Motivating Homeowners to Pursue Energy Retrofits: Challenges and Opportunities

Ener­gy effi­cien­cy and renew­able ener­gy, as well as their role in the home improve­ment indus­try, are not new con­cepts. How­ev­er, it can be chal­leng­ing to mea­sure the degree to which ener­gy-effi­cient and sus­tain­able prod­ucts and sys­tems are actu­al­ly pen­e­trat­ing dif­fer­ent seg­ments of the mar­ket and whether cer­tain home­own­ers have a strong inter­est in pur­su­ing projects in these areas. 

Addi­tion­al­ly, it can be help­ful to know what types of projects are the most pop­u­lar among home­own­ers, where there is more hes­i­ta­tion and resis­tance, and the exist­ing bar­ri­ers that out­weigh the appeal for dif­fer­ent segments.

Based on research from HIRI’s Gov­ern­ment Incen­tives and Ener­gy Retro­fit report, adop­tion of ener­gy retro­fits is broad but uneven, reflect­ing both prac­ti­cal neces­si­ty and aspi­ra­tional poten­tial. Home­own­ers are strong­ly moti­vat­ed by finan­cial con­cerns, includ­ing the desire to low­er util­i­ty bills and deal with ris­ing ener­gy costs. Our research reveals that gov­ern­ment incen­tives on their own rarely moti­vate home­own­ers, but they have emerged over recent years as a com­ple­ment to oth­er, more prag­mat­ic dri­vers, and also a cat­a­lyst to get home­own­ers to final­ly take the leap on a project. 

For your man­u­fac­tur­ing brand, under­stand­ing the cur­rent adop­tion rates of retro­fits, from solar pan­els and insu­la­tion to high-effi­cien­cy HVAC, elec­tri­cal, mechan­i­cal, and plumb­ing sys­tems, will help you tai­lor your mar­ket­ing and com­mu­ni­ca­tions to align with home­own­ers’ needs and desires, while address­ing their con­cerns and the bar­ri­ers that deter ener­gy-effi­cient and renew­able projects.

How Many Homeowners are Adopting Energy Retrofits?

Over 8 in 10 home­own­ers adopt­ed ener­gy retro­fits in the past five years, led by prag­mat­ic and neces­si­ty-dri­ven upgrades, such as installing:

• new ener­gy-effi­cient doors and windows
• improved insu­la­tion
• ener­gy-effi­cient heat­ing, ven­ti­la­tion, and air con­di­tion­ing (HVAC) systems

Dis­cre­tionary tech­nolo­gies, for instance, solar ener­gy, bat­tery-ener­gy stor­age sys­tems, and elec­tric vehi­cle (EV) charg­ing sta­tions, lag behind considerably. 

Energy Retrofit Adoption Highest Among Young, Affluent, Urban Homeowners

Adop­tion in these areas is more high­ly dri­ven by income, age, and type of home area, whether it’s urban, sub­ur­ban, or rur­al. Adop­tion rates are sig­nif­i­cant­ly influ­enced by capac­i­ty, with high­er-income (those mak­ing $160,000 or more) and younger house­holds more like­ly to take on ener­gy retro­fit projects, while old­er and low­er-income groups (those mak­ing less than $80,000) appear more ret­i­cent to pur­sue them, based on HIR­I’s research. There’s also a notice­able dis­crep­an­cy between urban and rur­al house­holds, with the for­mer more like­ly to have com­plet­ed this type of home improve­ment project in the past five years.

Planned Energy Retrofit Projects

Look­ing ahead, about six out of 10 home­own­ers report­ed plan­ning an ener­gy retro­fit of some sort over the next 12 months. We con­tin­ue to see a bent toward prac­ti­cal upgrades, such as the instal­la­tion of ener­gy-effi­cient win­dows and doors, smart ther­mostats, water-sav­ing plumb­ing fix­tures, and improved insu­la­tion. Aspi­ra­tional projects, like those involv­ing EV charg­ing sta­tions, heat pumps, and bio­mass stoves and boil­ers, are sec­ondary priorities.Our research also shows that gov­ern­ment incen­tives mean­ing­ful­ly influ­ence retro­fit adop­tion. This is espe­cial­ly true among younger, urban, high­er-income, and advanced DIY house­holds. Old­er, rur­al, and low­er-income groups remain less respon­sive, even if per­haps those incen­tives are intend­ed to make these kinds of projects more acces­si­ble to less afflu­ent homeowners.

What are the Main Drivers of Adoption in the Energy-Efficiency Market?

Prag­mat­ic dri­vers dom­i­nate when it comes to why home­own­ers decide to make ener­gy-effi­cient upgrades at their home. Own­ers are, by and large, moti­vat­ed by a desire to low­er their util­i­ty bills. Oth­er prac­ti­cal dri­vers include pro­tect­ing against ris­ing ener­gy costs, increas­ing home val­ue, and replac­ing old equip­ment. For urban Mil­len­ni­als and Gen Z home­own­ers, improv­ing air qual­i­ty and reduc­ing envi­ron­men­tal impact also stand out as appeal­ing rea­sons for mak­ing ener­gy-effi­cient upgrades. Sub­ur­ban and rur­al home­own­ers, as well as old­er ones, are less swayed by these motivations.

Energy-Efficiency Often Sparked by Repair/​Replacement Needs

Addi­tion­al­ly, many home­own­ers see equip­ment replace­ment as the oppor­tune time to make an upgrade. Since they have to replace old or fail­ing equip­ment any­way, it makes sense to them to cap­i­tal­ize on the oppor­tu­ni­ty to choose ener­gy-effi­cient and renew­able options, such as water-sav­ing plumb­ing fix­tures, high-effi­cien­cy HVAC sys­tems, bet­ter insu­la­tion, and ener­gy-effi­cient doors and win­dows. Effi­cien­cy and renew­able options are also per­ceived as offer­ing the best val­ue on the mar­ket, which may be more of the dri­ving fac­tor in the decision.

Government Incentives Are Not Primary Motivators

Gov­ern­ment incen­tives have the poten­tial to influ­ence home­own­ers across demo­graph­ics, impact­ing project plan­ning near­ly twice as much as pro­gram famil­iar­i­ty. Research also shows the impact of gov­ern­ment incen­tives and their influ­ence near­ly dou­bles from non-DIY­ers to advanced DIY­ers. But over­all, incen­tives seem to ampli­fy exist­ing prag­mat­ic dri­vers, main­ly costs and equip­ment replace­ment, high­light­ing their role as both cat­a­lyst and com­ple­ment to under­ly­ing moti­va­tions. As a home improve­ment prod­ucts man­u­fac­tur­er, it’s impor­tant to empha­size afford­abil­i­ty and clar­i­ty for every­day upgrades, while posi­tion­ing incen­tives as a bonus, to accel­er­ate adop­tion of cer­tain tech­nolo­gies. Con­sid­er align­ing incen­tive offer­ings with prag­mat­ic upgrade trig­gers, while tai­lor­ing out­reach to demo­graph­ics that show low­er responsiveness.

What are Top Barriers to Adoption that Manufacturing Companies can Address?

Cost is both a sig­nif­i­cant moti­vat­ing fac­tor for adopt­ing ener­gy retro­fits and upgrades, as well as a bar­ri­er for home­own­ers. In gen­er­al, home­own­ers are often weigh­ing the upfront cost of the instal­la­tion against the per­ceived long-term sav­ings and over­all return on invest­ment (ROI), as well as how long it will take to recov­er that ini­tial cost of the upgrade.

Older and Lower-Income Homeowners are More Skeptical About ROI

In this area, there also are demo­graph­ic dif­fer­ences. Younger and high­er-income home­own­ers antic­i­pate a quick­er pay­back when doing ener­gy-effi­cien­cy and renew­able projects. Mean­while, old­er home­own­ers and those in a low­er-income brack­et are more skep­ti­cal about how long it will take to recov­er the costs.What may be sur­pris­ing is that while aspi­ra­tional tech­nolo­gies — like EV charg­ing sta­tions, solar pan­els, bio­mass equip­ment, and bat­tery ener­gy stor­age sys­tems — are adopt­ed less fre­quent­ly than more prag­mat­ic or nec­es­sary upgrades, home­own­ers expect a faster ROI from such projects. They also have more lofty expec­ta­tions in terms of the long-term cost sav­ings they’ll get from these upgrades.

Homeowners are Largely Unfamiliar with Government Incentive Programs

When it comes to gov­ern­ment incen­tive pro­grams, our research shows that while most home­own­ers are at least some­what famil­iar with them, few­er than one in five are high­ly famil­iar, and aware­ness declines sharply with age, as well as income lev­el. Low­er-income house­holds are more like­ly not to know a pro­gram or incen­tive exists. There is also a gen­er­al lack of under­stand­ing about eli­gi­bil­i­ty and whether home­own­ers will qual­i­fy for the program.For your mar­ket­ing team, the key is to tar­get afford­abil­i­ty and trust mes­sag­ing to have a broad­er reach for your man­u­fac­tur­ing brand. You want to high­light cost-sav­ings and ROI for ener­gy-effi­cien­cy improve­ments to address the key bar­ri­ers to their adop­tion. Addi­tion­al­ly, you can moti­vate home­own­ers to pur­sue projects in these areas by clar­i­fy­ing infor­ma­tion around project eli­gi­bil­i­ty for gov­ern­ment incen­tives and empha­siz­ing their cred­i­bil­i­ty, while tai­lor­ing out­reach to mit­i­gate the con­cerns of skep­ti­cal old­er and rur­al homeowners.

Using Research to Tailor Messaging Around Energy Retrofits

To gain a deep­er insight into home­own­ers’ behav­iors and atti­tudes around ener­gy-effi­cient and renew­able projects and prod­ucts, as well as gov­ern­ment incen­tives that sup­port these types of home improve­ment activ­i­ties, down­load HIRI’s recent Gov­ern­ment Incen­tives and Ener­gy Retro­fit report. The study includes demo­graph­ic infor­ma­tion and mar­ket insights that can help your team bet­ter con­nect with home­own­ers who are inter­est­ed in explor­ing or already plan­ning to pur­sue ener­gy-effi­cient upgrades and high­light how your brand’s prod­ucts can be used for these projects. As a HIRI mem­ber, you have access to not only this report, but also an abun­dance of oth­er research and insights into the home improve­ment mar­ket, project and prod­uct cat­e­gories, and key mar­ket­ing channels.