We've been asking government rebate program administrators to come on The Heat Pump Podcast for more than two years. Every one of them said no.
Robert Spotts and Clay McCombe said yes. Robert leads Power Ahead Colorado, a $200 million EPA-funded heat pump program covering the Denver region. Clay designs and runs its contractor and workforce programs. What made the conversation worth the two-year wait wasn't the size of the program. It was how much they were willing to admit.
Robert described program design as a scale. At one end is a contractor who wants the $1,500 rebate handed over with no friction. At the other end is a program that does site visits and reviews your Manual J and Manual S on every install. Every program lands somewhere on that line, and where it lands comes down to how much risk each side can carry.
What contractors don't see is what sits behind him. Power Ahead runs inside a 50-year-old regional agency spending federal money. Clean audits matter there. Fraud exposure matters. EPA reporting requirements aren't optional. As Robert put it, that's an organization he and Clay are defending — and then, in the same breath: "That's not an excuse. We fully understand the contractor's perspective as well."
That's the practical takeaway for a contractor staring at a photo requirement. Some of it exists because a federal auditor will eventually ask. Some of it is a design choice someone made and could unmake. Knowing which is which tells you where pushing back is worth your time.
Before Clay joined DRCOG, he worked for the City and County of Denver trying to grow the heat pump workforce. He spent roughly a year in 2023 sitting down with contractors, mostly to ask why they were leaving rebate money untouched.
Two answers came back. Heat pumps don't work in Colorado, it gets too cold. And the administrative burden wasn't worth the squeeze.
The second one is the business answer, and it's the one program designers usually miss. A shop booked out three months doesn't need help finding work. So a rebate has to beat the office hours it costs to claim — easy math if you have a front office, much harder if the owner is doing intake at night. Clay's read was that this penalizes small shops for being small.
Then there's the money itself. Clay described contractors floating tens of thousands, sometimes hundreds of thousands of dollars, waiting on a payout with no visibility into when it lands. His word for it: they're almost acting as banks.
Power Ahead built its contractor side around those three complaints. Payouts target 30 days and are contractually capped at 60. Four locally based contractor agents do nothing but answer contractor calls and emails. There are weekly office hours where you can join a video call and ask where your payment is. A contractor advisory group meets quarterly to flag requirements that have become burdensome.
None of that is exotic. It's just what happens when someone treats contractor friction as a design failure rather than a complaint to manage.
The clearest evidence that the listening is real: Power Ahead is removing a process contractors asked them to build.
Programs run out of money. Contractors who build their business model around a rebate get left holding the bag. So contractors asked for pre-approval — a way to lock in the funds before the job. Power Ahead built it. It now takes about a week, and it's delaying installs. Contractors hate it. So it's going away.
Robert's framing was that he hopes it shows the program is burdensome, but also nimble.
He was equally direct about the bigger problem, which is that Power Ahead is now one more program in a state that already has several. A state rebate, utility rebates, local government rebates, this one — all with their own applications, timelines and priorities. Robert's own assessment is that his program has become part of the problem it was built to solve.
Clay's answer to that is worth a look if you're in Colorado. The Power Ahead contractor finder shows badges for participation in other programs, so a homeowner trying to stack incentives can filter for a contractor enrolled in all of them. It doesn't merge the applications. It does make the stacking visible.
The market shifted faster than the arguments did. Clay estimates the Xcel Energy heat pump trainings he attended in 2023 were about 80% heat pump skeptics. Many of those same people are now the strongest advocates — not because anyone won a debate, but because more than half their leads started asking for heat pumps.
Meanwhile, Robert's surveys show only about 4% of people in the Denver region can name a heat pump unaided.
That's the gap the next few years get decided in. Not whether contractors believe in the equipment — that's mostly settled. Whether the programs designed to move the market can get out of the way of the people doing the work.
[00:00] - Episode Teaser
[03:02] - Meet Robert Spotts and Clay McCombe
[05:42] - How a $200 Million Heat Pump Program Came Together
[12:26] - What “Market Transformation” Actually Means
[14:12] - Making Heat Pumps Work Economically in Colorado
[18:08] - Dual-Fuel vs. All-Electric Systems
[21:34] - Why Contractors Get Frustrated With Rebate Programs
[24:48] - How Contractor Attitudes Toward Heat Pumps Are Changing
[28:25] - Balancing Installation Quality With Contractor Friction
[34:56] - Building a Better Contractor Marketplace
[39:53] - What Success Looks Like by 2029
00:00:00.000 — 00:00:38.880 · Speaker 1
I think there's a scale from a contractor who just wants to say, give me $1,500 to on the far other end. We want site visits and check your manual J's and S's on every single install. And so where on that scale does each program land? That's the challenge. And there's gets about risk tolerance for both parties. And so we are really doing our best to shift towards reducing those risk to launches on our end. But that's not without its challenges. It's not just Clay and I. There's a whole organization we're defending, a 50 year old organization that loves clean audits and doesn't want to be exposed to fraud and has federal requirements that we have to adhere to.
So that's not an excuse. We fully understand the contractors perspective as well.
00:00:42.720 — 00:03:33.500 · Speaker 2
Hey everyone. Today is an episode we've been trying to make for over two years. We have invited a lot of folks representing government heat pump rebate programs, and every one of them has said no until Roberts Spotts and Clay McCombe said yes. Robert leads Power Ahead Colorado, a $200 million heat pump program in the Denver region. And Clay runs everything on the contractor and workforce side for Robert. And they didn't just show up. They were incredibly honest and candid, as you heard from that intro clip. If you install heat pumps, if you work with rebate programs, and you have ever wanted to know what the people on the other side of that paperwork are thinking, this is going to be a great episode for you. And one thing before we start Power Ahead Colorado is sponsoring an amply training on Thursday, November 5th at the Edgewater Civic Center just outside Denver. It's 8 to 130. I'll be covering how to build an end to end marketing and sales funnel that makes you stand out as a high performance heat pump contractor. Eric will cover manual J, manual S, and designing a heat pump system that won't come back to haunt you.
And then he'll do another training where he runs through the whole workflow. It's $4,000 at registration and power ahead. Colorado reimburses every dollar of it after you attend. As long as you're registered with the Colorado Contractor Hub, you walk out of that training with a year's subscription to amplify and a new iPad Pro all included in that $4,000 cost. But after the rebate, it's zero to you. We only have 50 seats and a maximum of two seats per company, because we want to make sure a bunch of companies in the Denver area in Colorado get to attend. And registration closes October 14th. So that's not too far away. We got a little over two weeks. The link is in the show notes Colorado Contractors.
We would love to see you there. All right. With that, let's get into our episode with Robert Spotts and Clay McCombe, Power Ahead Colorado.
00:03:37.300 — 00:03:39.780 · Speaker 2
Hi, and welcome to the Heat Pump podcast. I'm Ed Smith and.
00:03:39.780 — 00:03:42.460 · Speaker 3
I'm Eric Fitz. We are co-founders of Amply Energy.
00:03:42.460 — 00:03:51.020 · Speaker 2
And today we have Robert Spotts and Clay McCombe from the amazingly named DRCOG out in Denver. Guys, welcome.
00:03:51.020 — 00:03:51.620 · Speaker 1
Thanks for having.
00:03:51.620 — 00:03:51.780 · Speaker 2
Us.
00:03:51.820 — 00:03:52.980 · Speaker 1
Yeah, yeah. Hey, guys.
00:03:53.080 — 00:04:05.800 · Speaker 2
Hey. So we'd love to start. Just introduce yourselves, and then we'll get into DRCOG more. So, Robert, let's start with you. Who are you? What's your role at DRCOG? What are you responsible for at Power Ahead? Give us the overview.
00:04:05.840 — 00:04:07.160 · Speaker 1
Yeah. And again, really.
00:04:07.160 — 00:05:01.980 · Speaker 4
Excited to be here. Long time listeners. So it feels surreal to be here. I'm Robert spots and I manage or lead the Power ahead Colorado program here at the Denver Regional Council of Governments known as Doctor Cog here. I've actually been at Doctor Cog for a little over 19 years now, which is basically my only real job.
So I started in mapping and transportation modeling and then moved into air quality and greenhouse gas emission stuff. So once this opportunity arose to apply for this grant and we were awarded, very fortunate to be selected to run the program, $200 million program funded by the EPA, focused really on heat pump adoption in the Denver region.
So my job is really to herd the cats, so to speak. Whether you're talking about our committees that give us oversight or thinking about strategy across four major program sectors that I'm sure we'll talk about here in a second.
00:05:02.020 — 00:05:16.420 · Speaker 2
Awesome cat herder, one of the most important and underrated jobs in any organization. I can't wait to dig into that more. Clay. Same question. Introduce yourself. What's your role at Cog? Tell us more.
00:05:16.460 — 00:05:54.560 · Speaker 1
Hey guys, thanks so much for having me on. Clay McComb out of Denver, Colorado. I'm a program manager here at Doctor Cog. I get to oversee all of our contractor development and workforce development programs that I was fortunate enough to get to design myself. So dream job. I'm running the programs that I designed back in 2023.
I don't know too many people who get that privilege. So yeah, genuinely dream job working here, implementing these programs. I am a big heat pump guy. Big workforce guy.
00:05:55.640 — 00:06:21.800 · Speaker 1
Yeah, I think heat pumps are just like these magic boxes that are going to solve climate change. It's not that simple, but I really care about our environment. Denver has some of the worst air in the world, and not only are heat pumps, I think a solution to that, but they're a way to create long lasting, quality jobs for so many people in Denver and around Colorado.
So that's why I care about this so much. But yeah, I run about five programs here at Doctor Cox.
00:06:21.840 — 00:06:38.480 · Speaker 3
And switching back to Robert, can you just tell us a little bit more about the origin story? Both of what the heck is Doctor Cog? It's like a regional planning organization. And then how did you end up with this $200 million grant? Just tell us more how this all got started.
00:06:38.520 — 00:10:24.760 · Speaker 4
Yeah. So the Denver Regional Council of Governments is one of the longest living metropolitan planning organizations. We've been around since the 50s, historically born out of dealing with things like transportation. But these agencies across the country do all kinds of things, and really, at the end of the day, serve at the pleasure of their members.
We have 59 member governments. We cover everything from Boulder, Denver, Castle Rock into the mountains with Idaho Springs and way out east into the plains. So really diverse and big region. We represent about 56% of the state's population. So most people in the state live within our region, and we continue to do transportation, but have gotten a lot more into affordable housing.
We have a big area agency on aging where we support our aging population, make sure that they're aging well and happily. And so when this opportunity came about for a program from the EPA called the Climate Pollution Reduction Grant program, that led to a $1 million grant that basically allowed us to do regional planning and identify at a regional scale what the climate issues we are dealing with, as well as identify strategies to reduce those emissions.
So that was a great process. Pulled in a lot of stakeholders throughout the region. A lot of them were already coordinating organically. This formalized a lot of that planning and identifying of what the cities couldn't do on their own as well. Right. A lot of these cities that have really aggressive climate goals, like Denver and Boulder, they had a stopping point with a lot of things from advertising to just recognizing that levers are more at a regional or statewide scale, that they couldn't address them.
And so, as part of the planning process, recognize that buildings are for end use climate pollution. Over half of our emissions are coming from buildings. You hear transportation a lot, and that's as a single source. But at the end, use buildings are just a huge source of climate pollution and a really challenging one to address.
As as you all know, every building is a snowflake. The economics don't always make sense. There's not a lot of awareness, especially in a state like Colorado. And so we've got some real challenges to address that. And so essentially what happened was our partners worked really hard with us to create a really compelling application to the competitive part of this program, the Climate Pollution Reduction Grant program.
And so what I think we were coming at it from a perspective of collaboration and removing market barriers, focusing on market transformation. And to that end, we focused really on four main pillars for this program, and that is rebates and advising. We're just reducing the cost of installing heat pumps.
We need the workforce and contractors to install those. So that's Clay's position. What he's really going to focus on. There's very little awareness. So we need a lot of comms and community engagement just to bring about that awareness. Convert these people from just even knowing about it to actually thinking about installing it, which is a real challenge.
And then finally, one of the things that is underpinning this whole program is our focus on policy. Doctor cog works directly with our member Governments, and we're a home rule state, meaning that every local jurisdiction has their own policy, building policies and permitting processes. And that creates real challenges and barriers to this policy.
Program is distributing funds to local governments to add capacity, allowing them to evaluate advancing building codes and policy in the region, reforming their permitting processes, and at the end of the day, trying to create more consistent policies across the region. So installers aren't faced with these uneven landscapes where things are different when they cross an invisible line, a street, and things are completely different on the other side of it.
So that's the program. We're really excited, but it's really ambitious and challenging to implement, I'll say as well, especially in a five year term.
00:10:24.800 — 00:10:41.500 · Speaker 3
Wow. Yeah, it's a lot you are tackling. And just to clarify, on the communication side, this is budget both to communicate to consumers, to homeowners and also to contractors and other stakeholders. Or is it broad communication in general for everybody involved in this whole transformation.
00:10:41.540 — 00:11:15.060 · Speaker 4
Yeah, it's for everybody. I think the first year we really have honestly focused on just broad awareness, both of the program to so people are aware that this program exists and that there's resources for them as well as heat pump awareness and what heat pumps can do. We've really been just focusing on heat pumps are for heating and cooling.
That's just our mantra. People do not know they are for cooling and the name is a bit challenging, but we have a lot of key performance indicators or that we have to hit, and we are using those comms to lift up those that are struggling behind, whether that's getting the right of workers enrolled or getting contractors into the hub or beyond.
00:11:15.100 — 00:11:30.620 · Speaker 3
Got it. And so you're one of 25 grantees out of hundreds of applications. Can you tell us more about what was the unique approach that you think led to you guys winning a grant? And what are the pieces of the grant that really came to you or you guys are working on now?
00:11:30.660 — 00:13:04.220 · Speaker 4
Yeah, it was really an honor when we heard and at the end of the day, honestly, I think all 300 of those should have been funded. There's obviously demand to implement these programs. We have a really big challenge we're facing globally here. And so it's with a heavy heart that we were one of the ones that was awarded and wished the others could have been as well.
I can't get inside the EPA reviewer's heads, but at the end of the day, I think we built a team that was across our jurisdictions. There were about 10 to 20 of us working together in a war room basically every week for about three months, just hashing it out, thinking about strategy, thinking about how to build the best program, pulling in these ideas from third party implementers, the best in class programs from around the country that are doing this work, and thinking about everything from just budget to what we saw in the market.
And I'll also just add that we worked to get over 66 letters of support from everybody from unions, contractors, our elected officials, locally and federally. In fact, we almost broke the EPA system we were submitting because you can't submit more than 99 documents, and we had 70 letters of support, and we were panicking at the last minute to even just submit this thing.
So it was a huge effort. But I think because of the way it was designed, the program stands really strongly on its own merit. It really is focused on market transformation. Right. I think EPA saw a long term change happening here. And so now we got to implement this thing and we're well on our way and really excited about where it's headed.
00:13:04.260 — 00:13:17.860 · Speaker 3
Robert, it's incredibly impressive. One thing I want to follow up on is this term market transformation. You've said it several times. Can you just help our listeners, your perspective? What does market transformation even mean? It's a pretty broad term.
00:13:17.860 — 00:14:27.880 · Speaker 4
I think rebates, the idea of rebates and what's in it for me and I can get a reduced cost on something really sucks. A lot of the oxygen out of the room when you're talking about programs like this. But I think our goal is to make it so that rebates are no longer necessary, right? We want the workforce there, so that there's trade folk to be able to install these things.
We want the contractors to be profitable installing heat pumps. So they're switching over from their business as usual to this new model. We want the awareness to be there, obviously, and the support of policies and permitting processes, which are really uneven right now. And just to dive into that for one second is that across our region, heat pump installs can be considered a remodel in some instances, which can take months to get permits approved.
Obviously impossible for an emergency replacement, right? So there's extreme challenges here that we need to change and address barrier by barrier so that in the future, when somebody's furnace or air conditioner breaks down, it's not really a question. This is the thing we do now. We install heat pumps and that's the place we're trying to get.
We know we're not going to get there in five years, but we feel like we can create a lot of momentum in that time.
00:14:27.920 — 00:14:48.700 · Speaker 3
Got it. So it's creating the conditions so that this market can thrive on its own without the rebates that it's just there's the supplies there to do the work. That demand is there to do the work. And these are all the barriers, the challenges that create friction and slow things down or make it more complicated are largely smoothed out and ideally eliminated.
00:14:48.740 — 00:14:50.260 · Speaker 4
That's the goal. Easy peasy.
00:14:50.300 — 00:14:52.340 · Speaker 3
Yeah, yeah. You got this.
00:14:52.740 — 00:15:27.940 · Speaker 2
All right. It's a super impressive program. And you all are tackling this not in the easiest spot in the country for heat pumps. So we want to talk through some of those challenges. So let's start with cheap natural gas. You guys have super cheap natural gas. You've got really challenging design temperatures.
So on paper like I would not think of Denver as the place to go to for let's do a huge heat pump program. Robert, how do you make the economic case to a homeowner? Where does it fall apart? Talk us about some of those top line challenges.
00:15:27.980 — 00:17:55.360 · Speaker 4
Yeah, I think that's the nut we are trying to crack right now. And there's a couple of ways we're doing that. First of all, we're really focused on not overpromising anything, right? There's again, every house is a snowflake. You don't really know. And if you're designed well with your install of a heat pump and you focus on efficiency first, we definitely think there's still a way that your bill will be comparable or lower potentially, especially after doing some weatherization.
So you have to step back and focus on the bigger picture of what is your upfront cost of this swap. Because often with the rebates here, and I will mention that the power had Colorado rebates about $1,500. It's a flat rate for all installs that are cold climate certified heat pumps. Utilities can be 2 to 3 times that, so you're really getting a big discount on that upfront cost.
We really want you to focus on the comfort and health of your building, right. Does this heat pump really can and will make your building feel more comfortable if installed correctly? And our market research, Our behavioral research resources indicate that's a huge driver, folks. They want to feel good in their homes.
We're also uniquely positioned where a lot of Colorado homes don't currently have air conditioning. They've relied historically on swamp coolers, evaporative coolers. And this is an opportunity to add that to your home. Now obviously that can come with a cost during the summer potentially. But there's always this also this issue where people are not comfortable in their homes and they're leaving their homes and potentially spending money outside, and they will pay a little bit of a premium to be more comfortable in their home.
Then the operating cost gets a little more challenging for us here in Colorado. So that's again where the efficiency and weatherization is a really big player. But there's also some things happening at our Public Utility Commission that are focused on beneficial electrification rates. So that's the potential to change the rates during the winter for electricity, so that heat pump users are essentially not subsidizing those peak demand costs during the summer.
And that's something there's a pilot happening with our biggest utility right now, Xcel Energy, this fall. They're supposed to implement something next year, which we really hope will help crack this nut and bring the cost of operating more towards parity with the cheap natural gas we have. And finally, natural gas is probably the cheapest it's ever going to be today.
It's volatile, it's going to be expensive in the future. And so we really see heat pumps as a way to keep your energy bills stable and consistent, because that's historically electricity's a lot more.
00:17:55.400 — 00:17:56.120 · Speaker 2
That's awesome.
00:17:56.160 — 00:18:38.020 · Speaker 3
Makes sense I was curious about the creating heat pump specific rates. There are other states like Maine, Massachusetts, New York, Connecticut have either experiment with or have like full blown rates in place. And they're incredible. I know, at least in the state of Maine, that heat pump rate is it's half of what the normal retail rate is.
And it's made a big difference. Ironically, in the state of Maine, we have very little natural gas. So it's like an even more powerful incentive. It's most folks are on oil, particularly in the northeast, but really in Maine. But it's exciting to see different utilities rolling out these more specialized rates, whether it's just even traditional time of use rates or something very specific to heating.
It's excellent.
00:18:38.060 — 00:18:48.580 · Speaker 4
Yeah, that's going to be going through the PUC. There's going to be a lot of back and forth with that, I think. But we're really excited about the potential because it's a really big deal for us in our program. If something that actually works gets passed.
00:18:48.620 — 00:19:08.980 · Speaker 3
So speaking of natural gas, does the program have a position on dual fuel? Is the program only incentivizing pure electric systems? Talk to us about hybrid systems, particularly in the context of relatively cheap natural gas. And the program.
00:19:09.020 — 00:20:42.460 · Speaker 4
Yeah, we struggle with that a lot and considered not allowing it as part of our program. But at the end of the day, we recognize that how plug in hybrids are gaining a lot of popularity right now. People, when trying something new, really want the security of the old thing as an option. And so we didn't want to dissuade people from participating in the program at all, or even considering it, because we didn't allow that as an option.
So that said, I think our utilities are recognizing that there's not as much emission savings from dual fuel systems as they may have modeled or planned. And I think a lot of that has to do with the way they're being installed, where the set temperature is way too high. We're talking like in the 40s or 50s, which is the furnace is kicking on whenever.
And the controls and the quality of install. I think when you allow the dual fuel, you're really sometimes encouraging just a box swap like AC out, heat pump in and treat it basically like it's an air conditioner of sorts. And with the rebates right now, it could just be a cheaper unit to install than a new air conditioning unit without treating it like a heat pump.
Right. So that's the challenge. I think we and our utilities are trying to correct some of that type of install and verify that set temps are at the appropriate level. There's debate about even that what the set temp should be at. So yes, we are allowing them. At the end of the day the goal is meaningful heat pump use, but at the same time satisfied customers who wanted to install these things and are feeling comfortable and satisfied with that install afterwards.
00:20:42.500 — 00:21:45.760 · Speaker 3
Yeah. Makes sense. It's definitely a big challenge. And like you're saying around this, figuring out what's the thermal balance point or the economic balance point, there's some equipment where you got to pick a number and you can figure that out, that number based on a design process. But it's an educated guess.
There's some equipment that you can just set the thermostat to figure it out. And so it'll respond to the dynamics of the home and it will adjust itself over time. And those systems are that's pretty amazing because then you can and it'll iteratively get that just right. And with a hybrid system again, if it's set up right like you're describing, you can get 90% or more of those carbon reduction benefits and have an incredibly comfortable home and all these great outcomes, and then also avoid the downsides of the systems.
Operational costs are suddenly way higher. So yeah, if done right, it's a fantastic option and a really smart option to have as part of a program. But like you said, it's a tricky control setup issue and how to validate that and require it and all those pieces, it's hard. Yeah.
00:21:45.800 — 00:22:12.960 · Speaker 4
And end of the day we want to stop investing in gas infrastructure. That's how we really reduce energy costs, right. We are investing billions into our gas infrastructure. Still, even as Colorado state goals aim to reduce all emissions by 2050. So that's the major downside to me of the dual fuel system is you're still relying on that gas line in a way.
And so but at the same time it's a trade off is a space the place we're in right now and we're going to allow it for the foreseeable future.
00:22:13.240 — 00:22:43.500 · Speaker 2
Super helpful Robert. So I got a question I want to ask. And on this podcast or running theme is Eric is a defender of rebate programs. And then I take the role of skeptic on rebate programs. So Klay, I got a question for you. Engage deeply with contractors. You talk about utility and government programs.
I've heard contractors be driven crazy by these sorts of programs. What don't they like about it? What do you hear. Show us that you guys understand what's going on with contractors when they come in contact with these sorts of programs.
00:22:43.540 — 00:25:24.200 · Speaker 1
Yeah, that's a really great question. Before I was here, I was working for the City and County of Denver, and essentially my job was to help grow the heat pump installing workforce. And so for me, having not been in the industry myself, I really just tried to spend as much time sitting down with contractors face to face or over the phone and just listening.
And I was pretty surprised. It was about a year of sitting down with contractors back in 23. Excel had so much money. City of Denver had so much money going towards heat pump rebates. And yet we weren't seeing participation. From a business standpoint, I'm scratching my head like asking these contractors, you're leaving money on the table, doesn't this?
Why won't you participate in the two most common reasons I heard were. Again, it's crazy how much has changed in our market in three years. But one heat pumps don't work in Colorado. It gets too cold. And just genuinely, I'd say a lot of contractors, we're talking homeowners out of heat pumps that maybe even wanted them.
And then the second was the administrative burden of some of these programs wasn't worth the squeeze. With the labor shortage that we have in the trades. A lot of these contractors are booked out for months, and so they don't necessarily need our help getting new business. HVAC businesses can be extremely profitable.
And again, we have this giant labor shortage. So if it doesn't work for the contractor, and if it's too much time spent on the computer navigating these programs, if you don't have a whole front office staff doing that for you, it's just not worth it. And that's really not fair to the smaller mom and pop shops out here.
The big dogs, they have teams that can dedicate time to that, but a lot of these contractors are 1 to 3 people operations with one or a couple trucks. So for me, and then the last thing I hear constantly is just the payout time for the rebates. There might be a project that gets approved, but we're seeing a black box from program implementers in terms of when that payout is going to happen, which unfortunately results in some contractors floating tens of thousands, hundreds of thousands of dollars, almost acting as banks.
And again, back to the small contractor versus large operation. That's not as feasible for the smaller operations. And so predictability payout times transparency. Those are all things that I was hearing. And really what informed a lot of my program design with our contractor facing tools.
00:25:24.200 — 00:25:41.120 · Speaker 2
That's great. Or it's insightful, right. And it's the sort of stuff that we hear too. So I'm curious. That was like three years ago. How is participation now and how have you guys tackled those three big things of do heat pumps work, administrative burden, pay out timing, stuff like that? I'm curious.
00:25:41.160 — 00:29:05.120 · Speaker 1
Yeah, I used to think of it as this big conflict of trying to convince these contractors that cold climate heat pumps work in Colorado. And really, I've taken a different approach now, and they traditionally haven't worked. Traditional heat pumps didn't work in the colder climates, and that's people have dedicated decades of their career to the trades.
That is what they knew. And so it's less of an argument in this battle and more of, hey, the technology is really advanced with what manufacturers are putting out there. Would you be interested in checking out this upcoming training from a manufacturer talking about their equipment? So I have seen that shift.
There's also been a shift in belief in heat pumps I think just from demand. These Excel energy heat pump trainings that I've attended for years now, I would say it was like 80% heat pump deniers back in 2023. And many of those deniers are now just the strongest advocates because they're telling us, hey, over half of my leads are asking for heat pumps.
And so whether I believe in it or not, this is a matter of do I still want to stay competitive in this market? And there are several contractors who dig their feet in and say, nope, we are only installing gas and that's okay too. I don't want to spend. Why should I be telling someone who's dedicated their life to this trade, tell them how to do their job?
So really, I think we are seeing that shift to the early majority and late majority of at least a curiosity for heat pumps from the market demand and just being exposed to those new technologies. As far as how we're tackling some of those other issues, we're probably a little more onerous in terms of design, making sure that this is a quality install.
This is permitted work done by a licensed contractor. Those are photo requirements. We're a little more onerous on the front end, but that's just because we're so obsessed with these heat pumps being installed correctly on the back end. I think we are taking more aggressive approaches in terms of faster, predictable payout times.
We guarantee no more than 30 days is our goal, but contractually we won't go past 60 days as far as paying out a rebate to a contractor, because we know that our businesses rely on this. They build their business models around these rebate programs, often for better or for worse. And so any changes or unpredictability really affects our bottom line.
And so not only do we make that language very clear, but we're constantly communicating with contractors. We're trying to do as few changes as possible. And if we are going to anticipate making a programmatic change, it's one because the contractors have told us and asked for it. And two, we're giving really ample notice to give the market time to prepare for those changes.
So I'd say frequent communication, predictability, transparency and just human availability to I'm happy to answer anyone's questions. Contractors call me all the time. And we've also created for jobs called contractor agents who their whole job is almost helpdesk being that human touchpoint for contractors to call or email with any questions or gripes or just to vent.
We have those four positions. They're all locally based here in Colorado.
00:29:05.160 — 00:29:39.600 · Speaker 2
Yeah. So as we're taping this, Eric and I were at the Heat Pump Summit yesterday, and I was talking to a representative from one of the major Massachusetts utilities who said adamantly, we are not focused on quantity. We are focused on quality. He said, it seems like it's a bit of a shift in the last 12, 18 months.
Clay, I heard you say all those photos, some of those requirements, you guys are being focused on the same thing. So, Robert, if a contractor is listening, explain why that stuff is important. So even if they say, look, this is real pain, I get why I got to do it.
00:29:39.640 — 00:32:06.980 · Speaker 4
Yeah, it's I think there's a scale from a contractor who just wants to say, give me $1,500 to on the far other end. We want site visit and check your manual J's and S's on every single install. And so where on that scale does each program land? Right. And that's the challenge. And there's I think it's about risk tolerance for both parties.
Right. And so we are really doing our best to shift towards reducing those risk to oranges on our end. But that's not without its challenges. It's not just Clay and I, there's a whole organization we're defending as a 50 year old organization that loves clean audits and doesn't want to be exposed to fraud and has federal requirements that we have to adhere to.
So that's not an excuse. We fully understand the contractors perspective as well. And the other problem is that there's a lot of programs, at least in Colorado, there's a state rebate, there's utility rebates, there's our rebate, there's local government rebates. And they all have their own priorities, right.
So if power Head Colorado focuses on quality and our utility focuses on fraud, that creates. Well, first of all, we're starting at a bad place where we have multiple applications and payout timelines and all that, but also different requirements and priorities for each program. And so I'll be the first to recognize that we are maybe new and creating a new opportunity.
But we've also become part of the problem, so to speak. So that's a challenge. What we want to do, though, is help streamline that for contractors. And so I think this new business model of rebate aggregators not perfect. There's a cost to that where they'll do the paperwork for you at a cost end or front of the dollars that exists.
We're trying to work with some of those folks and reduce costs on that end, so that maybe you just do and fill out this one application, and it's fed to all the other programs, and that can reduce it. At the same time, we really are listening to the contractors beyond Clay. And I can't be more serious that Clay takes phone calls from contractors all the time and is out there talking with them, and I think that's really important.
But we do have a contractor advisory group, too, that's meeting quarterly with us to give us feedback on what they perceive as overly burdensome. And is that an option to talk about, to review? We really are taking that into consideration. We're actually about to start doing weekly office hours where the contractor agents, Clay talked about and our rebate administrator are just sitting there on a video call for an hour once a week, and folks that want to come and even ask, where the hell is my payment?
We can try to figure that out.
00:32:07.020 — 00:32:33.700 · Speaker 3
That's excellent for either one of you. Is there anything you talk about that there's a couple different elements that you're working on. You're offering new things to help reduce these points of friction. Are there certain things you just draw the line, like there's this certain aspect of how you've implemented your program that it's just an absolute necessary piece of it.
And are there other things where you're like, there's a part of your program you implemented a few months ago that you decided, you know what, this is not helping. We're going to cut this thing out. It'd be great if you have one example from each of those buckets.
00:32:33.700 — 00:33:24.280 · Speaker 4
I'll take one first clay and hear a second from you. But I'll say we had some programs that ran out of money. That happens where the programs historically just run out of money. And again, their business model is based around these rebates, and it just comes to a sudden cliff and they are left either disappointing customers or floating the dollars.
And so we currently have a pre-approval process where we basically secure the funding so they verify that the geography and the equipment's eligible. We go through this pre-approval process that's taking us about a week or so right now, and that's driving the contractors crazy. We actually heard from them that they wanted this.
They wanted this way to secure it. But now they're delaying installs because of this pre-approval process. And so now we're hearing the feedback the other way, and we are actively working on switching to go to not having the pre-approval process. And so I hope that says we are burdensome but also maybe nimble.
And we're trying to get better.
00:33:24.320 — 00:33:26.120 · Speaker 2
Damned if you do, damned if you don't. Robert.
00:33:26.120 — 00:33:27.120 · Speaker 4
That's right.
00:33:27.240 — 00:33:27.520 · Speaker 2
Yeah.
00:33:27.560 — 00:35:36.560 · Speaker 1
For me, I would say showcasing licensed contractors and really being adamant that you do need a trade license to be listed on our registered contractor list. Surprisingly not a requirement with many other programs that I've found. And Colorado Robert mentioned that we're a home real estate. A little bit ago.
The same goes for mechanical licenses. It's actually managed at the local level and in a great metro like Denver, where Robert said, Doctor Cox territory is 59 cities and towns. If there's a contractor that serves all of Doctor Cox territory, they likely have 40 to 50 different mechanical licenses at one time that they have to renew every year, and some are reciprocal.
You can send one license, but this is a very common thing. And the theme I keep coming back to is how this impacts a smaller operation versus a larger one. Smaller contractors that I talk to, they don't know when a license expires. Either their partner or spouse is calling the permitting offices and renewing licenses for them.
This is a common trend I've heard to. I couldn't ignore this a few years ago and just kept hearing about how fragmented and complicated this was. We tried to push for a state license in Colorado. We're actually one of only 16 states in the US that doesn't regulate mechanical licenses at the state level. Unfortunately, our application was rejected by Dora, but we will, I think, pursue that again in the future to try and help contractors make their lives easier.
But in the meantime, you have requiring those licenses and really showing the public if you're getting a contractor from power ahead Colorado, they are trusted. There is a license, there's credibility here. And I think that's going to lend to the credibility of the industry out here in Colorado as a whole.
Sometimes it's the Wild West and you don't know who you're getting, especially with heat pumps. And so requiring that license felt like a new innovative approach, maybe more onerous again, but just obsessing over quality and credibility of our contractor network.
00:35:36.600 — 00:35:49.560 · Speaker 3
I was curious, is there something in particular, as you've helped to create these contractor hubs and these programs? Is there something that you're most proud of that you guys have done? Is it standing your ground on this, a licensing piece? What is.
00:35:49.560 — 00:35:54.780 · Speaker 1
It? The licensing fees was the state. Licensing is a failure. I'm proud we tried.
00:35:54.820 — 00:35:55.780 · Speaker 3
Sure, sure.
00:35:55.900 — 00:37:26.520 · Speaker 1
Yeah, I'd say from a contractor perspective. Robert mentioned earlier our rebates are not the only rebates out here. And more and more customers are getting educated about these rebate programs and incentive programs and are being told to stack. You need to stack your rebates, make sure you're getting everything you're qualified for your project, and there's a lot of great tools that show stack ability for a customer.
But the next step is finding a contractor that can stack contractor that's enrolled in all of the rebate programs you want to participate in. And there's so many contractor lists in Colorado for different programs across the state. Excel. And the lists don't often speak to each other. I'd say this is probably what I'm most proud of is on our contractor finder on our website Powered Colorado, we do show badges that show participation in other programs.
So if I want to stack as a customer, I can filter by program participation and see the badges almost like the Boy Scouts with all their scout badges. You can see the program badges listed on a contractor's profile. Really clean and easy for the customer to see. So I'd say that aspect is innovative. Unique.
Huge shout out to our Vendor Building Decarbonization Coalition. I know Panama has been on the podcast before he and his team. What they've done with switch is on. They've brought that to Colorado through our contractor hub and Finder, and it's just a really slick format. I encourage anyone to play with the contractor Finder and check it out.
00:37:26.560 — 00:38:17.340 · Speaker 2
Your contractor hub. I was blown away by how well-designed that website is. I've seen other ones that are like similar to this, and they feel like a 2003 website. You got your contractor facing side, you got your consumer facing side. It's really extremely well done. And we've been impressed with how innovative you guys.
You reached out to us for this training. We're planning on November 5th. You certainly seem like you're thinking outside the box with a dual focus on homeowners and contractors, right? And how to make everybody happy. So same question to you, Roberts, as you think about this program that you had over 99 documents you were submitting to the EPA for, what's a design decision you're most proud of and maybe one that you might tweak or tweaking now?
I'd be curious, in your view, on that, now that you're a few years into.
00:38:17.340 — 00:40:33.180 · Speaker 4
This, I think maybe one of the stars is really the jurisdictional support effort here. It's about $35 million of the program overall. And long term, that's where the emissions are really going to be driven by every single heat pump, one by one out of millions of buildings takes away at it. But having a policy that's either electric ready or requires all electric, and whether that's a retrofit and creating more efficiencies in inter.
Building through building performance standards or transparency policy is going to be a lasting impact regardless what happens with the rest of this program. And beyond that, it's just really open the door to our local governments to get together and crack this nut together. It's started with our local governments all saying, let's do this.
And it was designed in a well enough way that we are not only like supporting them in meetings once a quarter with here's what we should be doing, but we're providing them enough money so that they're staffing up. There's going to be about 30 to 40 new local government staff hired through these dollars over the life of this program, and their focus is 100% on building policy.
And that's just it's really cool to start. Those people are now in rooms together and getting their city councils and county commissions excited about this, now that they have the capacity to do this thing. If I were to shift a little bit of budget, first of all, I'd say I'd go for 500 million. Why stop at 200 million?
We need more stats. And honestly, I think our application may have been good enough. We could have got there. But I think community engagement has proven to be a really important part of this program. We only have $4 million for community engagement. 2.2 million of that is going to be directly awarded to community based organizations throughout the region, people with real connections to the community and the hardest places to reach and different types of communities, whether it's the contract or community or low income community.
So that said, it's proven to be so important and effective. Just getting out there and talking to people that people see our commercial and it's really slick and they move on. If you engage somebody at a festival, at a tent and they're actually like, you're actually talking to them about, they had not heard of a heat pump.
Or surveys show that only about 4% unaided know what a heat pump is in this region. It's incredibly low. And so having a conversation and getting somebody interested and seeing that convert to somebody's calling our energy advisors to learn more about what might work for them. That's where I might spend a little more money is on the community engagement.
00:40:33.220 — 00:41:03.400 · Speaker 2
All right. Clay Robert awesome answers. Been great to have you guys on and learn more about Cog Power Head Colorado I see you guys. This program runs through 2029, so you're deep into it. But you got some time left when the money's gone. When this has run its course. What has to be true in Colorado for this to have worked?
And what's the thing you're most worried about between now and 2029 to get to that point?
00:41:03.440 — 00:42:30.180 · Speaker 1
I would say something I haven't really talked about so far is our workforce programing and helping get new talent into the industry through support, clear guidance, but also just rebranding the trades in a career, in the trades, in a job market that's changing so rapidly and jobs are disappearing. AI is truly, I think, going to take all of our jobs one day.
But and so to be a job seeker, whether you're out of high school or you were displaced by AI, there's a lot of people wondering what's next. And through our workforce Programing. We've opened five green workforce hubs. Hopefully there's clear pathways and general understanding that this is not only a safe and stable career.
This is extremely rewarding and lucrative career where you'll have a trade that you can have your whole life open your own business with. And so hopefully, I'd say at the end of our program, hopefully our contractors have been profitable enough. Through this demand, we've created that they have the capacity and the financing to be able to create more jobs, hire more new talent, train on the job.
That would be my dream is just we're growing or filling the trades gap with people that maybe wouldn't have traditionally heard about the trades and replacing them in not just jobs, but meaningful careers.
00:42:30.220 — 00:42:32.020 · Speaker 2
Love that. That's great.
00:42:32.980 — 00:43:40.820 · Speaker 4
Robert, from my perspective, I think I want this program to prove value so that it's, first of all, the place that if somebody is thinking about HVAC in general, they're thinking about us throughout the region and potentially throughout the state. I hope we prove enough value that we develop natural partnerships, and that creates future funding opportunities, whether that's working with utilities, working with local governments, working with the state.
Maybe another federal opportunity comes around. The work is not going to be done in 2029. And I think this program is really cool and is really based on a proven model that's working in about a dozen states and very closely aligns with Colorado's climate goals and beyond. So that's what I'm hoping for. I think my biggest concern is I've talked about it a little bit is, but that just we add to the frame, we add to another program, more confusion, more applications.
And just at the end of the day, instead of getting market transformation, we're having more contractors that are just throwing their hands up and not wanting to participate in these programs. That's my biggest fear. But Clay and I really wake up every day trying to think about solutions so that it doesn't happen.
00:43:40.940 — 00:43:56.140 · Speaker 2
Yeah. From the bit we've gotten to know you guys working together on this training. If anyone can avoid that, it's you too. You just seem like you eat, sleep and breathe this stuff. So thank you so much for joining us on the Heat Pump podcast and answering all those questions.
00:43:56.180 — 00:43:56.940 · Speaker 1
Yeah, thanks for having us.
00:43:56.980 — 00:43:57.780 · Speaker 4
Thanks for having us.
00:43:57.820 — 00:43:59.300 · Speaker 3
It was really fun. Thanks, guys.
00:44:02.380 — 00:44:24.740 · Speaker 3
Thanks for listening to the Heat Pump Podcast. It is a production of Amply Energy and just a reminder that the opinions voice were those of our guests or us, depending on who was talking. If you like what you've heard and haven't subscribed, please subscribe in your favorite podcast platform. We'd love to hear from you, so feel free to reach out! You can reach us once again at hello@amply.energy. No .com just energy. Thanks a lot.