Posted by Charley Cormany, EFCA Executive Director
For years the HVAC industry has relied on repeat visits to existing customers to generate new business. The service contract model is well tested and used by many because it works. The idea is pretty simple – sell annual service contracts to your customers and then check in on them twice a year to make sure their systems are in top operating condition. Most contractors visit their clients before the heating season and before the cooling season. Typically a technician performs routine services such as replacing filters and cleaning leaves and other debris out of the air conditioner’s outdoor unit.
Regular maintenance ensures optimal performance and increased lifespan of the systems. Homeowners benefit from knowing that their systems are working properly and are in good condition, Contractors benefit from year-long revenue and continued contact with their client base, which often leads to referrals and the opportunity for additional sales. It’s a win-win situation.
This is all great for HVAC companies, and perhaps other industries like window vendors. It’s a pretty easy sell to go back to the clients where you have installed new heating and cooling systems or windows and present the benefits of air sealing and improving insulation.
But it’s a little harder for home performance contractors. The problem is that most home performance projects are comprehensive by design, so the potential to go back for further sales seems limited. For home performance contractors, the challenge is: how do we contact our existing client base, and what can we offer that does not feel like an overt sales pitch?
Energy Monitoring—A Game Changer for the Energy Efficiency Industry
One possible answer is energy monitoring, which could be a game changer for the energy efficiency industry. Recent legislation, AB 793, requires utilities to develop a plan to use advanced monitors to help educate customers about energy use. AB 793 also provides incentives to residential and small business customers who purchase energy management technologies. These energy management technologies could be products, services, or software.
Perhaps the most difficult part of energy efficiency retrofit work is to quantify results. The best practice of testing a home before and after retrofits can provide some measure of success, but how do you translate a reduction of air leakage to the outside by 37 percent into real world savings? We can tell people all day long how effective the measures we install are, but typically the only metric they have to confirm this are their utility bills. Wouldn’t it be great if we could somehow show homeowners how much energy they were using? If we had easy access to energy consumption data, we could easily quantify the results of our work and prove the effectiveness of upgrades.
Imagine being able to offer affordable, easy to use, “real time” energy monitors as part of your upgrades. Taking it a step further, how about offering energy monitoring as an ongoing service for your clients? You could educate them on how to save energy and provide alerts when problems arise. Providing energy monitoring services could become the HVAC service contract of the home performance industry.
Energy monitoring allows consumers to visualize how they use energy, on a real time basis. This can be a powerful tool. I personally have seen a friend of mine lower his utility bill from $600 per month to a little under $200 per month simply by monitoring his use, and that was just using his smart meter.
Today there are a whole host of new tools for residential energy monitoring. The first residential energy monitors relied on attaching physical leads to circuits inside an electrical panel. These monitors can provide data in real time and are a useful tool. Obviously this type of monitor requires a licensed and certified electrician to install. While these systems work well they are limited by only being able to identify load issues by the circuit, not the individual device or appliance. New technology is bringing easy to use, low cost, software based, solutions to the market.
Smart meters use a radio frequency to transmit data. This signal is known as ZigBee and is similar to Wi-Fi (both are funny words used to describe a radio frequency). The utilities use devices to read the ZigBee signal from your smart meter–this is what your utility bill is based on. ZigBee signals can be used for a variety of other uses including energy monitoring. Today there are software solutions that utilize the ZigBee signals to provide real time energy monitoring in your home without any physical connection to the electrical panel. These software-based solutions typically require the customer to install some form of router that captures the signal and then transmits the data to a physical monitor in your home. The routers are not very expensive, typically under $100. This now makes installing a real time energy monitor easy and cheap, and that’s a good thing.
One thing software monitors can do that physical monitors cannot is profile appliances. Here’s how it works. Every electrical device has a unique electrical signal during its operation. Software based energy monitors can “learn” the profiles of these appliances and eventually they can identify individual loads. This means you can now tell if the circuit with the large load is due to a problem with refrigerator, or if someone left a light on. Most of the software solutions have some form of smartphone connectivity that allows you to see your energy use on your phone. You can program in alerts that will let you know when your energy use is high. This can be a powerful tool in making consumers aware of their usage patterns. For example you might start running your dishwasher later in the evening or charge your electric vehicle in the middle of the night to avoid the peak load and take advantage of lower rates.
“Time-of-Use” Billing Changes the Landscape
Managing your load will become even more significant as “time of use” utility rates become more commonplace. In a time-of-use billing model, the rate you pay for energy increases at certain times of the day. This means energy is cheap when there is low demand (in the middle of the night) and expensive when everyone else is using it (in the late afternoon). In California, time-of-use is already in effect if you have solar panels. The utilities are all pushing for a future where everyone has time-of-use billing. From a utility standpoint, having detailed, real-time data allows the utilities to respond to peak demand and create solutions to help reduce peak demand loads. This is a big deal: if a utility can reduce peak loads, they could avoid building new power plants.
One strategy to reduce peak demand is for the utility to alert you during a peak use period and offer you a discount if you reduce your load. This is called Demand Response (DR) and will be a huge part of the future of the new “smart grid”. Demand response will become even more important when time-of-use energy rates are fully implemented. Knowing your energy use in real time will allow you to plan ahead performing certain activities in relation to the rates.
Monitoring Means New Opportunities for Home Performance Contractors
Having an expert monitor energy use makes sense. When I was a contractor we used “green button” data provided by the utility to monitor energy use. We accessed this information by using the customers’ log-on information, which they willingly provided to us. We occasionally used it to compare the home to the previous year and see how effective our upgrades were performing.
In one case we got a call from a client about their vacation home. They were wondering why their electric bill had drastically increased. We knew the house was empty and sure enough when we checked the green button data it confirmed that indeed the electrical use had spiked and stayed high mid way through the month. My business partner went to the property and poked around. He eventually discovered a well pump that was running continuously, the float switch ball had gotten stuck in the on position, a piece of debris was in the way and the pump could not shut off. Ten minutes later and all was back to normal.
Today, a software based ZigBee monitor could have identified the problem and saved a lot of time and money. This is just one example of how a homeowner could benefit from and energy monitoring contract. I am certain the annual monitoring service contract would have cost less than the utility bills did during the period of time when the pump was running continuously.
How does this all fit together? We have established:
- That the HVAC industry has long benefited from service contracts.
- That it is hard to quantify the results of our work as energy efficiency contractors, and that real time feedback would be a benefit.
- Energy monitors have come a long way in the past couple of years, the prices are going down, and their capability keeps improving.
- As time-of-use pricing comes into play, real time feedback will become even more important.
Is it Time for You to Start Offering Energy Monitoring Services?
To get started, it would be prudent to install a ZigBee router on all of your home performance projects as part of the package. You could then offer basic monitoring for free for a period of time, maybe the first 6 months, and then charge a nominal annual fee from that point forward. Perhaps you include some basic coaching on how homeowners can change behavior to increase savings. You could provide energy-monitoring services for vacation homes, add alerts when usage exceeds a certain predetermined level, help determine what devices are using the most amount of energy–the list goes on.
Energy monitoring might well become the service contract of the energy efficiency industry. This could be just what it takes to grow your company to the next level. If you are a home performance contractor, I encourage you to learn more about this technology and see if it fits your business model. It could be a great way to build trust, get referrals, and repeat business from your customers.
Efficiency First California
Image from iStock.