3 types of startups helping you fight energy waste and save moneyby@danwu_danwu
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3 types of startups helping you fight energy waste and save money

by Daniel WuApril 10th, 2018
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<em>We all hate spending money on utilities. I highlight companies and other initiatives working to save renters money on energy — by providing portable, cheaper tools, new financing tools to afford expensive retrofits, or new sources of green energy cheaper than your utility. As renters, we should be aware and support these efforts.</em>

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We all hate spending money on utilities. I highlight companies and other initiatives working to save renters money on energy — by providing portable, cheaper tools, new financing tools to afford expensive retrofits, or new sources of green energy cheaper than your utility. As renters, we should be aware and support these efforts.

According to a survey by Freddie Mac, more renters are worried about rising utility bills (70%) than rising rents (63%).

These concerns aren’t unfounded. Utility costs (electricity, gas, water, and sewer), from one analysis of public real estate records, add 25% to homeowners’ costs and up to 27% to renters’ costs. These costs hit low-income renters the hardest, eating up 21% of their entire incomes. The biggest utility culprit is energy — electric and gas take up 49% of total utility costs, followed by internet and cell phones (29%) then water (7%). Of electric and gas costs, 58% of it is due to heating and cooling. It’s clear, then, that more energy-efficient and energy-producing units mean more money and financial empowerment for renters.

Most solutions are impractical or too expensive for renters and landlords

Renters are 30% — 40% less likely than homeowners to be energy efficient. Solar panels or insulation retrofits are (1) too annoying or impossible to move to your next apartment or (2) too expensive with large up-front costs. Landlords — who own the building — otherwise do not care about saving you money since you pay for your own utilities. This gap between renters’ and landlords’ interests is called the “split incentives problem.” So you — the renter — use what’s there: Drafty windows and earth-killing appliances your landlord hasn’t updated since the 1980s.

The split incentives problem leaves a lot of money on the table. Insulation retrofits of the floor, wall, and ceilings, the Salford Energy House study found, saved 63% off heating costs, resulting in $500 of savings a year. The most cost-effective retrofits, such as $5000 fabric insulation and double-glazed windows, the University of Nottingham found, have payback periods of 3 to 6 years. Similar studies found that controlling the temperature in each room throughout the day — and shutting off air flow in empty rooms using smart vents, like Ecovent or Flair— can result in energy savings from 25% to 40% for a cost of $490 per room. Closing your shades at night, for instance, can save up to 17% of your heating costs. If the thought of closing all those blinds everyday overwhelms you, Luftron’s smart shades open and close at optimal times at $350 per window.

Unfortunately, these cost-saving solutions are too expensive or impractical for most renters, especially if they can’t take those improvements with them to their next apartment. Fortunately, startups and other initiatives are starting to address these problems.

Meet the startups fighting energy waste

Strategy #1: Affordable and portable tools for renters

To address the fact that some tools are too cumbersome or impossible to move to your next apartment, a swath of portable energy-saving or energy-producing tools have come onto the market.

  • Smart Thermometers. A $250 Nest can result in savings of 10–15% of your heating and cooling costs, with a payback period, as one analyst estimates, of 1.5 years by saving $120/year. These are small and easy enough to install and reinstall as you move to different apartments. Heat Seek produces a smart thermometer that collects hourly temperature data to advocate for tenants who suffer from a lack of heat.

Example smart thermostat

  • Energy monitors. The Sense Home Energy Monitor connects to your home’s electrical panel and provides insight into your energy usage. Neurio, which is a monitor for solar energy, claims to reduce your payback period for solar by 30%. Ohm Connect pays you money to cut back on electricity when there is high demand for it in your area. Residents, according to the FAQs, can make $100-$300 a year.

Sense Home Energy Monitor tells you where you’re wasting the most energy

  • Energy audits. For $200-$400 or even for free, local technicians measure airflow and detect sources of drafts in your house. Using this information, you can use targeted insulation to save money on heating and cooling costs. One person documents that he spent $400 on the audit and $500 on insulation and labor costs to save $1000 a year, resulting in a one-year payback. Search the residential energy services network’s database to find an energy auditor near you, but confirm they’ve passed muster by searching their business in the Better Business Bureau database. Furthermore, check to see whether your electric or gas provider will give you a rebate to install insulation as a result of your audit. One person found his provider gave a 75% rebate for these items.

Energy auditors come to your home and find sources of drafts and energy loss using data like the above.

One author aspires to put his apartment “off the grid” using window sill and balcony panels.

  • Smart Radiator Covers. By wrapping a $250 Cozy over your radiator, you can control your room’s heat better. No longer do you have to open your windows in the dead of winter. Plus, a Cozy is digitally monitored. So when they’re placed throughout a building, data is fed back to boilers to redistribute heat. Increases in energy efficiency result in a payback of two years.

Strategy #2: New financing to overcome up-front costs

To address the fact that some tools or retrofits too expensive to purchase, a swath of new financing opportunities have come onto the market to make $10k-$20k solar panels or insulation retrofits affordable for renters. Importantly, while landlords have to provide consent, these tools don’t require the same renter — who will, on average, move out in 1–2 years — to pay back the obligation. Landlords have to disclose this obligation to new tenants, but this should not be a barrier as tenants generally face unchanging utility costs.

  • On-bill financing. and Ouachita Energy Cooperative (in Arkansas) are initiatives that pay for energy-efficiency or solar retrofits upfront (or help you find lenders). The energy savings over decades pays for the upfront costs plus interest, resulting in minimal or new increases in the renter’s utility bill. This financing tool is called “on-bill financing.” If a tenant moves out before the payback period, the obligation can be transferred to the new tenant, since the improvements stay with the physical structure. Similarly, Sealed targets homeowners and has plans to work with renters in the future.

Sealed’s visual illustration of on-bill financing, where third parties pay for costs up front (the “solar loan payment”) and beneficiaries pay back the loan helped by electric bill savings

People and other smaller investors — not banks or big investors — lend you capital to finance your project.

  • Barnraising. While this solution still requires you to get consent from your landlord, Grid Alternatives provide free or low-cost panels to low-income families in exchange for allowing community volunteers and job trainees to get hands-on experience (“barnraising”) to install those panels. Because this model is free for the renter and landlord, landlords can’t complain about the cost and there are no obligations to payback.

Grid Alternative supervisor and trainee at work

Strategy #3: New sources to buy energy beyond your local utility

This strategy minimizes both aspects of the split-incentives problem. Tenure isn’t an issue. Renters can buy cheaper, renewable energy sources regardless of where they live. Upfront costs aren’t an issue. Third parties build and maintain these farms. Lastly, landlord consent isn’t an issue. Local solar farms sidestep any need to install solar on your roof; a requirement that blocked up to 92% of US residents from using solar energy.

  • Batteries that store extra energy. With nightfall, solar panels can no longer generate electricity, forcing homes to rely on the grid. But with batteries, solar can store extra energy produced by microgrids and solar farms throughout the day. A $14,000 battery can take 8–12 years to pay back. While targeted towards homeowners, Swell can benefit renters by increasing the efficiency of solar farms and microgrids who sell energy to renters.

Illustration of Brooklyn’s Microgrid Project

Ideally, we’d live in a society where policies would incentivize developers, landlords, or renters to build or retrofit green. See, for instance, Germany’s recent bill to help renter access solar on their apartments. But until then, to save money on your utility bill, it’s going to take some work. These products can be good investments in the long-term, paying itself off and saving you money over the decades.

If you’ve used any of these products or services, I’d love to hear your experiences.

☞ Agree or disagree? Add me on LinkedIn with a note here.