This article was originally published in the March/April 1994 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 1994

Second-Generation Rebates: Manufacturer Buy-Downs

Promoting compact fluorescent lamps (CFLs) as an energy-efficient alternative to incandescent lighting is a challenge that has stumped the efficiency industry for years. Retailers won't commit shelf space until they are assured of a self-sustaining market, with or without utility support. Some utilities are questioning the cost effectiveness of subsidizing CFLs, and consumers--if they have any opinion at all--usually believe that CFLs are expensive, hard to find, and incompatible with most household fixtures.

The Environmental Protection Agency has teamed up with the Consortium for Energy Efficiency (CEE), a utility partnership, to address these obstacles. The utilities are pooling their resources to provide a rebate to lamp manufacturers--a tactic pioneered by Southern California Edison which has proven effective in reducing the cost of CFLs to consumers without the high administrative costs typical of consumer and retailer rebate programs. By giving the incentive directly to the manufacturers, the reduced wholesale price is passed on to distributors and retailers before markup. Because markup is typically a percentage of cost, a reduction in the initial wholesale cost lowers the retail cost more than direct customer rebates do, often doubling savings, which increases the effectiveness of utility DSM expenditures.

The partnership is developing a model request for proposals to be released for public comment this year. The manufacturers' proposals will be evaluated against more than a dozen criteria, including retail distribution, marketing, promotion, product, and pricing capabilities. The goal is to identify the best performing and most aggressively marketed products, and to standardize specifications, evaluation criteria, bidding procedures, program timing, and utility involvement with product delivery.

The manufacturer buy-down program does not attempt to promote compact fluorescent lamps for all applications, or to dramatically expand the performance of the technology. Because today's CFLs are suitable for only about half of residential applications, a complementary initiative is under way to encourage manufacturers to bring efficiency to the remaining home sockets.

This second initiative will provide an incentive to induce manufacturers to develop and produce a lamp with all the familiar performance characteristics of an incandescent A-lamp, but with superior energy efficiency at a reasonable price. The proposal request for this project should be issued late in 1994, with winners announced late in 1995, and marketing and introduction of new products by 2000. This project takes advantage of a window of opportunity created by the U.S. Energy Policy Act of 1992, which requires DOE to investigate the need for efficiency standards for incandescent lamps, and to issue those standards by April 1997 if it finds they are feasible and justified. Introduction of an advanced technology could affect DOE's decision, and influence legislation requiring the manufacture and sale of efficient residential lighting products. For additional information, contact the CEE program office at (617)330-9755.

-- Bill Von Neida

Bill Von Neida is program manager for residential projects at the U.S. Environmental Protection Agency .


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