Strategy Guideline:

Mitigation of Retrofit Risk 

Factors

M. Berman, P. Smith, and E. Porse

Alliance for Residential Building Innovation (ARBI)

December 2012
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iii

Strategy Guideline: Mitigation of Retrofit Risk Factors

Prepared for:

The National Renewable Energy Laboratory 

On behalf of the U.S. Department of Energy’s Building America Program

Office of Energy Efficiency and Renewable Energy

15013 Denver West Parkway

Golden, CO 80401

NREL Contract No. DE-AC36-08GO28308

Prepared by: 

M. Berman, P. Smith, and E. Porse

Davis Energy Group

123 C Street

Davis, California 95616

For Alliance for Residential Building Innovation (ARBI)

NREL Technical Monitor: Cheryn Metzger

Prepared under Subcontract No. KNDJ-0-40340-00

December 2012
iv

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v

Table of Contents

List of Figures ............................................................................................................................................ vi

List of Tables .............................................................................................................................................. vi

Definitions.................................................................................................................................................. vii

Executive Summary................................................................................................................................. viii

1 Introduction........................................................................................................................................... 1

1.1 Risk Factors .........................................................................................................................1

1.2 Strategy Guidelines..............................................................................................................2

2 Planning and Decision Making Criteria.............................................................................................. 3

2.1 Overview..............................................................................................................................3

2.2 Technical Risk Factors.........................................................................................................3

2.3 Programmatic Considerations..............................................................................................4

2.3.1 Consumer Perspectives............................................................................................4

2.3.2 Contractor Perspectives ...........................................................................................5

2.4 Coordinated Framework for Decision-Making....................................................................6

3 Technical Description .......................................................................................................................... 6

3.1 Energy Models and Savings Projections..............................................................................6

3.2 Occupant Behavior...............................................................................................................7

3.3 Installation of Upgrade ........................................................................................................8

4 Implementation ..................................................................................................................................... 9

4.1 Accuracy of Energy Savings Projections.............................................................................9

4.2 Understanding Consumer Perceptions of Energy Savings................................................10

4.3 Measuring Energy Savings................................................................................................11

4.4 Quality Control Measures..................................................................................................13

5 Conclusions ........................................................................................................................................ 14

References................................................................................................................................................. 16

Appendix A: Background on LSRP Programs....................................................................................... 17

Appendix B: ECON-2 Model Results Used for Utility Justification...................................................... 18

Appendix C: EnergyPro Model Results Used for Design Purposes.................................................... 19

Appendix D: BEopt Model Used for Post-Installation Projections ...................................................... 20
vi

List of Figures

Figure 1. Nest Labs thermostat (Source: Nest Labs website; reprinted with permission) ................. 8

Figure 2. Ecobee thermostat (Source: Ecobee website; reprinted with permission)........................ 12

Unless otherwise noted, all figures were created by the ARBI team.

List of Tables

Table 1. Identified Risk Factors for Residential Retrofit Programs ....................................................... 1

Unless otherwise noted, all tables were created by the ARBI team.
vii

Definitions

ARBI Alliance for Residential Building Innovation (program team)

CEC California Energy Commission

CPUC California Public Utilities Commission

DEG Davis Energy Group (ARBI team lead)

DOE U.S. Department of Energy

EGIA Electric & Gas Industries Association

EUC Energy Upgrade California, a statewide program

HEA Home Energy Assessment

HEU Home Energy Upgrade

LSRP Large-Scale Residential Retrofit Pilot

PACE Property Assessed Clean Energy Program

RECS Residential Energy Consumption Survey

RFQ Request for Quotation
viii

Executive Summary

The Alliance for Residential Building Innovation (ARBI) is currently developing strategies and 

measures designed to promote and achieve increased energy savings in the residential building 

retrofit sector. Through its experience implementing pilot programs for residential energy 

efficiency retrofits in California, ARBI has developed guidelines focused on promoting and 

achieving realistic energy savings. Increased understanding of technological, economic, and 

sociological factors affecting energy savings for residential retrofit projects can help guide

successful approaches for retrofit programs. These guidelines are targeted to retrofit program 

managers, retrofit contractors, policy makers, academic researchers, and non-governmental 

organizations that work to realize energy savings from home energy upgrades (HEUs). 

The guidelines build on identified risk-factors that encompass four key areas: 1) accuracy of 

energy savings projections, 2) understanding of consumer perceptions for energy savings, 3) 

measurement of energy savings, and 4) quality control and quality assurance for retrofit 

installations. The guidelines are designed to assist retrofit programs in addressing key trade-offs 

for cost and performance, non-energy benefits, and interactions of program infrastructure with 

other sectors.

Risk factors associated with residential energy retrofits include both technical and programmatic 

factors. Inaccurate energy modeling, low-quality installations, and lack of market-ready 

technologies are all technical factors that can impact actual performance of a home after an HEU. 

Additionally, programmatic factors such as consumer education, contractor participation, supply 

of qualified contractors, and the possibility of take-back by consumers after an upgrade can 

degrade retrofit performance. 

Specific strategies seek to address the four key areas for attaining energy savings. First, to 

promote accurate projections of energy savings, implementers should develop more accurate 

energy modeling. This is facilitated through better pre- and post-installation monitoring, as well 

as understanding how and when to use models appropriate for particular purposes, such as design

or energy use projections. Second, to develop greater understanding of consumer perceptions of 

savings, industry professionals must understand varied consumer motivations for retrofits. 

Performance guarantees, which are facilitated through better projections and monitoring, can go 

far to manage consumer expectations. Third, to measure energy savings, new technologies such 

as thermostats with networking and monitoring features can assist service providers to monitor 

consumer behavior. Better measurement also facilitates greater insight into potential changes in 

consumer behavior after a HEU. Finally, to promote quality control, program managers can 

facilitate early interactions between contractors and certification managers that reduce conflicts 

and delays in post-installation certifications. Trade-offs between multiple certification programs 

can be minimized by ensuring that all participating parties at a local or regional level agree on 

retrofit and QA/QC procedures.

Through the compilation of such strategies, program managers can facilitate effective 

interactions between consumers and industry participants that promote residential energy 

savings.
1

1 Introduction

The Alliance for Residential Building Innovation (ARBI) is currently developing implementation

strategies and measures designed to promote and achieve increased energy savings in the 

residential building retrofit sector. ARBI is working with public and private sector partners to 

conduct a series of large-scale residential retrofit program (LSRP) pilots in Stockton, and Los 

Angeles, Alameda, and Sonoma counties in California. The objective of the pilots is to increase 

energy efficiency in the residential sector through improved uptake of whole house home energy 

upgrades (HEUs).

Through its experience in pilot program implementation, ARBI has developed a series of 

guidelines focused on promoting and achieving realistic energy savings. Through increased 

understanding of technological, economic, and sociological factors affecting energy savings for 

residential retrofit projects, ARBI seeks to provide guidelines that describe successful

approaches for retrofit programs. The strategies are targeted to retrofit program managers, 

retrofit contractors, policy makers, academic researchers, and non-governmental organizations

that work to realize energy savings from HEUs. On a broader scale, ARBI is also evaluating the 

success of various business and program models in order to achieve significant program uptake. 

1.1 Risk Factors

The ARBI team has focused on promoting and achieving energy savings for residential retrofits 

as part of its strategies for successful technical and programmatic approaches for the residential 

energy efficiency sector. Prior to program implementation, ARBI identified a series of risk 

factors related to technical and economic components of the programs, which were seen as 

potential impediments to program success if not addressed through proper mitigation strategies. 

These identified risk factors are listed in Table 1 below.

Table 1. Identified Risk Factors for Residential Retrofit Programs

Programmatic Risks

a. Low uptake, resulting in failure to achieve economies of scale;

b. Resistance from homeowners to allow access to key areas of the home;

c. Unattractive business model for contractors;

d. Inability of contractors to keep up with workload requirements;

e. Failure by contractors to adhere to program guidelines.

Technical Risks

a. Low-quality installations and lack of quality control (QC);

b. High number of callbacks for service issues;

c. Post-installation technical problems such as moisture, mold, or combustion, resulting 

from tightening of a thermal envelope during a home energy upgrade;

d. Failure of upgraded homes to perform to expectations of homeowners;

e. Failure of upgraded homes to produce energy savings predicted by modeling.
2

Controlling these risk factors requires careful planning, coordination, and data collection 

activities on the part of the ARBI team and its partners working to implement retrofit programs. 

Using established databases and performance metrics, ARBI collaborates with selected 

contractors to gather data and assess progress towards mitigating these identified risk factors.

1.2 Strategy Guidelines

In developing strategies to mitigate such risks, ARBI has created a series of guidelines within the 

overall plan of promoting and achieving energy savings for residential retrofits. These strategy

guidelines derive from research and program experience gained by the ARBI team through 

collaboration across sectors, which has sought to identify industry best practices. Four key 

components constitute these guidelines, as described below.

1) Accuracy of Energy Savings Projections: Retrofit program managers and contractors 

must be able to accurately project energy savings in order to ensure current and future 

program success. This includes projections both before and after installation activities, 

which establishes baselines while ensuring that industry participants provide customers 

with strong yet manageable results. Energy models play a critical role in such activities, 

but models must be utilized appropriately in order to promote accurate energy 

projections. Confidence in predictions of energy savings is also critical in mitigating a 

host of financial, legal, and technical risks in the residential energy efficiency market. 

2) Understanding Consumer Perceptions of Energy Savings: While technical strategies

are necessary to realize retrofit results, industry personnel must also understand how 

consumer perceptions of energy savings influence program uptake. Knowledge of the 

variety of consumer motivations can significantly affect program or marketing 

approaches. Strategies that address consumer perceptions related to expected savings and 

willingness to pay for installation work can directly address risk factors associated with 

market uptake.

3) Measuring Energy Savings: Beyond projections, industry personnel must develop 

methods and standards to accurately measure energy savings after completing an 

upgrade. Methods that utilize new and existing technologies, as well as increased 

information technology networking capabilities, can assist program managers and 

industry personnel to measure savings, while also serving to more robust data for energy 

modeling capabilities. Accurate measurement also addresses consumer perception, 

market viability, financing, and contractor performance. 

4) Quality Control: Quality control (QC) and Quality Assurance (QA) guidelines are 

important for developing effective mechanisms that mitigate risk for the energy retrofit 

sector. Notably, appropriate use of various industry certification standards and guidelines,

such as those from ACI, RESNET, DOE and Building Performance Institute (BPI), can 

significantly improve achievement in energy savings programs.

The strategy guidelines provide a framework for retrofit programs to address key cost and 

performance tradeoffs, non-energy benefits, and interactions of program infrastructure with other 

sectors. They encompass robust and cost-effective procedures that can be implemented on a 

consistent, prescriptive basis by program managers and qualified contractors in order to assure 

growth in the energy efficiency retrofit market. 
3

2 Planning and Decision Making Criteria

2.1 Overview

In the residential energy efficiency retrofit market, a host of impediments can prevent effective 

promotion and achievement of retrofit energy savings. Industry growth relies on successful

relationships between service providers and consumers, and challenges arise that can prevent one 

or both groups from following through with installations. While consumers maintain 

expectations for energy savings, industry requires reasonable post-installation usage from 

consumers to meet savings projections. Even as contractors need technical and programmatic 

capabilities to gather energy data for monitoring and feedback, consumers often seek minimally 

invasive and cost-effective installations that improve safety and comfort. A host of financial, 

programmatic, and technical factors can influence decisions and tradeoffs that potentially impede 

realistic achievement and growth in the residential energy efficiency sector.

2.2 Technical Risk Factors

Technical factors can significantly impede achievement of energy upgrade programs. 

Underperforming homes (post-upgrade) can result from a variety of factors, including inaccurate 

projections, poor installation procedures, lack of quality control, or altered homeowner behavior. 

New technologies can affect technical risk factors associated with residential building energy 

retrofits. Energy models that do not accurately predict home performance after an upgrade can 

significantly impede industry confidence. Increasing the amount of time spent collecting and 

inputting data to a model can potentially improve performance, but the marginal costs associated 

with such efforts can be prohibitive when seeking economies of scale. Many current energy 

models have shown to be inaccurate as 

a predictor of energy savings for the 

industry, but not necessarily due to poor 

modeling tools. Energy models can 

serve many uses, but inappropriate use 

of the models can result in 

unreasonable expectations. Thus, the industry should understand how and when to use energy 

models for particular purposes. Furthermore, while additional data is needed to use such models 

more accurately, in many cases, poor installation work degrades home upgrade performance. 

Thus, although models must be recalibrated after a period of usage, completing installations to a 

high quality standard is also necessary to ensure performance. 

In addition, though a few contractors in the current marketplace are providing performance 

guarantees, new technologies that increase data collection and performance modeling can assist 

industry leaders and policy makers in developing more effective modeling techniques. This, in 

turn, contributes to the ability of contractors to provide verifiable pre-installation assessments on 

a broader scale. Developing technologies that can, for instance, address the issue of “take-back,” 

where consumers alter behavior after an installation, would significantly enhance the ability to 

offer performance guarantees and mitigate risk factors for low uptake. These new technologies, 

though, can add costs to the project, which add new layers of complexity to tradeoffs between 

cost and performance. 

Energy models can serve many uses, but 

inappropriate use of the models can result in 

unreasonable expectations.
4

While new technologies that reduce energy consumption in other sectors can adversely affect 

performance, comfort, and health of consumers, within the energy efficiency retrofit sector, 

upgrades can actually work to improve health and safety. For example, many consumers might 

complain that driving a more fuel efficient vehicle instead of an SUV impedes their comfort or 

flexibility; however, improving the energy performance of a home is consistently viewed by 

residents as increasing their well-being. Even still, some comfort, health and safety risks can 

ensue from HEUs. Issues such as drafts from air supply registers within the house can bother 

otherwise satisfied customers. At the same time, failing to properly manage the building 

envelope along with ventilation can create dangerous back drafting of combustion appliances. 

Guidelines for quality control can work to mitigate these risks, for a serious accident related to 

an HEU could have a highly disproportionate effect on this nascent industry. Finally, tightening 

the building envelope to high standards can potentially increase moisture in the home, which can 

lead to mold and other health effects. Energy efficiency contractors must control such risks to 

ensure customer well-being. A strong and knowledgeable industry is, in turn, the responsibility 

of industry leaders and policy makers who oversee well-trained contractors and crews.

Thus, ensuring performance from a technical perspective encompasses significant cost and 

market considerations. If consumers expect a certain level of energy savings, the energy 

efficiency industry can certainly provide this level of service. The challenge ensues in providing 

this service at an attractive price. The retrofit industry must understand consumer behavior to 

clarify tradeoffs in up-front costs and long-term performance, working to provide high-quality 

and proficient technical work at an appropriate price. 

2.3 Programmatic Considerations

While technical considerations significantly impact energy upgrade performance, programmatic 

considerations can also influence progress towards realistic energy savings for residential 

retrofits. If low numbers of retrofits occur, then economies of scale within a program are not 

achieved and cost savings are not generated and passed on to customers. Low uptake, though, 

can be caused by a number of more fundamental risk factors, including: low levels of knowledge 

and understanding within the marketplace; unrealistic expectations for energy savings from 

retrofits; and inadequate access to capital for residential sector upgrades.

2.3.1 Consumer Perspectives

For consumers, the largest impediments to HEUs are cost and knowledge. Retrofit costs, 

financing options, and requirements for up-front payments without guarantees can significantly 

affect consumer willingness to pursue an HEU. If the performance of an upgraded home was

guaranteed, it would both ease consumer worries and improve the attractiveness of the market to 

outside capital. Thus, cost and performance work together. At the same time, identifying the 

accurate energy performance and cost savings associated with upfront consumer expenses is 

critical. Without identifying the commercial “price point” where consumer psychology and 

capital availability converge to increase sales, residential building energy retrofit programs face 

significant risk for low uptake.

Performance guarantees—agreements between contractors and customers that post-installation 

homes will achieve specified energy savings—can be a critical component in addressing 

consumer risk factors. Consumers who are driven by fiscal value must believe that money spent 

on a HEU will result in improved performance. To the extent that a contractor can provide these 
5

assurances, risk is transferred from the consumer to the service provider. Subsequently, the 

contractor must have incentives to both offer performance guarantees and assume this risk 

through reduction of uncertainty in post-installation performance. Thus, programmatic structures 

that minimize contractor risk while meeting consumer expectations can go far to increase 

residential retrofits.

Energy efficient homes have a potential competitive advantage in the real estate marketplace. 

From the perspective of an educated consumer, a home with verified energy savings would be a 

more attractive investment, as the lifetime costs would be much less. As of yet, however, the real 

estate sector does not routinely recognize this value added, for it is a difficult topic for real estate 

agents to quantify and communicate to consumers. Thus, consumers in a current home face the 

potential of performing an upgrade that does not enhance market value if they have to sell at 

some future point. Similarly, consumers purchasing or renting a home face uncertainty about its 

energy performance. 

2.3.2 Contractor Perspectives

While consumers must choose to spend money on an energy efficiency upgrade, service 

providers must be properly motivated and capable to conduct profitable, quality work that 

achieves improved energy performance. 

A significant risk lies in the ability of contractors to keep up with demand. Growing market 

sectors across many industries regularly encounter difficult trade-offs related to managing 

potential future demands in the face of fiscal requirements. If contractors and work crews are not 

able to keep up with large, sudden growth within energy efficiency retrofit programs, then 

potential customers may be lost and economies of scale not achieved. 

Another risk for contractors who seek to ensure performance is the opportunity for “take-back”

in upgraded homes. Some consumers may feel that after an HEU, they can be more lenient with 

energy usage, leading to activities like turning up the thermostat in the winter or down in the 

summer. This directly affects home heating costs and home energy performance. When takeback occurs, consumers may perceive that the upgrade did not affect performance, when in fact 

they are paying the same amount for more 

comfort through greater efficiency. This risk 

is directly related to a keen understanding of 

the marketplace as well as consumer 

psychology.

The ability of contractors to provide accurate 

projections and deliver quality installations 

may be impeded by lack of access to key 

areas of a home. In some instances, 

consumers are reticent to allow contractors into particular parts of their home, such as 

bathrooms, bedrooms, or offices. This is often primarily related to security and trust issues 

between contractors and customers, but may occur even if the customer requested a visit or 

service. This poses risks to contractors who may not be able to provide verifiable guarantees or 

waste precious time and resources in such situations. 

After a home energy upgrade (HEU),

some consumers may feel they can be 

more lenient with energy usage. This can 

lead to take-back activities, such as 

turning up the thermostat, which directly 

affects home heating costs and home 

energy performance.
6

A major challenge is the current emphasis on “low-bids” within the building industry generally, 

and the residential retrofit sector specifically. Consumers are more likely to choose lessexpensive options, which often results in sub-par work. Furthermore, not all contractors perform 

the same quality of work. Individual, high-performing contractors may be in a situation where 

other, lower-bid providers create a dour reputation for the residential retrofit sector, thus 

depressing overall sales. This relates closely to technical risk factors associated with installation 

quality and performance guarantees.

2.4 Coordinated Framework for Decision-Making

Strong overlap exists between the programmatic and technical risk factors that can impede rapid 

market penetration of residential energy efficiency upgrades. Most importantly, cost and 

performance issues are strongly linked for both consumers and service providers. Consumers 

may be willing to pay for quality work if verifiable performance guarantees and other assurances 

are part of regular upgrade services. At the same time, providing such performance guarantees 

requires quality control, efficient programmatic structures, and, in some cases, new technological 

capabilities in order to assure accurate modeling. Decisions on cost tradeoffs require both 

consumers and contractors to be knowledgeable of marketplace opportunities and understand 

products offered. 

Competitive advantages for energy efficiency upgrades have both a short- and long-term 

perspective. In the short term, contractors face decisions as to specialize in providing energy 

efficiency upgrades, which can increase their marketplace competitiveness. The residential 

retrofit marketplace, however, is nascent, and contractors risk low returns on investment if their 

specialization is too precise for current market needs. When viewed in a longer term, consumers 

face decisions regarding energy efficiency that could potentially add resale value to a home 

through verified energy efficiency upgrades. As of yet, however, market appreciation of HEU 

work is far inferior to other more traditional aspects such as size, number of bedrooms, or 

kitchen countertop material. Thus, both consumer and contractor confidence in the growing 

residential retrofit sector rests on assuring that technical, programmatic, and economic risks are 

effectively mitigated. 

3 Technical Description

3.1 Energy Models and Savings Projections

Promoting achievable energy savings is dependent upon appropriate use of energy models.

Such models, which assist contractors in assessing the potential for performance upgrades 

through residential retrofits, are very useful as guides. The usefulness of the models, however, 

is closely related to the desired purpose and how the models are run.

Energy models can by employed as a tool to assist or provide: 

Relative Rankings, which utilities and others create to assess the level of rebates provided to 

particular homes. Based on the characteristics of a home, including age, construction type, 

occupancy patterns, and location, utilities use energy models to place a home within a tiered 

rebate structure based on the potential energy performance as compared to other homes. In 

such instances, absolute performance is less important than relative performance, as utilities 

are primarily concerned with creating a relative ranking of homes that guides equitable 
7

distribution of allotted rebate dollars based on potential energy savings. The ECON-2 model 

shown in Appendix B provides an example of a model used for this purpose. Model 

projections can be sent to the utility to provide justification for rebates.

Design of energy efficiency upgrades prior to installation. Energy models allow industry 

professionals the opportunity to comparatively assess various implementations, which 

influence contractor designs to arrive at a package of installation measures that seek to 

maximize performance and minimize cost. Energy models used in the design phase may or 

may not reflect actual energy savings, even as some service providers could be tempted to use 

them as a benchmark in communicating projected energy savings to consumers. The 

EnergyPro model in Appendix C provides an example of a model used to assess influence 

design and assess trade-offs of cost and savings.

Energy Use Projections for energy savings for retrofit projects. This application of energy 

models has significant potential benefits for increasing consumer confidence in energy savings 

projections, but also retains the greatest level of associated uncertainty. Energy models are 

reliant on quality data inputs and accuracy in system modeling to predict outcomes. Thus, if 

input data is inaccurate, or if actual conditions differ from model conditions, the models will 

not accurately project energy savings. If service providers use them as the primary tool in 

providing consumers with energy savings projections, the contractor assumes significant risk 

that actual performance will differ significantly from projections. The BEopt model in 

Appendix D provides an example of a model used to project energy use after an installation. 

Appropriate use of energy models within various stages of home energy assessments and HEU

is vital to providing realistic energy savings. While projections are necessary to facilitate 

consumer buy-in, results are critical to industry performance and reputation. Thus, the 

interaction of models with the technical and economic influences of the market is vital, and 

training industry personnel in the appropriate use of such models can significantly improve 

consumer perception and accuracy of predictions. 

3.2 Occupant Behavior

Home energy performance after an upgrade can be drastically affected by the behavior of 

occupants. Additional residents, new appliances, and changes in temperature set-points can 

degrade the projected performance, potentially causing issues between contractors and 

consumers. When a home is modeled, the service provider will ask for reasonable projections

as to occupancy and use, while also noting the types of energy-consuming devices found in the 

house. This data is an input to the model, which assists contractors in providing performance 

guidelines to customers. 

After an upgrade is completed, consumers often expect a particular level of performance, 

indicated by reductions in energy bills. Often, however, customers change their behavior. 

Adding new residents or energy-intensive appliances can increase energy consumption and 

reduce savings. Further complication occurs if utility rates increase. A lifestyle change such as 

a new stay-at-home parent or change in employment can also increase energy consumption.
8

These differentiations are not usually apparent to consumers, as 

detailed breakdowns of energy use and costs are seldom available. 

In such instances, consumers may contact the service providers with 

complaints of unrealized energy savings. At present, service 

providers seldom have the capability to rigorously analyze customer 

energy habits, which could possibly show how changes in behavior 

affected energy use. Some new thermostats available on the market 

are able to monitor and record temperature set-points, providing a 

record of consumer behavior to assist in diagnosis. For instance, the 

new Nest Labs thermostat from former iPod designer Tony Fadell 

uses algorithms and user input to develop a “schedule” for energy 

usage that manages heating and air-conditioning to promote savings. 

The device, which was released in 2011, is available for $249. Other 

market-ready models, noted in Section 4.3 below, provide various 

capabilities to record and program thermostat parameters at a wide 

range of prices. 

3.3 Installation of Upgrade

Quality control measures to ensure proper installation of retrofit actions are necessary to 

ensure energy savings. Retrofit program managers must promote quality control across the 

suite of potential upgrade actions if actual energy savings are to achieve projections. 

The thermal envelope of a home, which separates conditioned (climate-controlled) spaces from 

non-conditioned spaces, is a key contributor to energy performance. Walls, floors, and ceilings 

all constitute the thermal envelope. The thermal envelope must be tightened and sealed in 

order to minimize heating and cooling losses to the outside. Air sealing measures such as 

weather stripping, caulking, and windows can all improve retention of heating and cooling in 

the conditioned space. Proper attic insulation at a minimum of R-38 (ideally R-49) can reduce 

transmission through the building envelope to a non-conditioned attic. Windows should be 

installed considering environmental conditions, ideally using a model that includes external 

factors such as building orientation and shading. In window selection, solar heat gain 

coefficient (SHGC), U value, and frame material must be appropriate for the climate, building 

orientation and shading conditions.

In addition to the thermal envelope, mechanical systems also contribute significantly to 

building performance. One of the primary contributors to energy loss is ductwork. Leaky ducts 

can reduce effective delivery by 30% or more, so measures must be taken to properly seal as 

much ductwork as possible. Ducts in non-conditioned spaces such as an attic are usually 

accessible and can be properly sealed. Other ducts, however, are sometimes inaccessible 

without removing walls or floors, which present trade-offs between cost and performance. 

Ideally, all accessible ducts within non-conditioned spaces should be sealed. Ducts within 

conditioned spaces are not as much of a concern since any leakage is within the thermal 

envelope; however, this can present imbalances in proper air distribution and internal home 

conditions. 

Other parts of mechanical, water, and electrical systems must also be considered. Mechanical 

systems such as furnaces and air conditioners should be upgraded with appropriately-sized, 

Figure 1. Nest Labs 

thermostat (Source: 

Nest Labs website; 

reprinted with 

permission)
9

high efficiency equipment. Water heaters are significant contributors to energy and water use.

Installing a water heater blanket, as well as insulation for hot water pipes, can reduce energy 

losses associated with transmission of hot water. Home electrical systems should be upgraded,

including installation of CFL or LED bulbs and ENERGY STAR® rated fixtures for fans and 

other devices. Plugging devices into power strips that prevent energy losses when turned off

can also significantly reduce annual energy bills. Finally, water system components such as 

low-flow shower heads can improve water heating energy savings and reduce water 

consumption. Many retrofit programs are including these and other measures (low-flow toilets) 

to reduce energy and water consumption. 

Quality control measures such as those listed below are critical for energy performance:

• Testing should be conducted before and after installation using appropriate test-in and 

test-out procedures to characterize energy improvements while ensuring proper 

installation 

• Installation crews should receive training from a BPI certified trainer, receive ongoing 

instruction from specialists in energy efficiency retrofits, and earn BPI certifications

• After installation, contractors should conduct combustion appliance safety tests, 

examining the combustion appliance zone (CAZ) to measure and ensure carbon 

monoxide levels comply with established safety standards 

4 Implementation

4.1 Accuracy of Energy Savings Projections

The challenge of predicting energy savings is long-standing, but advances in technology and 

modeling techniques are allowing contractors and energy professionals to more accurately model 

homes prior to installation. The ARBI team has worked with leading industry professionals to 

better understand the energy modeling process, especially the appropriate use of models in 

various scenarios.

A key factor in utilizing models appropriately is to understand the ultimate goal of the modeling 

process. As energy models can be used for many purposes, knowing how to apply model results 

in various scenarios mitigates the risk that inappropriate modeling techniques will result in poor 

model results for the intended purpose. If a model is used as part of the upgrade design process, 

it can supply useful insights to assist energy professionals in implementing the best combination 

of measures for a particular house. It may not, however, accurately reflect final performance, 

depending upon the actual circumstances of the installation process as discussed in Section 3.3. 

The model may provide accurate projections based on the proposed design, but not the house asbuilt. Also, upgrades in insulation, mechanical ventilation, and HVAC systems may or may not 

have been installed as the model assumed. The model performance will be subject to the 

difference in model assumptions and actual conditions. To correct for this, the model should be 

rerun using test-out data, reflecting post retrofit conditions.

If a model is used to provide projections for consumers, it should be framed by industry 

personnel as a guideline that can be refined based on continued monitoring and adjustment, 
10

rather than an absolute target. Monitoring allows insights into occupant behavior and may 

provide feedback about equipment efficiencies if it is configured to measure efficiency. Once 

occupant behavior is more accurately understood, the model schedules can be adjusted to more 

accurately reflect actual conditions. At the 

same time, occupant behavior can be 

highly variable from provided input, 

meaning that models may reflect error. 

Thus, understanding the limitations that 

models have towards various ends can go 

far to improve their accuracy.

Pre- and post-installation monitoring is a 

critical component of accurate energy 

savings projections. Data drives both 

better modeling and more accurate predictions. Models with more data are likely to be more 

robust. At the same time, the process of obtaining that data allows energy professionals to assess 

actual performance of upgrades. Conducting tests both before and after installations and 

inputting that data appropriately can work to provide better predictions of models. 

Over time, modeling may not be necessary for every house pre-retrofit. The ARBI team is 

currently working to apply energy models to broader scales, including at the neighborhood or 

regional level. If an area is comprised of similar homes built in the same era, then energy models 

can be applied more broadly, thus reducing time and effort required to project energy savings. 

Applying models too broadly, however, can result in poor model performance. The number of 

occupants in a home, details regarding construction, and types of appliances are all important 

inputs to energy models that can be overlooked if working at too broad of a scale. Thus, industry 

professionals must balance economies of scale with need for detail in using energy models 

within both the design and use projection scenarios.

4.2 Understanding Consumer Perceptions of Energy Savings

Consumers typically have an expectation to receive certain energy savings for their investments 

in energy efficiency retrofits. This expectation, however, is shaped by public perception, 

education, and interactions with energy efficiency professionals. Managing such perceptions, so 

that they are both realistic and beneficial, lies at the heart of effective understanding of the 

marketplace and consumer behavior.

Industry professionals must work to better understand the multiple motivations consumers may 

have for pursuing energy efficiency retrofits. A first question to ask is: what does a potential 

customer care about? For some customers, realized savings may be the most important 

motivation. In these instances, contractors should emphasize appropriate savings predictions,

including making consumers aware that 1) model predictions are not absolute, 2) consumer 

behavior after an upgrade can significantly affect results, 3) electricity rates can change, which 

can affect utility cost savings, and 4) weather patterns can have a significant effect on home 

performance. For other customers, savings may be less important than concerns of health or 

comfort. Contractors should work to understand what factors are of greatest concern to 

customers, and be sure to incorporate measures that mitigate these concerns into the HEU. 

Pre- and post-installation monitoring in 

a sampling of houses is a critical 

component of accurate energy savings 

projections. Conducting tests both before 

and after installations and inputting that 

data appropriately can work to provide 

better modeling predictions of energy use 

for similar house types.
11

Presentations to various consumers must be adapted based on consumer motivations in order to 

most accurately and effectively present opportunities for energy savings in a home.

Contractors must work to cultivate a 

long-term relationship with consumers, 

helping to guide them through the 

process of understanding energy 

predictions, opportunities, and savings. 

For instance, many consumers will not 

have time or interest in understanding 

the nuances of energy predictions 

provided through common industry tools 

such as EnergyPro, BEopt or Recurve

reports. Rather than inundate customers 

with too much information, the 

contractor must help the consumer work 

through a complex findings report in 

order to identify the most useful results 

that will sell the upgrade to a consumer. 

In other industries, performance guarantees have shown to be critical components to managing 

consumer expectations. For the energy efficiency sector, they present significant challenges. If 

consumer expectations are too low, they may not decide to move forward with an HEU. At the 

same time, if performance guarantees do not justify initial consumer expenditures, customers 

will be reticent to spend large sums for an HEU. The guarantee as part of a well-priced and wellmarketed package is a strong tool to combat lack of education and consumer complacency in the 

energy efficiency marketplace. It can work to mitigate several of the previously identified risks, 

such as model prediction of energy use, consumer uncertainty over results, or hesitancy about the 

contractor.

Warranty programs for retrofits similar to those offered in other home and consumer sectors can 

facilitate long-term relationships between customers and contractors, while also increasing the 

economic attractiveness of retrofit work for contractors through the inclusion of maintenance 

agreements. 

Finally, consumer perception is also addressed through program strategies that ensure quality 

work. Assuring strong, ethical work amongst industry professionals can help to build trust in the 

nascent energy efficiency industry. Testimonials from prior customers also go far to assure 

potential customers of contractor trustworthiness.

4.3 Measuring Energy Savings

The measurement and assessment of energy savings after HEU installations can provide robust 

data useful in future work, as well as insights into quality control needs and consumer 

satisfaction. Incorporating these into regular operations of retrofit programs is critical to gaining 

useful information throughout the pilot operations. 

Performance guarantees provide security 

for consumers and a competitive advantage 

for contractors. While other related 

industries have successfully implemented 

performance guarantees, the residential 

energy efficiency sector has not widely 

explored these options. Applying effective 

performance guarantee models to the 

residential energy efficiency sector requires 

collaboration within the energy efficiency 

industry, while working with partners in 

other industries to adapt successful business 

models.
12

In recent years, a number of innovations and services have created greater opportunities to 

measure energy savings in residential homes. Innovative home energy management systems that 

differentiate home heating and cooling energy use from other energy uses provide greater 

resolution for homeowners and energy managers. Networking that links data gathering 

capabilities with residential energy use data through automatic retrieval provide increased 

analysis and remote monitoring capabilities. Online platforms such as MyEnergy

(www.myenergy.com) offer residents the opportunity to view detailed descriptions of their energy 

consumption and compare consumption across various time periods. Retrofit programs can 

incorporate screenshots from the MyEnergy platform into customer communications and 

management activities, while also facilitating analysis by program managers. The cost of 

capturing this data is dropping dramatically, as well, making it affordable to incorporate such 

capabilities into regular retrofit program operations. The ARBI team is now researching the 

efficacy and accuracy of this portal and data collection technique.

New technologies also provide opportunities for better monitoring. Devices that differentiate 

between consumptive uses provide greater resolution into residential energy patterns, which 

assists homeowners in analyzing areas for potential improvement. Additionally, such 

technologies allow program managers to more 

readily track energy usage of upgraded homes, 

allowing for greater analysis capabilities that can 

assist in customer management. Another relatively 

new technology can shed light on occupant 

behaviors that drive energy use—thermostats that 

monitor and retain heating and cooling setpoints 

over time. Such thermostats are becoming 

increasingly available at market prices. For 

instance, the previously mentioned Nest Labs 

thermostat, which seeks to combine design and 

technical capabilities, retails for $249. The Ecobee 

thermostat, which retails for $350, monitors sets as 

well as indoor and outdoor temperature, while also 

connecting to local WiFi networks for remote control. The EnergyHub device, which retails for 

$300, has similar capabilities, except for monitoring outdoor air temperature. Generally, such 

communicating thermostats provide additional opportunities to connect available data with ready 

platforms, including smart phones and the MyEnergy portal. When homeowners and program 

managers have access to more robust data on energy usage, it can help to answer questions and 

alleviate conflicts in a more efficient manner, thus saving all parties time and energy. 

At the same time, such capabilities run the risk of becoming one more electronic-based 

procedure in the already busy world of consumers. Strategies must take into account how to 

effectively incorporate new robust data capabilities into products focused on consumer uptake. 

Customers can become quickly overloaded by too much data, to the point that they tune out and 

program goals are diluted. Therefore, implementations must minimize burdens for consumers, 

relying on strong relationships to pinpoint the level of engagement that customers are willing to 

undertake in long-term energy monitoring. If done effectively, such measures can assist in longterm monitoring efforts, performance guarantees, customer retention, and uptake of HEUs in the 

market.

Figure 2. Ecobee thermostat (Source:

Ecobee website; reprinted with 

permission)
13

Finally, home performance for retrofits may tend to degrade over time following an installation. 

Simple measures such as replacing air filters, however, can work to maintain high levels of 

performance. Ensuring that such maintenance occurs can significantly increase longevity of 

performance, but accomplishing this must make economic sense to all parties involved. This 

could include homeowners regularly servicing their HVAC systems or keeping their pool 

cleaned so the pump doesn’t have to expend additional energy to keep the filter clean. As noted 

previously, contractors can manage consumer expectations for future performance through 

warranty programs, which serve the dual purpose of maintaining home performance while 

building long-term contractor-customer relationships. Through such methods, assessment of 

energy upgrade performance can also assist program managers to better understand the long-term 

dynamics of technical and market factors. 

4.4 Quality Control Measures

Quality control and quality assurance measures are critical in providing performance guarantees, 

building consumer confidence in energy efficiency retrofits, and assuring customer safety and 

health. While strong training and certification programs exist that certify contracting 

professionals in proper energy efficiency installation techniques (such as those offered by BPI), 

effective implementation of such techniques may vary. In some cases, subcontractors hired by 

certified contractors may not have proper training and conduct sub-par work.

More often, however, breakdowns in communication among industry professionals impede the 

certification process. The ARBI team has seen that facilitating this communication early in the 

HEU process can alleviate complications in certification program mandates. By involving

contractor certification program representatives in the selection process for neighborhood-level 

performance parameters, retrofit program managers can facilitate smooth quality control 

processes as contractors upgrade homes. 

For instance, if a contractor seeks to start 

an upgrade program in a neighborhood, 

retrofit program managers can facilitate a 

site visit between quality control

representatives, contractors, and program 

managers. During such sessions, issues of 

inspections and tradeoffs can be worked 

out, so that contractors have a clear agenda provided by program representatives for installation 

upgrades. This has been shown to significantly alleviate subsequent delay and uncertainty in 

certification of upgraded homes. These meetings foster agreements among the involved parties, 

which then provide a roadmap that, if followed, will result in a certification. Even if a home is 

subject to multiple certification standards, ARBI collaborators have found that these preinstallation site visits are critical to mitigating later certification delays. By recognizing that 

certification programs are a vital part of the retrofit industry, these early collaboration procedures 

can work to alleviate the most pressing risks related to lack of information transfer.

Certification programs vary across the industry, which can complicate the certification process.

Various public and private upgrade programs may use different and multiple certification 

regimes, complicating the process of certification for contractors and homeowners. Consumers 

and contractors can be burdened when multiple annual audits are required for rebate dispersal. In 

extreme circumstances, contractors may even refuse to work with rebate programs that have 

Program managers can develop installation 

guidelines and integrated QA/QC procedures 

tailored to specific regions and programs, to 

minimize added costs to participating 

contractors. 
14

onerous certification requirements. To mitigate this risk, actions must be taken to streamline, 

synthesize and homogenize various certification requirements and eliminate overlapping 

program requirements within upgrade programs. 

Quality assurance programs can address issues both before and after installations. Robust 

education and training programs for participating contractors and crews can work to ensure that 

contractors are conducting good work. At the same time, program managers for state and 

federally managed upgrade programs can conduct post-installation verifications to assess work 

from participating contractors. This combination of program measures can ensure that 

contractors are providing quality installations, maintaining program reputation and consumer 

satisfaction. Industry leaders and program managers can also develop documentation and 

materials that facilitate knowledge transfer. This knowledge transfer would allow new program 

designers and managers to have a framework and benchmarks to start building their own 

programs. 

Overall, key performance indicators for the strategy guidelines include number of home energy 

assessments and HEUs, number of post-installation claims and complaints, and level of expected 

and actual savings. Clear actions that increase technological and programmatic innovations are 

necessary to ensure greater financing potential for residential energy efficiency upgrades. 

Residential energy efficiency retrofits must seek competitive market advantages, including both 

short- and long-term perspectives.

5 Conclusions

Strategy guidelines are important to promoting and attaining realistic energy savings for 

residential retrofits. Relationships between program managers, contractors, quality assurance 

personnel, and consumers are influenced by technical and administrative factors, and can be 

facilitated through early integrated communication. The ARBI team has sought to develop 

guidelines across several categories. First, accurate projections of energy savings provide 

consumers with reasonable expectations while offering service providers the opportunity to 

mitigate risks. More accurate energy modeling, facilitated through new technologies and pre- and 

post-installation monitoring, can improve current practices. Models must also be used for 

appropriate purposes in particular situations, including as tools for projections or design. Second, 

developing greater understanding of consumer perceptions of savings can assist service providers 

in managing expectations and market offerings. Industry professionals must understand the 

varied consumer motivations for retrofits. Performance guarantees, which are facilitated through 

better projections and monitoring, can go far to manage consumer expectations. Third, more 

effective strategies to measure energy savings are critical for retrofit industry growth. New 

technologies such as thermostats with networking and monitoring features can assist service 

providers to monitor consumer behavior. Better measurement also facilitates greater insight into 

potential changes in consumer behavior after a HEU. Finally, effective procedures for quality 

control measures can ensure standardized work. Program managers can work to facilitate early 

interactions between contractors, quality assurance personnel and certification managers to 

reduce conflicts and delays in post-installation certifications. Trade-offs between multiple quality 

assurance and/or certification programs can be minimized by ensuring that all participating

parties at a local or regional level agree on retrofit, quality assurance, and certification 
15

procedures. The combination of such implementations across the four categories can go far to 

mitigate risks associated with low uptake of energy efficiency retrofits. 
16

References

ecobee (2011). http://www.ecobee.com/.

MyEnergy (2011). “What is MyEnergy?” https://www.myenergy.com/about.

Nest (2011): The Learning Thermostat. http://www.nest.com/.
17

Appendix A: Background on LSRP Programs

The ARBI team is currently working to implement a series of large-scale residential retrofit 

program (LSRP) pilots in Stockton, and Los Angeles, Alameda, and Sonoma counties in 

California. The LSRP pilots aim to develop a market for energy efficiency retrofits through 

increased consumer outreach and education, incorporation of market efficiencies, and creation

of economies of scale. In enacting the pilots, the team has developed and is continuously 

refining several novel strategies, including:

• Design of bulk purchasing strategies based on an assessment of existing approaches. This 

includes understanding dynamics of local and national equipment sources. 

• Design of methods for addressing various logistical challenges, particularly those related 

to storage of equipment and delivery to multiple job sites.

• Design of contractor participation guidelines. These guidelines were designed to ensure 

that contractors hold suitable qualifications, would adhere to quality specifications, and 

would maintain high standards of workmanship. It is critical that contractors approach 

and work with homeowners in a way that is consistent with the overall goals of the pilot 

LSRPs.

• Identification of key values to be tracked and beta testing of tracking systems.

• Evaluation of delivery infrastructure, which includes determining effective customer 

relations strategies as well as efficient higher-level bureaucratic organization.

• Evaluation of various marketing strategies, including door-to-door outreach, 

neighborhood-level targeting, early adoption incentives, sales infrastructure, publicity 

campaigns, and communications efforts such as websites and call centers.

• Evaluation of varying sales infrastructures, including use of professional contractors and 

installers as sales personnel, as opposed to the use of professional sales personnel with 

experience in other related industries.

The objective of the pilots is to increase energy efficiency in the residential sector through 

improved uptake of whole house home energy upgrades (HEUs). The three pilots contain similar

core elements, while employing tailored marketing and outreach strategies based on the specifics 

of the target regions. This allows ARBI to compare and contrast various strategies. The ARBI 

team has responded to early results by implementing targeted modifications in pilot structure 

based on data and feedback from participants. 
18

Appendix B: ECON-2 Model Results Used for Utility Justification

As described in Section 3.1, the ECON-2 model output below provides an example of 

information used by utilities to assess rebate levels for particular HEUs.
19

Appendix C: EnergyPro Model Results Used for Design Purposes

The figure below shows a screen shot of an EnergyPro model with various alternatives used in 

developing a cost-effective package of measures. 
20

Appendix D: BEopt Model Used for Post-Installation Projections

The figure below shows a screen shot of a BEopt model with various alternatives used for 

simulating pre- and post-installation energy use. 
DOE/GO-102012-3811 ▪ December 2012

Printed with a renewable-source ink on paper containing at 

least 50% wastepaper, including 10% post-consumer waste.