RESEARCH DESIGN FOR INSTITUTIONAL ANALYSIS OF HUD'S SOLAR HEATING AND COOLING DEMONSTRATION PROGRAM Thomas E. Nutt-Powell MIT Energy Laboratory Report MIT-EL-79-029 May 1979 Table of Contents page Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . 2 Introduction . 3 . . . . . . . . . . . . . . . . . . . . . . . . . . An Hypothesized Institutional Analysis for Housing . . . . . . . . 6 The Perturbation Prompter ..................... 48 Specific Research Design . 51 . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 List of Tables 1 - Institutional Entities Performing the Finance Function in Housing ......................... 8 2 - Institutional Entities Performing the Research Function in Housing ......................... 10 3 - Institutional Entities Performing the Political Function in Housing . . . . . . . . . . . . . . . . . . . . . . . . . 12 4 - Institutional Entities Performing the Regulation Function in Housing ......................... 13 5 - Institutional Entities Performing the Production Function in Housing ......................... 15 6 - Institutional Entities Performing the Service Function in Housing . . . . . . . . . . . . . . . . . . . . . . . . . 16 7 - Institutional Entities Performing the Socialization Function in Housing ......................... 8 - HUD-DOE (SHAC) Demonstration Program Residential Project Cycles 1, 2, and 3..................... 56 9 - HUD-DOE (SHAC) Demonstration Program Residential Project Cycle 1........................... 57 10 - HUD-DOE (SHAC) Demonstration Program Residential Project Cycle 2........................... 58 11 - HUD-DOE (SHAC) Demonstration Program Residential Project Cycle 3........................... 59 12 - Indicative Sample by Developer Type & Region . . . . . . . . 60 Table of Contents, cont'd. page List of Charts 1 - Finance and Finance Functions . . . . . . . . . . . . . . 20 2 - Finance and Research Functions. . . . . . . . . . . . . . 21 3 - Finance and Political Functions . . . . . . . . . . . . . 22 4 - Finance and Regulation Functions.. . . . . . . . . . . . 23 5 - Finance and Production Functions.. . . . . . . . . . . . 24 6 - Finance and Service Functions . . . . . . . . . . . . . 25 7 - Finance and Socialization Functions . . . . . . . . . . . 26 8 - Research and Research Functions . . . . . . . . ... . 27 9 - Research and Political Functions. . . . . . . . . . . . . . 28 10 - Research and Regulation Functions . . . . . 29 11 - Research and Production Functions . . . . . . . . . . . 30 12 - Research and Service Functions. . . . . . . . . . . . . . . 31 13 - Research and Socialization Functions. .... 32 14 - Political and IPolitical Functions . . . . . . . . . ... 15 - Political andI Regulation Functions. . . . . . . . ... . 34 16 - Political andIProduction Functions. ....... 35 17 - Political andI Service Functions . . . . . . . . . . ... . . . . .. ........ . .. 18 - Political and Socialization Functions . . . . . . . . ... . . . 33 36 37 19 - Regulation and Regulation Functions . . . . . . . . . . . . . 38 20 - Regulation and Production Functions . . . . . . . . . . . . . 39 21 - Regulation and Service Functions. . . . . . . . . . . . . . . 40 22 - Regulation and Socialization Functions. . . . . . . . . . . . 41 23 - Production and Production Functions . . . . . . . . . ... . 42 Table of Contents, cont'd. page 24 - Production and Service Functions . . . . . . . . . . . . . . 43 25 - Production and Socialization Functions . . . . . . . . . . . 44 . . . . . . . . .. . . . . 45 27 - Service and Socialization Functions.. .. . . . .. . . . . 46 28 - Socialization and Socialization. . . . . . . . . . . . . . . 47 26 - Service and Service Functions . List of Figures 1 - Innovation Acceptance . . . . . . . . .. . .. . . . . . . 52 ABSTRACT This paper is one of a series prepared under the sponsorship of DOE's Photovoltaic (PV) Program as part of the institutional analysis of housing. After an introduction describing the theory and methods of institutional analysis, the paper is organized into three sections. ABSTRACT, the first section, presents the research design used for institutional analysis of HUD's Solar Heating and Cooling Demonstration Program. It contains an hypothesized institutional arena, which describes the institutional entities in the housing arena by function and activity and then arrays them according to intensity of interaction across function. The second section of the paper describes the HUD program and describes how it serves as the perturbation prompter for institutional analysis. The third section of the paper presents the specific research design used in the study. From the first three cycles of the HUD program, 11 projects were chosen for on-site case study. A special open-ended semi-structured survey instrument was used to collect information from a set of informants identified for each project. The results of this data collection effort are reported in subsequent reports in this project. The author gratefully acknowledges Michael Furlong, Steven Heim, Patricia McDaniel, Barbara Parker, Andrew Reamer, and Carole Swetky, all of the PV Institutional Analysis Project at MIT; Jeffrey Cruikshank, who provided editorial services; David Moore, Director of HUD's Solar Heating and Cooling Demonstration Program; and Etta Roth of Real Estate Research Corporation. Without their help and support, this paper could not have been completed. The drawing is the architect's rendering of the Friends Community, a Cycle 3 project in North Easton, MA. 3 This paper is one of a series resulting from institutional analysis of photovoltaic (PV) acceptance. These studies are undertaken with sponsorship of the US Department of Energy (DOE) as part of its Photovoltaic Program. In addition to institutional questions, DOE is interested in economic, marketing, and technological issues, and is sponsoring a series of studies and field tests on these topics. Institutional analysis studies have typically been undertaken in relation to particular PV field tests, though in some cases studies have focused on comparable technologies and institutional forces influencing their acceptance. The housing institutional arena is being investigated in relation to the PV program, in the context of the DOE-HUD Solar Heating and Cooling (SHAC) Demonstration. The SHAC demonstration program involves direct federal grants to assist project developers in incorporating solar thermal approaches into various building forms. In this context, institutional analysis is directed to understanding those forces which influence the rate and nature of innovation acceptance in the housing sector. (For a more detailed dis- cussion of the theory of institutional analysis, see Nutt-Powell, et al., 1978.) An institutional analysis involves seven steps: (1)Identify the sector (i.e., economic, geographic) to be studied; determine study objectives. (2)Prepare a preliminary sector exploration -- i.e., an overview that could be applied to any location-specific sector. (3)Construct an hypothesized institutional arena. (4) Identify the "perturbation prompter." (5)Devise the specific research design. (6)Monitor perturbations. (7)Analyze the institutional arena. 4 This paper incorporates material relevant to the third, fourth and fifth of these steps: constructing an hypothesized institutional arena, identifying a "perturbation prompter," and devising the specific research design for an institutional analysis of the Solar Heating and Cooling Demonstration Program. Its organization follows the theoretical and methodological constructs for institutional analysis of innovation acceptance presented in an earlier paper in this series. (Nutt-Powell, et a], 1978). That paper posits six types of institutional entities -- formal and informal organizations, members, persons, collectivities, and social orders. Institutional action consists of ex- changes, for which the critical datum is information. within an institutional arena. Such exchanges occur Innovation forces institutional action by disrupting existing social meaning. This paper is preceded in the study by five others, each a background paper serving as an element of the preliminary sector exploration of the housing institutional arena. These papers deal with research and socialization (Furlong and Nutt-Powell, 1979), governmental involvement (McDaniel and Nutt-Powell, 1979), standard setting (Parker and Nutt-Powell, 1979), energy provision (Reamer, Heim, and Nutt-Powell, 1979) and housing production (Swetky and Nutt-Powell, 1979). Taken together, these papers provide the basis for constructing an hypothesized institutional arena for housing. An hypothesized institutional arena is a means of representing institutional entities characteristically involved in a given sector, and of indicating the nature of their typical exchanges. At any point in time there is an identifiable pattern of exchanges between and among institutional entities. This is called a "resource configuration." It is possible to postulate a relative homeostasis of an institutional arena's resource 5 configuration in order to establish researcher perspective as well as a starting place for data collection. This postulation is the hypothesized institutional arena. A review of the hypothesized institutional arena leads to the identification of where and how the introduction of an innovation could prompt a perturbation (that is,cause exchanges between and/or among institutional entities which are not routine). For research purposes, one can identify three types of institutional analysis, based on the time and nature of perturbation prompting. The first studies the introduction of an actual pertur- bation during its introduction; the second examines a perturbation after it has been introduced; and the third studies a perturbation introduced solely for research purposes. This project, which has included work in four different institutional sectors, has been based on studies using each of these approaches. Once an hypothesized institutional arena is constructed and a perturbation prompter identified, it is possible to devise a specific research design for institutional analysis. The research design establishes how perturbations occasioned by the innovation will be monitored. This paper has three major sections. The first presents an hypothesized institutional arena for housing; the second discusses the perturbation prompter for this study; and the third presents the specific research design devised for this study. Subsequent papers in this series will report the findings of these investigations. 6 AN HYPOTHESIZED INSTITUTIONAL ARENA FOR HOUSING Institutions are defined along three planes: role. function, activity, and Function is the broadest parameter, including, for example, production and research. Activities are undertaken in support of a function; for example, assisting or analyzing. Finally, role is the particular implemen- tation strategy adopted by an institutional entity with regard to its function and activity; for example, vendor or linking-pin. In defining an hypothesized institutional arena, the analyst focuses on function and activity as the two generalizable defining planes. The hypothesized institutional arena for housing presented here is based on information gathered during the preliminary sector exploration stage, and is presented in the five preliminary exploration working papers of this study. The work described in these papers was initiated by taking each of the seven institutional functions (finance, research, political, regulation, production, service, socialization) as a separate starting point. Data obtained from literature and key informants established the division of institutional entities into the five topics reflected in the titles of the working papers, a clustering which is the consequence of institutional entities serving more than one function. Thus, two papers are combinations maintaining function designation -- research and socialization (Furlong and Nutt-Powell, 1979) and production (Swetky and Nutt-Powell, 1979) -while the other three present clusters of institutional entities meeting many or even all functions -- governmental involvement (McDaniel and NuttPowell, 1979), energy provision (Reamer, Heim and Nutt-Powell, 1979) and standard setting (Parker and Nutt-Powell, 1979). 7 This paper does not repeat the extensive description and discussion of institutional entities in housing contained in these earlier papers. Most particularly,it does not present detailed definitions of these entities and the manner in which their characteristic functions and activities are manifested. Rather, each entity is defined briefly here according to the functions it fulfills, and the activities it performs in meeting those functions. These definitions are found in Tables 1-7 (one for each of the seven functions). The definition of institutional entities by function and activity is then used to develop a series of interaction matrices, representing the exchanges characteristic of institutional entities by function, and indicating the relative intensity of this interaction. The intensity of inter- action is represented by a four-level ordinary scale: high. none, low, medium, The assignment of an intensity rating was by a pooled judgement of the research team. The interaction matrices are presented as Charts 1-28. The set of figures and charts together represent an hypothesized institutional arena for housing, with particular reference to exchanges important to solar energy innovation acceptance. 8 Table 1 INSTITUTIONAL ENTITIES PERFORMING THE FINANCE FUNCTION IN HOUSING ENTITIES ACTIONS Veterans Administration (VA) Insures, guarantees home loans Federal Housing Administration (FHA) Provides housing subsidies, loans Department of Housing and Urban Development (HUD) Farmers Home Loan Administration (FmHA) Provides loans, grants, subsidies Federal National Mortgage Association (FNMA) Trades mortgages in the secondary market General National Mortgage Association (GNMA) Trades mortgages in the secondary market Federal Home Loan Mortgage Corporation (FHLMC) Trades mortgages in the secondary market Federal Deposit Insurance Corporation (FDIC) Provides deposit insurance Federal Savings and Loan Insurance Corporation (FSLIC) State Housing Finance Agencies (HFAs) Provides deposit insurance Provides housing loans, grants Provides housing loans, insurance, grants, subsidies State Department of Community Development(DCAs) Provides housing loans, grants, subsidies Congress/Internal Revenue Service (IRS) Provides financial incentive through tax policies States, Counties, Municipalities Sets & collects property tax Federal Reserve Board Sets monetary policy Federal Home Loan Bank Board Sets monetary policy State Bank Regulatory Boards Sets monetary policy Mortgage Companies Provide loans Private Mortgage Insurance Companies Insures mortgages Insurance Companies Provide loans Real Estate Investment Trusts Provide means to accumulate and invest capital 9 TABLE 1, cont'd ENTITIES ACTI )NS Pension Funds Provide loans Savings & Loans Provide mortgages Commercial Banks Provide construction loans Mutual Savings Banks Provide mortgages Individuals Provide loans Equity Syndications Provide means to accumulate capital Finance Companies Provide home improvement loans Credit Unions Provide home improvement loans Tax Assessors Provide financial incentives through tax policies 10 'Table 2 INSTITUTIONAL ENTITIES PERFORMING THE RESEARCH FUNCTION IN HOUSING ENTITIES ACTIONS Congress Conducts policy-oriented research President Conducts policy-oriented research State legislatures Conduct policy-oriented research Governors Conduct policy-oriented research Municipal Planning & Budget Agencies Conduct policy-oriented research Federal Housing Authority (FHA) Conducts housing market analyses U.S. Department of HUD - Policy Conducts long-term broad.based policy studies at local, regional and national levels Development and Research (PDR) U.S. Bureau of the Census Collects and analyzes demographic and housing statistics Private research Performs research on contract with other actors in the housing arena Trade and professional associations Perform subject-related research Unions Perform subject-related research Universities Perform basic and applied research related to housing on contract or grant Banks Research economic and fiscal trends, local housing market characteristics Federal Reserve Board (FED) Performs economic research Federal Home Loan Bank Board (FHLBB) Performs economic research Commission/Task Force, Staff Carry out special, highly visible studies Cabinet Officers, Staff Carry out focused policy and programrelated research Congressional Budget Office (CBO) Studies economic and fiscal impacts of Congressional appropriations and policies 11 TABLE 2, cont'd ENTITIES ACT-IONS General Accounting Office (GAO) Performs reviews and evaluations of existing federal programs Office of Management and Budget (OMB) Researches program impacts and fiscal needs Interest Groups (Federal/State/Local; General Special/Specific Special/ Public Interest/Specific Public Interest) Perform subject-related research Banking Commissions Research practices Voluntary Standard Setting Commissions (ASTM, ANSI) Research nature, characteristics & performance relative to standard setting U.S, Department of Energy (DOE) Performs energy-related research bank policies and mortgage 12 Table 3 INSTITUTIONAL ENTITIES PERFORMING THE POLITICAL FUNCTION IN HOUSING ENTITIES ACTIONS Congress Determines policy President Proposes/approves/administers policy U.S. Cabinet departments/officers Propose /debate/administer policy; determine policy at a lesser level General Accounting Office (GAO) Proposes policy; determines minor policy regarding reporting requirements U.S. Office of Management & Budget (OMB) Determines federal budget and management practices State legislatures Determine policy Governors Propose/approve/administer policy State cabinet departments/officers Propose /debate /administer- policy; determine policy at a lesser level Local governing councils Determine policy Local chief executives Propose/approve/administer policy Local cabinet departments/officers Propose/approve/administer policy Voluntary standard commissions (e.g., ASTM, ANSI) Determine standards 13 Table 4 INSTITUTIONAL ENTITIES PERFORMING THE REGULATION FUNCTION IN HOUSING ENTITIES ACTIONS Building Inspectors Inspect construction regarding structural standards Housing Inspectors Inspect housing regarding health and safety standards Federal Home Loan Bank Board (FHLBB) Sets and administers regulations for savings & loans Federal Reserve Board (FED) Sets and administers regulations for commercial banks U.S. Department of the Treasury Sets and administers broad financial, tax,and fiscal regulations State Banking Commissions Set and administer regulations regarding statePchartered banks U.S. Department of Housing and Urban Regulates interstate land sales Development (HUD) -- Office of Interstate Land Sales HUD -- Secretary Regulates secondary mortgage market Securities Exchange Commission (SEC) Oversees interstate corporation financial practices Internal Revenue Service (IRS) Sets and administers tax regulations Environmental Protection Agency (EPA) Enforces anti-pollution laws Council on Environmental Quality (CEQ) Oversees the environmental impact statement process Office of Coastal Zone Management (CZM) Regulates permissible uses within designated coastal zones Occupational Safety and Health Administration (OSHA) Regulates worker health and safety conditions Fire Departments Enforce fire regulations Design Review Regulates construction to meet aesthetic standards Courts Adjudicate arena disputes in the housing 14 TABLE 4, cont'd ENTITIES ACTIONS Interstate Commerce Commission (ICC) Regulates materials transportation Unions Regulate member behavior Insurance Commissions Regulate National Labor Relations Board (NLRB) Arbitrates labor disputes State Realtor Regulatory Boards Regulate realtor behavior Professional Registration Boards Regulate entry to professions Trade and Professional Associations Regulate member behavior Federal Energy Regulatory Commission (FERC) Sets interstate energy prices State Public Utilities Commissions Regulates local utility behavior Department of Justice Enforces antitrust laws Nuclear Regulatory Commission (NRC) Regulates construction and operation of nuclear power plants State Facility Siting Boards Determines where energy facilities may be sited Fair Housing/Equal Opportunity Employment (EEO) Agencies Enforce fair housing and qqual opportunity laws insurance company behavior 15 Table 5 INSTITUTIONAL ENTITIES PERFORMING THE PRODUCTION FUNCTION IN HOUSING ENTITIES ACTIONS Developers Initiate, coordinate, oversee production process Architects Design housing product Consulting Engineers Advise Lawyers Design corporate structure Surveyors Determine site specifications Real Estate Brokers Facilitate site acquisition Trade Unions Provide labor for construction Contractors Build, manage, organize Subcontractors Build Materials Manufacturers Manufacture housing components, whole structures Materials Distributors Distribute housing components Public Housing Authorities Develop public housing State Developers Develop Community Development Corporations (CDCs) Develop Energy Companies Supply energy in production process Public Service Provide roads, infrastructure to facilitate production the 16 Table 6 INSTITUTIONAL ENTITIES PERFORMING THE SERVICE FUNCTION IN HOUSING ENTITIES ACTIONS Consulting Engineers Advise Planners Assess alternatives and market need Lawyers Advise on legal options Title Companies Guarantee title Real Estate Brokers Facilitate sales, assess market demand Materials Distributors Advise on product use Welcome Wagon Does direct advertising for local merchants Insurance Companies Insure property of owner and/or occupant Repair Personnel Advise on, assist in maintenance Energy Companies Utilities gas, electric Oil Solar Supply energy, service lines, advise on energy use Municipal Police Fire Sewer Water Provide Provide Provide Provide Security Companies Provide security for structures and occupants Maintenance Firms Provide building & grounds maintenance Property Management Oversees operation, management and maintenance Equal Employment Opportunity (EEO)/Fair Housing Agencies (Federal, State, City) Investigate Consumer Protection Agencies Investigate. and adjudicate complaints Mortgage Financers Arrange debt structure Tenants Organizations Advocate constituent interests security re: crime security re: fire continued use of sewer system continued use of water system and adjudicate complaints 17 TABLE 6, cont'd ENTITIES ACTIONS Neighborhood Associations Advocate constituent interests Trade Associations Provide advice and information Professional Societies Provide advice and information Unions Provide advice and information Standards ASTM ANSI NBS Organizes standards setting process Legitimates standards Investigates standards HUD National Flood Insurance Act Provides flood insurance Materials Manufacturers Provide advice on product use 18 Table 7 INSTITUTIONAL ENTITIES PERFORMING THE SOCIALIZATION FUNCTION IN HOUSING ENTITIES ACTIONS Designers Set construction parameters through design preferences Trade Associations Socialize members, government, and the public through newsletters, advertising, and lobbying Professional Associations Socialize members, the government, and the public through newsletters, advertising, and lobbying Unions Socialize members, the government, and the public through newsletters, advertising, and lobbying Educational Institutions Directly socialize students; indirectly socialize the public, government officials Standard Setting Bodies Socialize manufacturers and users of building components Lending Institutions Set construction parameters through lending preferences Congress Sets parameters for housing preferences through choice of legislative issues President Sets parameters for housing preferences through public statements, legislative programs, and administrative directives State Legislatures Set parameters for housing preferences through choice of legislative issues Governors Set parameters for housing preferences through public statements, legislative programs, and administrative directives Commissions Legitimate new directions and ideas Cabinet Officers Set parameters for housing preferences through public statements, legislative programs, and administrative directives Interest Groups Advocate the acceptability of particularized views on housing 19 TABLE 7, cont'd ENTITIES ACTIONS Historical Form Establishes the familiar as a parameter Public Services Establish existing service forms as parameters Tax Assessors Set construction parameters through assessment practices Developers Influence construction practices through financial risk-taking preferences Real Estate Brokers Establish housing parameters through broker preferences Welcome Wagons Convey community norms Property Management Firms Socialize owners and occupants through management practices Materials Distributors and Manufacturers Set construction parameters through advertising, offering, and endorsement of products 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C----· W U C ._LC C 4 C 0 C' IV -J -O ·r o In In L.L LW ,, S 0 In In S O 00 U * r 0 cnn CCC , L, "C -nr--·-llcr,rrrn*··rr -cU*rs.r-- C. 0 Li. 0 0" I-S ·r,-nrr- ra· I-. z LU PE z 0 LU z .r' = .3i THE PERTURBATION PROMPTER The 1973 oil embargo provided dramatic evidence of the nation's reliance on imported non-renewable energy resources. It prompted the passage in1974 of the Solar Heating and Cooling Demonstration Act (P.L. 93-409), which authorized a wide range of federal activities intended to help establish solar energy as a viable energy resource for the US. A comprehensive program is being conducted by the Department of Energy (DOE) under the authorization of this and related legislation. As part of this effort, DOE isconducting the National Program for Solar Heating and Cooling of Buildings. According to DOE's 1978 annual report on the program, its thrust is to promote and demonstrate the economic viability of solar energy for the heating and cooling of buildings. There are four basic elements: Research and technology development of new and advanced system approaches and subsystems or components to reduce costs, improve reliability, and provide solutions to problems. Engineering development aimed at bringing systems, subsystems, and components to a marketable stage for utilization. Demonstration of solar heating and cooling in commercial and resi'dential buildings, using available systems installed both innew and existing buildings, and the associated collection, evaluation and dissemination of data and development of standards and performance criteria. Market development to assure than an institutional framework exists for widespread use of solar energy including technology transfer, environmental and resource assessment, and studies on barriers and incentives. (DOE, 1978c.) The activities other than residential demonstration that have been completed' are summarized in two DOE documents. (DOE, 1978a; DOE, 1978b.) The Department of Housing and Development (HUD) has responsibility for residential applications. HUD has developed a demonstration program 49 which provides grants to builders and developers who equip new residential construction or existing housing with solar systems. HUD's residential demonstration program is designed to: finance solar systems in both new and existing dwellings; develop performance criteria and test procedures for solar dwellings; disseminate solar heating and cooling information; undertake market development efforts to encourage the rapid and widespread acceptance of solar heating and cooling technologies by the housing industry throughout the US. (HUD, 1976, p. vii.) The solar systems may be used for water heating and home heating and/or cooling. The program has proceeded in a series of award cycles, each initiated by Requests for Grant Applications (RFGA) announced through the solar and construction press and through HUD's own solar mailing list (HUD, 1978). Five cycles of awards have been made in the HUD residential demonstration, with awards announced on January 19, 1976 (Cycle 1), October 15, 1976 (Cycle 2), May 30, 1977 (Cycle 3), March 29, 1978 (Cycle 4), and September 28, 1978 (Cycle 4a). In addition, HUD (with DOE and the Solar Energy Research Institute) has sponsored a Passive Residential Design Competition and Demonstration, with design prizes and construction grants. Awards were announced December 20, 1978. While the oil embargo/energy crisis serves as the general perturbation prompter, the specific perturbation prompter is the HUD residential demonstration program, and in particular the RFGA defining the nature of activity required to receive a grant. in two areas: HUD asked that applicants provide information (1)technical aspects of the solar energy system to be used; and (2)reasons why the particular project should be funded as part of a demonstration program. (HUD, 1978). HUD assumed the marketability of the 50 applicant's projects, as the awards were to cover only the incremental costs of using a solar system. (Inall cases backup systems were provided for.) 51 SPECIFIC RESEARCH DESIGN The HUD Heating and Cooling Demonstration Program represents a deliberate public intervention into the housing market to accelerate the acceptance of an innovation, solar energy. The HUD program uses solar thermal technologies. Because solar energy is an innovation in housing, the introduction of both solar thermal and photovoltaic (PV) will have comparable impact in the housing institutional arena. It is for that reason that the study of HUD's program provides useful guidance to framers of programs to accelerate the acceptance of PV in residential applications. In an economy based on free marketing assumptions, it is necessary to justify market interventions by public bodies. In housing, for example, interventions have been justified by appeals to inequities in access (for housing subsidies), and to the societal importance of historic form (for special tax treatment of income-producing rehabilitated historic structures). Intervention to encourage use of indigenous renewable energy resources (such as solar) is justified on the grounds of political independence and the control of inflationary forces. Because the housing sector is a high consumer of energy, there are several intervention efforts. The efforts include those aimed at user practices (for example, energy conservation practices including thermostat settings and automobile usage) as well as those aimed at equipment used (for example, energy efficiency ratings on major appliances and gas mileage ratings on automobiles.) The HUD Solar Heating and Cooling Demon- stration Program fits into the second category. In general, public intervention into market practices to accelerate innovation acceptance is based on an "S-curve" model of innovation diffusion. As shown in Figure 1, private market acceptance of an innovation occurring 52 FIGURE 1 INNOVATION ACCEPTANCE UNDER NORMAL, MARKET-BASED PUBLIC INTERVENTION AND INSTITUI IONALLY-BASEU INI'ERVENIION CONDII IONS 12 J -00 $=mm Ox~aw - -=4. h -p0 / Of wzi7r I / / I II5 ! 4/ o4 / L~~~~~~~~~~~~~~~~~~N +ihmee A normal conditions B = market-based public intervention conditions C = institutionally-based public intervention conditions 53 through time is plotted by curve A. Market-based public intervention theory is plotted by curve B. Curve C plots innovation acceptance prompted by institutionally-based public intervention. In the case of curve C, the public intervention not only prompts the acceptance of the innovation earlier in time, it also encourages the acceptance to occur more rapidly once begun. Hence, where curves A and B are identical in slope and duration, with curve B merely beginning sooner, curve C has a sharper slope and begins sooner. The difference between curves A/B and C effectively reflects a difference between market and institutional analysis. acceptance are reduced to cost. In A/B the factors influencing Government intervention strategies to accelerate innovation are premised on impacting cost, typically to minimize the initial costs of innovation development by the private sector. However, once the acceptance process begins, it follows a trajectory no different from private market acceptance. The only difference is that it has begun sooner. By comparison, institutional analysis identifies multiple currencies influencing the innovation acceptance decision. Institutional exchanges consist of information, of which cost is only one type. Among other currencies of exchange are source (From whom do I hear the information?), form (In what form do I acquire the information?), context (Inwhat institutional context am I acting?), and application (How easily can this be made part of my routine?). The various currencies interact to yield some measure of comprehensibility of the innovation. To the extent that the innovation is comprehensible, its acceptance will accelerate. The HUD Solar Heating and Cooling Demonstration Program uses a marketbased public intervention strategy. The program proceeds on the hypothesis that financial incentives are both necessary and sufficient to accelerate 54 acceptance of solar technologies in housing. It further hypothesizes that the financial incentives can be focused on a single actor, the developer/ builder. A sound research design for institutional analysis of this program includes cost as one of the currencies of institutional exchange which contribute to the comprehensibility of an innovation. But the research design must also account for the other currencies listed above: sources, form, context, and application. Method Acceptance of HUD's RFGA and solar increment grants to developers as the perturbation prompter, combined with research constraints of time, funds and personnel (and in light of the fragmentation, disaggregation and localization of the housing arena), led to a decision to adopt an illustrative case study method for this research. Specific projects were selected for detailed study based on their possible usefulness in representing institutional currency exchange processes relevant to solar innovation acceptance in housing. The case studies are intended to illustrate particular currency exchange dynamics in various localized housing institutional arenas. Sample Selection Though HUD focused on developers as the critical actors to whom to demonstrate solar technologies, it did not make grants according to the type of developer. The work completed in preparing the hypothesized institutional arena for housing revealed that factors contributing to comprehensibility would vary according to developer type. Hence, the first variable used in sample selection was developer type. A second primary variable was market location. Finally, high intensity interactions between institutional entities (as shown in the hypothesized institutional arena) were used to cull possible cases for sample selection. 55 The sample universe was all grant awards made in Cycles 1, 2, and 3. As shown in Table 8, this consisted of 317 recipients. The grant recipients were categorized according to ten developer types. The ten types of developer are: + Small builder -- primary activity is the construction of housing + Small developer -- primary activity is the packaging of housing developments with a volume of up to 75 units/year + Housing Authority -- a municipal housing authority + Large developer -- primary activity is the packaging of housing developments with a volume of 75 or more units/year + Non-profit developer -- primary activity is the packaging of housing developments, with a non-profit incorporation + Manufacturer -- primary activity is the manufacture of building materials, with housing development as a secondary activity + Designer/Engineer -- primary activity is either as a designer or engineer, with housing development as a secondary activity + Utility -- primary activity is as a utility company + City -- primary activity is as a municipality + Institution -- primary activity is as an institution, such as university Designation as a type of developer was made by project staff members, based on project information contained in the three summary volumes about HUD's project. (ERDA, 1976; HUD, 1976; HUD, 1977.) The distribution of awards by developer type was shifted during the three cycles, with small builders and large developers being increased proportionally (See Tables 9, 10, and 11.) It was decided that the sample would include at least one project for each developer type (excepting institution and city), with at least one project in each of four regions into which the continental US was divided. The four regions (and states included in them) are: * Mid-Atlantic and Northeast -- VT, NH, MA, CT, RI, ME, NY, NJ, PA 56 I -J C c-- r- -. -J. c ctr C< c-r ID 3 C) C -5) CD - CD+ m O - IM 5 C -0 I 0 O -h c-fc+ EL n a- 0 0 0 --I m CD LD :.o. -.5 U) :q 0 oc I- - Ca. CD C c0 w 0C CD 0 - - CD D m> ms [o-3 - :z 0 1 CD H n, <. ul tn 01 Zm ¸ ! .~ i~ - ii _ I_ CD O D I D c 0 rN In (-P _. _I + Ln Ln -1' 1 C) -0 -_ I i (.0 I m __J t C0 I -4v: 4P rn 5: c--. 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(D O D m, 3m U)) c I1 a I -I I- c C) D CD Q -< Q D -- D -'.0 o ----- - CD CD N) N) CD cn _A 0 tn O 'm L H -J HT'ID o - ,,L - - ,, rN nr DC-I'. 0 -D(- 0(D - D o CD 58 _J. c- _.J CF D -I -e c-. c_. r- Z CD -h 0 C) m -. 5 CD a' n_.I o -0 CD I1 00 1 __i 0 oD tO .-S 0 o CD CD -s CD -o -I. co 0-4 r -A 0,- cn- rD '00 CO -I. 0 -$ O tD S V) -J (0 CD I -. u0 o -S ... l N Mu -o 0 Il c -I. o --I o0 00 N) -- 00 W 0_ CD D O U) c. 0 C.o m + o --I I C -OI C 1 C '-4 i CD < 0- Iii __J 0 __J C) i oI -0 < r ,, C -o C -ro r DD a Il i _0C I J N) _L .o _-. O H . +- c- - 01 ~o C) PO (3 -J po 00 __J o5 -I H - -O 59 . --i -I. c-t- C _J. c- r- -. CD LA -A. c- . CF -D -s 0 3 -h I ,D ?o 0 CD Ln =-- =:I 0) .. -Da rD .. c-I m 0 -i·I c. 0 - 0 . I I rD -o II ..J, CO I '< - W CD -s O :, 0-0 -4 C 0') JO ~O A o OD c c --A N, J w Cn (A Ul D C 0) _a. c re v: CO c-- _. 0 --- -J .J rN C OI m I -J N : C-.l1 DQS C -4 IJ C n LI c, Oll (D Q -< o c CD N =F D c (2 L/ H v 4 r oo oo- N, l - -J I I 1 C N- L Jo rDv D-a CD O 5 .1p 4 c1, I-a No (o 0' -------- I) (A o -J 0') 0'), --q --q r- V Cr 3 - 60 -~~~~~_ - CD c-F C. :x Z 0 -. C -J C- -$ o CD i, m CD D 0) La C+ C -5 CD C I5 m CD CD D a mr _. -s I o co -, a Un .. _. CD D = (0 cI -s _. c- CD CD -5 CD -s I 23 eI CA) __J cI-- mrDCDc OJ -J -a. 0 0 CD I I -n V) D --i 0 C CI __a =D 0D N) V) i i . ct CD (D -0 rD i i I --A __ CD Ln CD (0 -o. 0 _ -. -J- rD c+ rtb _,- - CD 61 * Southeast -- MD, VA, DE, WVA, KY, TN, NC, SC, GA, FL, MI, AL, LA, AR * Southwest and West -- TX, OK, NM, AZ, CA, NV, UT * Midwest and Northwest -- OH, IN, MI, WI, IL, MT, IA, MN, ND, SD, NE, KS, CO, WY, ID,WA, OR, AK, MO The regional delineation was based primarily on climatic conditions with particular reference to insolation. On first review, 34 projects were identified as of potential interest for case study. A detailed review of project application and subsequent development information was conducted using HUD's files. The Real Estate Research Corporation is also conducting research on factors contributing to the acceptance of solar technology on housing, under contract with HUD; where applicable, their field files on the list of potential sample projects were also reviewed. Based on this review, 11 projects were selected for direct contact and on-site case study. The number selected by developer type and region is shown in Table 12. Data Collection Process An initial notice of case study activity was directed to the developer of record for each project. A list of additional informants, produced on the bases of hypothesized interaction intensity as revealed in the various matrices, was developed for each project. The developer was asked to supply names and addresses of each actor, for purposes of direct contact by project staff. Insofar as was possible, informants were supplied in advance with some basic information on the purpose of the research. Interviews were held with informants, with data collected using a specifically developed open-ended semi-structured survey research instrument. (See Appendix A.) Most field research was conducted during January, 1979, with follow-up inquiries conducted by telephone through February, March, and 62 April. Interviews with additional informants were often scheduled on the site, at the suggestion of one or more informants. 63 I EECES DOE (1978a) SOLAR HEATING AND COOLING DEMUNSTRATION PROJECT SUMMARIES Washington: DOE/CS-OU09. DOE (1978b) SOLAR HEAlING ANu COOLING RESEARCH AND DEVELOPMENT PROJECT SUMMARIES Washington: DUE/CS-uO10. DOE (1978c) NATIONAL PROGRAM FOR SOLAR HEAIING AND COULING OF BUILDINGS: ANNUAL REPORT Washington: DOE/CS-0007. ERDA (1976) NATIUNAL PROGRAM FOR SOLAR HEATING AND CUOLING OF BUILDINGS, PROJECT DATA SUMMARIES, VOLUME 1, COMMERCIAL AND RESIDENTIAL DEMONSTRATIONS Washington: Division of Solar Energy. Furlong, Michael and Nutt-Powell, Thomas E. (1979) INSTITUTIONAL ANALYSIS OF RESEARCH AND SOCIALIZATIUN IN HOUSING: A PRELIMINARY EXPLORATION Cambridge: MIT Energy Laboratory. HUD (19/6) SOLAR HEATING AND COOLING DEMONSTRATION PROGRAM: SUMMARY OF HUD CYCLE SOLAR RESIDENTiAL PROJECi'S Washington: HUD-PDR-230. HUD (1977) SOLAR HEATING AND COOLING DEMONSTRATION PROJECTS: SUMMARY OF HUD CYCLE 3 SOLAR RESIDENIIAL PROJECTS Washington: HUD-PDR-230-1. HUD (1978) RESIDENTIAL ENERGY FROM THE SUN: A BRIEF DESCRIPtION OF HUD'S RESIDENIIAL SOLAR DEMONSIRAIION PROGRAM Washington: HUu-PDR-351. A DESCRIPTIVE A DESCRIPTIVE McDaniel, Patricia and Nutt-Powell, Ihomas E. (1979) INSTITUTIONAL ANALYSIS OF GOVERNMENTAL INVOLVEMENI IN HOUSING: A PRELIMINARY EXPLORATION Cambridge, MIT Energy Laboratory. Nutt-Powell, Thomas E. with Landers, Stewart, Nutt-Poweli, Bonnie R. and Sorrell, Levi (1978) TOWARD A THEORY OF INSTITUTIONAL ANALYSIS Cambridge: MIT Energy Laboratory. Nutt-Powell, Thomas E., Furlong, Michael, McDaniel, Patricia, Parker, Barbara and Reamer, Andrew (1979) Cambridge: MIT Energy Laboratory. Parker, Barbara and Nutt-Powell, Thomas E. (19/9) INSTITUTIONAL ANALYSIS OF STANDARD SETTING IN THE UNITED STATES: A PRELIMINARY EXPLORATION Cambridge: MIT Energy Laboratory. Reamer, Andrew, Heim, Steven and Nutt-Powell, Thomas E. (1979) INSTITUTlONAL ANALYSIS OF ENERGY PROVISION IN HOUSING: A PRELIMINARY ANALYSIS Cambridge: MIT Energy Laboratory. 64 Swetky, Carole and Nutt-Powell, Thomas E. (1979) INSTITUTIONAL ANALYSIS OF HUUSNG PRODUCIION: A PRELIMINARY EXPLORATION Cambridge, MIT Energy Laboratory.