The market opportunity for residential energy upgrades—the combination of measures to improve energy performance in homes—is substantial, amounting to roughly $150 billion in the United States alone. Americans are also less satisfied with the energy performance of their homes compared to any other criterion, including affordability, privacy, safety, and space.
Given the market potential for residential energy upgrades and the fact that the residential sector represents about one-fifth of U.S. greenhouse gas emissions, we might be inclined to think the present reality could evolve to look something more like this: the economic, health, and environmental “win-win-win” of energy upgrades leads to billions in homeowner investments—with all this stimulated through widespread mainstream media promotion, contractors racing across our nation’s neighborhoods to keep up with orders, people engaging their bankers to secure popular new financing options, and a massive increase in sales of efficiency and renewable energy products. This is unfortunately not (yet) the case—largely because energy performance improvements in the residential sector require multiple, complex actions among millions of individual decision makers—despite growth in the U.S. energy upgrades market and uptake of smart home technologies resulting from noteworthy efforts by governments, nonprofits, and for-profit companies.
Rocky Mountain Institute (RMI) sees a need to act now and act boldly to increase the magnitude and speed of investments in energy upgrades, achieve the full economic potential of our homes, and improve the quality of our housing stock. We plan to do this through our new initiative, Residential Energy+.
Accelerating and scaling investment in home energy upgrades
Residential Energy+ will facilitate collaborations that empower homeowners with the motivation, information, and tools to invest billions in energy upgrades across the United States. We will do this by engaging with a broad range of market actors that shape the residential sector and enabling these actors to capture this multi-billion dollar market opportunity. Although we find policy at the federal and local level promoting the transition to high-performance homes to be helpful, this initiative specifically focuses on the cultivation of market-based solutions at a national scale that make investments in energy upgrades as attractive and easy as possible for homeowners.
Many have worked hard on initiatives promoting investment in residential energy upgrades, resulting in advancements in technologies, policies, financial products, and business solutions supporting improved residential energy performance. We seek to build on the leadership of those who have made these inroads to date by using a whole-systems approach to coordinate non-traditional partnerships amongst media, the real estate industry, the financial services sector, and service providers. In other words, we seek to serve as the mortar for an already well-established set of bricks, that when united have the capability to unlock this market.
Because there is much to learn from the successes and challenges of prior and existing initiatives, we focused the first phase of our initiative on engaging with the most active practitioners and experts in the energy efficiency and solar industries, determining existing barriers, and identifying market opportunities where we can foster innovative industry collaborations to encourage and ease homeowner adoption.
Residential Energy+ will accelerate and scale investment in home energy upgrades by focusing on three reinforcing strategic pillars:
- Increasing consumer demand for home energy upgrades by leveraging existing, mainstream consumer channels that increase the visibility and popularity of energy upgrades, bolstering the motivation to act and the awareness of available solutions
- Increasing transparency around home energy performance to inform that demand and impact home valuation
- Expanding resource availability to ensure consumers have convenient access to the financing and service providers necessary to enact home energy upgrades
This November, RMI and Carbon War Room will convene a catalytic set of approximately 40 motivated, diverse industry leaders to establish the framework for market solutions to unlock billions in homeowner investment in energy upgrades—setting the gears of progress in motion.
The most direct path to homeowners
A typical homebuyer on the market today likely wants a home with an open-concept kitchen. In response, home-sellers have made this feature an area of focus when remodeling and advertising their properties in order to increase the asking price and shorten the amount of time the property is on the market.
While there may be several reasons why this feature has been widely adopted, it’s due in part to the mainstream channels that influence what we want in our homes: the magazines we flip through, the television programs we watch, the stores we frequent, and the online platforms we use. These channels are powerful because they are pervasive and affect our decision making both consciously and unconsciously—namely, by shaping what we see as possible in our homes, how often it is reinforced, how it links to our identities, and how we should talk about it.
As RMI looks to unlock billions in homeowner investment in energy upgrades, we could ignore the sway mainstream consumer channels has on society—or we can leverage these channels to make energy-efficient and renewable energy features as much the norm in our homes as has become the case with hardwood floors, granite countertops, and open-concept kitchens. Our inclination is to pursue the latter—working with those already influencing millions of Americans—to help the growth of the energy upgrades market.
The key players
Our strategy to integrate energy upgrades into mainstream channels entails fostering collaborations among different types of market actors, including:
- Content Providers delivering technical and messaging content to information outlets
- Information Outlets such as the broadcast media (i.e., television and radio programming), print media (i.e., magazines) as well as cultural hubs (i.e., sports venues, museums, community centers, etc.) providing trusted content to wide audiences
- Consumer Platforms where consumers interact in-person and digitally with the array of home improvement options for their homes
- Product Providers seeking to better promote their products to increase sales among homeowners
What might these collaborations look like? Imagine energy upgrades being incorporated into the storyline of home improvement shows; segments on popular talk shows about the multiple benefits of energy upgrades and the options that are available; dramas and soap operas in which a critical character is an energy auditor or solar installer, or undergoes an energy upgrade as part of the storyline; home improvement retail with staff eager and prepared to help you improve energy performance in your home, paired with improved product placement of the options for energy upgrades; better promotion of energy upgrades and associated contractor credentials on websites connecting homeowners to contractors; and the tying of energy performance into the interactive web portals where you can virtually reconfigure the possibilities for your home. A combination of these would together help make energy upgrades conversational, approachable, and desirable.
The link to more valuable homes
Although we think it is critical to popularize energy upgrades through mainstream channels that heighten their visibility and desirability—providing a source of motivation for homeowners to invest—we recognize that these channels are insufficient on their own.
Increased market transparency around home energy performance and the impact of energy upgrades on home values, as well as convenient access to the necessary financing and service providers are important to making energy upgrades more attractive to consumers. These complementary pillars of the Residential Energy+ initiative will be covered in greater depth in the following blogs in this series. Stay tuned!
Image courtesy of Shutterstock.