Trends and Drivers in HVACR Energy Efficiency Incentive Programs

Presented by:Talbot H. Gee, HARDI

Prepared Exclusively for:HARDI Western Regional Conference

Las Vegas, NVMarch 21, 2011

• Curbing the high-efficiency equipment slide• Update on the U.S. energy efficiency market• Why the Western Region is especially important• How to capitalize on EE incentives

Objectives: Maximizing $6+bil1. Market and EE overview2. SCE Program Highlights3. Discussion with Dale Gustavson, Better Buildings4. NV Power: Program Specifics with Tom Downey5. Q&A

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20100.0001.0002.0003.0004.0005.0006.0007.0008.0009.000

A/C & HP Units (in millions)

A New Normal?

Ten year avg: 6.35 million unitsSource: AHRI, JP Morgan

U.S. Factory Shipments of Central A/C and Air-Source HeatPumps to HARDI Member Sales

12/12 Rates-of-Change

-20

-15

-10

-5

0

5

10

15

20

'05 '06 '07 '08 '09 '10 '11 '12

Shipments

-20

-15

-10

-5

0

5

10

15

20HARDI

Shipments

HARDI

AHRI Shipments in 2010 were 0.2% above the 2009 level. HARDI Member Sales were up 10.5% in 2010.

The peak in the 12/12 business cycle for AHRI is a potential sign of weaker HARDI Member Sales growth in the coming months.

U.S. Factory Shipments of Central A/C and Air-Source HeatPumps to U.S. Housing Starts

12/12 Rates-of-Change

-20

-15

-10

-5

0

5

10

15

20

'05 '06 '07 '08 '09 '10 '11 '12

Shipments

-60

-45

-30

-15

0

15

30

45

60Housing

Shipments

Housing Starts

ITR predicts a 1.5% decline in 2011 housing starts from 2010, forecasting 579,000 units. This does not bode well for 2011 unitary shipments given this historical correlation.

2011’s Efficiency Mix

Source: JP Morgan 2011 HVAC Outlook, CEE 2010 Annual Report

Since 2006:

Nearly 5x increase in >15 SEER unit shipments

Over 2.5x increase in >13 SEER unit shipments

2010 record $5.4 bil in US electric efficiency funds

…but 27% drop in total unitary volume (7 mil to just over 5 mil)

HARDI est. 78% 13 SEER in 2011

System Replacement Rates Plummet

Source: JP Morgan

• “It is important to keep in mind, that the economics of energy efficiency, even with the help of the government, are generally not attractive enough, in our view, to drive discretionary replacements without a “green” incentive, as most consumers tend to focus on the upfront costs of replacing a new system. This is best exemplified by the significant pre-buy seen when the industry transitioned to 13 SEER in 2006- distributors clearly saw that the value delivered by higher efficiency was not commensurate with the higher price.”– JP Morgan 2010 HVAC Market Review & Outlook

The Appliance Standards Effect

• $5.4b is electric• 39% C&I• 31% Resi & low

income• 75% in West for

EE

All of This Despite…

Source: CEE 2010 Annual Report

Source: CEE 2010 Annual Report

• CA, NY, FL, MA accounted for 50% ($2.7b) of 2010 budgets

While Leading, CA is Not Alone

Source: CEE 2010 Annual Report

Simpler to design, implement, and justify+

Cheaper to design, implement, and justify+

More effective (i.e. better uptake) =

Better prescriptive OR performance based

Utility Efficiency Program Needs

• 2010 Program Highlights– Added incentives for water-cooled chillers and variable

refrigerant flow equipment (VRF)– 10 GWH energy savings and 4 MW demand reduction– Incented over 42,000 Tons with 31% annual growth rate

Southern Cal Edison Distributor Incentives

Source: CEE 2010 Annual Report

Snapshot of Others in CA

Other Notable Western Region Programs

Source: 2010 CEE Annual Report

And a few more…

Source: 2010 CEE Annual Report

• HARDI Foundation to form:

Center for Energy Efficiency Optimization– Will study how wholesale distribution can best drive

and influence energy efficiency

Support Your HARDI Foundation!

Maximizing EE $$

• Better Buildings Inc. www.betterbuildings.com• Staff for Western HVAC Performance Alliance• SCE and PG&E program support

Q&A w/ Dale Gustavson

• Tom Downey, Field Manager, Proctor Engineering

• Anne Marie Blankenship, Program Manager, Resource Solutions Group

Nevada Energy Program

Questions