November 6, 2013

I’ve been involved, if somewhat peripherally, with the Home Performance industry for quite a while. I was one of the original group working on Home Performance with Energy Star in Atlanta quite a few years ago. As I learned more about this evolving field, I felt that it was both important and necessary, and thought that it had potential to be a profitable business model. I had concerns that the program was being managed by building science types (read: geeks) who were focused on collecting reams of data from performance testing and using this to sell improvements to homeowners. Fairly quickly, I determined that unless it moved from a technical to a sales focus, it wasn’t going to go anywhere. While there are a few companies who have managed to balance the technical aspects with the necessary sales skills, most auditors and contractors have struggled to create profitable, sustainable business models. Early on, there was a focus on keeping the auditors independent in order to provide an unbiased report that a homeowner could use to compare proposals from contractors for the work. I saw this as a cumbersome model that increased costs, complicated the sales process, and might not help advance the program in any meaningful way.

Performance enters puberty

Fast forward about eight years, and home performance is beginning to mature, benefiting from government and utility incentives designed to stimulate an industry that would sustain itself when those incentives were gone. On the positive side, many local programs have moved to the combined auditor/contractor model, which, despite its drawbacks, does lead to more completed projects. I am concerned that where the auditors are employees of specialized improvement contractors that they may suggest solutions through the lens of their business operations. HVAC contractors may focus on HVAC solutions to the detriment of envelope improvements. Insulation contractors will likely find insulation is the answer to problems they uncover. If all you have is a hammer, everything starts to look like a nail. I still believe that the combined auditor/contractor model can work, but maybe I am just being naïve.



Will it survive into adulthood?

The big question is, what will happen to the home performance industy as incentives go away? It will probably fare better in regions with high energy costs, where paybacks are faster. Where energy audits or HERS ratings are required at the time of sale, there may be some more demand. My fear, however, is that in many markets, demand will start to wither, homes will go unimproved, and many of the thousands of trained professionals, many of whom entered the industry after their old careers dried up, will, once again, be looking for new lines of work.