How Energy Trends Will Impact your Business
Three ways professionals can help their customers prepare for energy efficient home improvement tax credits
By: Doug Marshall*, Senior Business Development Manager at Resideo Technologies
Electricity has been a passion of mine since childhood; I was intrigued by how this "invisible stuff" could be used as energy to make things work. This passion resulted in my journey from a student of electrical engineering to a technology advisor in venture capital, an investor in energy technology and now a rewarding career with a smart home solutions leader.
That seemingly intangible resource that sparked my interest as a kid, is now driving tangible homeowner demand for smart solutions. In fact, according to a recent Parks Associate's survey, while security had once been the driving force behind smart home adoption, energy management is becoming more popular as U.S. internet households grow more concerned about their energy costs, and they become more aware of how their energy choices impact our planet's resources.
Instead of novel technologies that entertain or provide simple conveniences, consumers want a smart home that can help them curb their energy expenses and operate more efficiently. To help them invest in electrifying their homes and transportation, the U.S. government is offering homeowners a ten-year window of incentives.
The Inflation Reduction Act (IRA) federal tax incentives are becoming available in 2023, and homeowners may be able to receive benefits each year they upgrade part of their home. As homeowners and professionals understand the impact these incentives offer, and knowledge spreads, it’s expected the demand will outpace supply. In fact, Goldman Sachs is already forecasting that the IRA will pay out three times more than the original government forecast at roughly $1.2 trillion dollars due mainly to these lucrative tax credits and rebates that are not capped.
The expected tax benefits and the "electrification of the home" trends have the capacity to pave an incredible opportunity for the professional. Specifically, energy trends are translating into new demands on services, and may require the need to adjust product mix, partnerships, labor skills, and marketing strategies to accommodate the important impact emerging from electrification.
Learn more about heat pump tax credits and how the IRA legislation can help professionals at Resideo.com/IRA
Three ways Energy is Changing the Professional Services Industry
Professionals and builders interested in creating long-lasting customer relationships will need to stop thinking of separate systems – like “just an HVAC” or “just a security” system – but rather, start selling smarter energy as a whole. And here’s why.
There are three emerging energy trends that will forever change the way we build and service homes. Spoiler alert: each trend is accompanied by the opportunity to build additional energy relationships.
- 1. Homeowners Want Greater Efficiencies – and professionals have opportunity to help unlock full potential
Demand for energy efficient homes is on the rise. In 2021, 45% of U.S. households made energy-saving renovations or added major energy-efficient devices.
While this is encouraging, a more wide-spread and whole-home approach is needed to truly unpack tangible energy-saving benefits. There are two key incentive programs professionals should help their customers leverage:- The U.S. Department of Energy (DOE) is encouraging a Zero Energy Ready Home that is so efficient it could offset most or all the home's annual energy use. Developers that build qualifying homes can receive a $5,000 credit, which applies to new single family, multifamily and manufactured homes, as well as existing homes that undergo a deep retrofit.
- ENERGY STAR recently launched its Home Upgrade program designed to help homeowners deliver significant energy and cost savings. Seen as the best-known, green certification program for household devices, ENERGY STAR ide ntified six high-impact, energy efficiency improvements that can help transition to a more energy efficient home:
- Clean heating and cooling - Well-insulated and sealed attic - Efficient water heater - High-performing windows/ storm windows - Smart thermostat - Electric ready
Resideo has the left side of this column covered with our efficient heating and cooling controls for air and water – an opportunity Resideo’s HVAC professionals are well-suited to leverage. In fact, according to the DOE's energy saving potential, smart thermostats will offer savings regardless of which state you live in. And professionals may be able to earn up to $2,500 for single-family new homes that meet ENERGY STAR program requirements.
The last item on the list – creating a home that is "electric ready" with upgrades like a heat pump – is where the real opportunity lives.
My Take: Your customers will have questions. And being aware of how they can take advantage of these savings could help you close more sales – and when you show proof of upgrades, it adds to your bottom line, too. Whether building a new home or retrofitting an existing heating source, it’s important to stay aware of energy opportunities in your area and learn how to claim those financial incentives when they become available.
Look for other opportunities for networking with area energy raters, auditors, consultants, remodelers, attic installers, and more. For example, I know of HVAC and security companies that have developed partnerships with energy auditing businesses to jointly market a comprehensive solution for their customers and share leads for products and services, which all parties find extremely lucrative.
Because at the end of the day, HVAC companies are great at delivering a more efficient home, and security companies already have low-voltage installation capabilities; and these existing capabilities can be leveraged and expanded as trends evolve.
Incentives offered to professionals by ENERGY STAR's Home Upgrade and the DOE's Zero Energy Ready Home Programs.
- 2. Electric Vehicle Adoption – and the Impact on Electricians
In the U.S., we're experiencing a rapid pace of Electric Vehicle (EV) adoption that is happening faster than experts have forecasted – and it's about to increase significantly. In fact, for the first time ever, an EV is the second best-selling vehicle (technically it's number four following three truck models both from a dollar value AND volume standpoint.
In 2023, Americans are projected to purchase more than 1 million EV's, up from 900,000 in 2022 – which is just under 10% of all new vehicles purchased. And industry models are forecasting growth of new EV purchases to top 60% by 2030. Some homeowners considering EVs may not be aware that their homes’ electrical infrastructure may need updates to charge their vehicles while at home. Enter: electricians.
Electricians are essential to the electrification transition. And the pace of EV adoption is putting additional demand on electricians to install in-home chargers and perform main panel electrical upgrades. However, this trade is already experiencing a shortage of talent. Rough math shows that there are about 700,000 current electricians– and it's estimated that we need more than a million.
My Take: There's only upside if you electrify your team. Professionals who depend on electricians may want to consider developing in-house electrical talent. I’d encourage companies to start or expand your businesses’ high-voltage electrical division. Otherwise, shore up sub-contractor relationships and get active in the Electrical Association.
New EV owners will likely need an electrical professional to install EV chargers in their home, which also may require an upgrade to the home's main electrical panel in order to support high-output EV chargers. HVAC companies that add home EV charger installation into their offering may find incredible opportunities to generate leads that could expand to other whole-home energy upgrades. For example, if an HVAC company was called to install an EV charger and sees the home is still running on a fossil-fuel heating system, that home may be a good candidate for a heat pump and a smart thermostat. The IRA tax incentives may help homeowners in this situation lower the cost of qualified electrical upgrades... and could help you close more deals.
- 3. The Growth of Solar and Battery Storage – and its Impact on a Smart Home
Roughly 50% of a person’s carbon emissions come from their car, 25% from the home’s heating and cooling, and 10% from heating water in their home. Homeowners looking to reduce their carbon footprint and slow the impact of climate change will want to electrify those three items first. You’ve already seen the stats about EVs, here’s a look at how homes are electrifying.
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Eight percent of homeowners are estimated to have solar panels already installed, and the SEIA (Solar Energy Industry Association) laid out a roadmap where the U.S. could reach 30% by 2030. California continues to have high adoption of solar energy; other U.S. states – like Texas, Florida and New York – are expanding rapidly and saw major growth in 2022.
Homes that have solar panels installed can pair them with home storage batteries to provide backup during power outages, support time-of-use utility rate plans, or support virtual power plants (VPP) utility programs. Recently, SEIA/Mackenzie Solar Market Insight forecasted that installations of a home battery storage system paired with solar panels are expected to triple by 2027.
Smart Electrical panels are also gaining momentum in the new construction industry, which adds new electric control and monitoring capabilities so homeowners can make informed energy use decisions that can lead to lower energy bills. In retrofit applications, a smart panel offers homeowners the same new technologies – without upgrading the entire electrical service.
My Take: The key to unlock the real potential of solar panels with a home battery storage system is having a smart thermostat or heat pump controller. Roughly 50% of a home's energy use comes from heating and cooling the home, so optimizing the home's heating/cooling schedule – the largest energy load in the home – is paramount.
HVAC companies can differentiate their businesses from other providers by partnering with solar installers to provide homeowners with a whole-home, energy-saving package that can help reduce their energy costs and increase the home's comfort.
And security dealers have another opportunity for synergies caused from new battery storage regulation. Some states are requiring additional fire detection devices be installed near the new batteries, which are often located inside home garages. Connected heat and smoke detectors are common in these new requirements.
EV adoption is at the beginning of its s-curve with adoption ramping. Heat pump demand is expected to surge in the coming years ignited by tax incentives. Residential solar is forecasted to expand to 15% of U.S. homes by 2030. These trends represent a trifecta of demand from multiple electrification channels for skilled electrician talent.
As consumer demand for these items continues to grow, homeowners are looking for an easier way to swap out their gas appliances with low-carbon electric models. Professionals who offer solutions that qualify for IRA incentives have an incredible opportunity to help consumers with the single largest climate investment in American history.
Learn more about how Resideo helps manage and optimize energy in our 2022 ESG report.
*About Doug: Doug has more than 20 years of experience delivering on large projects and working on strategic partnerships for Resideo Technologies, and before that Honeywell International. With a customer-first mentality, his passion for bringing high value to customers and partners through energy and smart home technology creates powerful moments and value for Resideo's customers.
Professional service organizations looking to develop energy offerings or create cross-channel relationships can contact Doug at doug.marshall@resideo.com.
