RESIDENTIAL HVAC SYSTEMS

OVERVIEW

Across the United States, space heating and cooling account for 43% of residential energy use,¹ consuming 2.7 million GWh of energy.² Although improving the building shell can have a dramatic impact on heating and cooling needs,³ the type of heating, ventilation, and air conditioning system (HVAC) is an important factor in home efficiency. With greater consumer education and accessibility to efficient equipment, energy used in residential climate control could be reduced by more than 250,000 GWh,⁴ the amount of energy used by homes in Arkansas, Kansas, and Kentucky combined.⁵

ANALYSIS

Buying a new heating or cooling system is a daunting task for consumers– it’s both expensive and confusing.⁶ Even with the EnergyGuide label,⁷ it’s not clear which system will work best in a particular situation, as performance varies from house to house.⁸ To ensure comfort, most HVAC systems are oversized wasting both energy and money.⁹ Even after installation, most consumers don’t know whether they made the most cost effective decision.¹⁰

Additional hurdles to obtaining efficient systems stem from manufacturer and distributor practice. HVAC systems must meet minimum efficiency standards set by DOE.¹¹ Manufacturers can also choose to participate in the voluntary Energy Star program,¹² but they have little incentive to reach beyond these targets.

Distributors stock only a subset of the available products, limited by the high cost of these items.¹³ Moreover, roughly a third of HVAC replacement decisions are made under duress, when the homeowner’s current system fails.¹⁴ This leaves many consumers without time to fully evaluate their options and identify the distributor with the more efficient product.

IMPLEMENTATION

To overcome information and distribution barriers, the federal government should implement a number of policies.

Improve Appliance Standards

Appliance standards have saved consumers more than $300 billion since 1987.¹⁵ Congress should direct DOE to update the minimum efficiency standards for residential HVAC systems, which are included in the bipartisan National Consensus Appliance Agreements Act of 2011.¹⁶ This would eliminate costly and confusing conflicts between different state standards, reduce manufacturing costs and could save up to 350,000 GWh of energy.¹⁷

Create a Best-In-Class Deployment Program

To encourage production and deployment of “Best-in-Class” HVAC options, Congress should create an incentive program for HVAC distributors. This incentive program would target the least efficient currently deployed systems, providing a direct rebate for replacing them with the most efficient currently available equipment.¹⁸ Benefitting the more than 1 million workers in the U.S. HVAC industry,¹⁹ this would let the private sector find a solution to our efficiency gap. Further, by creating demand for “Best-in-Class” systems, manufacturers will be encouraged to commit more resources to R&D ²⁰ raising the efficiency of all options. If 5% of the least efficient home HVAC systems were replaced with highly efficient models, it would save more than 25,000 GWh of energy.²¹

Form a Sizing Assistance Fund

Congress should create a grant program for states to create a residential HVAC advisory program. This 3rd party service would provide customers with personalized recommendations on the size of the HVAC system they need, with no financial incentive to upsell larger models.²² Distributors and installers would have an additional check on their recommendations, protecting customers from higher costs and reducing confusion in the buying process. Utilities would also benefit from the decrease in energy demand, mitigating the need for building expensive peaking power plants.²³

Create a Loan Program for Rural Electricity Cooperatives

Increased energy audits and disclosure, as covered in the Residential Building Materials Component, would also help encourage more efficient HVAC systems.