An open letter to all stakeholders in the HOMES rebate program as part of the Inflation Reduction Act of 2022
To: All stakeholders in the HOMES rebate program
From: Adam Stenftenagel
CEO / Co-Founder
Snugg Home
Radiant Labs
adam@snugghome.com
Date: March 3, 2023
Subject: The need to preserve BPI-2400 and utility bill calibration as required in the HOMES rebate program of the Inflation Reduction Act
This open letter is written on behalf of the founders of Snugg Home and Radiant Labs. Please feel free to share or distribute widely. An effort is underway to eliminate or diminish the utility bill calibrated modeling requirement of the HOMES rebate program (as part of the Inflation Reduction Act of 2022).
In full disclosure, our companies, Radiant Labs and Snugg Home, would benefit financially from the HOMES rebates being deployed through utility bill calibrated, modeled savings as currently supported by BPI-2400. Being one of only a few BPI-2400 compliant tools, we would have an obvious market advantage in the beginning if BPI-2400 were maintained as the standard for calculating the HOMES rebates. However, we are building tools to help contractors be successful regardless of whether rebates are calculated through deemed savings, modeled savings, modeled savings with calibration, or measured savings.
What really matters to us is that contractors can sell bundled electrification packages at scale resulting in deep carbon savings. That's the real win for all of us and the climate. Our arguments as to why we think calibrated, modeled savings is significantly better than deemed savings or uncalibrated models are more about the massive scale that we need collectively than the short term wins we would get in our businesses.
We have worked in all kinds of programs over the last 13 years — state, utility, city, and federal. We've implemented and supported contractors through it all. As time passes, we are leaning into modeling even more because we've seen so many problems arise when uncalibrated modeling or deemed savings are used instead.
Ultimately, the country needs to retrofit 10 million homes a year (We've got less than 8 years to meet our GHG targets and we've got 80 million single family homes). The HOMES rebate program alone could, at most, provide rebates for 2 million homes over 10 years. That is only 2-3% of the total homes. But, if implemented effectively, the HOMES rebate program could be a catalyst for meaningful mass market transformation. To meet our climate goals, we have to accelerate electrification and get it past the tipping point to where it sustains itself outside of what any government or utility program could provide.
With that in mind, the HOMES and HEEHRA programs simply cannot backfire. If the public is served poorly by these programs, then broader heat pump and electrification efforts will be marred by those experiences. To make sure people are thrilled with their heat pumps and evangelize to the rest of the country, we need to meet these three criteria:
Criterion #1: People's energy bills should not go up
This is even more crucial for low income households.
Criterion #2: The cost of improvements should (mostly) pay for themselves
The monthly savings on people's bills should make up for the cost of the improvements in a reasonable amount of time if financed. Some homeowners, especially in market rate projects, may prioritize comfort, health, and safety or climate over finances. Even for those cases, homeowners should at least have an idea of their total operating costs.
Criterion #3: The installed equipment is viable and correctly sized to the home
A home must be efficient enough to support maximum HVAC system capacity. Conversely, the installed equipment must be sized correctly to meet the home’s heating and/or cooling loads. Variable speed heat pumps make it less important to get the sizing perfect, but even those have their limitations. Oversizing costs more up front and can cause significant comfort and humidity issues, so dialing in the system with an efficient envelope is very important.
Uncalibrated energy models, such as the Home Energy Score (HES), or a deemed savings approach cannot ensure any of these things. Deemed savings with line item rebates can be fairly accurate across a utility portfolio. Unfortunately, deemed savings is rarely correct on an individual basis. From what we understand, the primary premise of HOMES (as opposed to the HEEHR rebates) is to demonstrate modeled or measured performance and ensure that the widest variety of improvement options are supported and rebated if the savings can be justified. Deemed savings does not accomplish or support this.
In addition, for software providers like us to support deemed savings, they must make special custom calculations that are different in every single state based on each state's Technical Resource Manual (TRM). We have done custom calculations for state TRMs in the past and it entails 100s of hours of development. Supporting even a few states with a deemed savings approach would be a nightmare from a software development perspective, and even worse if all states and territories adopted it. Deemed savings would balkanize the US market and drive up the cost of administering programs. It would also take development time away from features that could otherwise make contractors more successful. Instead, we propose to let software companies build high quality modeling that applies to every state and territory. We'd like to see this program optimized for not only retrofitting 2 million homes, but also the other 78 million that need to be done after funds are used up.
Using the Home Energy Score is better than deemed savings. We have HES built in as an option to Snugg Pro. But we still don't recommend it for calculating rebates due to the significant limitations in what measures it can model as well as the fact that HES does not support utility bill calibration which regularly results in very inaccurate savings estimates. In its current state, it does not demonstrate at all whether a homeowner’s actual bills would go up or down from the improvements. This potentially fails all three criteria for success outlined earlier in this document. In the rare cases where a homeowner or contractor was legitimately unable to come up with utility bills, we would be ok with the Home Energy Score as an alternative. Snugg Pro has a No Bills option built right in that could be used for this situation as well.
We understand utility bills can be difficult to obtain. We've been working with our contractor customers for over 10 years to collect bills to calibrate their models. They do this every day and produce high quality, calibrated energy models very quickly. When bills are available, a trained contractor can collect all the necessary information for a utility bill calibrated model in as little as 20 minutes in the home. With utility bills, remotely collected or default building characteristic data can be utilized for most of the model. Only the actual items being replaced or upgraded in the home need site observed data (photo verified for quality assurance). In addition, a utility bill calibrated model in combination with blower door test results can provide a very high level of accuracy in block heating and cooling load calculations with zero additional effort by the contractor.
Snugg Pro, our BPI-2400 compliant energy auditing and modeling tool, is used by over 80 utility and government programs across the country. Most notably, New Jersey’s Home Performance with Energy Star programs utilize Snugg Pro to create BPI-2400 compliant utility bill calibrated models to calculate their rebate levels. Forty contracting companies are creating over 6000 home performance projects per year among 7 different utilities with 4 program implementers all approving projects through a single interface.
BPI-2400 is about to undergo an update that will create an alternative path if utility bills are not accessible for a particular home. Recently purchased homes, which represent roughly 7% of the residential building stock, are the primary case of unattainable bills. This update should not provide an option to avoid using utility bill calibration altogether, since utility bill calibration is the entire point of BPI-2400.
We highly encourage the DOE to provide support to state offices to work closely with their public utility commissions to enable easy access to utility data for all customers in each state. California has taken the lead on this and it can be done elsewhere. Where the barriers to this kind of data sharing are insurmountable, we encourage the DOE to work with utility bill data providers such as UtilityAPI and Urjanet (recently acquired by Arcadia) to provide streamlined access to customer data when a customer signs a waiver as part of their rebate eligibility. Post project utility data collection is also crucial to ensuring quality control on the projects and validating the work. If this data can be made more accessible, then the contractor burden for performing highly accurate BPI-2400 energy models can be extremely low.
In summary:
- Utility bill calibrated modeling is essential to ensure a home’s bills don’t go up
- Utility bill calibrated modeling determines if the improvements will pay for themselves in savings
- Utility bill calibrated modeling helps broaden the possible work scope so that cost effective envelope improvements are included with heat pumps and that those systems are sized accordingly
- Utility bill calibration can be easy, fast, and very accurate
- Deemed savings is only accurate on average across a portfolio and rarely on an individual basis
- Deemed savings can be extraordinarily hard to implement across multiple states and TRMs
- The Home Energy Score is an ok alternative if utility bills are unavailable, but lacks the ability to model complex improvements and has limited accuracy
- BPI-2400 should be preserved as the standard for utility bill calibration and only altered to allow for uncalibrated options when bills are unattainable
- We recommend the DOE provide support for easy access to utility bill data
Thank you for your time and attention to this important matter. We welcome your feedback and questions anytime.
Sincerely,
Adam Stenftenagel
adam@snugghome.com
About Adam Stenftenagel
Adam is our award winning building science expert. Incidentally, he's also the co-founder and CEO of Snugg Home. He knows the ins and outs of energy modeling and the efficiency industry.