WRITTEN BY JESSE HITCHCOCK & ANGELICA PEREIRA ∙ TORONTO, ONTARIO

Changing buildings is hard, but changing people is harder. 

Deep energy retrofits require structural upgrades to the building envelope. These upgrades can be complicated to understand, expensive to implement and are often burdened by convoluted processes to meet program requirements. As a result, we’ve spent years focusing on the low-hanging fruit -- low/no-touch behavioural recommendations that reliably produced energy savings of 2-7%. These small, incremental improvements have gotten us this far, but we have to be bold in improving our building stock in order to meet our collective energy efficiency and climate change goals. Building retrofits can unlock energy savings of 60%, giving them the power to fundamentally impact the way we consume energy. Instead of trying to change how people live in their homes, deep energy retrofits allow us to change the way the homes themselves operate. 

Future-proofing energy efficiency

Structural energy efficiency upgrades such as deep energy retrofits are more expensive to implement, but they last for the life of the building and continue to provide energy savings regardless of a change in occupants or their behaviour. Behavioural programs, in contrast, require the active participation of homeowners in maintaining appliances, monitoring equipment, and can be rendered ineffective if customers become less engaged over time. 

As a result, behavioural upgrades such as smart meters and thermostats often lack longevity. Even when encouraged to purchase and install a smart meter, for example, the meter itself does not result in a significant reduction of energy consumption. In a study conducted by British Gas, researchers found that households who implemented smart meters produced non-significant energy savings of -0.04KWh to -0.15KWh per month. Other behavioural devices, like smart thermostats, are useful in enabling demand response but their impact on overall energy consumption is not clear. These technologies undoubtedly provide the utility with useful data, but they don’t create meaningful, long-term impacts for the customer. 

To make real progress in reducing energy consumption, utilities and other administrators must shift gears and focus on innovative ways (PACE, financing, labelling) to support consumers participation in structural energy efficiency upgrades. These upgrades stand the test of time. They last as long as the building stock, and deliver consistent, substantial energy savings regardless of who lives in the building. 

As we continue to make ambitious commitments around decarbonization, emissions reductions and net-zero buildings, we expect to see diverse stakeholders such as governments, not-for-profits and even the real estate industry, become involved in the delivery of energy efficiency programs. To facilitate this, we cannot hinge our successes on behavioural programs that rely on the availability of consumption data that is often only available to select administrators. Upgrades to the building envelope can be modelled and completed in the absence of consumption or AMI data, and this presents a significant opportunity as more diverse stakeholders can get involved in the energy efficiency sector. 

More than the sum of its parts: the non-energy benefits of structural energy efficiency 

Structural energy efficiency upgrades go far beyond energy savings. Making improvements to the building envelope and HVAC systems is also an opportunity to increase comfort and create a healthier interior environment for residential customers. Indoor Environmental Quality (IEQ) is defined as “the quality of a building's indoor environment in relation to the health and wellness of those who occupy the space within it”, and it includes factors such as temperature, air contaminants, drafts and odours. The Toronto Atmospheric Fund recently published a comprehensive study showcasing that energy efficiency retrofits are linked to Indoor Environmental Quality. In addition to producing energy savings and emissions reductions, the retrofits also resulted in a 44% reduction in exposure to extreme indoor temperatures (≥26°C) in winter, a 20% reduction in exposure to outdoor odors such as smoke, and a 35% reduction in condensation which can lead to mould growth and respiratory stress. The study concludes that “efficiency retrofits provide a valuable opportunity to improve IEQ while generating a return on investment through utility cost savings. The very same upgrades that save energy can also be designed to deeply improve resident satisfaction, health, and comfort.”

In addition to the spread of odour and mould, the building envelope and HVAC systems can also impact the spread of viruses. The USGBC and many other Green Building councils around the world are now providing LEED credits for COVID-specific HVAC upgrades. By controlling the ventilation system, HVACs also control the flow of air indoors and the “aerosol effect” of viruses like COVID-19 and the common flu. As a result, upgrading these systems can help optimize air flow and prevent the spread of such viruses. The US House of Representatives recent decision to allocate $6 billion to provide homeowners with rebates to upgrade their HVAC and insulation is a testament to retrofits being valuable and necessary. The value of deep energy retrofits is particularly stark for low-income residents, who benefit from reduced energy costs as well as improved thermal comfort and an enhanced sense of safety and security. 

On top of the notable IEQ improvements that can be generated by structural energy efficiency, it also boosts the retail value of the home. A US Green Building Council study showcased that homes can sell for an average of 8% more if they are more energy efficient, and attic insulation can help homeowners recoup 107.7% of their investment when they decide to sell. Not only does structural energy efficiency significantly lower energy bills while living in the home, it also proves to be an impressive return on investment when it’s time to sell. 

A problem of scale

A large reason that structural energy efficiency upgrades are more challenging to implement is their scalability. The programs that support these upgrades require on-site visits from certified auditors who must be compensated for their time and expertise. They also rely on coordinating and managing multiple contractors and vendors, tracking progress, and measuring/verifying results. Utilities and other administrators often offer large rebates/incentives to offset the upfront costs of structural energy efficiency. When these programs are successful, it often results in lengthy scheduling delays while the industry tries to scale-up to accommodate the need. On the back end, the desks of program managers and CSRs pile up with applications and administrative paperwork required to manage multiple quotes, invoices and vendor/customer inquiries, causing additional delays. All of this negatively impacts the customer experience and deters participation in deep retrofit programs. 

Fortunately, these are old problems. We know that two main barriers prevent uptake of structural energy efficiency: clear cost-benefit analyses for customers and costliness for utilities and administrators. Technology eliminates these problems. We no longer have to struggle with accurately conveying the return on investment of structural efficiency, or with the cost-burden borne by utilities to administer the programs. The innovative data science we’ve become accustomed to utilizing in almost every other sector can also be leveraged by utilities to deliver modern day programs and make deep energy retrofits more accessible and compelling than ever. 

The future of deep energy retrofits

We can’t continue to compare behavioural and structural energy efficiency in a vacuum. Our capacity as an industry to deliver structural energy efficiency upgrades is not the same today as it was two decades ago. Traditionally, we wait for customers to seek out retrofit opportunities and funnel them into a multi-step process that begins with an on-site assessment. After the assessment, customers solicit quotes from contractors, schedule the work, and eventually apply for incentives once the work is complete. Between the wait-times for auditors, contractors and the administrative burden of intaking and processing rebate applications, the entire process takes several months and costs the utility as much as $1,000. Also of note, we start customers down this lengthy process without having insight into their building or the opportunities they are best suited for. 

Today, technology is revolutionizing the ability to identify deep retrofit opportunities and work hand in hand with auditors, vendors and stakeholders to deliver them at scale. Using a data-driven approach, customers with the most need for deep retrofits can be identified and triaged accordingly. Customers who only need small, lower-touch upgrades can be funneled into the correct program stream before any program dollars are allotted. Customers who do require the on-site assessment can be automatically assigned to an auditor based on their region or other allotments set by the administrators. When on-site, the auditor is empowered with a roadmap of data about that specific building, and the additional data they collect automatically updates the customers profile. Contractors and other vendors can also be assigned by the customer or by admins, and all of these processes are streamlined and powered by real building data. Technology gives us the opportunity to speed up these timelines, improve the customer experience and ultimately maximize energy efficiency program dollars to ensure we can meet our ambitious net-zero and climate change commitments. 

It is now possible to dramatically improve the accessibility and potential of deep energy retrofits. We can deliver cutting edge marketing and engagement campaigns -- informed by real, evaluation-grade data -- and simultaneously design programs that maximize energy savings per program dollar spent. This data also helps utilities create modern-day incentives that incorporate creative lending and financing. Instead of waiting for customers to come to the utility, technology allows us to find the buildings and homeowners who will benefit the most, and reach out to them directly with compelling, personalized offers. Having evaluation-grade insight into the entire service area is a game changer for deep-retrofit programs. Instead of being seen as costly to deliver and challenging to generate interest in, structural energy efficiency is now easy to access, deeply impactful and offers the potential to save money while improving health, comfort and wellbeing.