In Part 1 of this series, we explored how small program design choices can make or break contractor participation in energy efficiency programs. In Part 2, we looked at how incentive structures shape contractor behavior, and why aligning incentives with program goals is key to delivering real results. Now, in Part 3, we turn to program models that bring it all together to strike the right balance between scalability and accountability.
Not all energy efficiency rebate programs are structured the same way, and for contractors, the differences matter. The type of program a contractor participates in can impact everything from the paperwork required to how fairly their work is compensated. Ultimately, program structure plays a major role in whether contractors decide to offer rebates to their customers at all.
Contractors usually end up working within one of these types of energy efficiency programs:
- Deemed savings programs assign fixed savings values to efficiency measures based on energy savings averages. This means every measure receives the same rebate amount within a program, regardless of how well the work was done or how much energy it saved.
- Modeled savings programs estimate savings for each project based on site-specific data and engineering models before or after installation. Incentives are based on predicted savings tailored to the home or building’s unique characteristics, rather than a fixed average.
- Measured savings programs calculate incentives based on actual energy savings realized after installation. These programs use real energy usage data to determine what was actually saved.
To achieve real market transformation, we need program designs that not only ensure accountability and impact but also make sense for the professionals delivering the work.
Deemed Savings Programs Struggle to Provide the Right Incentives
Deemed savings programs are sometimes considered a low-friction way to deliver efficiency measures. On paper, they seem simple: assign fixed energy savings values to upgrades, regardless of the home’s actual performance or how the work is done. But in practice, that simplicity comes at a cost. To ensure installations are done correctly and to prevent gaming the system, programs layer on safeguards like paperwork, inspections, pre-approvals, and audits.
These guardrails — essential for quality control and fraud prevention in the absence of alternative accountability strategies — often turn “simple” rebates into a burdensome maze for contractors. The data contractors are required to collect can take hours to complete, which means time spent on paperwork instead of helping customers or making sure the right project is scoped and installed. Most contractors (and customers), as you can imagine, don’t like this.
Deemed programs also drive decisions based on the rebate, rather than the individual home. Yet homes aren’t one-size-fits-all. Every home has different systems, insulation levels, air leaks, usage patterns, and quirks — and every household has unique goals, constraints, and comfort issues. Great contractors don’t walk into a home ready to fill out a checklist; they walk in asking, How do I solve my customer’s problems?
But all installations are treated the same in deemed programs, whether the work is top-tier or barely compliant. That structure doesn’t necessarily provide the right incentives to reward quality work. It can breed an environment where some contractors just tick boxes instead of solving real problems, and most good contractors hate that. They are professionals who take the time to do it right: sealing all air gaps before insulating, optimizing system design, and looking for deeper savings. But deemed programs don’t always reward going the extra mile. And for contractors who care about doing things right and delivering real energy savings, that’s a dealbreaker.
Deemed programs are also a risky bet from an energy savings perspective. Deemed programs often overestimate the expected energy savings, resulting in low realization rates when compared to the actual energy savings achieved by a project. For example, Connecticut’s Home Energy Solutions Program saw realization rates ranging from 33% to 51%, depending on the measure. These low realization rates aren’t just a technical issue; they create a real risk for utilities and other stakeholders relying on these savings to meet business or policy goals.
Modeled Savings Programs: Caught in the Messy Middle
Some programs have tried to fix the shortcomings of deemed savings by turning to modeled savings approaches. In theory, modeling is a big step up: instead of relying on broad averages, a modeled savings program estimates energy savings for each home using site-specific data. The goal is accountability: rebates and incentives reflect what the models say a project should actually save.
But in practice, the trade-off is time and complexity. To generate an accurate model, contractors have to collect detailed information and enter it into specialized software. That extra data collection and modeling can add an hour or more to each project, slowing down the sales and installation process. For contractors working at scale, those extra hours pile up fast. Many find themselves stuck doing paperwork to apply for rebates instead of closing jobs, managing crews in the field, or installing projects.
Modeled savings programs also struggle to deliver the full accountability they promise. For example, modeled programs in states like California, Michigan, and Illinois have also seen realization rates (typically between 28% and 80%) — better than some deemed savings programs but still far from perfect.
In other words, the models may look precise on paper, but in practice, they frequently overestimate actual savings and burden contractors with extra work to collect site-specific data and run complex calculations. That added time and paperwork can slow down sales and installations, making it harder for contractors to operate at scale. When participation drops because the process is too complicated or time-consuming, the benefits of better modeling evaporate. It’s a classic trade-off: programs gain a measure of accountability but lose the scalability needed to deliver savings at the pace and volume required.
Measured savings flip the script
Instead of relying on fixed assumptions and tracking endless inputs, measured savings programs focus on what actually matters: the real-world performance of the upgrades. That shift changes everything.
With measured savings, contractors are evaluated on energy savings outcomes, not how much paperwork they complete. Programs, therefore, no longer have to rely on extensive documentation and inspections just to assume savings are happening. Instead, they can use metered data to understand the real impact of the project. That means fewer hoops to jump through, less administrative drag, and more room for contractors to focus on doing great work.
The approach is a win-win: Programs gain a more accurate picture of how upgrades are performing in the field, and contractors get to participate in programs that integrate better with their business. Contractors are paid for results, not red tape.
Moreover, measured programs provide contractors and households with more flexibility to install what works best for a particular project. Want to combine air sealing, heat pump installs, and ductwork redesign? Go for it. Want to skip a measure that makes no sense for the home? No problem.
Take, for example, two real-world programs. In the first example, measured savings is used. Contractors can see rebates ranging from $2,000 to over $6,000, depending on the energy savings of the home, and those rebates are paid quickly by an aggregator. In doing so, contractors spend more time in the field, reduce the amount of administrative work, and close more deals with customers. As one contractor operating under the program said, “I can do the right job for the homeowner without worrying about weird rule changes or extra paperwork. It’s predictable, and that helps me grow my business.”
By contrast, a contractor participating in a deemed savings program must submit multiple documents just to qualify for a flat $500 rebate, regardless of the home’s energy profile. One missed detail, and the rebate could be denied entirely.
When programs are overly complicated and misaligned with day-to-day contractor workflows or burdened with excessive red tape, participation suffers. On the other hand, when programs are streamlined, fair, and performance-driven — designed with contractor realities in mind — they foster stronger engagement, better results, and faster market transformation.
Measured Savings Programs Work – But Only If You Pay for Performance
It’s not enough to just measure performance; programs also need to tie incentives to it. Some programs have taken the step of tracking actual energy savings on the back end, using utility data to evaluate outcomes. That’s a good start, but if the rebate amount is not based on those measured savings, the core issue remains: contractors aren’t being paid for what their work actually delivers. Programs might have a clearer picture of performance, but they miss the opportunity to reward it. When performance data is collected but not connected to compensation, it sends mixed signals.
Measured savings — when paired with measured incentives — align everyone’s interests. This naturally aligns the interests of contractors, households, and programs. Contractors are encouraged to dig deeper, optimize installations, and deliver the best possible outcome for each home. The result? Contractors who deliver high-quality installations see both increased energy savings and bigger rebates. And that kind of alignment creates an incentive for pride in craft, not just compliance.
This is where aggregators come in. By handling the data analysis and processing behind the scenes, aggregators make this performance-based model practical for everyday contractors. Aggregators provide upfront rebates upon installation, then shoulder the performance risk, so contractors and households don’t have to wait through measurement periods for the rebate. Instead of spending hours figuring out how much energy was saved and chasing down paperwork, contractors get clear, predictable payments tied directly to real results, with the aggregator doing the heavy lifting. That means more time in the field, less time in the office, and a smoother path to scaling energy efficiency programs.
Ultimately, program design is what makes or breaks contractor participation. If programs are burdensome, confusing, or disconnected from how good contractors do business, they won’t attract the scale or quality needed to meet our goals. But when programs are structured to reduce red tape and reward real savings, they unlock the full potential of the contractor workforce. Getting this balance right isn’t just smart design — it’s essential for transforming the market and delivering results that ratepayers and policymakers can trust.