Authors: Abhi Kantamneni, HVAC 2.0 Sr. Policy Advisor; Jeff Howard, HVAC Comfort Engineer; and Ted Kidd, HVAC 2.0 C.O.O
HRAI, a trade association of HVAC techs in Ontario Canada, released a report on the role HVAC contractors can play in whole-home residential energy retrofits. You can download the entire report here or read the executive summary here.
As a growing network of HVAC contractors with demonstrated success with tackling whole-home energy retrofits, we at HVAC2.0 read this report with great interest.
This blog post will highlight the many findings from this report that match with our own contractor network’s experiences with whole-home energy retrofits. The next blog-post will highlight how our HVAC2.0 sales process is helping our growing network of contractors address the barriers and issues similar to ones surfaced in this HRAI report.
Industry Perceptions of Barriers
The HRAI report highlights how industry leaders and policy experts' perceptions of HVAC contractors differs from HVAC contractors' own experiences, willingness and capacity to participate in the market for whole-home residential retrofits.
I remember watching Evita and chuckling when Antonio Banderas looks into the camera and declares that politics is “the art of the possible.” I understood it, but didn’t want to accept it. Nearly 30 years later I may have figured out how to accept it while still moving things forward. Perhaps this will help you in your work too.
Most of you should know that I am not one to settle for the status quo, nor is anyone around me. We like shaking things up, questioning everything, changing what’s possible, doing great work, and teaching others to do the same.
At the end of the day though, there’s a limit to how quickly we can move, and it’s important to think about that so we don’t try to do high minded things that are ultimately impossible today (but not tomorrow!) In other words, we need to look for the art of the possible if we want to change the status quo.
A friend recently pointed me to the MAYA Principle, which stands for Most Advanced Yet Acceptable. Raymond Loewy coined the term and is known as the father of industrial design. If you like a rounded design of the 30s, 40s, or 50s, the odds are pretty good he was behind it: from streamlined steam engines to Greyhound buses to Coke bottles, Loewy designed it.
Loewy talked a lot about creating designs that looked futuristic, but not too futuristic so that the masses would accept them. I call it “familiar with a twist.”
To that end, we just spent nearly a year working through BAD ASS HVAC which takes things that are very familiar to the HVAC industry and puts a twist on them. That twist provides far better comfort and air quality than a standard system that looks almost identical to BAD ASS HVAC with an untrained eye.
That familiarity seems to be the key - we all like futuristic things, but we all have some resistance to them at the same time. Some have A LOT of resistance to it, which we talked about recently looking at late adopters and laggards, but if that twist is applied well, most will not only accept it, but embrace it.
Perhaps telling our own story of figuring out how to make our system MAYA will be helpful as you consider what it might look like in your life.
A Painful Metamorphosis
One of my catch phrases is that “half measures deliver quarter results”, typically thinking about air sealing an existing home - either do it right or don’t bother, otherwise you end up in the Gulf of Disappointment after chasing low hanging fruit.
Alas, in developing the HVAC 2.0 program we figured out that better residential indoor air quality, comfort, and electrification often involves a half measure: upgrading HVAC but not the building shell. Very strange for someone who until then had focused heavily on insulation and air sealing. I got called an HVAC guy by a Passive House friend a month back and it put me back on my heels a bit.
Our MAYA key was figuring out that by running a blower door test on a home and asking a bunch of questions (aka the HVAC 2.0 Comfort Consult) we could figure out if HVAC alone was likely to solve client problems. Our guys were used to doing dog and pony shows at free quotes, not getting paid for their time. With a Comfort Consult we gave them a path to get paid for their expertise while still offering a very basic free quote. That’s MAYA to many HVAC contractors.
Like I said, this was painful because we’d worked very hard to figure out a scalable process to sell and execute comprehensive performance retrofits. But in the end we’re finding that the market for those retrofits is likely no more than 100-200K homes in the US per year until something changes.
Instead we built that path in as the most advanced step in the HVAC 2.0 process. Anyone who wants one of those projects has access to them through an HVAC 2.0 contractor, which was our ultimate goal.
Getting from selling only complex projects to giving customers options of buying either simple or complex ones was a turn that has taken several years, and we owe that to our HVAC 2.0 early adopters, particularly Michael Housh.
HVAC 2.0 is now MAYA, or close enough that we can attract more contractors and help them genuinely improve their businesses and improve the health of homes across the country. But again, this was a tough iterative process that took years and required us to destroy one preconceived notion after another. What dogma do you need to question in your world?
How does MAYA apply to you?
If you’re reading this, you’re probably trying to change things for the better. Are you doing it in a way that’s most advanced, yet acceptable? Is it a path others can follow without it being too hard?
It’s a question worth pondering, it’s critical to making big shifts. And remember, once we do MAYA, we can move that much further the next time until we actually get to where we want to go. The hope is that multiple quick evolutions can look like a revolution when we look back in 20 years.
What does MAYA or “familiar with a twist” look like in your work?
Congrats to San Francisco for banning gas in all new construction starting in less than 2 months! I never would have guessed it would move that fast!
San Francisco is the perfect climate for heat pumps, and putting in 100 year infrastructure that’s likely to be abandoned/stranded assets within 20 years is a poor use of resources. It’s also a great example of state’s, or in this case, city’s rights.
Now to tackle the other 99%: Retrofits.
We’ve gotten pretty good at doing electrification retrofits, and are now teaching HVAC contractors around the country how to do it, but it has not been an easy path. It seems like it’s a story that should be told so the lessons we’ve learned can be learned the easy way by others.
I got into this industry as a cellulose insulation contractor. By 2012 I had achieved the elusive HPwES Century Club Award by selling lots of small, mostly ineffective jobs. My wife was pregnant, I was working 100 hours a week, I hated my life, and was looking to get out. I met a guy who offered to show me how to sell bigger, satisfying, impactful jobs.
This changed the direction of my life for the better. I actually cried with joy.
In 2014 we removed our first gas meter outside Cleveland Ohio. It’s an area with some of the cheapest gas in the nation and no assistance programs. We’ve electrified 12 more existing homes since then (with many more partial electrifications) using the sales process we developed. This is a small number. But when combined with our Google reviews, case studies, and sales ratios, it’s proof of concept. It’s probably the cold climate record outside of programs.
We’ve long been passionate about scaling comfortable, healthy, renewably powered homes, so we worked hard to develop a process that avoided the common failures we’d seen in the Home Performance world.
We dedicated 2012-2015 to developing this client focused sales process. In 2016-2017 it became clear that consumers needed better preparation before meeting with us. During this time I wrote The Home Comfort Book. Part of my motivation was to express gratitude to my mentor/partner by putting what he’d taught me into a more digestible form. The other part was creating a good onramp for homeowners to understand building science, which underpins our work.
In experimenting with sharing the chapters of the book, we’ve found that giving HVAC 101 to everyone that meets the “3 foot rule” has surprising and positive responses. It’s been very satisfying to watch it turn on mental light bulbs for both HVAC contractors and homeowners.
Low Risk, Big Reward
On this journey we learned that people will spend 10-20% of the value of their home to fix the problems we can fix. The biggest barrier is confidence in outcome. If the risk of failure is high, people won’t take that risk. Our process seeks to reduce that risk.
The process successfully fixes homes for the meat of the market, from about the 40th to the 95th percentile of household income. It engages and educates homeowners in the discovery and design steps so they understand the what and why of their problems, and are partners in designing solutions. We’ve found that the rich and poor are hard for us to serve, but this works great for the middle classes because they can afford to do the work, but it's a serious financial commitment for them.
Our marketing filters did a nice job of qualifying people with problems others have not been able to solve, finding frustrated people, educating them and partnering with them to solve these previously unsolvable problems. We began to call the process Home Performance 2.0 and look for a way to scale it.
Pivoting to HVAC
Through all this, we’ve been wrong a lot. We were told the HP 2.0 process we were developing wasn’t scalable. Recently we finally have come to agree. Our process requires too large of a training, sales and marketing lift, and reaches too few homes, likely only 1-5%.
So in 2018 we pivoted to applying an expanded version of the process to HVAC contractors, renamed it HVAC 2.0, and aimed to make it available to any homeowner that wants it.
It has been going far better than we expected. A number of homes have been electrified without programs by our alpha testing group. They are seeing huge gains in closing ratios, ticket sizes, margins, job satisfaction, and client happiness.
The pivot to an “every home” approach has been interesting. Instead of invisibly filtering people before they reach us, we are developing more active filters that the HVAC contractors explicitly use with homeowners after contact.
It’s a filtering/matching process that all leads back to the blower door where we began. A blower door tests how leaky a house is. Once you truly become a member of the cult of the blower door, you start to have this overwhelming desire for every homeowner to have the opportunity to have a blower door test and a blower door based load calculation before they make their next 15-25 year commitment to a new heating and cooling system.
If a load calculation is run using a blower door test (to repeat, they test how much a house leaks air) and actual energy consumption, the variance of heat load calculations drops from +/ 70% to +/- 10%. And yes, it really is +/- 70%. That means without knowing the air leakage and energy use of a home, it is literally a guess which size HVAC is correct. When we get down to +/- 10%, it becomes obvious which size is correct.
Right sized HVAC is the key to residential electrification. In general, the smaller the HVAC, the better the comfort. Also, heat pumps are almost all smaller than furnaces, so if we can downsize enough, the right piece of HVAC is almost always a heat pump.
But this is risky for contractors. Get too aggressive and the contractor fears getting a callback on a very hot or cold day when the house is uncomfortable, and they are on the hook to fix it, which typically involves pulling out the equipment they installed and putting in a bigger one for free. This happens on the hottest or coldest days of the year when they are otherwise making a large percentage of their year’s pay. So naturally they size larger to avoid those callbacks, but sacrifice client comfort 99% of the year in doing so. (Much more about this in Comfort 101 from my book by the way… you are within a virtual 3 feet right now!)
The hopeful part is that our early HVAC contractors are absolutely loving selling blower door tests and running what we call a Comfort Consult in HVAC 2.0. There are 105,000 HVAC contractors in the US. They are in homes more often than any other contractor, they deal with comfort which is the key selling point for electrification, and they are the only army large enough to be able to handle the 2 million residential electrifications a year we need in the US have any hope of reaching 2050 goals. It’s hopeful!
Our founding contractors have already performed a number of electrifications, it’s a natural outcome of the HVAC 2.0 process, no arm twisting of either homeowners or contractors required. This can hopefully avoid this problem:
The Narrow Path We’ve Found
Here’s the path we’ve found for scaling electrification: we’ve created a sales process that makes the HVAC contractor’s life better. They are able to solve previously unsolvable complaints by expanding their understanding of conditions from just the HVAC equipment to the whole house. Their clients are ecstatic, a common comment is that they can’t believe it is the same house. Both contractors and homeowners are well served.
We’ve created a map, or subway map if you will, of the steps they need to follow, and made following it natural and easy.
We are helping them track data that they hate tracking manually. We are helping them avoid the overpromise and underdeliver trap, and other practices that lead to general distrust of the HVAC and Home Performance industries.
Because they are right sizing HVAC, they will largely be selling heat pumps, or at least hybrids (heat pump + furnace). This is the guerrilla path to electrification. As a friend put it to me, it’s like getting kids to eat vegetables by putting them on pizza.
Let’s talk about do’s, not don’ts
Through all this, we’ve learned a number of things that should be helpful if California wants to avoid inadvertently slowing down residential electrification, which is a remarkably narrow path. Anybody who wishes to hear about the horror stories, let me know. Rather than talk about the failures, cautionary tales, and “don’ts” let’s talk about the “do’s.”
This is perhaps the biggest point: simple and predictable can spark markets, complicated and unpredictable kills them. If you want simple, it needs to be upstream of the consumer and contractor. For example, if you want to have all air conditioners replaced by heat pumps, make heat pumps cheaper than air conditioners at the supply house.
We have never sold an air conditioner. If the government wanted to do one really powerful thing, they could put an incentive on heat pumps that makes them cheaper than air conditioners, and the industry would jump forward 10 years overnight.
With that one action you could end the manufacture of air conditioners. That’s one big item on our wish list. Here’s the rest of it:
HVAC 2.0 Electrification Wish List
Thank you so much for your time and interest in our path. HVAC 2.0 is becoming a movement, and we invite you all to be members. We now have free accounts so you can explore the methods, you can sign up here if you like.
Good luck California as you begin to #electrifyeverything! We’ll be watching, and if you’d like help, we’re here for that too.