Don’t discount the significance of this win just because water heaters don’t seem that important.  The new standard will net consumers $10 billion over the next 30 years!  Hot showers for everyone!

The big improvement is a switch to a higher efficiency level for water heaters with more than 55 gallons of storage capacity that would essentially require advanced technologies to be used.  Condensing gas technology and heat pump water heater technology in the largest units are cost effective now and will eventually become cost effective across the board.  DOE found that a large heat pump water heater in particular could save over $600 dollars over the lifetime of the water heater.  I wrote about how these units work last year.

According to DOE the standard will save 2.8 quads of energy, enough to power 15 million American homes for a year and avoid the need for three new 250 megawatt power plants.  The standard will attain CO2 emissions savings of 164 million metric tons and keep a half a ton of mercury out of the air from power plant emissions.  

DOE has now laid the ground work for water heaters to move from the simple tanks and burners that have been around for decades to the much more advanced units that will make all of our showers cheaper and more sustainable in the future.  With this new standard and the increased use of solar hot water where it makes the most sense, we are going to slash the third largest use of energy in our homes while giving up nothing but wasted energy.

Take Action

Tell DOE to set the water heater standard that will save consumers $22 billion dollars over 30 years.  Who doesn’t like a hot shower that’s cheaper and uses less energy? 

Once you follow the link above you can send the suggested letter direct to DOE, or create your own. 

Background

The Department of Energy is about to make a final decision on the minimum standard for water heaters, meaning the benefits of a more efficient product are so overwhelming for consumers that all water heaters must be at least as efficient as the standard selected for that particular size and type.  DOE takes into account the benefits and costs of the more efficient technologies and sets the standard at the maximum level that is “technically feasible and economically justified”, so consumers are big winners. 

This program is responsible for our modern refrigerators that use a fraction of the energy they did 20 years ago, while keeping our food just as cold and with more storage capacity to boot.  Similar story on air conditioners, furnaces, and other household appliances.  Now it’s time for water heaters to go around again.

I explained a bit more about the technical issues in this blog entry last year.

The Draft Letter

The Department of Energy's proposed water heater standard is a step in the right direction for saving energy. As you prepare the final standard due in March, I urge you to take the additional step of strengthening the requirements for the largest water heaters. Stronger standards for the biggest units would boost total national energy savings, economic benefits for consumers, and global warming emissions reductions by more than 40 percent compared to the proposed rule. Just as importantly, the DOE would be helping advanced technologies become mainstream products and speeding the transition to next-generation water heaters.

By switching to a higher efficiency level for water heaters with more than 55 gallons of storage capacity, the DOE would essentially require new technologies to be used. Condensing gas and heat pump water heaters would meet these higher levels, delivering roughly 30 percent and 50 percent energy savings, respectively, compared to conventional gas and electric products. These advanced technologies are commercially available today. Units larger than 55 gallons make up a small portion of the overall market, but add considerably to national savings because they typically are used to deliver more heated water than the more common, smaller sizes.

By strengthening the standard for the large-volume products, the following additional savings could be achieved over 30 years:

• 1.1 quads of energy or enough to power more than five million typical U.S. homes for a year;
• $6.4 billion dollars in net savings to consumers and businesses; and
• 63 million metric tons of carbon dioxide, an amount equivalent to the annual emissions of 25 coal-fired power plants.

With water heating representing the third largest energy use in the home, it is essential that the DOE seek substantial changes in water heater efficiency to meet national energy savings and global warming emission reduction goals as well as to provide savings for consumers and businesses. I strongly urge you to adopt stronger standards for the larger volume water heaters and capture these significant savings.

Don't wait, hit send and make your voice heard.

Joint administration of the program will continue, however the new MOU may signal an end to some issues that have bubbled up repeatedly. Recent examples include,

• The media attention given to the poor performance of some Energy Star labeled refrigerators. You have to go way back to my not-so-nice blog from last year, but basically a test procedure problem at the DOE allowed refrigerators to use twice as much energy as they should and be sold as Energy Star.
• "Off the shelf" units testing much worse than advertised as a result of a lack of enforcement.
• The lack of updates to the efficiency levels required to attain the levels in many product classes, such as windows, where at one point 90% of all replacement widows sold met the weak requirements.
• Disagreement over which agency should handle the Solid State Lighting specification.

Now that both agencies have staffed up after the administration change, they clearly would like to put the past behind them and move forward. The MOU is designed to clarify roles and responsibilities as much as possible and put forward a framework for expanding and enhancing the program. There may be some skepticism that after decades of uneasy relations that these issues will finally be resolved, but after taking a look at the MOU and talking to staff, it seems to me that they should be given the opportunity make this agreement work.

In a nutshell, the MOU clarifies which agency is the lead in which area. In the past DOE and EPA split up the specifications for various appliances. DOE covered the more traditional products, such as refrigerators, water heaters, and windows, while EPA covered all consumer electronics. EPA also managed Energy Star for buildings while DOE conducted its own building efficiency work that was only loosely related.

EPA will now be taking the lead on all appliances and equipment specs while DOE will take more of a leadership role in buildings. DOE will also expand the National Building Rating Program (which would determine how efficient a building is and distill it into a rating) and manage all test procedures and metrics, all of which feed into Energy Star.

The MOU also clarifies how Energy Star specifications will be set, and does so in a way that NRDC has advocated for in the past. The baseline to participate in the program will be set where approximately the most efficient 25% of the market (flexibly defined, depending on the product) will qualify. Once the market share of Energy Star products reaches 35%, the specification will be revisited. Specifications for products with long useful lives will be revisited automatically every 4 years, while products where technology is evolving rapidly (TVs and other consumer electronics) will be revisited every 2 years. We agree with this proposal and think this will help keep the label fresh and usable for consumers.

There will also be testing of products "off the shelf" for enforcement, meaning someone will go out and buy one at the store and see if it works as advertised. Products will also be tested in accredited laboratories to determine if the product qualifies in the first place, rather than just letting manufacturers self certify. With these changes, consumers should feel very confident that they will save money and energy if they purchase an Energy Star appliance.

Lastly, the agencies are proposing an "Energy Super Star" for the most efficient 5% of products. This is very new, and everyone has some questions about how it would work but the idea certainly has merit. Legislation currently under consideration in Congress would create something similar by designating "Best-in-class" appliances at about the same efficiency level. Regardless of how it is done, it seems that the very best appliances will be identified in some way.

The agencies have put forward a framework for improving and enhancing Energy Star and this is a very positive development. It may take some reworking of legislative language in Congress to make it a reality, but the new EPA and new DOE should be given a chance to make it work. Government agencies working issues out on their own is preferable to Congressional intervention every time, as changing laws is difficult and time consuming. If the agencies follow through, the Energy Star program will become even more successful and help make efficient appliances and buildings the rule, rather than the exception.

The 2007 energy bill set this standard covering the traditional, pear-shaped incandescent light bulbs that would effectively ban them in favor of more efficient technologies like compact fluorescent lamps (CFLs) and light emitting diodes (LEDs). But it didn't just ban them outright; it was crafted to include two key components that have triggered innovation in an industry that hasn't had much of a reason to improve Mr. Edison's original design.

The first component is that the standard is a performance standard rather than prescriptive. It did not just say "incandescent light bulbs are illegal" but instead set a requirement in terms of the amount of light generated per unit of energy consumed. Manufacturers, when confronted with this type of requirement, can choose to invest to make their existing projects more efficient or move to a different technology. In this case we are reaping the benefits of both: investment in advanced incandescents is leading to promising products while LEDs are becoming more affordable and effective. Efficiency advocates don't care what type of technology is used as long as energy is saved.

The second point is less obvious, but the bill directs DOE to undertake a new rulemaking several years after the standard becomes effective that will cover all lamp types, not just incandescents. That means the lights that are used for the same purpose will be subject to the same standards, rather than technology specific requirements. The "general service incandescent" lamp rule will soon become the "general service" lamp rule. This is important because no one knows where innovation will take us. If we define the rules too narrowly, then unforeseen technologies won't be able to compete on an even playing field with more established alternatives. They could languish on a researcher's table rather than being perfected and commercialized in ways that will save us all money and energy.

The article also makes an important point in favor of aggressive standards generally. Manufacturers are much better than DOE (or Congress) at figuring out how to meet efficiency requirements at least cost. As such, the costs projected by DOE during rulemakings are often overstated and fail to materialize. In this case, super efficient incandescents could become a cost effective way of meeting the standard and help to bridge the gap between traditional bulbs and LEDs.

Clearly standards are an effective policy tool for not only reducing energy consumption, but also driving innovation. With careful thought in how standards are structured, consumers and manufacturers can benefit as we move to a much more energy efficient future.

The standard itself is not completely terrible and will save about a quad of energy in 30 years (quadrillion BTUs, and we use about 100 of those in a year), but the way DOE reached their conclusions makes you go hmm...

Oddest of odd comes in the Department's treatment of LED lights. Using LED lights in refrigerated cases is generally a good idea, as they use less energy, give off less heat, and they make the Red Baron and the Gordon's fisherman look delicious. The real perk is they are thought to increase sales via superior lighting. The Department was considering requiring LED lights in all cases (vertical and horizontal, open and closed) as part of this rulemaking.

So in order to make a decision about LEDs for a standard that does not take effect until 2012, DOE had to make an assumption about what LEDs would cost in 2012 and beyond. Luckily, the Department's own Solid State Lighting division has done just that, by creating the most comprehensive projection of LED prices based on historical trends and technologies in development. The conclusion of this report was that LED prices would fall 50% by 2012 (they fell 9% in 2008 alone). Slam dunk.

Not really, because DOE rejected its own findings as too uncertain, saying in the final rule:

"While considerable information is available that suggests LED prices are likely to decline by at least as much as DOE's sensitivity analysis assumed, DOE is not using this information as the basis of its analysis due to a lack of certainty about the timing and success of LED research and product development."

So somehow these projections are too uncertain to use in this analysis. But the projection that, beginning in 2009, LEDs will stay at exactly the same price indefinitely? That is rock solid, iron clad, a done deal.

DOE did update to the most current prices for LEDs to reflect changes that have occurred since the NOPR. And since October the prices have...wait for it...decreased.

"For today's final rule, DOE updated the LED costs to represent the current cost of LEDs. DOE did not receive any data providing a greater level of confidence that LED price reductions would occur. However, LED costs have decreased and the costs used in the NOPR engineering analysis no longer represent the current cost of LEDs."

Sigh. So what does this inexplicable decision mean? Well, according to the NOPR, if LED prices decrease by only 6%, then LEDs make sense across the board and the highest standard level considered is justified. And if the 50% reduction, as projected by DOE, occurs, then the nation hits the jackpot, saving nearly five billion dollars. The energy and carbon savings in moving to the higher standard level are also significant. According to ACEEE,

"The stronger standards which DOE rejected would have saved another 0.26 quads (about 25 billion kilowatt hours), or enough to power another 1.3 million households for a year. DOE's chosen standard will eliminate 52.6 millions tons of carbon dioxide over thirty years (according to DOE, an amount equal to that annually emitted by 332,500 cars); the stronger standard would have cut another 13 million tons (an amount equal to that annually emitted by another 82,000 cars)."

This is a bit depressing, especially considering the irrational basis for making this decision and the apparently light treatment of the additional benefits. But hope springs eternal, as the incoming administration has promised to overhaul the appliance standards process. That's a good thing, because DOE will issue 25 standards over the next four years (pursuant to a consent decree that resulted from a lawsuit filed by NRDC and several states). For comparison, the Bush administration issued 4 standards. Hopefully this is the last time we see such bizarre logic used to determine national energy policy.