Leadership for HVAC Efficiency Programs

By David Lis, Regional Initiatives Program Associate
and
Jon Linn, Commercial Initiatives Manager

The landscape of high efficiency HVAC programs has changed very little over the past several years in the Northeast. End-user rebates on equipment have long been the mechanism for programs to promote energy efficiency. Recent studies have demonstrated that the ability of this method to affect the sales of high efficiency equipment is limited and its effectiveness at dealing with other efficiency opportunities (quality installation, etc) is lacking. Having achieved significant success through upstream Negotiated Cooperative Promotions (NCPs) with residential lighting manufacturers and distributors, NEEP has embarked on a path to accomplish a similar outcome for the regions’ HVAC programs (NEEP’s first and second quarter 2007 newsletters contain related articles). Through the development of cooperative promotional strategies that directly involve upstream market forces such as manufacturers, distributors and dealers, NEEP and its Initiative Sponsors are leading the region toward a new and innovative HVAC efficiency program model designed to capture the market’s great energy efficiency potential.

Through a series of steps beginning back in March of 2007, NEEP has brought the major manufacturers and distributors of HVAC equipment together with the region’s efficiency program administrators to work cooperatively. Instead of the traditional incentives and rebates to homeowners or businesses, which relies on them and their contractors (who specify most of the equipment purchased) in effect driving the adoption of efficient equipment, NEEP and its Sponsors understood that the greatest reservoir of untapped savings potential could only be realized by driving high efficiency through the higher-level supply side actors (manufacturers and distributors). It was recognized that these actors were the experts in driving sales of HVAC equipment and services and should be directly engaged to help efficiency programs accomplish their goals.

On the Residential HVAC side, NEEP and Initiative Sponsors jointly developed/distributed an RFP, seeking creative promotions from industry that would significantly expand the sales/quality installation of high efficiency HVAC equipment. By organizing and facilitating a regional effort to involve industry, costs to participate were much lower than if each state had approached industry separately. As a result, 21 unique proposals were received from 10 different HVAC companies. Partnerships for these joint promotions are currently being finalized and many have program launch dates set for February 2008.

On the Commercial packaged HVAC side, Sponsors and industry preferred to jointly develop a program, model and then see Sponsors individually negotiate with distributors rather than to solicit group proposals in advance. NEEP facilitated the process, working with interested sponsors, in developing resource materials and in initial contact with HVAC market players in the region. Together, NEEP and the sponsors drafted program summary outline with industry input, and then, themselves, a template agreement for use between sponsors and equipment distributors. In December, participating sponsor program managers began meeting with distributors serving their territories. These individual sponsors will come to agreements with the distributors, to direct all or a portion of the incentive funds to the distributors, as incentives and rewards for delivering qualifying efficient units. Early indications are that program administrators in Maine, Vermont, New York, Long Island and New Jersey may conduct these pilot programs in 2008. NEEP, and others, will share in lessons learned through their 2008 experience, for future programs.

Ultimately, the goal of all program administrators is simple; find the most cost effective ways to achieve energy savings. These creative programming approaches that directly involve upstream industry actors promise to do just that. The reach of HVAC programs will be greatly expanded, bringing in a whole new group of potential program participants. By working across program boundaries, the region will be able to leverage economies of scale to drive costs down.  The deepening relationships that our sponsors have developed with the community of industry players will prove invaluable as this new generation of HVAC programs matures. 

For more information David Lis at djlis@neep.org.