WASHINGTON, D.C. — Neither cost nor environmental impact is the top driver or deal breaker for people deciding whether to make an energy-efficient upgrade to their property, according to a new study from the Pacific Northwest National Laboratory (PNNL).

Rather, the survey of almost 10,000 homeowners and renters across the U.S. found that the comfort and safety of children and pets head the list of motivating factors, with repairing or replacing broken appliances or other equipment a close second, said Chrissi Antonopoulos, a senior analyst at PNNL. Reducing energy bills came in fourth, behind improving their homes’ appearance, Antonopoulos said, presenting the still unpublished survey results at the recent Behavior, Energy and Climate Change (BECC) Conference.

When it comes to residential energy efficiency and electrification — and the Inflation Reduction Act’s billions in rebates for consumers to upgrade their homes — “households do not make rational decisions, and they don’t make decisions based on cost-benefit analysis or something that is going to give them a kickback,” she said.

While consumer education seems to be an effective strategy for motivating energy efficiency upgrades, “technology patterns and behavior and decision-making are really difficult to predict, and we have decades of research and policies to kind of uphold that,” Antonopoulos said.

A joint effort of the American Council for an Energy Efficient Economy and environmental and energy programs at the University of California, Berkeley, and Stanford University, BECC looks at the drivers and roadblocks to individual and community action on climate change. IRA implementation was a central theme at this year’s event, with a special focus on how to ensure low- and middle-income consumers take advantage of the law’s rebates and incentives.

The potential for savings is huge, Antonopoulos said. “Our buildings are woefully inefficient,” she said. PNNL has estimated that about 68% of the U.S. housing stock, 130 million homes, were built before energy codes were widely enacted in the 1990s, she said.

These older homes may have high heating bills because they may not be well insulated and “they have huge HVAC systems … to make them comfortable,” she said.

The PNNL study looks at how to leverage consumer concerns into better energy-efficiency decisions. Safety, health and comfort may be more important in messaging than environmental impact, Antonopoulos said, with the notable exception of HVAC systems, where energy efficiency is a top priority.

“People are installing central air conditioning in huge numbers,” she said. “That is a touchpoint for installing heat pumps. … You’re going to install [air conditioning] anyway; let’s go for a heat pump technology.”  

Space heating accounts for up to 29% of energy costs for many households, according to the U.S. Environmental Protection Agency. Geothermal or air-source heat pumps, which use heat-exchange technologies, can provide more efficient heating and cooling, as well as significant savings. The IRA offers rebates of $2,000 to $8,000 for heat pumps, depending on household income.  

The caveat is that consumers value durability, repairability and low maintenance when replacing HVAC and other systems, Antonopoulos said. Having the latest technology or smart phone app is not a major concern, and contractors can play a huge role. They “have a big influence and can make something go either way, positive or negative,” she said.

Another intriguing finding from the study is that stove preferences appear to be linked to income level. “High-income households tend to prefer gas stoves because they want the super fancy range,” Antonopoulos said. “Lower and moderate incomes tend to prefer electric.

Both homeowners and renters are most likely to adopt “interactive, visible technologies,” like changing to LED lightbulbs, followed by technologies that improve comfort but are “behind the scenes,” like adding insulation or a new hot water heater, Antonopoulos said.

Upgrades with longer-term paybacks, like electrical system upgrades or installing solar panels, are harder sells and made less frequently, she said.

‘Fix the House First’ 

With inflation still high, President Joe Biden is banking on consumers seeing real cost savings from the IRA’s energy-efficiency funding starting in 2023. Speaking to a group of business leaders on Nov. 18, Biden pointed to the 30% investment tax credit for solar, noting it could bring down the cost of installing panels on a residential rooftop by up to $7,500.

“And when you get to keep savings money on your electric bills for the remainder of the year, it’s about $300 a year on average,” Biden said.

But even with effective messaging, low- and moderate-income (LMI) homeowners most in need of those savings may face significant obstacles in accessing the IRA funds, according to several speakers at the BECC conference.

Based on figures from the U.S. Department of Energy, “there are 26 million households in the United States earning less than 80% of the area median income, burning fossil fuels inside their homes today,” said Mark Kresowik, senior policy director at ACEEE, “[For] first-time low-income home buyers, utilities are the third-highest cost that they pay to afford their housing, behind only property taxes and home repairs.”

Many of these homes may need other, more basic upgrades to their roofing or electricity systems before they can even begin to take advantage of the IRA’s energy efficiency rebates.

“Poor housing conditions [are] the most critical and most important barrier that right now is being underfunded in this space,” said David Becker, marketing program manager for energy efficiency at DTE Energy in Detroit. “If we’re going to deliver energy efficiency, if we’re going to deal with historic redlining and historic underinvestment in these communities, we have to address the housing conditions. … When we layer on electrification efforts, solar panels, all those issues, we need to fix the house first.”

In 2020, DTE launched a Health and Safety Pilot with local community groups to identify and repair low-income homes, Becker said. The program, which started with $2 million in funding, has been extended through 2023.

The DTE pilot is upgrading about 300 to 350 homes per year, with roof repairs and electrical system upgrades absorbing the largest shares of home repair dollars, he said.  

DTE has also partnered with two health care nonprofits, the Gilbert Family Foundation and ProMedica, on a $20 million Detroit Home Repair Fund to provide health and safety home repairs for 1,000 homes over the next three years, Becker said.

“This allows us to more deeply impact these homes,” he said. “We can handle trip hazards and grab bars and anything that’s needed in the home [to make] the home healthier.” Following the May program announcement, DTE received more than 120,000 calls about the program in the first 24 hours, Becker said.  

Reducing Barriers

Melanie Santiago-Mosier, vice president for climate, energy and equity at the nonprofit Green and Healthy Homes Initiative, also stressed the need to get low-income households and communities “to the starting point,” where they can take advantage of energy-efficiency funding in the IRA and Infrastructure Investment and Jobs Act.

Her organization sees the federal dollars as a new funding source that can be “braided” with other funding streams, she said, during a keynote panel.

Community engagement upfront is critical, Santiago-Mosier said. “A rebate just kind of implies there’s an initial outlay of money in order to get some money back,” she said. “For a low-income family or an owner of affordable housing, it may be very challenging to actually make that initial investment.”

Henry McKoy, director of DOE’s new Office of State and Community Energy Programs, said the department is trying to close the finance gap with a new $250 million revolving loan fund that will be available to states. Echoing Santiago-Mosier, he also sees an equally critical “information gap” in ensuring people understand what the IRA provisions mean for them.

It “is important for us to make sure we have that outreach, that engagement, those communication channels that actually connect to people and meet people where they are,” McKoy said. “We can’t just look at communities as receivers of services, of benefits. We have to see them as true partners in this work going forward.”

Implementation of the IRA must be “effective, efficient and impactful,” he said. “If we go through this process now where we invest these dollars and at the end of the day we haven’t stood up and invested in institutions that will survive, that will serve as vehicles for this work going forward and that will really be transformational … we will have failed.”

Eligibility Requirements

Dan Burgess, director of Maine’s Energy Office, said meeting people where they are is also a pressing challenge for states, which will be doing much of the difficult work of translating the complex provisions of the IRA so they can be easily understood by homeowners.

He pointed to Maine’s current campaign to install 100,000 heat pumps in homes across the state by 2025, aimed at reducing the state’s reliance on home heating oil. To date, 80,000 heat pumps have been installed, Burgess said.  

“We have reduced barriers and made the program not too complicated. We’ve empowered contractors across the state … and I think it’s working because we’re not requiring folks to jump through 10 hoops.”

IRA rebates for heat pumps will allow the state to build on its own program, he said.

States will also be wrestling with different eligibility requirements and low-income definitions for different provisions of the IRA and IIJA, Kresowik said. Some programs base eligibility on average mean income, while others use the federal poverty level.  

“How [do] you make this easy, so somebody doesn’t have to go through one, two [or] three different income verifications?” he said.

Maine has explored a couple of different approaches to this problem, Burgess said. “You don’t have to provide all of your taxes, but you can provide this page, or you can sign up to allow [the Department Health and Human Services] to provide your information,” he said.

“There are a lot of legal requirements both at the federal level and then oftentimes at the state level,” he said. “I think it’s incumbent on state agencies to work with one another to figure this out, so that it’s as easy as possible for the participants.”