Home Star-An Energy Efficiency Program that needs to put dollars in America’s pockets if it is to work.
May 4, 2010
Home Star-an Energy Efficiency Bill working its way through Congress is marketed as the next great thing to get people to work with the side benefit of making America’s built environment more energy efficient. If the thinking isn’t changed as to financing, it will never make the impact it is counting on. It is a jobs bill that still requires Americans to reach into their pockets, pockets that aren’t filled with much cash at the moment or easy access to credit.
A few weeks ago I had the opportunity to attend the National Capital Contractor Forum in Manassas, Virginia. I attended to get some insight into the Home Performance by Energy Star pilot program being introduced to Northern Virginia. It had some great sponsors and some people who really care about what is happening in the Energy Efficiency business around Washington, D.C.
The Forum, as with many national home energy symposiums, conventions or conferences lately, pushed and discussed the Home Star initiative making its way through Congress. It is being hailed as the Nirvana for jump starting home energy efficiency upgrades. In February I was inundated with Home Star at the RESNET conference in Raleigh. Why? For those in the Energy Rating business it is a job creation bonanza.
Until the Contractors Forum I was assuming that Home Star was an energy efficiency program. I was wrong. I happen to ask about monitoring utility bills after the improvements and was brought up short by the speaker. I was told outright, “This isn’t about results, this is about creating jobs.” Well, results are my primary reason for being involved in the Sustainable, Energy Efficiency movement (I prefer this description to “Green” Building–a totally overused word describing everything from diapers to windows).
Nobody wants to see the building economy recover more than I do. But I don’t want the United States to create an entire contractor base focused on a government program requirement, all the while knowing nothing about what the program is meant to accomplish(measurable reductions in energy use–energy efficiency). Creating jobs in one thing, creating a skilled workforce that can improve American lives is another. I want contractors who know not only what they are doing, but why they are doing it, which is to get energy efficiency results that save consumers, builders and businesses money. When contractors know this and can take some pride in what they accomplish, they might actually stick with it as a career and the U.S. becomes better for it.
The Home Star program has incentives built in and two different tiers. One tier, Silver, would give a homeowner up to $3000.00 back on a $6,000.00 investment. There was a speaker, Ray Walsh, who related the situation to disposable income. Good analogy. His comment was if one had a choice to spend $6000.00 on their home, and they would get $3000.00 of it back or rent a home at the beach for their family for a couple weeks and take a vacation, what would they choose? Energy Efficiency expenditures compete directly with disposable income, which in this down economy is substantially reduced for the average working family.
Say I was going to spend $3000.00 out of my own pocket to improve my homes energy efficiency and save $50/month in my utility costs by doing so. This equates to $600/year, or a 5 year payback, a 20% return on my investment. That’s a nice return. But unfortunately I am probably not going to reach into my pocket and spend $3000.00. I will probably spend some of that money on a vacation, a car, something I want and need, and continue to pay the utility bill of $50 more, or $600.00 for the year. Why? I want some higher prioritized things for my family or me, then energy efficiency, which I can’t see, feel or touch.
That is the problem with any program at this point that requires a homeowner to reach into their pocket. Many of them don’t have it and if they do, they might think of many better things to do with the money. No overhaul of the existing buildings infrastructure is going to get anywhere unless it puts money in the consumer’s pocket. A business owner or high income individual may be attracted to tax credits offered and can afford to look at the expenditure as an investment, but the common worker, struggling to make ends meet, is not spending money on energy efficiency unless there is something in it for them and that something is not usually a savings of $50 a month after spending $3000.00 out of pocket.
I am not talking about new construction here. Anyone who doesn’t pay diligent attention to cost effective energy conservation, energy efficiency or sustainable building practices when building a new structure barks at the moon. They are loony. But an existing home owner(they are different then an existing building owner), no matter how much common sense it makes, is not reaching in their pocket to do it, unless they are forced to or can see some substantial jingle in their pocket.
If Home Star was set up with a financing package, meaning the $6,000.00 that is spent is entirely financed, and the homeowner still got their $3000.00 back from Federal Government, you might see some of this actually working. For example I spend $6,000 on energy efficiency upgrading and that entire $6,000.00 is financed. Now I get $3000.00 back from the government. I got three grand in my pocket that I can use–I like that. Going a step further I have say a low interest loan(3%)for the $6,000 that has to be paid back in 6 years. My payments would be approximately $92/month for 6 years. I am now saving $50/month on my energy bill or net out of pocket of $42/month for 6 years. This totals approximately $3000.00 out of pocket, or nothing, because I got that $3000.00 up front to use. And if the appraisers and the banks of the United States counted in my energy efficiency upgrades by increasing the value of my house, I know have something more when I sell or refinance.
This is just a hypothetical example and some out of the box thinking. It may seem fiscally irresponsible getting the government involved, but new thinking is what it is going to take to get Americans to upgrade the energy efficiencies of their homes, when they don’t have to. Frankly I believe the government should hold lending institutions feet to the fire to provide this type of loan. It is the very least they could do and it would go a long way towards removing this foul taste I have in my mouth from the government’s bank bail outs and creeps pocketing huge bonus’s when they still haven’t done squat to help Americans pull us out of this recession.
Energy efficiency is invisible, it only shows up on a utility bill in savings. Americans usually invest for an income or appreciation, they just don’t look at utility savings as income, try as we might to convince them otherwise. Until we figure out how to put money in building owners or homeowners pockets, they aren’t inclined to fork out the cash and in this economic climate, they are less inclined to do so.
We have subsidized bankers, car manufacturers, big oil, every one and almost anyone lately, but if America is going to change in totality the existing homes in this country, we are going to have to finance it, not just subsidize it. The Federal Government can mandate it for their existing buildings, they have the money and the control, but to force homeowners or building owners to do the same they gotta get some money in their pocket, not ask them to spend some. A financing program like this would go a long way towards getting the existing built environment more energy efficient and create jobs at the same time.
The above is strictly my opinion. The numbers were based on the Silver Star prescriptive path of the Home Star initiative. To achieve Gold Star performance path incentives, the homeowner has to spend more to get more and the same principles would apply.
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