Sherwin Comments on DOE on Home Energy Ratings

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The Department of Energy (DOE) is working on a nationwide standardized way to rate the energy efficiency of existing homes and has asked for comments. These are the comments from Elton Sherwin.

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Sherwin Comments on DOE on Home Energy Ratings

  1. 1. Response to the National Energy Rating Program for Homes Request for Information By Elton Sherwin Venture Capitalist and Author of Addicted to Energy
  2. 2. Analyzed Nine Different Energy Labels and Their Associated Rating Methodologies Option #5 Option #9 (Recommended Option) Option #3 Option #1 (RFI sample)
  3. 3. Recommendations One Methodology: Two Different Window Stickers Presents both Site and for the National Home Energy Source Data Registry Option #9
  4. 4. Recommended Format Local comparison National standard • Source energy (per sq ft.) – Scores above 80 are good, below 70 are poor
  5. 5. Option #9 Recommended Label Displays Both Site and Source Data Electricity** B+ Gas** C- 74 * *120 is highest score ** Your energy grade is determined 1 is lowest comparing your house to other homes in Compared to all homes in America your zipcode. (See Inverted Scale with Progressive Weighting) Image from iStockphoto
  6. 6. Local Rating • Local comparison • Top 15% to 20% get As • Include + and – A+ or A+++ reserved for net zero homes • Data from local utilities • Display best grade of three: – Total home, per person and per sq. foot
  7. 7. Local Rating Only the best grade is used
  8. 8. Why Best of Three? Why let homeowners have three shots at a good grade? • Gives all families a shot at a good grade: – Large and small families – Big and small homes • Will motivate more change
  9. 9. National Rating • National standard • Source energy (per sq ft.) – Intuitive: scores above 80 are good, below 70 are poor • 120 minus weighted EUI • National standard – Compare buildings nationwide • Consistent metric – CBEC-like
  10. 10. National Rating Source energy (per sq ft.) • 120 - weighted EUI
  11. 11. Why Zero to 120? Why not zero to 100? • Multiple reasons, subtle, but important • Americans know scores above 80 are good, below 70 are weak. • Need a scoring system that lets superior homes get above 80, yet also rewards net zero homes – Scale of 0 to100 fails to do this; it will demotivate existing homeowners--won’t be able to get there.
  12. 12. Advantage for This Methodology: Partial Labels • Useful labels possible even when data is missing – No heating oil bill – No gas bill – No size data • Partial labels work: – Apartments Rating generated when only the electric bill is – Wood-burning homes available Partial ratings encourage homeowner to enter/release the missing data
  13. 13. All-in-one Format Advantages • Visually appealing • All the data well presented • Gives both source (74) and site data (B+ and C-) • National, universal score across all American buildings (74) Nuances • Electric utilities can generate partial label without gas bill • Enroll every home in America prior to an audit
  14. 14. #9 Recommended Format • Complete • Simple • Visually Appealing • Update Monthly • Motivates Conservation • Motivates Efficiency Upgrades
  15. 15. National Home Energy Registry The whole industry is starved for data. This is a great idea.
  16. 16. National Home Energy Registry Recommendations • Aim for universal participation – Any homeowner can enroll online – Window sticker on every home • Two tier program – Tier one: Participation • Include a home’s data anonymously in program – Tier two: Excellence • Exceed average on any of 6 metrics • Publically making some data available
  17. 17. National Home Energy Registry Green Window Sticker • This home has This Home Participates in the made its utility bills and some basic Department of Energy information Energy available Excellence • Address is omitted, Program only zip code is public
  18. 18. National Home Energy Registry Leadership Window Sticker Department of Energy Homes can earn one to six stars To participate Energy homeowners must – Earn at least one Excellence star and Leader – Make energy data public, including the home’s address
  19. 19. National Home Energy Leadership Program Earn 1 to 6 stars Top 40% - Maximum of two stars per row Whole house Per person Per sq. ft. Electricity in zipcode Gas /Heating oil in zipcode Source Energy (national) Plus public disclosure of monthly utility data
  20. 20. One Coveted Window Sticker Could Make a Big Difference • Some homeowners will work hard to earn this sticker • It could have a larger impact than a Cap and Trade system – Must be based actual energy consumption – Should require public disclosure of data
  21. 21. Data Requirements
  22. 22. This Label Has Only Five Data Inputs 5 Input Data Items 1) Electric bill 2) Gas or heating oil bill 3) Zip code 4) Size of house 5) Number of occupants
  23. 23. Data Flow 5 Input Data Items 1) Electric bill Summarized on the Label (Public for Leadership Homes) 2) Gas or heating oil bill 3) Zip code 4) Size of house 5) Number of occupants Optionally, Leadership 7 scores calculated for Homes can display their window stickers home occupant Nation source energy score 74
  24. 24. This Label Only Needs an Electric Bill • Electric utility can generate this partial label and put it in the bill • Then encourage the homeowner to enter the program
  25. 25. Data Collected to Get a Green Window Sticker • Number of full-time residents – Optionally, as much data about part-time residents as owner wants to enter • Type of water heating (gas, oil, elec.) • Type of space heating and A/C • Number of pool pumps & refrigerators • Number of bedrooms • Single/double pane windows • Size and year built (if known) – Release to get this data from the assessor. • Release: get monthly utility bills
  26. 26. Additional Data Collected to be Eligible For a Leadership Sticker All items required for green sticker, plus • Number of TVs and Set-top boxes • Make and model or digital image of: – Furnaces – A/C units – Heater heaters – Thermostats • Optional: – Freeform text on why the house is energy efficient – Name of architect, builder and HVAC contractor – Additional pictures and data • Release to make the label public
  27. 27. Why Does a Label Need Both Site and Source Data Site: Local Source: National standard • Source energy (per sq ft.) – Scores above 80 are good, below 70 are poor
  28. 28. Because Fairbanks is Different Than San Francisco
  29. 29. Considered Eight Other Options
  30. 30. Options #1 and 2 Sample Labels from RFI Challenges • High score is worst • Bottom is best • Requires an audit to enter program • Need both gas and electricity bill to calculate • Upgrade predictions inaccurate
  31. 31. Option #3 Simplified Label Recommended Changes • Eliminate “after upgrade” • Replace “recommend improvements” with a Your Neighborhood calculation based on the most efficient homes in area. • Compare to neighbors Advantages Lower Number is Better • No auditor required to enter If your home were one of the most program efficient in your area, you would • Every home in America can save approximately $4,500 a year. participate Over ten years this could save you over $60,000 as the price of • Create big opportunity numbers energy increases. (see example)
  32. 32. Option #4 Inverted Scale Progressive weighting Your 125 Neighborhood Recommended Changes 100 Best Homes • Rating is based on source energy subtracted from 125 with 75 Typical Home progressive weighting. Your Home 50 – 125 is net zero – 100 is 25 BTU/sf (see next page) 25 Advantages 15 • High numbers are good. • Top performer is on top. Higher Number is Better • No auditor required to enter If your home were one of the most program efficient in your area, you would save approximately $4,500 a year. • No negative scores Over ten years this could save • Same scale works nationwide you over $60,000 if the price of energy goes up. • Same scale works for commercial
  33. 33. Recommended Inverted Scale Progressive weighting in options 3, 8 and 9 Source Formula: BTU/sf/mo Score • 0-25 BTU: 125-BTU 0 (net zero) 125 • 25 to 75 BTU: 100- ½ BTU over 25 25 100 • 75 to 125 BTU: 75-1/4 BTU over 75 45 90 • And so on. 50 88 • Objective is to have a single national 65 80 metric (per sq. ft.) with efficient homes over 80 and no negative 95 70 scores. 135 60 • Objective: most homes to achieve an 175 50 80 for less than $10-15/ sq.ft. 255 40 • All numbers are total source energy including all plug loads, HVAC and 335 30 hot water. 375 25
  34. 34. Where Do the $4,500 and $60,000 Come From? • Take the average electric bill per square foot for the top 25% of homes • Apply to this home • Same for gas • Calculate difference and multiply by 12. • Some nuances, but it is a better methodology than trying to predict BTUs after upgrades (inherently problematic and frustrating task)
  35. 35. Option #5 Modified European Union Format Advantages Electricity Gas • Does not require gas bill to enter program • Electric utilities can automatically generate from bill (omit gas column) • No debate of site vs. source energy • Heating oil companies can include in their bills • Very simple to understand • Turn on for all American homes quickly • Give monthly feedback to homeowners.
  36. 36. Option #6 Utility Bill Insert from Addicted to Energy
  37. 37. Utility Bill Insert from Addicted to Energy Advantages • Similar to modified EU format, plus • Gives homeowner more detail • Tells homeowner how much they would save if they were one of the most efficient homes in their climate Disadvantages • Not very colorful • Difficult to read
  38. 38. Option #7 Best of Three Grading Electricity Gas B+ C- Your energy grade is determined comparing your house to other homes in your zipcode. Your grade is always the best of the three. Electricity Gas B+ Total House C- B+ Per Person C- C- Per Sq. Ft. D-
  39. 39. Best of Three Grading Advantages • Calculates building, per person, and per sq. ft. • Highest grade is awarded to homeowner • No debate of site vs. source energy Nuances • Utilities can generate first row with no additional homeowner input • Homeowners can input additional data if they want the additional “grades.”
  40. 40. Option #8 All-in-one Source, Site, Local & National Compared to your neighbors Compared to all homes in America Electricity Gas Combined B+ C- 74 Your energy grade is determined 120 is highest score* comparing your house to other homes in 1 is lowest your zipcode. Your grade is always the “best of three” This score combines all sources of energy (electricity, gas, heating oil, etc.) Electricity Gas It is an absolute score and can be used B+ Total House C- to compare the energy used per square foot of any building in America. B+ Per Person C- C- Per Sq. Ft. D- * Source energy
  41. 41. All-in-one Source, Site, Local & National Advantages • Both local comparisons and • National, universal number based on source EUI. • Give every homeowner six opportunities for a good grade • Still motive people to strive for excellence. • Silence experts who insist on EUI or source energy or… because it has it all. • Easier to calculate than proposed labels (no projecting the future)
  42. 42. Recommendation • Elegant • Easy to Understand • Fair • Automatic monthly updates Option #9 • Drive reductions in energy consumption
  43. 43. Summary • Data-driven approach • Measures real improvements – Minimizes “greenwashing” • Universal participation – Does not require audits • Fair: works for big and small homes • Drive dramatic reductions in energy consumption
  44. 44. This implements a system that rates each type of energy separately (electricity, natural gas, heating oil, etc.) and also provides a CBEC- like national score. For more information on this label and the methodology behind it, see the associated PowerPoint. Five Critical Success Factors From a "cleantech" investor's point of view, here are five items that I would recommend: 1. Implement a system that is Internet-based with universal access. Enable and encourage all utility customers in private residences to participate. 2. Measure actual energy consumption. Do not use a checklist- driven system. Checklist-driven and audit-driven systems reward certain behaviors and not others. They are inaccurate and the current systems have failed to deliver substantial energy reductions in existing buildings. 3. Do not require an audit to get a rating. If you want to drive results, measure results, not audits. As my 20-year old daughter said, "they cannot audit every home in America!"
  45. 45. 4. Implement a system that can give automatic monthly updates. This motivates change and measures actual performance. It prevents "greenwashing." 5. A "zero" score should not be the top score. Americans like high scores; they are not motivated to be a "zero." National Home Energy Registry The National Home Registry is a great idea. Everyone is starved for data. I suggest two window stickers that should help motivate participation and encourage energy conservation. Recommendation: Two tier program • Tier one: Participation – Green Window Sticker – Include a home’s data anonymously in program – Every home in America can participate • Tier two: Excellence – Black or Platinum Window Sticker – Exceed average on any of 6 metrics – Make home's data available publically – Awarded 1 to six stars – Will motivate homeowners, builders and architects wishing to make "green" claims about homes to disclose the home's actual performance
  46. 46. For more information on these window stickers and the methodology behind them, see the associated PowerPoint. Problems in the RFI: A Venture Capitalist Viewpoint. Several items in the RFI are very problematic from an investor's point of view: Eliminate these two sections of any label: Several dozen software companies in America will struggle to raise financing if the DOE gets into the business of forecasting savings and predicting performance. You will not get it right but if you enter the business of forecasting the future, investors will shy away from funding software companies that do. • Avoid analyzing the problem from Washington. Let the locals analyze the problem. • Do not make specific recommendations from across the country. It will not work. Asset-based Ratings Kill Innovation: Asset-based ratings have an inherent bias towards certain technologies. Breakthrough technologies, by their very nature are never on the list of audited assets.
  47. 47. Asset-based ratings make it very difficult to fund innovations that are not on the inventory of assets that improve rankings. If you rate performance, you turbocharge innovation; if you rate assets, you stifle innovation. I invest in innovation for a living; feel free to call me if this connection is not clear. I fear I have not explained it well. However, if you are going to anoint certain building features as "winners," I have included my list at the end of the document. Additional Feedback • Don't limit homeowners' aspirations. I live in an area surrounded by million dollar homes. Some of my neighbors will strive for excellence. Don't tell them how much to spend. They may spend more. • Audit-based ratings create weak auditors. Ask yourself this question: If you were selling your house and rankings were based on data entered by an auditor, would you hire a lenient or skillful auditor? Obviously a lenient auditor. However, if you were selling a house and rankings were based on actual building performance would you look for a lenient or skillful auditor? You would look for a skillful auditor. Asset-based rankings create a country of lenient auditors; performance-based rankings create a country of skillful auditors. • Compare people to their neighbors. People care how they compare to their neighbors. See the attached PowerPoint for more information
  48. 48. Asset-based Audits – Ten Items that Matter If you do decide to go with an asset or audit-based system, these are the items that make the most difference. I recommend that they are the primary focus of your audit or checklist process. The following is adapted from Addicted to Energy. These 10 items dramatically reduce the carbon footprint of homes, new and old: 1) Thermostat. A separate thermostat with an occupancy sensor in every room, controlling the room’s heating and cooling. 2) Furnace. Variable-output, variable-speed, modulating furnaces with variable-speed fans and oversized ductwork, blow-tested at installation. Variable output is more important than efficiency. Rightsizing is also more important than efficiency. 3) Air Conditioner. Variable-speed, multistage, right-sized air conditioners. Efficient oversized A/C units are endemic in America. A/C units should be variable output. 4) Water Heater. Solar heat or waste heat from a furnace used to preheat domestic hot water. 5) Windows. R-10 spectrally selective windows where needed. 6) Smart Lighting. No incandescent or halogen ceiling fixtures. 7) Insulation. Two R-values of insulation above California Title 24, with the building shell blow-tested and thermally imaged for leaks. 8) Power Monitoring. Real-time reporting to the homeowner of all power, gas, and water usage by room. 9) Utility Bill Disclosure. All buildings claiming to be "green" must disclose their energy consumption. 10) High-efficiency, Zero Particulate, Closed Combustion Fireplaces. These fireplaces emit no soot, most often burning natural gas or propane instead of wood. If you use an asset-based system—which I do not recommend—audit these items. If you use an asset-based or audit-based system you must develop a methodology that prevents homes with oversized HVAC systems from getting good audits. I strongly urge you to go with a performance-based system that uses actual energy consumption data.

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