We write a lot on Energy Changemakers about the emerging role of the American home as a power plant, equipped with batteries, solar panels, smart thermostats and other technologies that can help meet broader community electricity needs.
But there’s a problem. Many American homes aren’t in good enough shape to fulfill that role.
A new report, Powering Affordability: Why America Should Invest in the Homes We Already Have, recommends overcoming this by linking housing and energy policy.
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Nearly half of American homes were built before 1980, and 49 million households have at least one critical home repair need, according to the report authors, Groundswell, a nonprofit that develops community energy projects, and Groundwork Collaborative, a progressive economic policy think tank.
Lower-income families are hardest hit. Their energy bills often eat up more of their income, in part because they cannot afford to upgrade their homes.
Even programs designed to help these households can fall short. For example, nearly one in five applicants to the US Department of Energy’s Weatherization Assistance Program must first address problems such as leaking roofs, mold or other health and safety hazards before their homes can receive efficiency upgrades.
Groundswell has encountered an even higher percentage in its own home improvement program. Fifty-three percent of applicants need repairs before energy efficiency measures can be installed.
The home as energy infrastructure
The report posits that the home be considered as a “piece of energy infrastructure” and brings out two numbers worth considering together:
Investor-owned utilities are expected to spend $1.4 trillion on new generation, transmission and distribution infrastructure through 2030.
America’s occupied housing needs $198.4 billion in repairs, according to the Federal Reserve Bank of Philadelphia.
In other words, the bill for fixing every household is a fraction of what we will spend on new energy infrastructure, and many of those repairs would help cut the 37% of US electricity that homes consume.
These numbers matter because it’s cheaper to save energy than to generate more of it. The report cites research from the American Council for an Energy-Efficient Economy (ACEEE) showing that:
- Energy efficiency: $21/MWh (median cost of energy saved).
- New natural gas generation: $45–$108/MWh (cost of energy produced).
The value to the grid becomes particularly apparent when energy efficiency improvements are aggregated across large portfolios of homes, reducing peak electricity demand or relieving congestion on constrained portions of the distribution system, according to the report.
The authors call for utilities and regulators to identify where demand reductions could defer grid investments and target home repair and energy efficiency programs accordingly. Doing so will require changes in how utilities measure and value energy efficiency, accounting for when and where the savings occur.
Tapping residential energy efficiency to power data centers
Among the more interesting policy recommendations is one that would allow data center developers to procure a portion of their energy needs through investments in residential energy efficiency.
This echoes initiatives in which data center developers pursue virtual power plants to meet capacity needs.
In this case, it would require changes in how energy efficiency is planned, measured and compensated. The authors call for federal and state policies that put a market value on peak demand reduction and incorporate residential energy efficiency into electric system planning.
They also propose establishing a federally capitalized revolving fund that would offer low-cost loans and grants for home repairs and energy efficiency upgrades. Money from the fund could be combined with utility incentives, state rebates and private investment from technology companies. The report also identifies community benefits agreements as a way to facilitate investment.
The authors make two important distinctions. Energy efficiency cannot be treated exactly like dispatchable capacity, given that its energy savings vary with weather and household behavior. And while critical home repairs may be necessary precursors to energy efficiency improvements, they do not in themselves offer measurable grid benefits. As such, the authors recommend funding those repairs separately rather than passing their costs on to utility ratepayers.
For the distributed energy industry, the report provides caution. Installing batteries, smart thermostats, heat pumps and other distributed energy technologies in poorly performing homes could undermine the value these technologies can deliver.
The authors argue for repairing homes and improving their energy efficiency before—or alongside—installing distributed energy.
“Investing in home repair and energy efficiency at scale is critical to unlocking the full potential of distributed energy resources, demand response, and virtual power plants (VPPs),” the report says.
