Monday, September 29, 2008

What’s Wrong With the Home Energy Audit Industry?

By Michael Chandler

Conflicts of interest seem to abound, consumers balk at the price of an audit, and nobody is leading change.

As satisfying as it is to build new high performance homes I have to admit that if I really cared about stopping global warming and conserving energy I’d re-focus my company to perform home energy audits and work that would stop the outrageous waste of energy in our existing housing stock. The reason I don’t do this is mostly because I’m having so much fun building new homes but also because I don’t see any way to do energy audits in a way that would make a profit.

Until recently I could assuage my guilt by recommending that people in existing homes call one of the larger Energy Star raters in our area. But now they have stopped performing energy audits on existing, occupied homes. It turns out that they couldn’t figure out how to make a profit at it either. So here is the paradigm we are dealing with here in North Carolina. If you want a home energy audit performed on a home you are living in you most likely will have to deal with an auditor who is operating out of a beat up truck with a laptop and answering machine in his spare bedroom. You’ll call and if you’re lucky he’ll get back to you within the week and maybe he’ll be able to get to your house within the month and he may or may not get your report and recommendations written up and back to you with an invoice in a timely fashion.

What is wrong with this picture? How can we fix it?
Existing homes are MUCH more difficult to analyze and do meaningful blower door and duct blaster testing on than new construction. You’ve got furniture, clutter, and old plaster and paint to protect. The HVAC equipment may be 20 years old and not have any service manual. The bath fans and kitchen hoods are likely to be badly under performing and need to be tested individually. You really can’t do a good job solo. And you’re not likely to get it done before lunch. At a minimum you need to plan for 6 hours on-site with two workers in a high liability environment and another 2 hours off site typing up the report. The going rate for this is $600 to $800 and homeowners bitterly gripe about that minimal cost. Can you write a logical, sustainable, business plan that has you sending employees into occupied homes, risking knocking over lamps or tracking mud on carpets and has a coordinator to answer phones and schedule visits and follow up at this rate? The answer is no.

How did we get in this fix?
It’s the un-intended consequence of well-intentioned actions once again. Back in the Carter administration we had “the moral equivalent of war” to save energy and we sent out home weatherization teams into the homes of the poor and needy to help them stop wasting energy. We used a lot of low paid part time barely insured do-gooders who were willing to work for cheap and forgo health insurance to be “part of the solution”. And they shut down and went away once the coop subsidy dollars got thin.

Can we make a new model work where auditors actually earn $1,200 to $1,800 per audit and can afford to have a professional organization and pay taxes and insurance and grow a professional crew of home energy auditors? Hard to do in a culture that is accustomed to valuing this as a nasty job that ought to be subsidized by the government or (I’m serious here) utility companies. Let’s put Exxon in charge of retrofitting Hummers to burn less gas while we’re at it and let’s set the rate low enough that they’re guaranteed to lose money.

The market is trying to adapt. We’re seeing insulation and weatherization companies offering home energy audits. Seems logical enough, call one number and get the diagnosis and the prescription filled from the same source. But people who have no problem with the energy company doing the energy audit somehow are more likely to see a conflict of interest in having an insulation company do it. My dad used to say “if all you have is a hammer, everything starts to look like a nail” and the concern is justified.

But what we have isn’t working. The public expects energy audits to be free or cheap and we have something like 75 million homes in desperate need of energy remediation to even get close to current watered down code requirements. Additionally we have thousands of homes ten years old and less that are wasting energy despite being built in compliance with the in-adequate codes of their time. We need a new paradigm and we need it soon.

In the commercial sector companies like Advanced Energy are going into existing factories and replacing outdated electric motors with new energy efficient ones in exchange for a percentage of future fuel savings. I don’t see this working with home weatherization but we need to at least be thinking outside of the box here. Our electrical distribution system is at its limit. Even if we could build more electric plants we are losing the capacity to reliably move this additional power to where it is needed. So, as a society, our best investment is in energy conservation in our existing building stock, both residential and commercial. We’ll never get there if we ensure that building diagnosticians are underpaid and unable to make up for it by selling and installing the products they need to fix the problems they encounter.

Somebody smarter than me needs to figure out how to lick this problem and get word to the next president as soon as possible and start turning this ship around.

--Michael Chandler is a builder and master plumber near Chapel Hill, North Carolina. His website is


green building curmudgeon said...

Excellent points, Michael. Homeowners are happy to pay exhorbitant prices for Sub Zero (usually not Energy Star rated) refrigerators, granite counters, 3 car garages, spa showers, etc., but ask them to invest a fractional % of the cost of their house in an energy audit and they are aghast at having to pay a fair price for it. Unfortunately, it will take much higher energy bills (or maybe even blackouts and brownouts) to start to change people's values in this arena. We can only hope that it comes sooner than later.

ab3 said...

You've raised some important issues here, Michael, but there are people running successful businesses auditing and improving existing homes. The ACI (Affordable Comfort) conference has a big focus on this field, generally referred to as home performance contracting. Usually, the company doing the audit also does the improvements, but there are some companies out there that perform those two functions separately.

Yes, there is certainly the possibility of the fox guarding the henhouse when the same company does both, but there are programs like Home Performance with ENERGY STAR out there that help avoid that. The key is to analyze the house as a system and give the homeowners a prioritized report, showing them the biggest problems and telling them how to solve the most important problems first and do as much as possible within their budget.

I've done this work myself and know that the key is being honest with the homeowners, knowing your building science, and doing work that makes a difference for them. The advantage to combining audits with contracting is that you can charge affordable fees for the audits and then make your profit on the contracting. As you point out, there's got to be a subsidy coming from somewhere to make this work, because homeowners don't want to pay a thousand bucks for an audit.