This article was originally published in the March/April 1998 issue of Home Energy Magazine. Some formatting inconsistencies may be evident in older archive content.
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Home Energy Magazine Online March/April 1998
DO CONSUMERS BUY ENERGY EFFICIENCY?
by Deborah Rider Allen
After more than 30 years of energy efficiency regulations and standards, the United States still carries a heavier energy load per capita than any other industrialized country. But aren't consumers buying more energy-efficient products for their homes, and aren't homes more efficient also? The numbers say yes.
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.HVAC: Better Numbers Central air conditioners and heat pumps have become more energy efficient over the past 20 years. The average SEER (seasonal energy efficiency ratio) of units shipped by manufacturers in the United States 15 years ago was around 7. But from 1976 to 1996, ARI reports that SEER ratings increased 52% on air conditioners (one or more-piece units designed to be used together, like central air conditioning with an indoor coil and outdoor condensing unit) and 60% on heat pump units. Though this is due in part to government regulations in 1991 and 1992, mandating that all new residential air conditioning equipment have a SEER of at least 10, figures show that consumers are not only buying more energy efficient units, but they are choosing units that are above mandated levels. The 1997 Consumer New Home Survey reports that 82% of respondents were willing to pay more for a home where a builder exceeded, rather than met, mandated building codes. SEER averages show a parallel tendency. In 1996, SEER averages were 10.68 for central air-conditioners and 11 for central heat pumps.
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).Filling Up On Fluff Consumers are also spending more money to put higher R-value levels of insulation into their homes today. Michael J. Herbert, vice president of sales and marketing for Insulation Consulting and Supply Corporation, a company that distributes and applies all types of insulation in more than 25 states, says the amount of insulation being installed per house has increased significantly over the past several years. Though contributing factors include the increased size of today's homes and the further adoption of the CABO model energy code in many states, consumer awareness has incrased with insulation R-values.
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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