HRAI viewpoint on electrification

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.

Industry perceptions of HVAC contractors and barriers they might experience in whole-home retrofits

‘Conservatism’ and lack of openness to innovation


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Lower level of environmental or “green” sympathy, and likely climate skepticism, because gas-heat system installs are  bread and butter for contractors.
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Dislike incentive programs and regulations because of administrative burden or ideological resistance to encouraging government involvement in industry

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Training programs (or lack thereof) are a barrier

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Contractor’s own readiness and willingness to participate in whole-home residential energy retrofits

NO. Contractors may be cautious but they demonstrate innovativeness in their orientation and work. They just don’t have  (profitable) experience with whole-home retrofits

NO. Contractors demonstrate an openness to industry taking a leadership role in climate change, but lack of experience, exposure, and comfort working with decarbonization solutions remains a barrier

NO. Contractors are open to incentive programs if they move the market, but uncertainty of incentive programs drives them nuts and makes it difficult to develop a sustainable business model around stop-start funding programs. ​

YES. Industry relies heavily on free manufacturers’ training sessions, very few house-as-a-system trainings out there.

Contractors' Experiences with Barriers

The HRAI highlights barriers to participating in residential whole-home energy retrofits as experienced by HVAC contractors themselves, and resonates with some of our own experiences:

HRAI report on contractors’ barriers to residential whole-home energy retrofits

Given that much of the warranty work that HVACR trades do is internally covered at their own cost, contractors do not want to be “on the hook” for someone else’s work. (in context of affiliate contracting with - say insulation folks - for home performance)

Investing in staff and equipment to do whole-home energy retrofits is a barrier for contractors of all sizes. If you are small, you don’t want to make big capital and operational expenses. If you are large, chances are your external investors want to expand into high growth areas like plumbing and electrical, not insulation and other home performance stuff.

Contractors may not always be familiar with load calculations, heating loss calc, system sizing etc.
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Home owners don’t know about and/or don’t express an active interest in home performance and comfort. Funny line from the report: “Whether HGTV’s focus on paint, tiles and backsplash is to blame or the general misinformation that solar panels or light bulbs will get you bigger energy savings than HVAC, most interviewees noted that the market is not well educated on energy performance issues”.
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Contractors don’t want to appear unknowledgeable about whole-home energy retrofits, so they may steer homeowners away from home performance and comfort issues because it’s easier to stick to what you know.

Lack of a sales process, particularly for turning system replacement and maintenance calls into whole-home energy retrofits.

​Few contractors want to risk being the early adopter, because contractors were burned in the past by adapting their business to stop and start government programs or funding incentives. Contractor support networks that the gas and electric utilities developed in the past are now mostly dead or unsupported; this too is a consequence of programs ending.

No existing relationships with suppliers/wholesalers/affiliate contractors that sell other home-performance and comfort (insulation/windows etc)

HVAC2.0 contractors’ perspective
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YES. Without a path to “Responsibly Avoiding Responsibility'', trusting a portion of project to another contractor is a wide-spread issue in the industry and CAN be a huge hurdle to overcome; (risk of finger pointing contests, which are lose lose lose for everyone, are avoided like the plague).

YES. Opening another department or revenue source has to be sustainable for business owners - most owners and shareholders of companies do not want to invest in any home performance because of the fear of failing or losing their asses and no business examples of successful transition.

YES.  Very few contractors are trained on how to do load or heating calculations. Most use rule of thumbs because it’s seldom required by each state or municipality.

YES. Homeowners and contractors are under the old adage of Ignorance is Bliss motto - ride or die!

Resources that provide useful information in language homeowners understand are nearly non-existent. The expectation of "free consulting" from contractors providing free quotes means "education" is purely about closing sales, not helping think about great solutions.

YES. See previous statement - plus it is easier/less risky/less time consuming to keep slinging boxes.


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YES. This, 100% this. More on this in the next blog-post. 

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YES. Government programs and incentives have a perverse effect on the marketplace for contractors : by incentivizing the contractors that don’t do it the right way, turning a blind eye in most cases, and being apathetic to the deleterious effects of their irresponsible interventions on the long term sustainability and viability of a contractor’s business. 

YES. Supply houses often don't stock heat pumps. Relationships are key for this to work, and HVAC contractors may not be willing to work with other trades that have ‘race to bottom’ sales processes.

Recommendations & Conclusions
Based on our reading of the HRAI report and our own combined experiences with whole-home energy retrofits both as policy-shapers and as frontline HVAC techs, we make the following recommendations for policymakers:

1. Prioritize viability and sustainability of HVAC contractor business models to create a sufficient supply of skilled workforce that can deliver whole-home energy retrofit services. Programs are more effective when they are tailored to the market segments they serve and support contractor business models, not just utility requirements or policymaker priorities. A critical mass of HVAC contractors (in US and Canada) are demonstrating the skills, competencies and willingness to take a leadership role in whole-home energy retrofits. Policy-makers must partner with and center the experiences, expertise and priorities of HVAC industry stakeholders in developing policy responses and co-create solutions for each market-segment.  
   
2. Invest in self-guided discovery through social-learning. You can’t teach a kid how to ride a bike at a seminar, and you can’t teach HVAC contractors how to develop a successful, scalable and profitable business model for whole-home energy retrofits through a webinar. Policymakers must pursue alternative models  - through role-based activities for hands-on training in trades school, short-duration applied training to augment on-job learning, and collective learning through communities of practice to scale up ambition, shared tacit knowledge and applied socio-technical skills - for preparing the next generation of contractors to meet the challenges of today and tomorrow.
   
3. Sustain market demand for whole-home energy retrofits through consumer education and feedback-loops, not stop-start incentive programs. An estimated 85% of HVAC purchases happen under duress when equipment fails on a hot or cold day, and HVAC contractors respond to this structural perversity by competing on price and prioritizing a quick sale. When contractors position HVAC and home performance as commodity services, homeowners lose due to poor quality workmanship. Incentive programs that do not address this underlying structural challenge of HVAC commodification further perpetuate its risks to contractor business models and homeowner experiences, thereby hurting homeowner trust and contractor participation in the retrofit marketplace. Policymakers can disrupt this cycle through consumer awareness programs that encourage preventative maintenance through planned replacement, by maintaining rigorous quality assurance standards on whole-home retrofit projects, by providing real-time feedback on program performance and publishing standardized disaggregated before/after energy use data on completed projects. 
   

Summary

HRAI’s latest research report highlights the barriers faced by HVAC contractors to participating in whole-home residential energy retrofits. 

As a growing network of HVAC contractors successfully and profitably tackling whole-home energy retrofits, we at HVAC2.0 read this report with great interest. Many findings from HRAI’s report match with the challenges our network of contractors faced prior to adopting the HVAC 2.0 process. 

We thank the HRAI for tapping into this tacit knowledge, lived experiences and operational reality of HVAC contractors, and for rendering this knowledge explicit through this research report. 

Our next blog post - on the HVAC2.0 sales process - will provide contractors, policy makers and industry leaders with a potential path forward on addressing the barriers, challenges and opportunities similar to ones surfaced in this HRAI report.