The Great Replacement Boom, Part Two: Challenges to Energy Efficiency

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The Great Replacement Boom, Part Two: Challenges to Energy Efficiency

In his blog post last week, Jim Lyza discussed the coming replacement boom for appliances and HVAC units. This boom – while great news for appliance manufacturers, installation contractors, retailers and utilities – will also present a challenge, since, for most homeowners,  these replacements will be reactive rather than proactive.

When my 11-year-old air conditioner went out in the midst of 100+ degree weather, the first question I asked my contractor was: “How much will it cost to repair it?” After recovering from that shock, I followed up with: “Are there any rebates available to upgrade to a more efficient unit?” The answer was a fairly confident “Nope.” It was less than a week later when we received our monthly utility bill with a rebate offer, which suggests that my contractor was either unaware of or unwilling to mention the rebate.

In our most recent Utility Pulse™ survey, we found that while energy efficiency rebate participation is relatively low, incentives could have a much stronger positive impact among Americans. Although fewer than one in four respondents reported receiving a rebate or financial incentive for energy-efficient improvements, these consumers said that the rebates were a good way to reduce their costs and encouraged them to buy a more efficient unit. While 68% said they were planning to act anyway, we know that energy efficiency activities usually take a back seat to aesthetic home improvements and are most often completed reactively – only after equipment breaks and replacement is absolutely necessary.

Whether the replacement is reactive or proactive, however, most homeowners will have to be aware of the rebates before they will consider upgrading/replacing to a costlier, higher efficiency unit. And in the case of reactive replacements, contractors and retailers must have the more efficient units in stock or very quickly available to facilitate better choices. A homeowner is not going to wait to get the “better” water heater if it takes two days to get it installed while their leaking unit is ruining the hardwood floor. Likewise, they’re not going to suffer through even one extra day with no AC in July to get a more efficient unit.

Ultimately, utilities, contractors, manufacturers and retailers should start working together NOW to build a plan for the coming boom. They should re-examine rebate offerings and make sure they’re as streamlined as possible for both DIY and contractor installs, and they should be available at point of purchase to reduce initial out-of-pocket costs. Programs should also be more integrated and holistic, rather than the current plethora of one-off, stand-alone offers, in order to encourage multiple, pro-active improvements.

They should also develop joint-marketing campaigns to make homeowners aware of rebates to encourage more participation and adoption of more efficient units.

About the Author

Indra Chapman

Indra is a former contributor to Shelton Insights.

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