The Climate Challenge
In the U.S., residential energy use adds up to about 20% of total greenhouse gas emissions, with heating and cooling consuming nearly half of an average home’s energy. Rather than heating or cooling air, a heat pump uses much less energy to move heat from one place to another.

Recent policy efforts like the Inflation Reduction Act (IRA) provide financial incentives, on top of a growing number of others from states and utilities. Additionally, a coalition of 25 states, representing 55% of the U.S. population, have committed to installing 20 million residential heat pumps by 2030.

So what stands in the way of everyone getting a heat pump?

Seeking a Solution
Phil Krinner, CEO and co-founder of Arch, asked 15 contractors for quotes, which varied wildly with none able to estimate potential energy savings. This is because heat pump performance is kind of a black box. It’s a vicious cycle.

When Phil rode-along with contractors, he found they’re spending three to five hours on leads with a sales conversion rate of 20-25% because they can’t promise savings. He shares, “That’s not only frustrating, that’s also a massive waste of resources.”

Faster, Cheaper, Smarter
Arch’s platform uses proprietary algorithms to integrate data from internal and external sources, quickly analyze a home, and optimize a system. The bet is that saving installers time can bring down upfront installation costs. As Arch gathers more data, the aim is to unlock competitive point-of-sale financing, further reducing installation costs and increasing sales for contractors.

As Phil shares, “By using technology to generate insights into the system’s performance and savings, we’re helping contractors, homeowners, and lenders see the financial opportunity.”

The Outcome
The International Energy Agency estimates that the U.S. must invest $160 billion annually by 2030 to meet its goals. By making every installer more efficient, Arch is helping to alleviate an immediate labor bottleneck while helping kickstart the adoption flywheel.

As Phil explains, “Drawing a comparison to how solar took off – the equipment cost curve is declining with even more efficient heat pumps in development. We’re nearing a virtuous cycle, where more demand means manufacturers produce more, it gets even cheaper, and that drives even more demand.”