The low cost of energy to homeowners means that energy retrofits often do not fare well using simple financial assessments, such as Rate of Return or payback. In addition, most other home upgrades, such as kitchen and bathroom remodels, also have negative rates of return and never pay back - indicating that these over-simplified approaches are not used by homeowners when making decisions about home upgrades. Instead, other metrics are needed to assess home energy upgrades.

These new metrics include:

• New approaches are needed to address the cost of energy upgrades. 
  • Monthly net cost of ownership: i.e., a cash-flow approach more akin to traditional home mortgages.
  • Affordability: Like selling a car, the home upgrade industry needs to do better at sales and closing deals by selling retrofits in the same way as leasing and financing of automobiles. 
• CO2 (and other Greenhouse Gas) emissions.
• Peak demand and the ability of a home or technology to time-shift to optimize use of renewables, respond to variable energy costs, and support electric grid reliability.
• Assessments of health, safety and IAQ associated with home energy upgrades including fire risk, CO, particles, wildfire and pandemic resistance.

To reduce the work involved and the cost of adding electric loads (primarily by avoiding installing higher power services and home rewiring) there are several innovative technologies.

One example are smart circuit splitters that allow several end-uses to share a single circuit, e.g., changing the time an EV is charged to allow for an electric clothes dryer to operate.

Another approach is to only use lower power devices that can use an existing 120V circuit.  Examples include heat pump water heaters, induction cooktops, condensing clothes dryers, and through the wall heat pumps. 

There are many health and IAQ benefits to upgrading a home's energy performance. Currently it is difficult to put a monetary value on this, but it is used by the industry to sell home energy upgrades and electrification (that removes contaminants related to combustion). Find more in our report from 2023.

We solicited project cost data from over 1700 projects to break down where project money was spent and identify potential ways to achieve greater energy, bill reductions and carbon savings at lower costs. The data are being used to update energy saving economic analyses.

Some key observations are:

• The cost of achieving at least a 50% energy savings are substantial – at least $25,000. The lowest cost ways to do this depend on the use of PV to offset energy use rather than substantial load reductions through envelope upgrades. 
• Costs for individual measures vary a lot from house to house. This has implications for business and homeowner risk acceptability. Measures that have better controlled costs (i.e., less variability) are likely to be more attractive due to reduced uncertainty (like PV).   
• It is possible to have very high (>70%) energy savings with readily available off the shelf insulation, lighting, appliance, DHW and HVAC solutions. 
• Simple load reduction with PV and electrification is a very attractive approach. And becomes more attractive from a Carbon, rather than energy, saving perspective.

Example energy retrofit archetypal projects from LBNL DER cost database. Find more in our report from 2021.

A survey from 2020 clarified deep energy retrofit (DER) market drivers, opportunities and challenges to broaden the adoption of deep energy retrofits. The survey results showed that:

• For homeowners, cost is the most important factor for undertaking a DER, however, homeowners are motivated by improved comfort, energy savings, sustainability or carbon reduction. 
• The biggest barriers to DERs are the lack of customer demand and lack of a reliable, trained home performance workforce. 
• High costs of DERs compared to the low energy prices is a fundamental barrier to wider adoption.
• Providing strong financial incentives, such as through rebates and tax credits, is by far the most effective way to increase customer demand for DER projects. 
• The most promising technologies are heat pumps, smart controls, real-time monitoring and diagnostics. Combining heat pumps with PV, home electrification and strategies that allow retrofits to happen over time as equipment needs replacing were identified as promising new retrofit strategies.
• Customer acquisition and work scope / proposal development are the two most time-consuming, non-construction tasks. One stop shops that combine project planning and finances together with standardized retrofit approaches were identified as promising ways to reduce these non-construction efforts. 
• Problems caused by accessibility or complexity of the structures, and any hidden problems with existing equipment or building elements are the leading reasons that lead to the high costs of DERs. 
• Survey respondents commented on the need to define the role of DER in reaching carbon reduction goals.  

For more information on our recent deep retrofit literature review read our report from 2021. 

Factors that can increase demand for deep energy retrofits include easy financing, healthier living, increased home value, lower costs, and rebates and tax credits. 

Thank you to our data contributors

A George Beeler, Architect - California
Az. Energy Efficient Home - Arizona
Berges Home Performance - Ohio
BIRAenergy - California
Build Equinox - Illinois
Byggmeister, Inc. - Massachusetts
Calnan's Energy Systems inc. - Massachusetts
Decumanus Green Design/Build - Massachusetts
Design AVEnues LLC - California
ELEM3NTS-E3, INC. - California
John Craig Construction, Inc - California
MA DOER - Massachusetts
Minnick's - Maryland
The Levy Partnership - New York
Think Little - Virginia
United Way of Long Island - New York
Wise Home Energy - New York