Sealed is ready to rise to the challenge and make every American home comfortable and clean for the planet.
In the last week, I’ve heard and read the phrase heat pump in the press more than in the previous few years put together—and it’s music to my ears.
Why? Because of the Inflation Reduction Act of 2022, the biggest effort ever undertaken by the U.S. government to mitigate and adapt to the climate crisis, that President Biden signed into law today. The Inflation Reduction Act provides over $10 billion in federal rebates, market incentives, and tax credits to help American households install heat pumps and slash energy waste in homes.
These small but mighty, electrically-powered, highly efficient HVAC systems are a decades-old technology, recently made new with tech advancements and modern designs (especially for functionality in cold climates). They are a powerful way to increase comfort, reduce energy waste, minimize your carbon footprint, and even eliminate fossil fuel use.
Here at Sealed, we’ve always believed in the power of the private market to scale home efficiency and electrification. But we’ve also known that the government has an important role to play too. The passage of the Inflation Reduction Act is a moment to celebrate: a meaningful public-sector contribution to accelerate the market, and an invitation to businesses like Sealed to rise to the challenge and make every American home comfortable and clean for the planet.
The passage of the Inflation Reduction Act is a moment to celebrate: a meaningful public-sector contribution to accelerate the market, and an invitation to businesses like Sealed to rise to the challenge and make every American home comfortable and clean for the planet.
In 2013, my cofounder Andy Frank and I made a big bet on what we saw as a sleeper market: home energy efficiency improvements. We knew that investing in improvements like weatherization (insulation and sealing air leaks) and upgrading heating and cooling systems to heat pumps were effective ways to reduce energy use, cut greenhouse gas emissions, and make homes more comfortable.
We knew these improvements were underutilized–most homeowners would sooner remodel their kitchen than replace their old, inefficient, and polluting furnace. And we also knew that many other companies had tried and failed to increase adoption.
To learn why people were holding back from efficiency upgrades, we spent a lot of time speaking with homeowners and visiting them in their homes (we even got kicked out of Penn Station at one point for interviewing homeowners there!). Few people knew about weatherization, and even fewer had ever heard of a heat pump.
We ultimately saw a few big reasons for the slow adoption of efficiency and electrification upgrades: the lack of awareness and trust that the improvements would really save a significant amount of energy, the huge hassle of figuring out the right renovation and appropriate contractors, and the high up-front cost of making improvements.
We wanted to create a company that removed these barriers by leveraging data, designing specialized financial tools, and applying new technologies to an old challenge.
We had a lot of conviction that we could make the Sealed model work, but discovered that it was a bit ahead of its time. Our early conversations with potential investors involved a lot of education about residential energy use and efficiency. Further refinement of the Sealed model, along with growing interest in climate tech beginning in the late-2010s, gradually made those conversations a bit easier.
As we picked up the capital we needed to scale, we knew that entering new markets would require the same first step that winning over investors did: clear and compelling education about the opportunity and how Sealed worked.
By 2020, our model and products were well-established, and Sealed entered a major growth period. We proved that our data and financial modeling were incredibly accurate and that our business model worked. Customers loved that they could make their homes more comfortable and significantly reduce their contributions to climate change, all at low or zero upfront costs.
Adding a performance guarantee–we don’t get paid if we don’t cut energy waste–made it an easy sell. But even as we saw Sealed gain traction, we were still fighting against a lack of consumer awareness and understanding of home energy use and efficiency.
We often heard the same skeptical–and factually inaccurate–responses from prospective customers (and sometimes investors) about heat pumps: they don’t work well in cold climates, they are unreliable and inferior to gas or oil heat, and they only heat and don’t cool homes. We remained enthusiastic evangelists for heat pumps and energy efficiency, but lack of knowledge and misconceptions about those topics persisted.
In the year or so leading up to the announcement of the Inflation Reduction Act (also referred to as the inflation relief bill, climate bill, or new climate change legislation in the news), some macro trends helped raise awareness of and interest in home energy and heat pumps. The impacts of climate change were more frequent and visible, and the pandemic’s creation of millions of new stay-at-home workers put a premium on having a comfortable home and maintaining efficient energy use. Those and other factors helped build momentum for Sealed.
In 2021, we completed more installations than in our entire history, and saw our revenue grow by 350% from the previous year. In 2020, 4% of Sealed projects included heat pump installation; in 2021 that share jumped to 20%.
So far in 2022, we have expanded into the Chicagoland area of Illinois, across the full state of Connecticut, and will serve the entire state of Pennsylvania by the end of the year (PA homeowners can sign up here).
The home energy improvement train was already picking up steam, and then the Inflation Reduction Act came along and attached a rocket engine.
The home energy improvement train was already picking up steam, and then the Inflation Reduction Act came along and attached a rocket engine.
In just two weeks, the Inflation Reduction Act made Sealed’s services and the benefits more understandable and more affordable to millions of Americans. We probably won’t see a heat pump on the cover of TIME (or maybe we will?), but the last few days have shown that public awareness of and interest in home energy waste is higher than it’s ever been in the U.S.
See Sealed’s complete homeowner guide to Inflation Reduction Act Rebates if you’re looking to make energy-efficient improvements.
In the coming days and weeks, we will publish a series of articles highlighting what Andy refers to as five key principles for success: speed, sustainability, performance, equity, and co-investment, and how they can be applied to the Inflation Reduction Act’s programs.
We now see a clear path to even faster growth, more GHG reduction, and comfort brought to more American homes than we could have even imagined ten years ago.
If Andy and I were to return to Penn Station today, I expect our survey results would be very different. Thanks to the Inflation Reduction Act, Sealed’s moment has arrived. It was worth the wait.