DO CONSUMERS BUY ENERGY EFFICIENCY?

Figure 1. Survey results like the ones above often show consumers are willing to spend money on energy efficiency. Most consistently, however, the sale of efficient products and homes is affected by more rigorous regulations and standards.

Table 1. Gas Warm Air Central Furnaces Shipments--1995-1996 AFUE Shipments % of Total Shipments Below 80% 1995--445,109 1996--432,224 17% 15% 80%-87.9% 1995--1,574,878 1996--1,763,948 60% 61% 88% and over 1995--580,982 1996--675,084 22% 24% Source: Gas Appliance Manufacturers Association

Table 2. Oil Warm Air Central Furnaces Shipments--1995-1996 AFUE Shipments % of Total Shipments Below 80% 1995--3,545 1996--3,440 3% 2% 80%-87.9% 1995--131,566 1996--148,414 97% 98% 88% and over 1995--0 1996--206 0% 0.1% Source: Gas Appliance Manufacturers Association

Numbers from the North The following information is pulled from Home Energy Retrofit Survey published by the National Energy Use Database in Canada (see Resources, p. 47). This publication describes trends in the Canadian housing market. In 1994, approximately 1 in 20 homeowner households undertook major energy efficiency work, such as improvements to insulation (5%), windows (7%), or doors (6%). In the case of insulation added in 1994, this work focused on exterior walls (2%), basement walls (2%), or attics (1%). Almost half a million Canadian households (7%) improved the windows in their homes in 1994. In most instances, these improvements consisted of replacing some windows: single-pane glass with double-pane (2%), the same type of panes (2%), or less frequently, double-pane with triple-pane (1%). Slightly more than 400,000 Canadian homeowner households (6%) made improvements to the exterior doors of their homes. This work involved replacing wood doors with metal doors (3%), improving the caulking or weatherstripping (2%), and adding a storm door (1%).  In the area of home heating, only a small proportion of households undertook upgrades, additions, or replacements to systems (2%) or conversions of systems (1%) or energy sources (1%). In 1994, 2% of homeowners added a fireplace to their dwelling; other homeowners (1%) upgraded existing fireplaces. The principal reason for homeowners to make improvements to insulation, doors, or windows was to save energy: 71% of households gave this reason. Comfort (44%), maintenance (37%), appearance (30%), and the resale value of the house (14%) were the other reasons given most often. In the case of changes, additions, and upgrades to heating or ventilation equipment, energy saving was the reason given most often (61%). Equal importance (31%) was given to maintenance and to comfort. The age of the building played an important role in the decision to undertake energy-saving work. Systematically, there was an increase in the frequency of activities to upgrade insulation, windows, or doors in relation to the age of the home. The replacement or upgrading of heating equipment followed the same trend. In 1994, approximately one in five (19%) homeowner households installed various devices to reduce energy consumption in their homes. The activities undertaken most frequently were the installation of low-flow showerheads (10%), replacement of incandescent bulbs with fluorescent bulbs (7%), installation of aerators on hot-water faucets (4%), insulation of hot-water pipes (3%), and installation of programmable thermostats (3%).  The installation of energy-saving equipment rises with total household income and decreases as the age of the head of the household increases.

Figure 2. Shipment-weighted average efficiencies of residential air conditioners. Air conditioner makers always produce some units that exceed federal standards, so the average unit sold is somewhat more efficient than the minimum required. Today, the federal minimum SEER is 10, and the average unit purchased is 10.68.

According to the 1997 Consumer New Home Survey conducted by NFO Research Incorporated for Professional Builder magazine (which surveyed 60,000 U.S. households), 66% of respondents said they would spend an extra $2,000 for energy-efficient products or features during the construction of a new home. Another 15% would spend up to $3,000. But this willingness to spend extra money comes only with the condition that the builder save them at least $250 annually on heating and cooling costs. Even with that savings, the remaining 19% of respondents would still invest in the efficient house or product, saying that it would take too long to recoup the expenditure (see Figure 1).

To the detriment of the so-called greenwashed (fake green) companies , the majority of consumers will no longer accept just a promise of energy savings for the products or services they choose for their home. To determine the credibility of claimed energy-saving features, 83% of the survey respondents want some sort of guarantee from their builder or the manufacturer of the product before they would purchase it for their home. Only 13% would simply take the builder's or seller's word for it. The final 4% said they were not concerned about credibility. And more than 50% also wanted an independent evaluation, such as blower door or Duct Blaster test conducted by an energy service company.

It is an entirely different marketplace and the whole industry is changing by demand, says John J. Tooley, senior building science specialist with Advanced Energy in Raleigh, North Carolina. In order to meet the demand for energy efficiency, product and service performance has to be guaranteed.

So what products are consumers purchasing to make their homes more energy efficient? Figures from the Air-Conditioning and Refrigeration Institute (ARI) show that consumers are buying central air conditioners and heat pumps in ever-increasing numbers. According to ARI, just 26 years ago only 10% of the housing stock, or 7.3 million homes, in the United States had central air. Today that number is significantly higher. Seventy-two percent or 68 million homes today have air conditioning, with 44% of those having central air or heat pumps and 27% having one or more window units.

In the new family home market, four out of every five homes built today will include central air conditioning. And the figures also show a significant difference between geographical regions. About 61% of new homes in the Northeast are built with central air conditioners and heat pumps, while in the South, these items can be found in 98% of new homes.

We have seen a very dramatic increase in the number of shipments of units in 1997, and we appear to be headed for the second best year in our history, says Edward W. Dooley, vice president of communications for ARI. The units that are being shipped today are much more energy efficient, so energy efficiency is definitely playing a role in purchasing.

In Richmond, Virginia, consumers now regularly purchase equipment above the minimum 10 SEER standard. More than 80% of the customers in the Virginia Power Energy Efficiency Financing Program (VPEEFP--a demand-side management program that assists home buyers in purchasing upgraded heating and cooling systems), are buying 12 SEER units for their homes. What we are seeing is that the consumers are much more conscious of buying more efficient heating and cooling equipment, says Ralph T. Savage, director of energy efficiency programs for Virginia Power. They are willing to pay a little more up front to improve energy efficiency, and this has been steadily occurring for the last three years.

VPEEFP has also seen consumers purchasing more products related to home performance and improved indoor air quality. Savage says there has been a marked increase in the number of consumers spending additional dollars to purchase air filtration products such as electronic air filters and high-efficiency particulate air (HEPA) filters. In the 1997 Consumer New Home Survey, 16% of respondents ranked healthy-home features as something they definitely wanted. Another 50% said they would really like to have those types of features. In terms of finances, 32% would spend an additional $1,000-$1,999, while 14% would spend more than $3,000 for healthy home features.

Consumers are also buying more efficient heating equipment, but this is probably due to more rigorous standards for those appliances. Statistics from the Gas Appliance Manufacturers Association (GAMA) show that in 1986, only 31% of the total shipments of central air gas furnaces had annual fuel utilization efficiency (AFUE) ratings of 80% or more. Just ten years later, that number had grown to 85% of the market. (Minimum allowable AFUE rating is 78.8%. Most of these increases are due to the improvements in required efficiency standards.) Central air oil furnaces show a similar trend. In 1986, GAMA reported that 53% of total shipments were for products with AFUEs of 80% or more. By 1996 that figure had risen to 98% of the market. These GAMA reports tracked shipments of upflow, downflow, horizontal, and multipurpose units. The trend continues annually, but only minor improvements show in comparing figures from 1995 and 1996 (see Tables 1 and 2).

Greater use of insulation is accompanied by more sealing and tightening of the building envelope. This has spun off into more energy-efficient framing techniques, and more care taken for any plumbing or electrical work that goes through outer walls. It does not matter what type of insulation product material is used; if it is not used in conjunction with a good sealing package for the thermal envelope, the R-value of the product is insignificant, says Herbert. While consumers are purchasing more energy-efficient products for their homes, the home building industry has had a wake up call in both sales and marketing and building performance levels. With a majority of consumers demanding guarantees for products and services, there has been a domino effect in the demand for quality in the home building industry. The increased performance levels of products and services are driving those who are not performing out of the picture, says Tooley. It is driving each part and piece of building a house and raising its quality and value. New products are also coming up to meet these needs.

Marketing products as more energy-efficient has become an integral part of the home building strategy. If you don't market your product as energy-efficient and everyone else does, then you lose, says energy conservation consultant Charles B. Bowles, president of the Energy Consortium in Richmond, Virginia. You have to have it in your marketing whether you are building them super energy-efficient or just doing standard techniques with a few energy-saving bells and whistles. Fortunately for consumers, builders, and manufacturers who are paying more than lip service to a desire for efficiency, the trend toward guarantees is increasing.

In a marketing survey for a builder in Texas, Bill Zoeller of Steven Winters Associates recently interviewed ten new home buyers about their perceptions of their recent purchase, including questions about energy use. Most of the home buyers knew what kind of HVAC system they had in their new home, and most of them found the system to be adequate. In the cooling climate of Houston, average summer cooling costs are between $150 and $390 per month (for one-story and a two-story house respectively).

Five of the home buyers said they would accept a less conventional HVAC system with a $500 per year savings. The respondents who wouldn't accept the system were concerned about reliability and serviceability. Despite this, eight respondents said they would have paid $1,500 more in the sales price to save $500 per year in energy costs. Nine respondents said that they use window treatments to control heat gain, saying they would pay between $500 and $3,000 for solar coatings and insulated glass resulting in a $500 per year savings in energy costs. Most of the respondents were concerned about indoor air quality, and six said they would have paid $500-$3,000 more for a system to remove irritants in the indoor air.

Zoeller's conclusions from the survey suggested that the developer should offer a high-efficiency, relatively conventional HVAC system, offer solar-coated or insulated windows as an optional upgrade, and maintain at least one model home with an air purification system.

But while the numbers reflect a growing consumer trend to make energy efficiency part of the equation when purchasing a home, the 1997 Consumer New Home Survey shows that only 7% of respondents ranked energy efficiency as their number one reason for buying a different home. A larger home, a newer home, and better location ranked as the top three reasons. Interestingly enough, retirees were more likely that the general population to rate higher energy efficiency as the primary reason for buying a different home (13% compared with 7%).

More than half of the respondents (70%) also went so far as to say that they definitely want or would really like to have an intelligent house energy management feature installed in their house. Of those, 28% would be willing to pay less than $500 for such a feature, 26% would pay between $599-$999 and 28% would pay $1,000-$1,999. Keep an eye out for our upcoming special report on energy efficiency and home automation in the May/June issue of Home Energy.

There are a minority of home consumers whose first priority is energy efficiency and who consider energy efficiency as a major concern. Today's consumer is still more interested in carpets and paint and crown molding, says Bowles. Thanks mostly to government efficiency standards and utility rebates, impressive improvements have been made in appliance efficiency, but overall home performance is still not a high priority for most consumers.

Deborah Rider Allen is a freelance writer in Richmond, Virginia.

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