Philadelphia’s buildings are among the oldest and most historic in the country, and many predate modern energy-efficient designs by centuries. Energy improvements to older buildings are often expensive, which has been a barrier to reducing the energy use of Greater Philadelphia’s homes and commercial properties. With $25 million in seed funding from the U.S. Department of Energy's Better Buildings Neighborhood Program, the City of Philadelphia created EnergyWorks to ramp up energy upgrades in the Delaware Valley region and gain insights into changing behavior and demand.
The goals of the program included: educating the marketplace on the benefits of energy efficiency; growing demand and expanding access to capital for energy efficiency improvements in the Greater Philadelphia area; driving energy savings and greenhouse gas emission reductions; and fostering businesses and creating jobs in the energy efficiency sector. Additionally, the program sought to simplify the upgrade process by creating a comprehensive energy efficiency solutions program.
EnergyWorks focused on developing affordable, streamlined financial tools. Rather than offering consumers one-time grants or rebates, EnergyWorks chose to provide low-interest loans to make funding for the program go further and to incentivize consumers to invest in greater energy efficiency improvements. In order to hit the ground running, EnergyWorks partnered with programs and organizations with experience in energy efficiency financing and contracting.
With the help of these established institutions, EnergyWorks was able to create a one-stop shop for large-scale, high-impact projects. EnergyWorks provided experts to guide home and business owners through all stages of the upgrade process, identify energy savings opportunities, and find low-interest loans to help finance the improvements. EnergyWorks gained valuable insight into the financial products and marketing techniques that were most successful at driving demand and successfully tailored its program to increase the number of whole-home energy upgrades versus just promoting single-measure projects. Read more in the EnergyWorks final report.
EnergyWorks incentivized home and business owners to invest in energy efficiency upgrades using targeted consumer outreach, communication through existing networks, low-interest loans based on energy savings, and a strong base of certified contractors.
- Residential Program Design: The program offered reduced-cost $150 home energy assessments. Homeowners who decided to invest in an upgrade worth $1,000 or more received an additional rebate of $50 from EnergyWorks, decreasing the price for the assessment to $100. This required homeowners to have some skin in the game but reduced an initial barrier to entry.
- Financing: EnergyWorks partnered with the Pennsylvania Treasury’s statewide Keystone Home Energy Loan Program (HELP), which is administered by AFC First Financial. EnergyWorks provided tiered interest rate buy-downs as an incentive for homeowners to invest in larger energy-saving improvements. Homeowners who completed whole-home (i.e., gold) upgrades were eligible for interest rates as low as 0.99% for 10 years, while single-measure (i.e., silver) upgrades qualified homeowners for loans with interest rates as low as 4.99%, in addition to rebates and tax credits.
- Marketing and Outreach: EnergyWorks focused on communicating the simplicity, affordability, and reliability of the program to drive consumer action. The program used a wide variety of marketing techniques to reach residential customers, including advertising on regional transit, print and online media, earned media, radio, email blasts, and events at local conferences. EnergyWorks also partnered with trusted community messengers, such as churches and nonprofit organizations, to reaching homeowners.
- Workforce Development: EnergyWorks developed a network of trained, Building Performance Institute-certified professionals to conduct home energy assessments and upgrades.
- Commercial Program Design: EnergyWorks partnered with two local community development financial institutions, The Reinvestment Fund (TRF) and the Philadelphia Industrial Development Corporation (PIDC), to offer one streamlined, comprehensive energy efficiency loan product to the local market. The program offered low-interest financing for single-measure upgrades, whole-building retrofits, and gut rehab projects that reduced energy use by at least 25%. To reduce the program’s barrier to entry, EnergyWorks covered up to 75% of the cost of a building’s initial energy assessment. EnergyWorks marketed commercial buildings through a multi-faceted outreach strategy that took advantage of PIDC and TRF’s established networks.
EnergyWorks gained a greater understanding of customer behavior and demand to promote future energy efficiency upgrades in the region. Lessons learned include:
- Keep it simple. The initial residential upgrade process involved many different steps that presented opportunities for customers to drop out of the program. EnergyWorks smoothed the process and increased conversion rates from application to upgrade by allowing customers to apply and pay for the initial home assessment online and by providing more customer service during each step. In the last year of the program, EnergyWorks reconfigured its website to create a cleaner look and easier navigation. Adding the option to apply and pay for the initial energy assessment online instead of by mail also encouraged more customers to participate and yielded higher customer satisfaction.
- Connect with customers. The most successful marketing efforts focused on end-user benefits and matched education with a clear call to action. Using real-life customer examples was also an effective and memorable way to communicate energy efficiency, as satisfied customers made valuable salespeople.
- Generate a sense of urgency. The increase in program sign-ups during time-sensitive, promotional offerings indicated that customers were highly motivated by immediate deadlines.
- Cast a wide commercial net. At the launch of its commercial program, EnergyWorks established a diverse referral network of corporate, community, and government leaders as the basis of its project pipeline. However, the program saw fewer and less diverse commercial projects compared to its residential effort, which generated a more robust pipeline of projects by using more targeted, aggressive marketing techniques to reach homeowners. The stipulations attached to the commercial loan fund dollars proved to be a hurdle in attracting a broad array of viable projects and interested borrowers, but more testing of outreach and marketing strategies would likely have unearthed additional projects.
- Provide sales training for contractors: Contractors’ ability to sell the value of a residential upgrade was vital to the success of EnergyWorks. Sales training offered the potential to create a large increase in the number of customers who completed upgrades.
EnergyWorks will continue to offer low-interest commercial loans through its revolving loan fund and residential loans through Keystone HELP until funds are fully expended. The program will continue to partner with local institutions and explore more ways to encourage energy efficiency in the future:
- EnergyWorks will be the first loan program to partner with the Warehouse for Home Energy Efficiency Loans (WHEEL), a national aggregation facility, which will allow the program to access national capital markets, produce lower rates for borrowers, and support the expansion of an energy efficiency lending market throughout the country.
- If a review of potential commercial projects indicates there is sufficient demand, EnergyWorks will pursue raising additional private capital to expand its commercial program. A new law in Philadelphia that requires commercial buildings 50,000 square feet or larger to annually benchmark and disclose their energy use should motivate more building owners to invest in upgrades in the near future.
- EnergyWorks is working with Philadelphia Gas Works on the utility’s developing whole-home rebate program, EnergySense. The program, which calls on Keystone HELP for financing, allows Philadelphia homeowners access to low-interest loans from EnergyWorks. This arrangement seeks to align the EnergyWorks and EnergySense programs, creating continuity in the marketplace and further leveraging EnergyWorks’ loan fund.