Leaky air ducts can undermine heat-pump performance. Aeroseal has a fix

Amit Gupta, CEO of Aeroseal, has a question for anyone considering switching to high-efficiency heat pumps and air conditioners: How much of that heating or cooling energy are you willing to lose to leaky air ducts? This could be a make-or-break issue for electrifying and decarbonizing homes and buildings, he believes.

Now, after 12 years of slowly building a business for Aeroseal’s novel duct-sealing technology, Gupta sees a host of conditions combining to lay the groundwork for major growth: the push for decarbonization at unprecedented speed and scale, the coming-of-age of heat-pump technology, and billions of dollars of government incentives for home efficiency and electrification.

Over the past year and a half, Aeroseal has shifted into overdrive to meet the moment. Last year it raised $22 million in venture capital from Bill Gates’ Breakthrough Energy Ventures, Energy Impact Partners and Building Ventures, its first venture-backed investment since its 2010 founding. It has now raised about $30 million in total, allowing it to hire about 40 engineers and expand production at its Dayton, Ohio manufacturing facility, Gupta said.

Typical air-duct networks lose 25 to 40 percent of the energy put out by central heating and cooling systems to leaks, holes and loose connections, according to a growing body of research from the U.S. Environmental Protection Agency and Department of Energy labs, so tightening up those ducts is critical. According to Gupta, the U.S. has ​“100 million homes with ductwork that needs to be sealed.”

Aeroseal’s system pumps a nontoxic aerosol of water and vinyl acetate into air ducts, where the tiny particles adhere to and seal up holes and cracks from the inside.

That’s far simpler and less labor-intensive than the traditional way to seal air ducts, which is to send workers into attics, basements and crawlspaces to tape up ducts or paint them with sealant. The old-school method is so costly, time-consuming and unpleasant, in fact, that very few contractors or homeowners are willing to go through with it — particularly when it’s so hard to know how leaky the ducts actually are, and thus how much money the work could be expected to save.

But that doesn’t mean that Aeroseal’s much cheaper and simpler alternative has had an easy time getting to market. Mark Modera, Aeroseal’s scientific advisor and a professor at the University of California, Davis, first developed the technology in the 1990s while he was a researcher at Lawrence Berkeley National Laboratory. He started his own company, then sold it in 2001 to Carrier, a major HVAC company. But during nine years as a subsidiary of Carrier, the company’s technology failed to gain traction.

“It was a bit of a mismatch in size,” Modera said of the technology’s time within Carrier. ​“It’s hard to be taken seriously in a giant company.” The fact that Carrier makes money selling HVAC equipment and thus might not see a business incentive in making air-duct improvements that could allow customers to order smaller and less-costly HVAC gear, was also a factor, he said.

Gupta and Modera spun Aeroseal out of Carrier in 2010, aiming to streamline the technology and develop the right business models to get it into the field. 

Finding workable business models 

The first business model that Aeroseal developed was selling directly to HVAC contractors, rather than through the large-scale regional distributors that make equipment available to those contractors, Gupta said. That’s still the bulk of its business today.

To date, Aeroseal has sold its technology to about 1,200 contractors and had it put to use in more than 200,000 homes and buildings, mostly in the U.S. but also in more than two dozen other countries. But with roughly 100,000 HVAC contractors in the U.S., there’s plenty of room for growth, Gupta said — particularly outside the smaller subset of contractors who focus on whole-home efficiency and weatherization.

The technology package Aeroseal sells to contractors at a price of about $35,000 consists of two parts: a portable device that can be carried into a home with software and sensors that allow contractors to plug into air ducts and determine how leaky they are, and a larger air compressor installed in a truck or a trailer that pumps the aerosol into a home’s air ducts via a series of clear plastic tubes.

The portable device includes a screen with dials showing how much energy is leaking out of ducts — easy for HVAC contractors to read and show to homeowners. You can see the dials in action in a 2016 clip from the PBS series This Old House. Providing this kind of clear and comprehensible data was an early emphasis for Aeroseal, Gupta said.

Most homeowners only replace their HVAC systems when they break down, and they usually want to do it as quickly and cheaply as possible. Putting the Aeroseal tech into HVAC contractors’ hands makes it more likely to get used during this key time window.

“There are 8 million homes that get a new HVAC system every year,” Gupta said. ​“We want that machine to be in every HVAC truck, so that every time your HVAC is replaced, you get a duct sealing.”

To that end, the company is planning to start renting its system to contractors, he said. It’s also working on designing a smaller device that would be able to blow sealing aerosol through a home’s air ducts without a truck-mounted air-compressor system.

Another Aeroseal business model focuses on newly built homes, given that they are simpler to seal than occupied homes. Aeroseal works with big homebuilders such as D.R. Horton, Lennar and Beazer to seal ducts in new construction, where the job can be done in about an hour at a cost of about $500. That’s notably cheaper than the cost of sealing ducts in existing homes, which ranges from $1,500 to $2,500.

The company has also developed another technology, dubbed AeroBarrier, which can spray aerosol throughout an entire newly built home to seal leaks in walls and windows.

The contractor challenge

Though duct-sealing in an occupied home costs upward of $1,500, the resulting energy savings can recoup that investment in about four to five years on average, Gupta said.

But not all contractors are incentivized to help homeowners plug holes in ductwork since contractors usually make money by selling equipment and charging for labor, not by reducing household energy bills over time.

That dynamic makes it more difficult to get efficient HVAC equipment into homes, and particularly to replace gas furnaces with heat pumps, said Andy Frank, founder and president of Sealed, a New York–based residential energy-efficiency startup.

For companies like Sealed that link their revenue to the performance of the systems they install, sealing up ducts is ​“really important,” Frank said. But ​“a lot of HVAC folks just don’t care what the duct leakage is.”

Sealed likes to use Aeroseal’s technology ​“as insurance on customer comfort and heat-pump performance” on projects where it’s replacing central-air furnace systems with heat pumps, he said. ​“We’re not sure what the leakage is going to be. But if it’s high, that can definitely have bad effects on comfort and heat-pump performance. And I’d rather not risk it if I don’t have to.”

The link between duct efficiency and heat-pump performance

Leaky air ducts are a big reason why so many U.S. homes are equipped with fossil-gas furnaces that crank out overheated air, Frank said. ​“Gas furnaces are notoriously oversized,” he said. This wastes energy and, of course, results in higher greenhouse gas emissions. Relatively few contractors are willing to risk leaving customers too cold, making oversizing a rational business decision. But for companies like Sealed that focus on replacing fossil-fuel-fired home heating with electric heat pumps, that’s no longer an option.

Heat pumps use electricity to compress refrigerant that captures outdoor heat and transfers it indoors, much like an air conditioner operating in reverse. That makes them far more energy-efficient than gas furnaces or other fossil-fueled heating systems. But that efficiency depends on not overheating the air that ducts carry to rooms throughout the house. Air temperatures coming out of vents need to be high enough to make rooms comfortable, but lower than the human body temperature of 98.6 degrees Fahrenheit.

With air delivered from central-air heat pumps, ​“when you feel it on your hand, because it’s lower than skin temperature, it feels cool,” Gupta said. Leaky ducts can reduce those temperatures by an additional 5 to 10 degrees Fahrenheit, making tightly sealed ductwork ​“super-important” for delivering a heat-pump installation that not only keeps homes warm but does so in a way that homeowners can perceive, he said — a vital selling point for contractors and homeowners alike.

Frank agreed that the uncertainties over leaky ducts and central heat-pump performance are ​“a big challenge in projects. That’s why we at Sealed do a lot more ductless systems” like mini-split heat pumps that deliver heated air from wall-mounted terminals, rather than ducted systems.

There’s also the problem of upfront cost, Frank said. Most customers discount long-term energy savings in favor of cheaper installation costs, particularly if they’re not sure how many years they’ll remain in a home to recoup the extra costs of efficiency investments.

Getting more contractors to adopt Aeroseal’s system will require bringing down the cost of buying and using it, he said. ​“That’s the problem they’ve been working on from both a technology and business-perspective model.”

Can more modular tech and incentives make duct sealing a no-brainer?

Bringing down cost and complexity should expand the scope of projects where Aeroseal can pencil out economically for both contractors and customers, Gupta said. Incentives are another vital part of that cost-effectiveness equation.

Utilities, which are a primary source of efficiency incentives across much of the country, have been upping their incentives for advanced duct and home air sealing in recent years, with some offering up to $1,000 per project. The federal tax credits and incentives created by the Inflation Reduction Act add another layer of value for homeowners making the switch to electric heat pumps, he noted. The combination of federal and utility incentives should be able to mostly cover the cost of sealing ducts with Aeroseal’s more portable technology once it’s available, Gupta said.

Getting the costs to within striking distance of parity with a standard HVAC replacement is only one part of the challenge when it comes to replacing an old gas furnace with a new electric heat pump, however. There’s also the problem of getting an adequate supply of new equipment, training contractors on how to install it cost-effectively, and making the benefits clear for contractors and homeowners alike.

Gupta highlighted the need to grow his company well beyond the early-adopter market to make a significant impact on heat-pump installation, broader home electrification and ultimately the fight against climate change. Roughly 13 percent of U.S. greenhouse gas emissions come from the direct burning of fossil fuels in buildings, most of that from heating.

That’s what led Aeroseal’s new investors to put their money into an already-profitable business, he said. Many of the advanced technology companies that Breakthrough Energy invests in are aiming to make a major impact on climate change in a decade or more, Gupta noted. Aeroseal is hoping to make ​“a real impact today, not 10 years from now.” 

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