REED Rendering #12: Transforming Markets


Welcome to the latest REED Rendering issue, a series of blogs where we bring your attention to interesting trends that we see in the data and the stories behind those trends.

What comes to your mind when you hear the term “market transformation”? A few things that come to my mind include fostering change, revolution, and improvement. Markets are transformed by promoting energy efficiency technology and changing market behavior by removing barriers towards adoption of that technology.

One market, in particular, has been transforming. Lighting.

Over the past several decades, NEEP has observed a true transformation of the residential lighting market. For consumers, the market has moved from near-exclusive incandescent bulbs, to a mix of incandescent, halogen, and CFLs, to the current reality which is primarily LED and halogen. 

In 2015, NEEP adopted the regional goal that the residential lighting market reach a socket saturation of 80-90 percent efficient quality lighting when transformed by 2022. In order to do so, NEEP laid out seven steps to achieve this goal, focusing on program administrators and Energy Independence and Securities Act (EISA) Phase 2.

So how are we doing?

According to REED, in the residential sector for 2016, the lighting/appliances program type had the highest amount of energy savings in Connecticut, Maine, New Hampshire, Vermont, New York and the District of Columbia, with the second highest savings type in Maryland and Massachusetts. Overall, lighting and appliances accounted for 44 percent of total residential savings for utility programs reporting to REED.

2016 Residential Savings by Program Type

While the REED data category doesn’t only show the savings from lighting since it also includes appliances, it still goes to show that lighting is a significant percent of energy savings overall, and particularly important in the residential sector. In addition, lightbulbs make up a big portion of the retrofit/direct install activities. This is because some lightbulbs are installed as part of a walk-through audit or a larger weatherization effort and they can help make the entire project more cost-effective.

After 2020, we anticipate LEDs to be the predominant type of lightbulb available on most store shelves. Programs throughout the Northeast and beyond have had a huge impact on this transition by providing customer incentives to buy down the cost of efficient lighting. Looking at REED data since 2014 shows that while residential lighting programs have been a huge part of program portfolios, in some years it has waxed and in others it has waned.

Percent of Residential Savings From Lighting

Since signed into law in 2007, EISA has stated a round of lightbulb efficiency standards would take effect in 2020, but it has not been a straightforward path for U.S. DOE to adopt these new standards. There are some active debates and confusion around how DOE’s lightbulb standard will play out this year and into 2020. If the full impacts of the EISA 2020 standard currently on the books today were imposed on 1/1/2020, it is expected to make LEDs or CFLs the only technologies available for sale for a wide range of residential lighting applications. This would include standard bulbs, as well as many decorative and directional bulbs. This would not only save a tremendous amount of energy, but would demonstrate the huge success of efficiency programs in transforming the market and ensuring successful adoption of LEDs.

Imposing this standard ensures the market remains transformed. Program administrators have been preparing for the implementation of this standard and are looking towards innovative programs to take the place of residential lighting in energy efficiency programs. Since lighting has accounted for a significant portion of savings for utilities, we have seen a lot of creativity in recent three-year planning proceedings to make up for this transformed market.

For instance, Efficiency Maine Trust included the Innovation Program in the 2020-2022 triennial plan, which is used by the Trust to conduct pilot and demonstration projects of innovative types of energy efficiency, conservation, or alternative energy measures. By conducting pilots on a smaller scale before making large investment on the program design and incentives, the Trust is able to determine if the program is cost-effective and popular within the Maine marketplace.

Massachusetts also expanded the program offerings in the 2019-2021 energy efficiency plan to include energy optimization, active demand management, and energy storage as program offerings. Energy optimization broadens the focus of energy efficiency to include all fuels and open the door for strategic electrification.

Lighting has been a big deal in energy efficiency programs, particularly in the residential sector. As market transformation is solidified, other technologies will come to the forefront of the market to present new opportunities for market transformation. I think it’s time to toss the ball to the heating, cooling, and ventilation (HVAC) market.

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