Thursday, April 24, 2014
Special to the Press Herald
YARMOUTH — The challenge of how to efficiently and cost-effectively heat Maine homes this coming winter got a significant boost with the Legislature's passage (and veto override) of the omnibus energy bill. The opportunity is extraordinary, with close to $20 million available over the next three years, but it is still outclassed by the size of the challenge.
Maine's double whammy of old housing stock and massive reliance on oil heat puts us in an energy pickle unlike any other place in the U.S. The real need, of course, is far larger than this funding can stretch, and that makes it all the more important that we spend these dollars wisely.
Efficiency Maine is in the process of developing an incentive plan for this program and, to its credit, is on a fast track to get a new system in place for the coming winter.
My company, Energy Circle, is headquartered in Maine but provides software and services to energy-efficiency retrofit contractors, independent energy auditors and government-utility programs across 46 states.
We work in states with active and aggressive incentives, others whose incentives have expired and many with no incentives whatsoever.
As a result, we've directly witnessed the benefits and challenges of the full spectrum of efficiency incentives and programs. We've seen massive state programs administered by high-priced consultants, and we've worked with small community initiatives with almost no overhead and tightly focused incentives, along with a number of models somewhere in between.
We live in the shoes of the contractors and auditors doing the work, and we have a national perspective on what works.
From our vantage point looking across the country, we'd offer these thoughts as Efficiency Maine formulates a program to help homeowners tackle the coming winter:
• Incentives should be based on performance.
The most successful programs provide incentives based on performance -- the larger the energy reduction, the larger the incentive.
The alternative to a performance-based approach is to attribute an estimated savings to a particular measure, but because every house is unique, this is very often an overly simple and inaccurate system.
• The quality of work and the energy savings should be verified.
One of the beauties of the science-based approach to home energy efficiency is that these measures taken can be verified. In other words, when the work is complete, various tests can confirm the reduction in leakage.
Good contractors do this pre- and post-testing as a matter of practice, but there is no substitute for third-party verification of the work. A quality control system that randomly checks up on contractors' work is one of the core features of good programs.
• Encourage and leverage financing.
Regardless how big an incentive may be offered, the cost of retrofitting a house is still beyond the means of most Mainers. Yet the economics are exceptional -- very often producing cash flow-positive figures based on reductions in energy costs.
This means, of course, that financing is frequently needed. But credit remains tight, and many homeowners can't or don't want to use home equity. The program should recognize this challenge and either buy down interest rates or take other actions to get financing within the reach of more Maine homeowners.
• Don't distort contractor-auditor business models.
Maine is fortunate to have a solid energy efficiency contracting and auditing sector. These companies provide great jobs -- homegrown, high-value and not exportable overseas -- the kind of skilled work that Maine desperately needs.
Our state has a mature home energy business sector. We have comprehensive contractors that handle insulation as well as air-sealing, experts in cutting-edge alternatives to oil heat, independent energy auditors who only do testing and many blends of these models.
The key point is that the private market should be allowed to grow and thrive around whatever business models Maine homeowners choose to purchase. The program shouldn't pick winners.
Companies designed to serve a specific incentive program tend to fail when the program expires and they have to compete for business in a traditional market environment.
Efficiency Maine should ask the question: Does the program encourage businesses that are viable without the incentive?
Following these principles will lead us to a model efficiency incentive program that can be the envy of the nation and the solution for folks facing another Maine winter.
Peter R. Troast is founder and CEO of Energy Circle, based in Yarmouth.