With Boston Pilot Project, Next Step Living Aims to Show Energy Efficiency Retrofits Aren’t Only for the Wealthy

10/21/10Follow @xconomy

Retrofitting homes for energy efficiency may not be as expensive or unattainable as consumers may think, says Next Step Living founder and CEO Geoff Chapin. His Boston-based startup is working to bring energy improvements to more households by helping consumers making sense of the array of rebates and financial incentives available for such home renovations, and marketing the improvements to wider groups of homeowners, rather than individuals.

“We felt the big reason why people hadn’t taken action yet was that they didn’t know the real value of what people could achieve,” says Chapin, who’s worked as a consultant in the environmental space. “And they didn’t have the community to make it all happen. So we took a community approach.”

Next Step promotes its services through community-based initiatives with cities, nonprofit groups, and employers, like Boston-based EnerNOC. The startup performs home energy assessments and helps homeowners take the next steps in sealing up their houses to prevent heated or cooled air from escaping, a primary factor in driving up energy costs. One such partnership is with the Mass Audubon Society, where members get a discount on Next Step‘s energy efficiency services and track their reduced carbon footprint as a group.

As far as home improvements go, many consumers look to new windows or insulation to reduce their energy costs, but air sealing is an earlier step that can be more effective (and less expensive) than those other methods, Chapin says.

“In the past, people have had insulation put down in the home before the air sealing,” Chapin says. “That’s like wearing a knotted sweater. The air sealing puts down a windbreaker level beneath before the air flows through.”

Next Step starts home energy assessments by blowing air out of the front door of the house, creating a vacuum effect that causes air from outside to leak into the house wherever it can. The technicians then take an infrared camera and highlight the areas through the home where the most air is leaking—in other words, the spots most in need of air sealing.

“It creates a visual picture of what happens and shows the biggest areas for improvement,” Chapin says. “It helps consumers understand why a certain room is always cold and helps them understand what has previously been a black box for their home.”

NextStep comes back a few weeks later to perform the air sealing—by using a caulking gun and sealing cracks with foam—and insulation updates, and also helps consumers make sense of what government and utility-based programs offer incentives to help them pay for the services (more on that later).

Next Step started its first large-scale community project in the Boston area in late summer as part of a city initiative called Renew Boston, in which Chapin says about 6,000 homes will receive the audits, and of those about 3,000 will receive retrofitting services. Those who fall between 60 percent and 120 percent of the state median income range will qualify for financial assistance for the work done, with the utility company footing 80 percent of the bill, and the city picking up the rest, up to a total cost of $3,500. The startup is working on similar pilot programs for Brookline, MA, and out in the western part of the state, in Greenfield, MA.

The startup raised $2.6 million in Series B funding in August, led by entrepreneur and environmental consultant John McQuillan and joined by return backers Black Coral Capital and the Clean Energy Venture Group. It also raised a $1.5 million Series A round last spring, and has received a $250,000 grant from the Massachusetts Clean Energy Center.

To paraphrase Black Coral Capital’s Rob Day, Next Step’s technology isn’t the sexiest. But the firm is focused on making energy improvement accessible, affordable, and understandable for the average homeowners, and not only the high-income customers who are typically the first to make their homes more energy efficient. Part of Next Step’s push is getting energy efficiency retrofits done in middle- and lower-income homes, where consumers typically lag in bringing cleantech improvements.

Next Step works directly with utilities, who foot a majority of the bill for home retrofitting services, through a consortium called Mass Save. The organization pays for the home energy assessment and all air sealant costs up to $800. It also offers 75 percent off new insulation installments, and helps homeowners secure 0 percent loans, called HEAT loans, to help finance further improvements in energy efficiency. All told, consumers pay about $500 for a process worth $3,300.

Air sealing and insulating are the two energy efficiency services that Next Step directly performs now, but the company is interested in working further with homeowners to determine what other steps they can take, including installing solar panels, or finding ways to cut down on unnecessary heating, cooling, or water usage, like setting dishwashers to lower temperatures.

A big next step for Next Step will be getting into the predictive analytics side of energy efficiency, by building Web tools that allow consumers to asses how much their houses could benefit from the energy retrofitting services. “An initiative for us to use the experience we have in the field to allow cities and utilities and individuals to understand which homes have the most opportunity before you even go in the home,” Chapin says. The company currently offers a free online energy efficiency calculator, but is also working on making its tools smarter based on the information the company gathers in its pilot projects, he says. “It’s a continuous learning model; as it learns more data it can better predict. Then you can spend more efficiently, and get more energy savings for every dollar spent.”

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