In Austin, Texas, air conditioners hum constantly from April to October, which creates a powerful opportunity to eliminate air leaks in homes and other buildings. That's also why contractors often find themselves with more than enough work during some months of the year but are quite slow in others, often resulting in layoffs.
To tackle this challenge, municipal utility Austin Energy used three decades of experience with energy efficiency programs and $10 million in seed funding from the U.S. Department of Energy's Better Buildings Neighborhood Program to promote a whole-house approach to energy efficiency and to encourage consumers to invest in home energy upgrades. The grant kicked off with a winter campaign that offered Austin homeowners a combination of incentives and provided contractors a steady stream of business during a traditionally slow period. The program soon expanded upon its success and used the lessons it learned to launch even more innovative energy efficiency programs.
Austin Energy’s approach to program design incentivized thousands of its customers to participate in energy efficiency projects. The program launched in winter 2010 with the introduction of the “Best Offer Ever,” a program offering single-family homes both enhanced rebates and interest rate buy-downs to 0%, complemented by federal tax credits. Austin Energy’s existing infrastructure of experienced internal support staff and qualified contractors allowed the program to launch quickly, and more than 550 homes were upgraded within six months.
With the success of the Best Offer Ever, Austin Energy experimented with further innovative program design, and the program became known as Energy Returns. Subsequent efforts included more financial incentives, such as tiered rebates and low-interest rate loans backed by loan loss reserves. Austin Energy worked to promote these incentives by optimizing marketing techniques, such as recording video testimonials from customers. By incentivizing thousands of consumers to undertake home energy upgrades, the Energy Returns program created local jobs; trained workers who received nationally recognized certifications; and provided quality control checks of the upgrade work conducted by participating contractors.
Overall, the Energy Returns program allowed Austin Energy to identify best practices for evaluating savings, designing innovative financial incentives, coordinating complex upgrades, driving demand, credentialing the workforce, and instituting quality assurance and control. Read more in the Austin Energy final report.
Austin Energy experimented with a combination of financial incentives, marketing techniques, and workforce development to promote home energy upgrades.
- Program Design: Historically, Austin Energy customers had taken advantage of rebate-only offers more often than loan-only offers. Austin Energy’s Best Offer Ever allowed consumers to combine both rebates and zero-interest loans for energy upgrades for the first time. As Austin Energy experimented with the program design, it was critical to partner with a local financial institution that could be flexible. Austin Energy selected a local credit union experienced with energy efficiency loans and willing to collaborate with the program as it set up a loan loss reserve, experimented with interest rate buy-downs, and tweaked program design.
- Marketing and Outreach: Austin Energy used a combination of radio, newspaper, and online advertisements; mass mailings; testimonial videos; features on its website; and outreach at local events to publicize the Best Offer Ever and Energy Returns offerings. Multifamily property owners that had undertaken upgrades were given yard signs, banners, window clings, and brochures to advertise their participation. As a way to promote deeper upgrades, Austin Energy offered an AC Check-Up program that gave consumers a free “report card” from their contractor who scored the overall health of their air conditioning system and identified potential energy savings.
- Financing and Incentives: In addition to the Best Offer Ever, Austin Energy tested other financial incentives, including a tiered rebate system that offered higher rebates for projects with greater expected energy savings and encouraged homeowners to undertake more comprehensive upgrades. Additionally, Austin Energy introduced low-interest loans backed by loan loss reserves to continue incentivizing low-interest-rate financing.
- Workforce Development: In order to ensure customers received impartial, accurate assessments, Austin Energy offered Residential Energy Services Network (RESNET) and weatherization training to participating contractors and energy assessors and promoted RESNET certification. Multifamily contractors were required to be Building Performance Institute (BPI)-certified, and other, similar certifications were encouraged. A total of 62 workers received National Comfort Institute, Home Energy Rating System, or BPI certifications. The demand for home energy upgrades generated by the program also created local jobs, with up to 40 jobs added during the program’s peak. Additionally, one of the most beneficial aspects of the grant was the ability to provide semi-independent quality assurance/quality control (QA/QC) services to support Austin Energy’s inspections unit.
By continuously seeking feedback from customers and contractors, Austin Energy was able to improve its program design and become more successful at promoting home energy upgrades. Some of the lessons learned during the process included:
- Allow ample time for program design. The Best Offer Ever program was highly successful, but the pressure to launch the program so quickly left some internal processes untested, such as the inspections and rebate processing, which limited the volume of rebates that could that could be handled by staff. It took more time to address these obstacles after the fact than it would have to address these concerns up front.
- Appoint an energy advocate. Austin Energy addressed customers’ time limitations barriers by assigning a staff member to guide them through the process. The energy advocate facilitated communication with contractors, kept the project on track, and answered questions from homeowners.
- Use direct mail. While Austin Energy used a variety of marketing techniques, direct mail proved to be one of the most effective, including mailings that reminded customers about bonus rebates and deadlines to participate, which helped spur enrollment.
- Adjust incentives based on objectives. Austin Energy found that elevated incentives (i.e., the tiered rebate system based on expected energy savings) were necessary to encourage homeowners to consider more comprehensive upgrades, and adding a deadline created a sense of urgency in customers who might otherwise procrastinate in starting the upgrade process. On the flip side, when Austin Energy wanted to shift emphasis to sustainable financing, it was able to increase the number of customers who chose low-interest loans by shifting from rebates to interest rate buy-downs.
- Offer QA/QC. Random QA/QC visits performed on 10% of upgrades encouraged contractors to slow down and pay more attention to detail during busy upgrade seasons.
- Keep it simple. At any given time, Austin Energy had several program offerings available and distinguishing between these offerings—even internally—was difficult due to the variety of program names used.
Based on the success of its Energy Returns program, Austin Energy will continue to focus on delivering innovative energy efficiency programs to its single-family and multifamily customers with the following plans for the future:
- The Energy Returns multifamily program was re-launched in October 2013 as the Multifamily Energy Reduction Partners program and integrated into Austin Energy’s ongoing efficiency programs. The new program includes many features of the former, including tiered rebates that encourage comprehensive upgrades, and rounds of feedback from contractors and customers are being incorporated to improve the program and continue pushing deeper upgrades.
- Part of the program’s single-family option will continue under the Home Performance with ENERGY STAR® program. This effort will benefit from the online contractor portal, field guide, and customer-facing videos developed for the Energy Returns program, and Austin Energy will continue the workforce development trainings begun under the grant.
- Austin Energy will continue to promote financing options available with its financial partner, including rebates and loans with interest rate buy-downs that are backed by a loan loss reserve.