The Department of Energy (DOE) is working on a nationwide standardized way to rate the energy efficiency of existing homes and has asked for comments. These are the comments from Elton Sherwin.

1. Response to the
National Energy Rating Program for Homes
Request for Information
By Elton Sherwin
Venture Capitalist and Author of
Addicted to Energy

2. Analyzed Nine Different Energy Labels
and Their Associated Rating
Methodologies
Option #5
Option #9
(Recommended Option)
Option #3
Option #1
(RFI sample)

3. Recommendations
One Methodology: Two Different Window Stickers
Presents both Site and for the National Home Energy
Source Data Registry
Option #9

4. Recommended Format
Local comparison
National standard
• Source energy (per sq ft.)
– Scores above 80 are good,
below 70 are poor

5. Option #9
Recommended Label
Displays Both Site and Source Data
Electricity**
B+ Gas**
C-
74 *
*120 is highest score ** Your energy grade is determined
1 is lowest comparing your house to other homes in
Compared to all homes in America your zipcode.
(See Inverted Scale with Progressive
Weighting) Image from iStockphoto

6. Local Rating
• Local comparison
• Top 15% to 20% get As
• Include + and –
A+ or A+++ reserved for
net zero homes
• Data from local utilities
• Display best grade of
three:
– Total home, per person
and per sq. foot

7. Local Rating
Only the best grade is
used

8. Why Best of Three?
Why let homeowners
have three shots at a
good grade?
• Gives all families a
shot at a good grade:
– Large and small
families
– Big and small homes
• Will motivate more
change

9. National Rating
• National standard
• Source energy (per sq ft.)
– Intuitive: scores above
80 are good, below 70
are poor
• 120 minus weighted EUI
• National standard
– Compare buildings
nationwide
• Consistent metric
– CBEC-like

10. National Rating
Source energy (per sq ft.)
• 120 - weighted EUI

11. Why Zero to 120?
Why not zero to 100?
• Multiple reasons, subtle,
but important
• Americans know scores
above 80 are good, below
70 are weak.
• Need a scoring system
that lets superior homes
get above 80, yet also
rewards net zero homes
– Scale of 0 to100 fails to do
this; it will demotivate
existing homeowners--won’t
be able to get there.

12. Advantage for This Methodology:
Partial Labels
• Useful labels possible
even when data is
missing
– No heating oil bill
– No gas bill
– No size data
• Partial labels work:
– Apartments
Rating generated when
only the electric bill is – Wood-burning homes
available
Partial ratings encourage
homeowner to
enter/release the missing
data

13. All-in-one Format
Advantages
• Visually appealing
• All the data well presented
• Gives both source (74)
and site data (B+ and C-)
• National, universal score
across all American
buildings (74)
Nuances
• Electric utilities can
generate partial label
without gas bill
• Enroll every home in
America prior to an audit

14. #9
Recommended Format
• Complete
• Simple
• Visually Appealing
• Update Monthly
• Motivates
Conservation
• Motivates Efficiency
Upgrades

15. National
Home Energy
Registry
The whole industry is
starved for data.
This is a great idea.

16. National Home Energy Registry
Recommendations
• Aim for universal participation
– Any homeowner can enroll online
– Window sticker on every home
• Two tier program
– Tier one: Participation
• Include a home’s data anonymously in
program
– Tier two: Excellence
• Exceed average on any of 6 metrics
• Publically making some data available

17. National Home Energy Registry
Green Window Sticker
• This home has
This Home
Participates in the
made its utility bills
and some basic
Department of Energy information
Energy available
Excellence
• Address is omitted,
Program
only zip code is
public

18. National Home Energy Registry
Leadership Window Sticker
Department of Energy
Homes can earn one
to six stars
To participate
Energy homeowners must
– Earn at least one
Excellence star and
Leader – Make energy data
public, including the
home’s address

19. National Home Energy
Leadership Program
Earn 1 to 6 stars
Top 40% - Maximum of two stars per row
Whole house Per person Per sq. ft.
Electricity in
zipcode
Gas /Heating oil in
zipcode
Source Energy
(national)
Plus public disclosure of monthly utility data

20. One Coveted Window Sticker
Could Make a Big Difference
• Some homeowners will
work hard to earn this
sticker
• It could have a larger
impact than a Cap and
Trade system
– Must be based actual
energy consumption
– Should require public
disclosure of data

21. Data Requirements

22. This Label Has Only
Five Data Inputs
5 Input Data Items
1) Electric bill
2) Gas or heating oil bill
3) Zip code
4) Size of house
5) Number of occupants

23. Data Flow
5 Input Data Items
1) Electric bill Summarized on the Label
(Public for Leadership Homes)
2) Gas or heating oil bill
3) Zip code
4) Size of house
5) Number of occupants
Optionally, Leadership
7 scores calculated for Homes can display their
window stickers
home occupant
Nation source energy score 74

24. This Label Only Needs an
Electric Bill
• Electric utility can
generate this partial
label and put it in the
bill
• Then encourage the
homeowner to enter the
program

25. Data Collected to Get a
Green Window Sticker
• Number of full-time residents
– Optionally, as much data about part-time
residents as owner wants to enter
• Type of water heating (gas, oil, elec.)
• Type of space heating and A/C
• Number of pool pumps & refrigerators
• Number of bedrooms
• Single/double pane windows
• Size and year built (if known)
– Release to get this data from the
assessor.
• Release: get monthly utility bills

26. Additional Data Collected to be Eligible
For a Leadership Sticker
All items required for green sticker, plus
• Number of TVs and Set-top boxes
• Make and model or digital image of:
– Furnaces
– A/C units
– Heater heaters
– Thermostats
• Optional:
– Freeform text on why the house is energy efficient
– Name of architect, builder and HVAC contractor
– Additional pictures and data
• Release to make the label public

27. Why Does a Label Need Both Site
and Source Data
Site: Local
Source: National standard
• Source energy (per sq ft.)
– Scores above 80 are good,
below 70 are poor

28. Because Fairbanks is Different
Than San Francisco

29. Considered Eight Other
Options

30. Options #1 and 2
Sample Labels from RFI
Challenges
• High score is
worst
• Bottom is best
• Requires an
audit to enter
program
• Need both gas
and electricity
bill to calculate
• Upgrade
predictions
inaccurate

31. Option #3
Simplified Label
Recommended Changes
• Eliminate “after upgrade”
• Replace “recommend
improvements” with a
Your Neighborhood
calculation based on the most
efficient homes in area.
• Compare to neighbors
Advantages
Lower Number is Better • No auditor required to enter
If your home were one of the most program
efficient in your area, you would • Every home in America can
save approximately $4,500 a year. participate
Over ten years this could save
you over $60,000 as the price of
• Create big opportunity numbers
energy increases. (see example)

32. Option #4
Inverted Scale
Progressive weighting
Your
125
Neighborhood
Recommended Changes
100
Best Homes
• Rating is based on source energy
subtracted from 125 with
75
Typical Home progressive weighting.
Your Home
50 – 125 is net zero
– 100 is 25 BTU/sf (see next page)
25
Advantages
15 • High numbers are good.
• Top performer is on top.
Higher Number is Better
• No auditor required to enter
If your home were one of the most
program
efficient in your area, you would
save approximately $4,500 a year. • No negative scores
Over ten years this could save
• Same scale works nationwide
you over $60,000 if the price of
energy goes up. • Same scale works for commercial

33. Recommended Inverted Scale
Progressive weighting in options 3, 8 and 9
Source
Formula:
BTU/sf/mo Score
• 0-25 BTU: 125-BTU
0 (net zero) 125
• 25 to 75 BTU: 100- ½ BTU over 25
25 100
• 75 to 125 BTU: 75-1/4 BTU over 75
45 90
• And so on.
50 88
• Objective is to have a single national
65 80 metric (per sq. ft.) with efficient
homes over 80 and no negative
95 70 scores.
135 60 • Objective: most homes to achieve an
175 50 80 for less than $10-15/ sq.ft.
255 40 • All numbers are total source energy
including all plug loads, HVAC and
335 30 hot water.
375 25

34. Where Do the $4,500 and $60,000
Come From?
• Take the average electric bill per square
foot for the top 25% of homes
• Apply to this home
• Same for gas
• Calculate difference and multiply by 12.
• Some nuances, but it is a better
methodology than trying to predict BTUs
after upgrades (inherently problematic and
frustrating task)

35. Option #5
Modified European Union Format
Advantages
Electricity Gas • Does not require gas bill to
enter program
• Electric utilities can
automatically generate
from bill (omit gas column)
• No debate of site vs.
source energy
• Heating oil companies can
include in their bills
• Very simple to understand
• Turn on for all American
homes quickly
• Give monthly feedback to
homeowners.

36. Option #6
Utility Bill Insert from
Addicted to Energy

37. Utility Bill Insert from
Addicted to Energy
Advantages
• Similar to modified EU
format, plus
• Gives homeowner more
detail
• Tells homeowner how
much they would save if
they were one of the most
efficient homes in their
climate
Disadvantages
• Not very colorful
• Difficult to read

38. Option #7
Best of Three Grading
Electricity Gas
B+ C-
Your energy grade is determined comparing your house to other homes in
your zipcode. Your grade is always the best of the three.
Electricity Gas
B+ Total House C-
B+ Per Person C-
C- Per Sq. Ft. D-

39. Best of Three Grading
Advantages
• Calculates building, per
person, and per sq. ft.
• Highest grade is awarded
to homeowner
• No debate of site vs.
source energy
Nuances
• Utilities can generate first
row with no additional
homeowner input
• Homeowners can input
additional data if they want
the additional “grades.”

40. Option #8
All-in-one
Source, Site, Local & National
Compared to your neighbors Compared to all homes in America
Electricity Gas Combined
B+ C- 74
Your energy grade is determined
120 is highest score*
comparing your house to other homes in
1 is lowest
your zipcode. Your grade is always the
“best of three”
This score combines all sources of
energy (electricity, gas, heating oil, etc.)
Electricity Gas It is an absolute score and can be used
B+ Total House C- to compare the energy used per square
foot of any building in America.
B+ Per Person C-
C- Per Sq. Ft. D- * Source energy

41. All-in-one
Source, Site, Local & National
Advantages
• Both local comparisons
and
• National, universal number
based on source EUI.
• Give every homeowner six
opportunities for a good
grade
• Still motive people to strive
for excellence.
• Silence experts who insist
on EUI or source energy
or… because it has it all.
• Easier to calculate than
proposed labels (no
projecting the future)

42. Recommendation
• Elegant
• Easy to
Understand
• Fair
• Automatic
monthly updates
Option #9 • Drive reductions
in energy
consumption

43. Summary
• Data-driven approach
• Measures real
improvements
– Minimizes “greenwashing”
• Universal participation
– Does not require audits
• Fair: works for big and
small homes
• Drive dramatic reductions
in energy consumption

44. This implements a system that rates each type of energy separately
(electricity, natural gas, heating oil, etc.) and also provides a CBEC-
like national score.
For more information on this label and the methodology behind it, see the
associated PowerPoint.
Five Critical Success Factors
From a "cleantech" investor's point of view, here are five items that I would
recommend:
1. Implement a system that is Internet-based with universal
access. Enable and encourage all utility customers in private
residences to participate.
2. Measure actual energy consumption. Do not use a checklist-
driven system. Checklist-driven and audit-driven systems reward
certain behaviors and not others. They are inaccurate and the
current systems have failed to deliver substantial energy reductions
in existing buildings.
3. Do not require an audit to get a rating.
If you want to drive results, measure results, not audits.
As my 20-year old daughter said, "they cannot audit every
home in America!"

45. 4. Implement a system that can give automatic monthly updates.
This motivates change and measures actual performance. It
prevents "greenwashing."
5. A "zero" score should not be the top score.
Americans like high scores; they are not motivated
to be a "zero."
National Home Energy Registry
The National Home Registry is a great idea. Everyone is starved for data.
I suggest two window stickers that should help motivate participation and
encourage energy conservation.
Recommendation: Two tier program
• Tier one: Participation – Green
Window Sticker
– Include a home’s data
anonymously in program
– Every home in America can
participate
• Tier two: Excellence – Black or
Platinum Window Sticker
– Exceed average on any of 6
metrics
– Make home's data available
publically
– Awarded 1 to six stars
– Will motivate homeowners, builders and architects
wishing to make "green" claims about homes to disclose
the home's actual performance

46. For more information on these window stickers and the methodology
behind them, see the associated PowerPoint.
Problems in the RFI: A Venture Capitalist Viewpoint.
Several items in the RFI are very problematic from an investor's point of
view:
Eliminate these two sections of any label:
Several dozen
software companies in
America will struggle
to raise financing if
the DOE gets into the
business of
forecasting savings
and predicting
performance.
You will not get it
right but if you enter
the business of
forecasting the future,
investors will shy
away from funding
software companies
that do.
• Avoid analyzing the problem from Washington. Let the locals analyze
the problem.
• Do not make specific recommendations from across the country. It
will not work.
Asset-based Ratings Kill Innovation:
Asset-based ratings have an inherent bias towards certain technologies.
Breakthrough technologies, by their very nature are never on the list of
audited assets.

47. Asset-based ratings make it very difficult to fund innovations that are not on
the inventory of assets that improve rankings.
If you rate performance, you turbocharge innovation; if you rate assets, you
stifle innovation.
I invest in innovation for a living; feel free to call me if this connection is
not clear. I fear I have not explained it well.
However, if you are going to anoint certain building features as "winners," I
have included my list at the end of the document.
Additional Feedback
• Don't limit homeowners' aspirations. I live in an area surrounded
by million dollar homes. Some of my neighbors will strive for
excellence. Don't tell them how much to spend. They may spend
more.
• Audit-based ratings create weak auditors.
Ask yourself this question: If you were selling your house and
rankings were based on data entered by an auditor, would you
hire a lenient or skillful auditor? Obviously a lenient auditor.
However, if you were selling a house and rankings were based
on actual building performance would you look for a lenient or
skillful auditor? You would look for a skillful auditor.
Asset-based rankings create a country of lenient auditors;
performance-based rankings create a country of skillful auditors.
• Compare people to their
neighbors. People care how
they compare to their neighbors.
See the attached PowerPoint
for more information

48. Asset-based Audits – Ten Items that Matter
If you do decide to go with an asset or audit-based
system, these are the items that make the most difference.
I recommend that they are the primary focus of your
audit or checklist process.
The following is adapted from Addicted to Energy.
These 10 items dramatically reduce the carbon footprint of homes, new and old:
1) Thermostat. A separate thermostat with an occupancy sensor in every room,
controlling the room’s heating and cooling.
2) Furnace. Variable-output, variable-speed, modulating furnaces with variable-speed fans
and oversized ductwork, blow-tested at installation. Variable output is more important
than efficiency. Rightsizing is also more important than efficiency.
3) Air Conditioner. Variable-speed, multistage, right-sized air conditioners. Efficient
oversized A/C units are endemic in America. A/C units should be variable output.
4) Water Heater. Solar heat or waste heat from a furnace used to preheat domestic hot
water.
5) Windows. R-10 spectrally selective windows where needed.
6) Smart Lighting. No incandescent or halogen ceiling fixtures.
7) Insulation. Two R-values of insulation above California Title 24, with the building shell
blow-tested and thermally imaged for leaks.
8) Power Monitoring. Real-time reporting to the homeowner of all power, gas, and water
usage by room.
9) Utility Bill Disclosure. All buildings claiming to be "green" must disclose their energy
consumption.
10) High-efficiency, Zero Particulate, Closed Combustion Fireplaces. These fireplaces
emit no soot, most often burning natural gas or propane instead of wood.
If you use an asset-based system—which I do not recommend—audit these
items.
If you use an asset-based or audit-based system you must develop a methodology that
prevents homes with oversized HVAC systems from getting good audits. I strongly urge
you to go with a performance-based system that uses actual energy consumption data.