Hard To Scale, Impossible To Ignore: Housing Innovation

Real EstateHard To Scale, Impossible To Ignore: Housing InnovationByJennifer Castenson, Contributor. Forbes contributors publish independent expert analyses and insights. Covers the future of sustainable, resilient and affordable housing. Follow AuthorAug 24, 2026, 08:18am EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.SummaryHome energy costs are rapidly increasing nationwide, exceeding inflation, due to rising demand from data centers and home electrification, compounded by a strained grid and reduced federal green energy support. Innovative companies are developing solutions, but scaling them faces significant challenges in a highly regulated, risk-averse industry. Programs like USGBC California's Net Zero Accelerator help startups commercialize technologies, connecting them with builders and addressing policy gaps. Examples include Gradient Comfort's window heat pumps, Harvest Thermal's integrated systems, Moduly's home batteries, and software like YellowTin and QuitCarbon for electrification planning. Despite these advancements, builders often prioritize low upfront costs, and policy/funding issues persist. Nevertheless, these innovations offer promise for lowering ongoing energy expenses and enhancing home comfort amidst climate risks. Show More A permitted Estuary greywater reuse system at a New Mexico home treats water from the showers, laundry and sinks — including the kitchen sink — and reuses it for irrigation.WaterleafHousing energy costs across the country are rising faster than inflation with no signs of slowing down. The Pew Research Center reports that more than 75% of households say their home energy costs have gone up in recent years, including 42% who say these costs have gone up a lot. One of the pressures challenging home energy is data center use. The Energy Information Administration recently reported projections of power demand to hit a record 4,268 billion kWh in 2026 and 4,391 billion kWh in 2027, with residential use taking up more than a quarter of that. And, homes will only continue to demand more energy as home operations move away from fossil fuels and as the internet of things grows within each home. The country’s booming energy needs rely on a failing grid at the same time that the federal government is removing support for green energy programs that would support it and help it last longer. In March 2025, the EPA terminated roughly $20 billion in Greenhouse Gas Reduction Fund grants, which have since been in ongoing litigation battles. While the cost escalates, innovative companies are working on scaling solutions to take away some of the energy pressure and cost. Yet, there are challenges there too. Bringing innovation to scale in the highly regulated, risk-averse housing industry that also is facing mounting cost pressures is difficult to say the least. Some organizations are developing programs to ease the path. Innovation Hits Housing And Its Energy DemandsU.S. Green Building Council’s chapter in California has been celebrating innovative technology for the built environment for eight years with its Net Zero Accelerator program that helps commercialize growth-stage startups. MORE FOR YOUThe organization recently announced its eighth cohort of startups that it will guide through policies and connections to the right advisors and partners to speed adoption. The selected companies are ready to put practical solutions in pilots for real-world experience. The program was founded with the understanding that policy can often move faster than technology can reach the builders in need. Industry pros often report that they cannot access the right solutions, cannot find affordable solutions, or don’t even know that there are solutions available. USGBC California wants to spotlight those solutions through the program so that they are visible and connected to the right people at the right time. “Our goal with this program is to connect these high-impact innovators with the building owners, managers, developers, designers, and builders who are ready to prove that net-zero is not just a sustainability target, but a scalable, standard industry reality,” said Ben Stapleton, USGBC California’s CEO in a press release. At a time that residential construction needs a boost of innovation, in particular to lower the costs for homeowners to own and operate a home, these solutions bring promise. But, getting them solidly in the market as solutions has plenty of challenges. Challenges to Scaling Housing Innovation While not focused on energy, but another utility, water, the startup Waterleaf was part of the Net Zero Accelerator program. The startup collects and treats lightly used greywater from laundry, sinks, baths and showers, which is then disinfected with UV to be ready for non-potable reuse in processes such as flushing toilets and irrigation. To date, WaterLeaf has saved more than 270,000 gallons of water and $8,000 in water costs over 10 years per system. “The accelerator provided a lot of visibility and opportunities to make new relationships and helped introduce us to a lot of people to understand the policy ecosystem important to water treatment technology to market,” said the company’s founder and CEO Adam DeHeer. “We were a very early stage company with new product so we had opportunities we couldn’t close because we didn’t have the track record.” This is one of various factors holding housing back from innovation. While some builders may take the risk to try out new product, they seldom take it on at scale, the scale that is necessary to arrive at cost parity and to drive change industry-wide. “There are structural and systemic blockers in policy and economics,” DeHeer said. “It’s not all just one challenge. We went down the path with big production builders and WaterSense builders, but they were soured by using technologies that were certified but then didn’t work in the field. We also came across conflicts of interest of adopting technology because of the stakes that people had.” So, instead of innovation being loved and embraced, like it is with phones and computers, it is seen as a risk and stalled. WaterLeaf has decided to go to market by building relationships with value-based builders, and homeowners with the intent to grow organically in a niche market. “Water is something that doesn’t get a lot of attention, yet it is going to be one of the major blockers in new home development,” he added. “As it surfaces as a political and development issue, and is fought over between AI data centers and suburban development there will be a quicker path to adoption paved by policy.” From water to energy efficiency, the challenges are the same. Housing Innovation For Affordable Energy The Net Zero Accelerator has processed a number of companies that can help solve the housing’s energy challenges. “A pilot here isn’t about finding out whether something works,” said Colin Mangham, chief experience officer of USGBC California who has led the Net Zero Accelerator since 2020. “These technologies already work. The pilot proves success can be replicated. Founders like to build for market disruption, but the people buying their solutions want a predictable outcome they can trust.” In seven years, the Net Zero Accelerator has supported more than 120 startups, several of them now focused on growing and scaling to support residential energy demands and change the equation for lower cost energy. For example, heat pumps have become more popular for environmentally friendly home operations and heat pump technology is improving enough to perform as well as traditional heating and cooling methods in all types of climates. A recent Green Builder Media COGNITION Smart Data survey saw 45.1% of builder respondents say that there was increased interest from homeowners in heat pumps, which ranked fourth on a list of eight home features. One Net Zero Accelerator program graduate, Gradient Comfort, makes ENERGY STAR-certified window heat pumps that heat and cool a room just by being plugged into a standard 120V outlet. The heat pumps do not need ductwork or rewiring or electrical panel upgrades. This technology is being used to retrofit homes and large multifamily buildings in an easy, efficient way that lowers the building’s environmental footprint. Another heat pump innovator from the program is Harvest Thermal that offers an integrated heat pump and hot water system built around a cloud-connected thermal battery that stores heat and shifts energy use to off-peak hours. The system replaces a gas furnace and water heater with one all-electric unit, cutting emissions up to 90% and lowering utility bills by 40% compared to gas. The company’s co-founder, Jane Melia, was involved in several startups before Harvest so brought experience facing startup challenges. Now with nearly 1,000 customers, the company is helping shift the energy load to make the grid cleaner and more efficient. A startup has different needs at different stages, starting with funding that acts as oxygen for it to grow. Melia chose the venture capital because that was what she was familiar with, which allowed the company to get certified and go to market three years ago. Getting to market took a number of steps, strategically deciding to sell through installers and not bring installation in house. Melia said they didn’t want to be a technology company, not an installation company, which would allow it to scale. Harvest then had to get the contractors trained. The company also markets to homeowners, routing them to qualified contractors who receive a qualified lead that’s easier to close. There are easier ways to scale, but that mostly turn out to be dead ends. “The concept of working with large builders is interesting, but in practice it is very hard to get a foot in the door and they take a lot of time to vet a new technology,” Melia said. “We have installed 500 homes now so the risk is reduced for them. Many of them are going for the cheapest HVAC, they focus on cost so get the lowest cost that they can. Plus, they focus dollars on kitchen and bath and the things that appeal to buyers.” That’s not the only challenge. In the midst of the federal government cut backs, Harvest won a grant from the U.S. Department of Energy for $2 million that it still hasn’t received. The federal government also could help increase interest and motivation from buyers by providing rebates and incentives, but Harvest doesn’t want to rely on rebates in case it isn’t sustainable. Melia also noticed a trend of venture capitalist investment moving away from climatetech because current policy isn’t in favor and grants have been pulled away. Regardless, she feels like the company is winning. “We are shifting two-thirds of heating of the home to the right time and reducing methane gas,” she said. Another accelerator startup was Moduly, which performs as a plug-and-play home battery system to store and disperse energy as needed and to balance the peaks and shifts of the grid. The battery can be installed by a homeowner or in a new construction home by plugging into a standard wall outlet without the need for an electrician. One battery can store 2,500Wh, which would keep a fridge running for a day, and a system of up to five batteries can be installed together. Moduly also can connect excess energy between homes, serving as a virtual power plant, again helping balance today’s energy demands and rising prices. Cloud-Based Housing Energy Boosts Beyond hardware solutions, there are software solutions there are inciting changes in energy use. YellowTin is a white-label software platform that utilities, employers, and lenders use to help users plan home electrification. The software allows homeowners to build custom recommendations on solar, EVs, heat pumps, and induction cooktops based on location. It then can help the user create a budget to make the improvements a reality. After taking part in the Net Zero Accelerator program, YellowTin has more than 8,000 users, and has run electrification partnerships with Sonoma Clean Power. Another software solution is QuitCarbon, another online service for homeowners to plan whole-home electrification and connect to a contractor for free. Homeowners get a customized plan including heat pumps, water heaters, induction cooking, panel upgrades, insulation, and EV chargers. The plan also comes with a dedicated QuitCarbon coach, and an introduction to a contractor, that is benchmarked for bid fairness for the homeowner. These startups are gaining adoptions, which is one thing, but the funding is becoming more compeititive in the world of AI. More Housing Innovation Challenges AheadDeHeer said the challenges to raising money are just escalating. “Since AI has taken over the startup world, I can’t get to the value that AI can at the nosebleed levels," he added. “My TAM is not 7 trillion. There are fundamental issues with what we value, how we value it, the policies and the economics. Unless one of those changes enough to pull the others along with it, we will not have a rapid adoption of water reuse at a distributed scale.” Some of these technologies are hard for a builder to adopt because they aren’t the benefit recipient. A homeowner will have lifetime value from more efficient energy and water systems, but the builder isn’t seeing any of that profit. DeHeer imagines a future of water markets like the growing carbon market to get paid for water reduction credits from a larger fund of some kind that would be an immediate payout for a lifetime value for the end user. But, things that add lifetime value have a high upfront, creating barriers to adoption. All of these factors are working against innovation in the housing industry. Housing’s Energy FutureLarge corporations also are using their resources and volume to provide solutions to growing home energy needs. Schneider Electric is looking at support for the entire ecosystem and where technology and innovation can boost efficiency in today’s new energy paradigm. These large corporations have the financial resources and the distribution modes to boost market penetration. The Net Zero Accelerator program is a great lift for these startups that need to compete with the large, global organizations, however, the obstacles still exist. New processes are welcome as homeowners are feeling the pressure of growing costs of homeownership. These innovations will drive the change needed to lower ongoing energy costs and to improve comfort as we face more climate risks. 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