With EISA compliance beginning and CFL market penetration improving, some utilities have found themselves defending the value of their lighting programs to regulators and CEOs who question the cost effectiveness of including them in a residential portfolio. The following are common questions utilities are hearing, along with key points to help overcome these objections:
WILL EISA DIMINISH THE SAVINGS FROM A LIGHTING PROGRAM TO A POINT WHERE IT IS NO LONGER COST EFFECTIVE?
This is a common misunderstanding. While the savings associated with efficient bulbs (CFLs, LEDs, and 2X) will be reduced as a result of EISA, our analysis shows that lighting will still be on par with appliance recycling as one of the most cost effective residential programs in a portfolio.
ARE LIGHTING PROGRAMS ONLY FOR GENERAL PURPOSE CFLS?
We are entering into the next generation of lighting programs which include LEDs and 2X, both of which are just being introduced into the market. In addition, specialty CFLs carry significantly lower market share relative to general purpose CFL bulbs and need further support. This means lighting programs will become less dependent on general purpose CFLs, and we will see the transition away from them occurring over the next three years. 2013 will focus on introducing the right LED, 2X and specialty bulbs to ensure residential customers have a good experience with the bulbs they use, and in 2014 we project a large percentage increase in LEDs, 2X and specialty bulbs. In 2015 the transition from general purpose CFLs to newer efficient technologies and bulb types will be complete.
DOES THE MARKET NEED AN INCENTIVE?
Price remains the leading consideration in light bulb purchases for consumers, according to a recent Ecova study of over 2,000 customers across three utilities. Additionally, new technologies carry large price premiums that will not allow them to cross the early adopter threshold without incentives. However, they need to be the right incentive levels. Recent analysis by Ecova has helped us understand the price elasticity of both existing and new technologies that help identify how incentives move demand.
ARE LIGHTING PROGRAMS JUST ABOUT INCENTIVES?
The lighting market is going through tremendous change: New laws, new technologies, and new labels with different information. All these changes result in confusion and increase the probability of consumers making inefficient choices until the new lighting options are more familiar. The educational function of lighting programs has become increasingly important, as has choosing the right bulbs to include in the product mix. Comparing lumens and new technologies to what customers understand clearly shows how efficient lighting can meet their needs, while selecting the best-in-class bulbs to incent ensures a positive customer experience with new technologies so utility programs do not make the same mistakes they made with CFLs early on.
In closing, a lighting program will continue to be one of the most cost effective options in a residential portfolio for years to come. The importance of lighting has in fact increased as the next wave of technologies attempt to cross the chasm into the mainstream market and there is rampant consumer confusion. A utility is once again poised to be the trusted advisor to their customers, helping them navigate the endless array of options, making it more affordable to purchase efficient lighting, and saving on their energy bills.
Want to know more about new LED technology? Check out Ecova’s recent Best-in-Class LED Reflector Lamp research.