Is energy efficiency broken?

If you’re a regular Shelton Group client, reader or follower, you’ve heard our party line about the problems with successfully marketing energy efficiency:

  • You’re dealing with a consumer market that doesn’t think they need what you’re selling.
  • They don’t think they need what you’re selling because the industry keeps selling “energy efficiency,” and nobody wants to buy energy efficiency. They want to solve a problem, and generally improve the comfort, health and safety of their homes … which allows them to feel relieved/smart/in control/like rock stars.
  • The end result is that we spent $7 billion on utility energy efficiency programs in this country last year alone (that’s all in – program administration costs, rebate money, sales & marketing, etc.) … and two-thirds of the population is blissfully unaware that those programs exist.

So, clearly, we have big issues with making the marketing of energy efficiency programs, products and retrofits much more cost-effective (and Shelton Group is working with our clients every day to turn this around). But a bigger question has been raised lately about the cost-effectiveness of energy efficiency programs altogether. Specifically, the recent EPIC study calls into question whether or not low-income weatherization programs actually deliver the projected savings they promise. Here’s an excerpt from the overview on the website:

Participating low-income households were provided with about $5,000 worth of weatherization upgrades (e.g., furnace replacement, attic and wall insulation, and weather stripping) per home at zero out-of-pocket costs. While the researchers found that the upgrades did reduce the households’ energy consumption by about 10 to 20 percent each month, that only translated into $2,400 in savings over the lifetime of the upgrades – half of what was originally spent to make the upgrades, and less than half of projected energy savings.”

Many organizations highly invested in energy efficiency have responded to this study’s assertions, and the best response, I believe, comes from ACEEE. Their response reminds us all that some of the bigger benefits of energy efficiency have nothing to do with utility bill savings. Which gets us back to the point I made at the beginning: what people really want to buy is not energy efficiency itself and not even just energy savings. We must understand the emotional value delivered by energy efficiency and market THAT.

For a real-world perspective on this, I reached out to Nate Adams, one of the country’s premier Home Performance thought leaders and implementers (we speak at a lot of the same conferences and write for a lot of the same media). Nate’s a guy who’s in the field every day working with homeowners to not only convince them to pull the trigger on energy efficiency upgrades, but then doing the work and tracking ALL the data points related to results. Here’s an edited version of his response to the question, “What do you make of this study’s findings?” I’ve bolded a few of his key points that happen to agree with the point I’m making here.

A core problem begins from the assumption that energy efficiency measures must or should “pay for themselves.” Very few things in life are free; it’s more of a question of how much are they worth? By expecting efficiency to be free, an impossible expectation is set.

Currently, low utility costs in much of the U.S. make “cost-effectiveness” from energy cost savings alone impossible. Our $15,000 projects often only save $300-500/year. This is typically a 30-70% drop in heating and cooling costs. Even at a $5,000 project cost, which is typically too little to deliver substantial energy savings, the math is challenging at best.

From my understanding, the energy cost savings are only a portion of WAP [Weatherization Assistance Program] cost-effectiveness calculations. Weatherization upgrades (taxpayer subsidized) and Home Performance upgrades (private market) often come with substantial health benefits, like reduced asthma and absenteeism.

In the private market, fixing problems other than utility costs are the drivers of almost all of our projects. In the rare cases where projects are cost-effective, the client first reached out to solve a problem like ice dams or uneven comfort, not energy bills. Fixing these problems has real value to both weatherization and Home Performance clients, but they aren’t part of a simplistic cost-effectiveness test.

The cost-effectiveness of weatherization programs is a stickier subject than for private programs, since government money is being used, but keeping “non-energy benefits” (NEBs) in mind is critical. By all means, put a value (and track the savings) on energy use reductions, but putting a value on health and community benefits is critical as well.

On the private side of things, programs need not pay for entire upgrades. Homeowners determine the value of solving problems they want solved. Energy efficiency is merely an after-effect of these upgrades, if they are well designed and implemented.

Focusing entirely on cost-effectiveness from energy savings alone is not a tenable path. Consumers care more about cost than cost-effectiveness. Can I afford it and will it solve my problems?

So, for weatherization programs, target low-income families with children who are frequently in the hospital with respiratory issues and fix those homes with healthcare money. Reduced healthcare costs may pay for that project in a year or less, according to Kevin Kennedy of Children’s Mercy Hospitals in Kansas City.

In the private market, focus on clients who have a real problem they want to solve. It’s working for my company, Energy Smart Home Performance.

The key, again, is in leveraging BOTH energy benefits and non-energy benefits. That is about as simple as you can make this complex beast. Until that happens, utility efficiency programs and weatherization programs will continue to struggle with uptake and cost-effectiveness, and we’ll continue to see studies that make us all look bad. Let’s fix that!

I couldn’t agree more. Let’s fix it … and the way to fix it in the private sector is NOT to conclude that energy efficiency doesn’t work, but instead, to “get it” that the way we’ve been marketing it doesn’t work, and to start marketing the benefits people actually care about.

About the Author

Suzanne Shelton

Suzanne Shelton

Where Suzanne sees opportunity, you can bet results will follow. Drawing on her extensive knowledge of both the advertising world and the energy and environment arena, Suzanne provides unparalleled strategic insights to our clients and to audiences around North America. Suzanne is a guest columnist in multiple publications and websites, such as GreenBiz, and she speaks at around 20 conferences a year, including Sustainable Brands, Fortune Brainstorm E and Green Build.

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Suzanne Shelton

President and CEO

Suzanne is the voice and the vision of Shelton Group. Drawing on her extensive experience in energy and the environment – and 25+ years in the marketing and advertising industry – Suzanne provides high-level strategic insights for our clients and guidance for our research and creative departments. She regularly speaks at conferences around the country, including Sustainable Brands, Fortune Brainstorm E and the International Builders’ Show, and serves as a guest columnist for publications like Fast Company, Green Builder and

Susannah Enkema

VP Research & Insights

Susannah directs our research team and plays a key role in extracting the nuggets of information that pave the way for recommended marketing strategies and creative approaches. Susannah has nearly two decades of market research and strategy experience, including her role as president of SE Consulting, where she led the services for the likes of DIY Network and the makers of GORE-TEX®.

Matt Brass

VP Creative

Matt steers the creative department in concepting, designing and producing campaigns. He ensures sound strategy and deep insights inform everything his team develops, and works closely with the accounts department to ensure copy and designs will meet our clients’ goals. As a designer and filmmaker himself, he’s also a principal contributor to all of Shelton’s in-house photography and videography work.

Courtnay Hamachek

VP Operations

Courtnay oversees our day-to-day operations to keep us running smoothly and support our growth. She establishes project management systems and processes to help our teams anticipate bottlenecks, prevent process issues, and keep projects on time and on target. Courtnay has built extensive experience over 25 years in all aspects of marketing, from account services and project management to design and production.

Aaron Crecy

Digital Marketing Director

Aaron is responsible for planning, executing and measuring digital marketing strategies for Shelton Group and our clients, with an emphasis on inbound, content, SEO, social media, email and paid initiatives. He constantly researches and explores new tactics and strategies to improve digital campaign performance and results.

Aaron brings to the table more than 20 years of marketing leadership experience with premium consumer-facing brands. He came to Shelton Group by way of Malibu Boats, where, as Director of Global Marketing, he oversaw strategic marketing planning and execution for multiple product lines, with specific emphasis on social media and digital. Prior to that, he served as CMO for a leading daily fantasy sports operator, guiding it from startup to the industry’s third-ranked site.

Scot Case

Senior Consultant

A sustainability strategy consultant since 1993, Scot has served as non-profit leader, as a partner in an environmental marketing firm that he grew and sold, and as an executive in a multi-billion-dollar, international company. He has published dozens of articles and case studies, was co-author of the original “Sins of Greenwashing” study, testified before Congress, and been quoted on NPR, Good Morning America, CNN, The New York Times, Business Week, and the Wall Street Journal. Scot was also highlighted in an Emmy award-winning documentary on sustainable purchasing.

Casey Ward

VP Account Services

Casey manages our relationships, growth and development with a specific group of clients that includes Environmental Defense Fund, Cotton LEADS and CertainTeed Insulation. She provides leadership and support for the account team members who manage the day-to-day processes for these clients. She contributes to strategic direction for each client and guides our creative efforts to ensure everything we do builds toward meeting – or exceeding – the client’s goals. Her ability to simultaneously see the big picture and pay close attention to the details helps her champion her clients’ needs and identify new growth opportunities for them.