Delivering On Our Promise Sustainable Solutions to Achieve Our Climate and Economic Goals

Efficiency First Sustainable Spaces Efficiency First, Washington DC Representing America’s Home Performance Workforce – Non-Profit Trade Association – 400 Member Companies – Active at National and State Level – Supporting a performance based market for residential energy efficiency retrofitting. For More Information:

Efficiency First Sustainable Spaces Carbon Saved: The Metric that Matters CARBON is the metric. Focus on PERFORMANCE and measurable results. The MARKET will innovate and deliver.

Efficiency First Sustainable Spaces What is America’s Largest Source of Carbon Emissions?Industrial Buildings Transportation Residential Buildings Residential Buildings 21% Passenger Cars Passenger Cars 11.5% Carbon Dioxide Emissions From Fossil Fuel Combustion

Efficiency First Sustainable Spaces 2030 Goal: 25% Reduction in Residential Energy CLIMATE: – Equivalent to taking ½ of all passenger cars off the road JOBS: – 1.25 million direct contracting jobs ENERGY: – Save as much energy as US imports yearly from Saudi Arabia COMMUNITY: – Keep energy dollars local and create an annuity

Efficiency First Sustainable Spaces State of the Contracting Industry 146,600 jobs have been lost in the residential building construction industry between April 2008 and Housing starts were down 12.8 percent last month from March [2009], to an annual pace of 458,000. “New home construction fell to its lowest pace on record in April” lowest pace on record in April” - New York Times, May

Efficiency First Sustainable Spaces What Is Home Performance? Audit Solution Retrofit Commissioning Quality Assurance

Efficiency First Sustainable Spaces Home Performance Contracting Sustainable: Jobs in Home Performance do not require endless subsidies. Leveraged: Government subsidies stimulate private sector investment. Market-Based: Leverage business as the engine to achieve rapid growth. A market-based * whole-house approach to retrofit existing homes for energy, health and comfort. * WAP or Low Income Weatherization serves the market up to 200% of poverty.

Efficiency First Sustainable Spaces Retrofitting Loading Order Insulation Air Sealing Duct Sealing Lighting Appliances Water Conservation Plug Loads Behavior Heating Air Conditioning Ventilation Water Heating FundamentalsMajor SystemsRenewables Solar PV Solar Thermal Wind Water Catchment

Section 1 Rethinking Our Approach

Efficiency First Sustainable Spaces Products Automobile Performance ? 1 M iles P er G allon 60 Performance 2

Efficiency First Sustainable Spaces Home Performance Products ? 1 H ome E nergy R ating S ystem 85 Performance 2

Efficiency First Sustainable Spaces System Performance: Heating Building Load - Stop Energy Leaks - Improvement: 20% - 40% Delivery - Fix Leaky Ducts - Improvement: 30% - 50% Behavior - Set Your Stat - Improvement: 5% - 10% Equipment - Efficiency / Size - Improvement: 10% - 15% Whole House vs. Products Savings Whole House Solution:30% - 50% Whole House Solution:30% - 50% (Ducts, Insulation, Behavior, 40K BTU 90% Furnace) (Ducts, Insulation, Behavior, 40K BTU 90% Furnace) High Efficiency Furnace:10% - 15% High Efficiency Furnace:10% - 15% (100K BTU 96% Furnace) (100K BTU 96% Furnace) Performance - Efficiency - Health - Comfort

Efficiency First Sustainable Spaces 1990 Clean Air Act Pre 1990, EPA required emission scrubbers on smoke stacks. Clean Air Act (1990) sets emission performance standards and trading system SO 2 Results: Emissions reduction Market innovation

Efficiency First Sustainable Spaces “What is all the fuss about retrofitting, why can’t we just put on solar panels?” Reduce Then Produce

Efficiency First Sustainable Spaces “The Firepower of the Lowly Caulk Gun” Wall Street Journal Cost Per Ton of Carbon Abatement

Efficiency First Sustainable Spaces Cost Effective Hybrid Model Lighting Retrofit  40% Better Lighting Quality  Reduced Lighting Maintenance Costs  Improved Energy Management Solar Electric 675kW Solar System The Moscone Center - San Francisco, CAHybrid EE + RE Project New Efficient T-5 Old Incandescent

Efficiency First Sustainable Spaces Moscone Center: Retrofit Summary Savings / YrEnergy ReductionPayback Period Cost Energy Efficiency $540,000 4,500,000 kWh 6 Years $3.2 MM Solar $99, ,000 kWh 42 Years $4.2 MM $639,000 Annual utility bill savings $429,000 Annual debt service costs (20 year bond at 5.5%) $210,000 ANNUAL NET SAVINGS $639,000 Annual utility bill savings $429,000 Annual debt service costs (20 year bond at 5.5%) $210,000 ANNUAL NET SAVINGS 5,325,000 kWh $639, Years $7.4 MM Hybrid

Efficiency First Sustainable Spaces Reduce Then Produce

Efficiency First Sustainable Spaces “Level the playing field and unleash the market.” and unleash the market.” Technology Neutrality

Efficiency First Sustainable Spaces Meet Our Homeowners City: Lafayette, CA Concerns: High energy bills Daughter has asthma Drafty/cold in the winter SavingsSavingsHealthHealthClimateClimateComfortComfort

Efficiency First Sustainable Spaces Meet Their Home Age:1958 Size: 2,200 ft 2 Annual Electric: $1,115 Annual Gas: $1,013 Carbon Emissions: 8.6 Tons/Year 168 Infiltration:3405 CFM50 (.68 ACHnat ) Attic Insulation:R 6.4 Fiberglass Batt (low quality) Wall Insulation:No Insulation Floor Insulation:No Insulation Duct Leakage:25%

Efficiency First Sustainable Spaces Option 1: Efficiency Retrofit Energy Efficiency Retrofit – 25% Reduction in Electricity – 54% Reduction in Natural Gas – Improved Health and Comfort 40% Reduction in Energy Bills

Efficiency First Sustainable Spaces Option 2: Solar Electric Solar Electric System – 73% Reduction in Electricity – 0% Reduction in Natural Gas – No Health or Comfort Improvement – Peak Load Reduction 40% Reduction in Energy Bills

Efficiency First Sustainable Spaces Annual Savings: $825 $825 CO 2 Reduction:2.7 tons 3.6 tons Total Cost: $28,000 $10,800 Simple Payback:33.9 yrs 13.6 yrs What is the Real Cost? 60% Less 33% More 3.5 kW Solar Electric Energy Efficiency Retrofit 60% Faster * Based on carbon abatement achieved over 20 years.

Efficiency First Sustainable Spaces A Ton of Carbon is a Ton of Carbon Total Cost:$28,000$10,800 Cost to Client:$13,300 $10,168 Rebates / Incentives: $14,700$632 Annual Savings:$825 $825 CO 2 Reduction:2.7 tons3.4 tons *Rebate / Ton of C0 2 $246 $9 SolarRetrofit

Efficiency First Sustainable Spaces Why Do We Value Carbon Abatement from Renewables More than Efficiency?

Section 2 Strategies for Carbon Reduction

Efficiency First Sustainable Spaces California Energy Commission (CEC): Loading Order Energy Efficiency Demand Response Renewable Resources Distributed Generation High Low Priority Priority for use of Public Good Charges

Efficiency First Sustainable Spaces California AB32: Global Warming Solutions Act Establish a statewide GHG emissions cap for 2020, based on 1990 emission levels. Local governments: – 15% reductions in GHG by

Efficiency First Sustainable Spaces California Air Resource Board (CARB): AB32 Implementation Plan Increased Building Efficiency and Appliance Standard 26.4 Million Metric Tons California Solar Initiative 2.1 Million Metric Tons 12X

Efficiency First Sustainable Spaces California Solar Initiative “By January 1, 2008, the commission… shall require reasonable and cost‐effective energy efficiency improvements in existing buildings as a condition of providing incentives for eligible solar energy systems” - CEC Guidelines for CA Solar Incentive Programs

Section 3 Disconnect Between Strategy and Policy

Efficiency First Sustainable Spaces Plans vs. Reality Strategies get it right: – Set the end goal – Focus on performance not product Policies get it wrong: – Focus on product incentives – Misaligned incentives when compared to results

Efficiency First Sustainable Spaces Stimulus Tax Credit 30% $1500 (No Labor Included) 30% $1500 (Labor Included) 30% Uncapped (Labor Included) Average Credit (Dollars)

Efficiency First Sustainable Spaces California State Rebates $0.15 / sqft $300 / unit $1.40 / W Average Rebate (Dollars)

Efficiency First Sustainable Spaces Cost-Effectiveness Annual Rate of Return (%)

Efficiency First Sustainable Spaces Local Jobs Labor as % of Project Cost

Efficiency First Sustainable Spaces Misaligned Priorities? Incentives Effectiveness

Efficiency First Sustainable Spaces One Market ”Incentives favoring renewables disincentivizes energy efficiency.” ”Incentives favoring renewables disincentivizes energy efficiency.”

Section 4 Delivering Market Transformation

Efficiency First Sustainable Spaces What it Takes to Scale Home Performance Increase Consumer Demand – Financing – Incentives Catalyze Market Transformation – Performance – Standards

Efficiency First Sustainable Spaces A Foundation for Home Performance Level the playing field Make it easy to say yes Drain the swamp Incentives FinancingStandards

Efficiency First Sustainable Spaces Incentives Performance based on before and after Home Energy Rating Score (HERS). 20% minimum improvement in energy performance grants rebate of $3,000. 5% in performance improvement adds $1,000. Incentives StandardsFinancing Currently in US House Climate Bill (Retrofit For Energy and Environmental Performance) Currently in US House Climate Bill (Retrofit For Energy and Environmental Performance)

Efficiency First Sustainable Spaces On Property Tax Bill Financing On Utility Bill Financing National Green Bank Green Mortgage Products Aggregated ESCO Model x Standards Financing Incentives What Models Can We Apply?

Efficiency First Sustainable Spaces Home Performance Standards Contractor Accreditation - Building Performance Institute (BPI) – All Building Analysts (auditors) Certified – Construction Team Lead Trade Certification – Yearly review of customer data – 5% Field Quality Assurance Standards IncentivesFinancing Certified Energy Auditor – RESNET Certified Rater – BPI Certified Building Analyst

Section 5 From Theory to Practice

Efficiency First Sustainable Spaces Let’s Apply the Future Model How does a level playing field for energy efficiency influence adoption?

Efficiency First Sustainable Spaces Energy Efficiency Retrofit HERS Before: 168 HERS Post: 121 Improvement: 28% Retrofit

Efficiency First Sustainable Spaces Retrofit with Performance Incentives Total Cost:$10,800 Rebates / Incentives: $4,832 Cost to Client:$5,968 Annual Savings (Gas/Elec.):$825 CO 2 Reduction:3.4 tons *Rebate / Ton of C0 2 $71 Retrofit * Based on carbon abatement achieved over 20 years. 45% Incentive

Efficiency First Sustainable Spaces Hybrid Whole-House Solution Energy Efficiency Retrofit – 25% Reduction in Electricity – 54% Reduction in Natural Gas – Improved Health and Comfort 2.1 kW Solar Electric System – Reduced from 3.5 kW to 2.1 kW – 40% Reduction in Electricity – Peak Load Reduction 65% Reduction in Energy Bills

Efficiency First Sustainable Spaces Value Engineered Hybrid Solution Total Cost: $10,800 $17,000 $27,800 Rebates / Incentives: $4,832* $7,300 $12,132 Cost to Client: $5,968 $9,700 $15,668 Annual Savings: $825 $550 $1,375 CO 2 Reduction: 3.4 tons 1.8 tons 5.2 tons Rebate / Ton of C0 2 $71 $280 $121 Solar Retrofit *Includes potential rebates from REEP incentive plus existing State rebates. Hybrid

Efficiency First Sustainable Spaces Finance for Immediate Savings $15,688 financed at 6% over 20 years Year: Monthly Payment: $112 $112$112 Monthly Savings: $117 $159$230 * Based on Electric Rate increase of 4% per year, and Gas rate increase of 6%. $12,970 Total utility bill savings: $39,850 Total cost of loan (20 years at 6%): $26,880 NET SAVINGS: $12,970 Total utility bill savings: $39,850 Total cost of loan (20 years at 6%): $26,880 NET SAVINGS: $12,970

Section 6 Pathways to Success

Efficiency First Sustainable Spaces The Time To Act Is Now! Change the way we talk about efficiency from products to systems. Start incentivizing our success in terms of results and measure performance. Fix the imbalances in the market. Set in place the foundation for a the American Home Performance Retrofitting Industry.

Efficiency First Sustainable Spaces Delivering On Our Promise Sustainable Local JOBS Cost Effective CARBON Abatement Significant Homeowner SAVINGS Effective Use of STIMULUS Seize this opportunity to achieve our climate and economic goals Seize this opportunity to achieve our climate and economic goals

Delivering On Our Promise Sustainable Solutions to Achieve Our Climate and Economic Goals For More Information: