA

Financing

“As a general industry prediction, we’ll talk too much and not do enough. (The challenge to the industry—please prove me wrong!)

Residential PACE will have huge growth and generate more than $2B in loan volume as it spreads beyond California. There will be some bumps as the market figures out how this impacts real estate transactions, but that won’t change the long-term trend.

- Mike Rogers, Principal | Omstout Consulting, Burlington, VT

“I think low interest, long-term financing for the lowest possible monthly payment that appeals to payment customers will play a bigger role than 0% interest for 12-60 months and deferred payment plans that appeal to cash customers. Tapping payment plan customers will drive closing ratios up by at least 10-15% average, and sales by approximately $4,000 over cash customers and $2,000 over no interest, no payment customers. Learn to leverage financing for maximum success.”

- Drew Cameron, President | HVAC Sellutions

Challenges (Some Personal) & Funnies

“Partnerships drive innovation - In 2016 I expect we'll see many new partnerships emerging to creatively drive the industry forward, from DOE accelerators to more communication among contractors on the ground.”

- Jacob Corvidae, Manager of the Residential Energy+ program | Rocky Mountain Institute, Boulder, CO

“2016 may also be the year that we get a true handle on ball deflation diagnostics.  This would go a long way in eliminating deceptive practices among your competition and leveling the playing field.”

- Sammy Chu, Chief Innovation Officer | EnerLogic, Long Island, NY

"Personal prediction: I’ll learn enough from Bruce Manclark to get me into trouble! This learning may come via a walking tour.”

- Mike Rogers, Principal | Omstout Consulting, Burlington, VT

“Mike Rogers will try to pass off his ankle bracelet as a FITBAND.”

- Bruce Manclark, Director | CLEAResult, Portland, OR

Comments

Wow. Great stuff!

I really hope we can get EUI on MLS. Bringing efficiency into the value of homes is a huge piece of creating a market for ourselves. If the value of a house gets dinged $10K because of poor efficiency, that's $10K for a HP practitioner.

Obviously, I love the focus on measured results. JD Power, baby!

Connecting with the grid - This is an area I have been putting a lot of thought into. High performance homes as thermal storage with PV, EVs and battery backup make for a compelling and comfortable future sans fossil fuels. The grid will like our projects, and if we can tap into the value streams there, projects may approach honest to God cost effectiveness.

Great list. And a very exciting 2016 indeed. I'm pumped, personally. I think we finally have hit a tipping point where we may finally be able to call ourselves an industry without someone snickering.

My prediction for 2016: People who are smart, passionate—and have a great sense of humor—will continue to lead and inspire the home performance crowd.

Peter Troast's picture

Thanks Nate and Jim! This post is always one of the best of the year. Some of what is here isn't new, but I have a very strong sense of things crystalizing. To a vibrant 2016.

2016 tracking outcomes against projections will start to take hold.

Competition for delivered results will create demand for feedback loops that inform contractors what they are doing right, and wrong, allowing dramatic improvements in delivered quality.

Transparency of results will take "fuzzy" values and make them real to consumers, turning Home Performance's current decline in the public perception (particularly in NY), rebuild public confidence and provide measurements that allow financial quantification that private finance needs to enter the marketplace.

The Home Performance design and sales narrative will shift from cherry picking mythically "cost effective" measures, to comprehensive improvement design that focuses on bringing client homes into balance affordably, fixing problems and saving large amounts of energy.

We are tracking our projects (http://bit.ly/ESHPOhioProjects), working on 3rd party savings verification (http://bit.ly/oneknobtrackyourenergy), and would like to build a standardized consumer facing case study template that automatically pulls results. Anybody that wants to help or participate, please let us know.

Posts like this make me proud to be part of the home performance world. I get a similar sense we're moving forward, and that consumers are increasingly making the emotional connection between what we can do and the good things they want out of life. I think we'll see better appreciation of energy codes among consumers, measured performance spreading beyond the Wild West, and maybe even a plucky reality show with blower doors...

1-on-1 Marketing Benchmark Analysis

Admit it...keeping up with digital marketing can be challenging. Let us help.

Having worked with over 400 companies across the US in the better building industry, Energy Circle has developed key benchmarks that every company should be meeting. Gain from our perspective with a 1-on-1 marketing benchmark analysis to see how your digital presence compares and learn about solutions to take your digital marketing to the next level. Your evaluation will include key areas such as website health/performance, SEO, reviews, content, conversion optimization and paid search engine marketing.