Another #greenfail – energy efficiency incentives meet Occam’s razor

A few weeks ago I made a comment on an article, Energy Efficiency: Cheapest Power Around, but Getting More Expensive, about my belief that we were wasting money on some of the energy efficiency initiatives sponsored by electric utilities. In the article they state,

IEE’s report didn’t get at how each dollar of utility energy efficiency money was spent, though it’s clear that the majority is still coming from simple steps like replacing lights and appliances with newer, more efficient models, as well as encouraging people to change behavior in energy-saving ways, Wood said.

In my comment I pointed out that when our heat pump broke down in 2010, we were going to buy a high efficiency heat pump regardless of the rebate. Although the rebate was appreciated it was not very important in our decision. The other major energy efficient effort by our utility was to give away compact fluorescent lights(CFL). Since I already had extra CFLs on my shelf I will probably not use these new CFLs for a couple of years. From my experience rate reduction was a better use of money that more people can take advantage of.

In a subsequent comment I was surprised to find that this comment offended someone and he attempted to defend the policy by claiming that he knew what I would really do. Here is the quote,

How can you really say you would have purchased the high efficiency model? What people say is often not what they do – despite what classic economic theory says about rational behavior.

So I went back and reviewed the marketing brochures, cost estimates, and the decisions made by my wife and myself in replacing the heat pump. My conclusion is unchanged except I am now convinced that the energy efficiency experts slept through their Marketing 101 class. The most important reason my wife and I were going to buy a high efficiency model is that buying a low cost, inefficient model was not an option. Using the 2010 Bryant brochure as an example we were offered three different models that varied from the less expensive model with a 13+ SEER and  9 HSPF to the most expensive model with a 16+ SEER and 9 HSPF. It is interesting to note that all of the brochures talked primarily about performance, warranty, and special additions available on the more expensive models.  None of the brochures used the rebate as a selling point. By chance one of the brochures mentioned  that the Energy Department had decided in 2006 that all new AC units or heat pumps would have a minimum of 13  SEER. When I look at various 2010 brochures it appears that all of the manufacturers complied. From a general viewpoint it is easy to conclude that the 2006 Energy Department decision was primarily responsible for the energy efficiency gains. It is this simple stuff that "green" investment advocates cannot get a handle on.

Even if we delve into more specifics, the argument for energy efficiency rebates does not get any better. At our house we consume half of our annual electric power in the three coldest months. Naturally the most important energy efficiency specification is the heating system performance(HSPF). Since our old heat pump had a 9.2 SEER and an unknown but undoubtedly low HSPF, I was happy with all of the models offered by Bryant. All of the specifications were much better but the heating system performance had improved dramatically for heat pumps in the last ten years. My wife had an additional requirement, she wanted a heat pump with a good warranty. She wanted the moderately expensive model since it had a good warranty. It was nice that it qualified for the energy rebate but as you can see it was not an important factor in our decision making. Since the HSPF numbers for the different models were the same, our annual kilowatt usage was going to be about the same regardless of the model we selected.

Whichever way I looked at energy efficiency rebates, it was primarily a political idea that was not going to change our behavior. I suspect other people replacing AC and heat pumps came to the same conclusions. The rebate was 3% of the total bill. Since the rebate is no longer being offered in 2012, I have to conclude that the saner minds in government agree that this an incentive we can live without. I chalk this up as another #greenfail like the bankrupt firms of Solyndra and Ener1. Much ado about nothing!